Friday, July 20, 2012

Big Name In Williston and the Oil Patch -- Built His Own Business -- Dead at 88

From Wyoming Business Report:
[Granite Peak founder Neil "Hurry"] McMurry was credited by those who knew him with having great vision for developing raw land into commercial projects. Most recently, his organization built about 2,500 new homes in Williston, ND, in response to the Bakken oil developments.  Just a few weeks ago ground was broken on another similar-sized housing development in [the Williston[] area.

“He didn’t have some fancy MBA, but rose to the top by putting on his boots and overalls everyday and working very hard,” McMurry's biographer Ann Chambers Noble said. “His handshake and his word have been better than any written contract.”
I think the first comment at the link says it all. 

More Fracking Crews In Williams County --> Increased Production

From the Oil Patch Dispatch:
A boost in the workforce helped Williams County add 66 producing oil wells in May, increasing daily production by more than 21,000 barrels that month, the latest figures show.

The significant jump – a 23 percent increase in oil production over April – was due to additional crews that do hydraulic fracturing, or fracking, said Lynn Helms, director of Mineral Resources.

Helms said he expects another big jump in Williams County oil production when June numbers are released as the frack crews continue to work on those idle wells.

Construction Begins on Natural Gas Plant --> Electricity West of Williston

Construction is just beginning on Pioneer natural gas plant west of Williston. It`s going to be a peaking plant, which means It will provide extra electricity when demand is at it`s highest.

Peaking stations are built to run faster than other electric plants.

"Once you hit the start button, then we`ll be running online at full load in about 15 minutes. That`s the beauty of a peaking station," Hill said.
Energy: 45 megawatts at peak power. 1 MW can power 800 "average" residential homes."

1Q12 Wells Updated

For what it's worth, I just went through the wells that came off the confidential list in 1Q12 but didn't report IPs when they were completed. Where IPs have been reported, I updated them.

Nothing much of interest was noted except this one. The following well has not yet reported an IP, and has produced almost 129,000 bbls to date:

CLR Has Permits for 14 Wells in Township South of Williston -- Daily Activity Report -- July 20, 2012

Daily activity report, July 20, 2012 --

New permits: 20
Operators: CLR (14), Samson Resources (4), Whiting, OXY USA,
Fields: Baker (Williams), Murphy Creek (Dunn), Ambrose (Divide), Sanish (Mountrail)

All fourteen of the CLR permits are in Baker oil field, listed as Williams County; Baker is south of the river except for a small piece in the northwest, so either I am misreading the map, or misreading something, but I thought south of the river here was McKenzie County, not Williams County; Baker is just north of Indian Hill; US Highway 85 South runs through it, south of the bridge. [Note first comment: I will be listing these as "McKenzie County" wells in my data base.]

More on this later, if I remember.

Four wells came off the confidential list:
  • 20563, drl, KOG/BTA, P Peterson 155-99-2-15-22-15H, Epping, s1/12;
  • 21504, 126, Legacy Oil, Legacy Et Al Berge 5-31H, a Spearfish well, North Souris, t4/12; cum 4K 5/12
  • 21754, drl, ERF, Grouper 149-94-36D-25H (original name with "TF" designation); Squaw Creek, s1/12;
  • 22246, 458, Slawson, Dagger 2-10H, Cabernet, t3/12; cum 12K 5/12;
Producing wells that were completed:

Williston #1 in Sales Tax Receipts; Williams County One Billion Dollars in One Quarter in Taxable Sales

The Williston Herald is reporting that Williston is again #1 in sales tax receipts in North Dakota. Data points:
  • Williston, year-over-year, 1st quarter: 76% increase; almost $800 million  2Q12
  • Williams County: just over the $1-billion milestone; that's in one quarter
  • Fargo: a 14% increase, yoy; about $550 million
  • Bismarck: slightly less than $400 million
But get this: the "number" for the city of Williston applies ONLY to goods delivered to sites within the city of Williston and just a small portion is actually delivered to addresses within the city limits. Wow. 

From the front page of the paper, it appears Love's Truck Stop is up and running north of Williston, next to Target Logistics, at the intersection of US Highway 85 north and County Road 6. I believe this intersection will be the northernmost cross-road for the Truck Reliever Route which will circumscribe the west, north, and east rural areas of Williston.

MDU, Ports of Los Angeles and Long Beach, and the Bullet Train

I'm staying in a residential area in San Pedro, south Los Angeles, about a mile from a huge fuel depot and less than a mile from the largest port complex in the United States. I bike down to the harbor on a regular basis; now that it is the new permanent home for the USS Iowa, I another reason to visit the harbor. I mention the fuel depot only to remind folks that oil activity can co-exist safely and quietly for decades with urban areas. But the point of the post has to do with the two ports. From the two bridges that go over these ports, for all intents and purposes, this complex is one huge port.

