Human Interest Story: Moving To North Dakota -- Best Thing I Ever Did

Link to a Bismarck Tribune article. I thought I had posted/linked this story, but maybe I didn't. A reader sent me the link.

Another great human interest story of an individual who said moving to North Dakota was the best thing he ever did.

Saturday Morning Links: Only ISA

Link here to Independent Stock Analysis.

Chesapeake, Michigan, North Dakota -- Will The Dots Connect?

I had not read the story until Don sent me a link. The Justice Department investigating a Big Oil company run by a white man was a "dog bites man" story as far as I was concerned. Nothing new, nothing interesting, nada, zip, zilch.

But when Don sends me a link, it's generally (okay, "always") worth reading. He seldom tells me why he sent me the link, but "reading between the lines" sometime provides a clue.

Same with this story. As noted, I had not read it, and I had not planned to read it: it was another "dog bites man" story.

But, with Don's link, I quickly scanned the linked article. I can't follow all the legalese, but wow -- what I did follow -- seems identical to the story regarding Chesapeake in southwestern North Dakota: lots of acreage bought; lots of discussion about potential; reality sinks in; and .... then ...

I still don't plan to follow the story until the ChesapeakeBakken plays out. (Funny: I had no intention of following the Keystone XL either until the pipeline became a symbol of this administration's attitude toward Big Oil.)

Hey, by the way, I was thinking about Big Oil tonight on the way home from Huntington Beach, California (maybe more on that later), and seeing the price of gasoline at $4.15 for regular when it had been about $3.75 when I first got out here two weeks ago. The initial run-up was unexplained; the recent run-up is being blamed on the Richmond, California, Chevron refinery fire. It's interesting how folks (at least some folks, not me) complain about Big Oil [for the record, I love Big Oil]. If folks only knew the challenges of drilling for oil in roadside-bomb-Iraq; the permitorium perpetrated by Washington; the challenges of a robust pipeline system; etc., etc., etc., maybe they would marvel at how well the industry actually does. I am amazed. One refinery fire and pundits suggest gasoline could to to $5.00/gallon before the summer ends. Think of all the things that could happen within the oil and gas industry worldwide, and yet, oil is delivered to refineries, and gasoline is delivered to your corner convenience story operated by .... well, by whoever operates them -- VP Biden knows, even if you don't --- and prices appear to be acceptable to most Americans. I base that on the fact that Californians, despite $4.15 gasoline drive at 75 miles/hour on the freeway, and pick-up trucks carrying nothing in their boxes, stop and start at intersections as if gasoline was still 30 cents/gallon.

Speaking of which: when gasoline is $3.75/gallon, most folks just say they are paying $4.00 for a gallon of gasoline. When they start paying more than $4.35 a gallon, they will feel as if they are paying $5.00/gallon. Just saying. JITFNE.

Wow, I'm in a great mood tonight. It appears CVX hit a new all-time high today. In 2010, CVX was paying 68 cents/share dividend; it is now paying 90 cents/share. 

It Never Quits --

Additional "It Never Quits" Stories

August 13, 2012: America's revolution in energy -- led by the Bakken (oil) and the Marcellus (natural gas) could add 3.6 million jobs and 3% to GDP.

It's a harbinger of a nationwide investment boom spreading from the oil fields of North Dakota and the Marcellus gas shale in Pennsylvania to power plants in California and chemical refiners in Texas. A surge in U.S. natural gas development has spurred $226 billion in spending plans on pipelines, storage, processing facilities and power plants, most slated for the next five years, according to Industrial Info Resources, a market- intelligence provider in Sugar Land, Texas.

U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999. Citigroup Inc. (C) estimated in a March report that a "reindustrialization" of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.

Original Post

Here's another article talking about the revolution in the oil and gas industry ... and again, the Bakken is the "gold standard." I think we've seen this story before.

The lede:

Global oil supply capacity is growing at an unprecedented level, and could result in an overproduction glut and steep dip in oil prices, according to a June 2012 study from Harvard University's Kennedy School of Government.

Contrary to the idea among some that global oil supply is running out, additional production of 17.6 million barrels of oil per day (bopd) could come online by 2020, boosting global production capacity to 110.6 million bopd, even with depletion rates for currently producing oilfields and reserve growth.

Then, note this:

The United States has more than 20 big shale oil formations, in particular the Eagle Ford shale, which has a hydrocarbon endowment on par with the Bakken. Most U.S shale and tight oil plays are also profitable at a West Texas Intermediate price ranging from $50 to $65 per barrel, making them "sufficiently resilient" to a significant downturn in oil prices.

Repeat: a hydrocarbon endowment on par with the Bakken.

"The Bakken" may not be a household word east of Berthold or west of Bainville, but anyone who knows anything about the oil industry, knows about the Bakken.

Also, note this:

[The author of the study] estimates spare global oil capacity – the difference between the world's total oil production capacity that can be reached within 30 days and sustained for 90 days and the actual production – at about 4 million bopd, which seems capable of absorbing a major disruption from a big oil producer such as Iran.

That explains why loss of Libya's oil had no appreciable effect on world markets, and current Iranian embargo: effects? Nada. Zip. Zilch. A Richmond, California, refinery fire that was put out in minutes will have a greater effect on price of gasoline in California than geopolitical events to date in the Mideast. 

There is so much more at this linked article; enjoy. Check out the break-even price of oil in these unconventional plays at the linked article. It might surprise you.

By the way, speaking of the Iranian embargo, it looks like Asia isn't too concerned about President Obama's sanctions.  On the world stage, he's become pretty irrelevant, notwithstanding Arab Spring or what will eventually be known as the Muslim Brotherhood resurgence.

For a dear friend (not for me):
Hank Williams Tonight, Jerry Jeff Walker