Sunday, August 19, 2012

More Grocery Stores; Update on Growth Plans for Watford City

From the McKenzie County Farmer, the growth plans for Watford City, at this link, sent to me by Kent.

I can almost guarantee this link will be lost sooner than later, so you may want to visit it now, take notes.

Also, in the same publication: Coburn's, Inc. with six grocery stores in North Dakota, including three in the Bakken region, will be opening five new grocery stores in western North Dakota, including one in Watford City. Doburn's development partner for these new stores will be Oppidan Investment Company out of Minneapolis. This is the second story in this blog mentioning Oppidan in the past week or so.  Coburn's has a long history in North Dakota, stretching back to at least 1988. According to the article:
In April 2012, Coborn’s, Inc. partnered with Williston-based JK Foods to co-own an Economart in Williston, N.D., and Food Pride stores in Stanley and Tioga where they serve the significant population growth that is occurring as part of the North Dakota oil boom.
The new stores (Coburn's and Cash Wise) will double the company's presence in the Bakken region. 

Minot Motels: 8 New Ones Completed; 8 Under Construction; Holiday Inn; LaQuinta; Microtel; Hampton Inn;

In case the link is lost or broken. This is from the Minot Daily News, published August 19, 2012:

Minot's newest hotels, and rooms:
Staybridge Suites, 102
My Place, 64
Holiday Inn Express, 66
Country Inn & Suites, 68
Souris Valley Suites, 136
Candlewood Suites, 80
LaQuinta, 91
Hampton Inn & Suites, 86
Hotels under construction, and rooms:
Microtel, 88
Baymont Hotel & Suites, 75
Astoria Hotel & Suites, 102
Noble Inn, 66
North Hill Suites, 130
Econolodge, 60
Magic City Inn, 87
Comfort Suites, 88 
See first comment, below:
Hilton Garden Inn Hotel, located on the west side of 16th Street Southwest at 31st Avenue, is scheduled for August 23rd. It will contain 360 multi-family residential units and 125,000 square feet of retail space.
See this post, also.

Later: not to be outdone, a reader sent me a Williston hotel/motel update, see comments below:

Williston has had the following completed: 
  • Holiday Inn Express & Suites, 
  • HomStay Suites, 
  • Candlewood Suites
  • Microtel Inn & Suites, 
  • Hampton Inn & Suites, 
  • Valu Place 1, 
  • Valu Place 2
  • Motel 6 (across from Trinity Medical Center; see comments below)
Under construction:  
  • Mainstay Suites
  • Best Western Atrea, 
  • Weatherton Suites, 
  • The Williston
  • Staybrdge Suites, 
  • Valu Place 3, 
  • Radisson Inn, 
  • Country Inn & Suites, and,
  • 2 more in the permitting process with the city.

GM Headed For Bankruptcy Again -- Forbes

Link here.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company.  It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday.  This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.

GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term.

Read the article. It's even worse than these two short quips would suggest.

GM is the government's version of a union too big to fail.

International Oil and a Book Recommendation

Don sent me a bunch of links. I have only two hours allotted for blogging so I will post the links, minimize the comments, and then come back to some of them.

North Dakota Rig Count: Some Rigs Moving to Montana

First, the number of rigs in North Dakota. This seems to be the histoire du jour. I only track active rigs in North Dakota, but the Bakken (and the Williston Basin) extends across man-made/jurisdictional boundaries. Had Lewis and Clark discovered the Bakken, the borders of North Dakota and Montana may have turned out a bit differently. But I digress. Part of the reason the total number of active rigs in North Dakota has decreased is because they've been moved across the state line into Montana. I can almost guarantee that operators are not moving new rigs to the Bakken, when they have more than enough in North Dakota and can move them across the border.  The average number of active rigs in Montana in February and April was 18; it jumped to 22 by May 25th.  Baker Hughes provides that data.

Okay, so enough of that for the moment.

Let's Study Enbridge Pipelines To Death

I'm really not interested in reading this entire article a third time, so if there is something in it I missed, let me know. The first few paragraphs and the comments tell me all I (think I) need to know. How long as the Keystone XL been studied? Four years and now we're studying it again. If was left up to lawyers, faux environmentalists, and newspaper reporters, one could make a case for studying the proposed Enbridge pipelines for 23 years. In case the link breaks, this has to do with complaints that the Canadian government is inadquately studying the proposed Enbridge pipeline from the interior to the coast. Thank goodness for the internet, the Drudge Report, and the Wall Street Journal.