From the Los Angeles Times today:
At the edge of San Pedro Bay, home of North America's largest cargo complex, they're building new piers, wharves and rail yards at a furious pace to further dwarf the competition.

So much construction is underway that the new facilities by themselves would move more freight than the entire port of Savannah, Ga., which ranks No. 4 among the continent's ports.

The ports of Los Angeles and Long Beach, first and second in the cargo-movement hierarchy, respectively, are hauling in so much dirt, they would have enough land to build a twin of Universal Studios Hollywood with enough left over to fill 100 football stadiums with 20 inches of muck. Long Beach alone expects to use 6,000 truckloads of concrete.

The most expensive and extensive upgrades in the history of both ports will cost nearly $6 billion. The improvements are getting underway as international trade rebuilds ever so slowly from the devastating global recession, but experts say the building binge is necessary to keep the roughly 40% share of Asian imports that the two ports handle.
That alone would be worth posting, but this is frosting on the cake. MDU -- yes, the Bismarck-headquartered MDU -- is supplying much of the aggregate (concrete) for the port project. From the 2011 annual report:
A number of projects also have developed in California including expansion work at the Port of Long Beach and a contract to supply the Port of Los Angeles with 1.2 million tons of aggregate. Knife River is the largest cement provider in Hawaii, which positions it for potential work on the a $5 billion multi-phase light rail project currently under way in that state. 
Hmmm... that bullet train in central California running from San Diego to San Francisco might be beneficial to MDU ... 

The Tape and the Director's Cut, July 18, 2012; 336 Wells Waiting To Be Fracked

Via CarpeDiem, Milton Friedman responds: "Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade." Amen.

And more: Gibson guitars. Via, again, CarpeDiem

Time for a new poll.

Last poll: overwhelmingly, 75% of folks feel 1280-acre spacing is the preferred spacing (to 2560-acre spacing) in the Bakken for mineral owners. Comment: I disagree, but the reasoning is not intuitive, but will become clear over the next twenty years.


Have a great weekend.

Carpe Diem's fact of the day: at the end of May, 336 North Dakota Bakken wells were sitting idle, waiting for frack crews. The government needs to build some more frack spreads. Fast.

The Director's Cut, July 18, 2012

  • May, 2012, oil: 639,277 bopd (new all-time high)
  • April, 2012, oil: 609,503 bopd
Producing wells:
  • May, 2012: 7,188 (new all-time high)
  • April, 2012: 7,036
  • Remember: each new well represents a new $10 million business
  • May, 2012: 180
  • April, 2012: 167
  • May, 2012: $79
  • April, 2012: $78
Rig Count
  • June: 213
  • May: 211
  • Apr: 209
The director reminds us the draft BLM regulations have been published in the Federal Register.

Crude oil takeaway via pipeline is almost 35% below production; rail and truck is adequate to make up the difference. This is a new data point. WTI-NYMEX-Bakken spread affected by bottle neck at Cushing.

Drilling permit activity has increased but well below record levels. As winter apporaches more permits will be needed to ensure locations can be built before the weather window closes.

More natural gas gathering systems and natural gas plants may be needed to keep up with the amount of natural gas being produced in the Bakken. Flaring is still high at 31% but well below the historic high of 36% in September, 2011. 

For Investors Only: SLB and BHI Both Beat; BHI Huge; Yahoo!In-Play; KMI Raises Dividend

July 20, 2012: am I missing something? CNBC keeps pumping MSFT. Compare MSFT with AAPL.

From SLB and BHI beat forecasts

Schlumberger beats by $0.05, reports revs in-line: Reports Q2 (Jun) earnings of $1.05 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $1.00; revenues rose 16.2% year/year to $10.45 bln vs the $10.45 bln consensus. Internationally, sequential results were underpinned by activity growth both offshore and in key land markets. Latin America and Middle East & Asia Areas both progressed well, while Europe, CIS and Africa showed particular strength across the Area. In North America, the Canadian spring break-up and the weakness in the US land hydraulic fracturing market lowered results although this was tempered by robust performance in other land businesses and in the US Gulf of Mexico.

6:03AM Baker Hughes beats by $0.22, beats on revs: Reports Q2 (Jun) earnings of $1.00 per share, $0.22 better than the Capital IQ Consensus Estimate of $0.78; revenues rose 12.3% year/year to $5.33 bln vs the $5.25 bln consensus. "The impact on margins from the seasonal slowdown in Canada was mostly offset by improved results in onshore U.S. The initiatives to improve our Pressure Pumping business helped stabilize its results this quarter by offsetting the higher costs for certain raw materials and the weaker market conditions for Pressure Pumping. Our International business delivered improved revenue and operating profit, driven primarily by outstanding performance in Europe and the Middle East....We are cautiously optimistic about the market outlook for the remainder of the year. If commodity prices remain at current levels, we believe activity in onshore U.S. should remain stable. In the Gulf of Mexico and International, we expect continuing improvement as these markets expand.

And this was a tough quarter. I wouldn't be surprised to see one or two oil companies to announce splits.


KMI raises dividend.

Note disclaimer regarding this site. This site is not an investment site. Make no investment decisions on anything you read at this site.

Potpourri -- The World Is Coming to the US For Energy;

Great, great 3-page article in Forbes: the world coming to the US for energy.  The Bakken is mentioned. I started this blog for several reasons: see "welcome" and "disclaimer" posts.  The tipping point for starting the blog occurred when one blogger (who is now no longer blogging about the Bakken) said the Bakken was being hyped/was over-hyped. He/she said that the amount of oil coming out of the Bakken would never amount to a significant dent in total world consumption. I agreed completely, but he/she was missing the point. The first point was that the Bakken was going to be a huge deal for 100,000 people in western North Dakota.  A lot of millionaires. A lot of development. A huge change in their lives. I was not worried about the amount of oil being provided for the world; I was interested in how this would affect western North Dakota where I was born and grew up. The second and bigger point that was missed by Snopes and others was that the Bakken has become the laboratory in which new drilling techniques were tested. It is amazing how far "we" have come from 1-stage fracking back in 2007 to 40-stage fracking now. There is so much more but it's beyond what I understand. The best example might be BEXP. I get tired of tinhorns who used "phony" and BEXP IPs in the same sentence. Not only were they "real" IPs, but they forced other operators to be change their methods of computing IPs because of pipeline  choke points. BEXP impressed Statoil enough to be bought by the latter, and a cursory reading of mainstream media suggests Statoil is taking the lead in new world exploration of oil and gas. Of course, XOM, CVX, BP, Shell, COP, are still out there, but every time I turn around (to coin a phrase) I see another article on Statoil.  As long as I'm rambling, it would be a mistake not to mention another big name in the Bakken: Continental Resources, and Harold Hamm, who by the way built his business despite government interference and over-regulation. He was probably the biggest promoter of the Bakken from the beginning, and was the individual most responsible for getting the USGS folks to re-look at the potential of the Bakken. If banks, investors, and venture capitalists are going to pour money into the Bakken -- and a lot of money is needed -- they need assurance from "someone" that the oil is there and is recoverable.


Reminder: for local gossip with regard to the Bakken, stuff you would hear at the Economart, click here.  Bakken pricing, gushers, phony IPs. It's all there.


Energy links at Independent Stock Analysis.

RBN Energy: the propane story, part II.


I assume this has been posted/linked elsewhere, but just in case -- North Dakota is #1 in the us for economic growth, 2011.
North Dakota's economy is outpacing all other states, with continued growth in economic production, new jobs, rising wages and increasing export sales, leading economic indicators show.

North Dakota's gross domestic product, a measure of total economic production, increased 7.6 percent in 2011, the U.S. Bureau of Economic Analysis recently reported.

Oregon had the nation's second best state economy last year, with a growth rate of 4.7 percent. Since 2000, North Dakota's economy has averaged an annual growth rate of 7.52 percent compared to the national economy's average growth of 3.9 percent during the same period.

Popular Mechanics finds the Bakken: an old, old story, but fun reading. Popular Mechanics says North Dakota is the next hub of US energy.  By the way, this past week we saw on two successive days permits for as many as fourteen (14) wells in one section. This is not an anomaly. We will see more and more of it going forward. Agile investors and surface owners should start to anticipate what this will mean. When I see the word "hub" I see Cushing. If you don't know what I'm talking about, one can take two trips to see first-hand what it will mean. The first trip is a few miles to the southwest of Williston to see the Enbridge complex; the second trip is to Cushing.


Huge technology story coming out of North Dakota: Pedigree Technologies, NDSU
“We track, monitor and diagnose our customers’ fixed and mobile equipment, and connect it to their mobile workers and corporate offices,” said Warner, adding that the technology allows customers to monitor their operations in real time.

“We’re like Facebook for machines,” he said, referring to software and hardware that enables machine-to-machine communication.
We'll see this in the oil patch (if it's not already there).


From CarpeDiem, North Dakota leads nation in jobless rate, June: 2.9%.