Saudi Arabia Producing At Levels Not Seen For Thirty Years

I've lost the bubble on this: the price of Brent. My fuzzy recollection is that Brent has been rising, back to the $120 range (I see Bloomberg has it at $115); that the Brent-WTI price points are widening; and the WTI-Bakken price points are narrowing. But don't hold me to that. But I do believe Brent has been creeping up. All that to say this:
Saudi Arabia pumped crude at the highest level in more than three decades in June, overtaking Russia as the world’s largest oil producer during the month, according to the Joint Organization Data Initiative.

The desert kingdom’s output rose 3 percent to 10.1 million barrels a day in June from May as it exported the most in a month since November 2005, according to statistics the government submitted to OPEC and posted on JODI’s website today. 
The question is why? Maybe later, "we" can discuss that.  Down below I will state that 3 percent is not a huge number but then one has to consider: a) even if Saudi oil production had not increased, they were still producing at very high levels at a time when the Chinese economy is said to be cooling, and the US economy doesn't look all that hot; and, b) this is the highest level in more than three decades. And it the past thirty years there have been some very, very robust periods of growth.

I think Saudi's increased production has to do with declining production globally, and Saudi/Russia are making up the slack. For all the talk about the Bakken and the Eagle Ford, EOG doesn't think that production will have a material effect on global production/demands.

In the big scheme of things, three (3) percent is not a lot of oil, 300,000 bbls. From "glossary":
Ultra Large Crude Carrier (ULCC): can carry in excess of 320,000 DWT of petroleum, or about 3 million bbls of crude oil. Also referred to as a "supertanker."

Very Large Crude Carrier (VLCC): generally have a capacity of over 200,000 DWT of petroleum; or approximately 2 - 2.5 million bbls of oil. Also referred to as a "supertanker." 
I know when I fill up my car, I sometimes "top off" the last little bit (not legal to do so in some states); it looks like 300,000 bbls in a supertanker amounts to "topping off." (A bit of a stretch; don't write me, please.)
Mexico's Big Oil Problem

And finally, we come to a story on Mexican oil: "Mexico's big oil problem." Oh, I see. I have already posted this link/story earlier, back on March 7, 2012. (At that same link I wrote: Then this story that just popped up on Drudge Report: IMF says oil could spike 30%. ) But "Mexico's big oil problem fits into the Saudi story above, very nicely, where I wrote:
I think Saudi's increased production has to do with declining production globally, and Saudi/Russia are making up the slack. For all the talk about the Bakken and the Eagle Ford, EOG doesn't think that production will have a material effect on global production/demands.
Nothing more, nothing less. Even the much-vaunted offshore Brazilian oil fields may turn out to be a bit of a near-term bust.  Search "Petrobras" or "Brazil" at this blog to see why I say that.

Book Recommendation: Nothing To Do With Oil

Now, for the best part of the day: a book recommendation.  Nothing to do with oil. For those who place The Double Helix by Jim Watson, on the discovery of the structure of DNA, as one of their top ten books to read -- you know, I have never done that, put up a list of top ten books -- wow, that would be difficult -- but I digress.

Anyway, I never thought about it, but The Double Helix was just the beginning.  What happened next? And who did what next? I never really thought about. It was a quantum leap from The Double Helix to Biology 101, Augustana College, Sioux Falls, South Dakota. The discovery was made in 1953. The Double Helix was published in 1968.  I was taking biology 101 as a freshman in 1969 - 1970. I was fascinated by molecular biology. Interestingly enough, I never thought to ask who the father of "molecular biology" was. Jonathan Weiner's Time, Love, Memory, c. 1999, which received the National Book Critics Circle Award, tells that story. Fascinating story. The importance of a prepared mind. Think Harold Hamm. [All Bakken, All The Time.]

I would not recommend this book if you have not read The Double Helix, but other than that, no other prerequisites.

If you want a book recommendation for a book about oil: The Prize: The Epic Quest for Oil, Power, and Money, by Daniel Yergin, c. 1991, with a new epilogue (2008, which I have not read; I have the 1991 edition) is at the side of my bed and has been there for years.

Forget About Romney's Taxes
I Want To See Mine ... Go Down

I have to chuckle. "Everyone" wants to see Romney's tax statements for the past 12 years. I could care less what Romney paid in taxes. I just want to see my own taxes go down. On a related note: I see that folks are still reminding us that the President was in the first helicopter and Michelle was in the second helicopter. And, yes, interestingly enough, the second link takes you to a "Bakken" post. Smile. [Okay, some of that might not be true; I've not seen the movie of Seal Team 6.]

That's All Folks

This post has not been proofread; I assume there are typographical errors.

Lots and Lots of Stuff To Talk About: Minot (Again); "Band of Brothers"; Rigs In ND; Soybeans; 60 New Sand Mines in Wisconsin

Wow, I am energized this morning. Too much "stuff" to talk about. I'm not sure if I can get it all done in the two hours I've been allotted. And I'm not sure whether to do multiple posts or one long post. So, we'll see as we go along.

175 Rigs In North Dakota: Adequate

First, I'm getting a lot of comments about the number of active rigs in North Dakota. My hunch is that 175 active rigs in North Dakota will be more than enough to keep me busy posting, and that 175 active rigs will be more than enough for current operators to reach their production guidance.

Having said that, there is one key data point regarding active rigs that no one has yet mentioned (as far as I can tell). There are probably several additional important data points not mentioned, but the one I'm thinking of is very, very basic and has to do with recent rumors about well design. I will leave it there for now, date-stamp this entry for bragging rights, and then come back to this later.

United Pulse: On Lentils and Split Peas in Minot

Part of the reason I am so energized has to do with the United Pulse story I posted a few days ago.  I had forgotten that I had posted a story this past January about United Pulse expanding into Minot. From that post:
The planned United Pulse Trading facility will be located at Minot’s Value-Added Agricultural Complex, which features North Dakota Port Services Inc.  as an anchor tenant. NDPS provides, through Burlington Northern Santa Fe Logistics and BNSF’s Northern Tier Intermodal line, container services to the complex through its facility adjacent to BNSF’s main-line switch yard featuring daily service and four-lane highway access.
There is simply too much to keep up with. A reminder to newbies: although this blog site is "all bakken all the time," in fact, the name of the blog, "Million Dollar Way" has nothing to do with the Bakken per se. In fact, if you go back to my roots and to the general tone of the blog, particularly in the early days (and the first blog which was deleted), there are good reasons why stories about lentils are important to me.

Speaking of lentils, leads me to soybeans. Did  you see this story in the print edition of the LA Times? Neither did I. But fortunately the on-line edition links it: China worries about social fallout of soybean oil price jump. North Dakota is a large producer of soybeans. Like the rest of the nation, the drought will affect North Dakota's soybean crop, but perhaps not as much as feared.
There are some soybean fields that still looked pretty good in Minnesota and North Dakota ahead of August pod setting. As of July 16, Minnesota’s soybean crop was ranked 65 percent good to excellent, 26 percent fair and 9 percent poor to very poor.

North Dakota’s soybean crop was ranked 62 percent good to excellent, 32 percent fair and 6 percent poor.

Across the U.S., the soybean crop was rated 34 percent good to excellent, 36 percent fair, and 30 percent poor to very poor as of July 16.
Based on anecdotal reading of the regional newspapers, it appears the drought did not affect North Dakota as badly as the rest of the nation, but that is anecdotal, and I do not know.

CarpeDiem: Railroads Re-Energized Due to the Bakken

60 new sand mines in Wisconsin supporting the oil patch in North Dakota. Not too shabby.

The paragraph I enjoyed the most:
In two years, Union Pacific recorded a 265 percent increase in frac sand shipments. The railroad has rebuilt interchanges in Wisconsin, lengthened track at a Mankato rail yard and will lengthen another track this year. The company built a side track at Bricelyn, Minn., lengthened several tracks at a rail yard in Council Bluffs, Iowa, and is considering four more yard improvements in Wisconsin and Iowa.
After Warren Buffett bought Burlington Northern, one of my best investments ever, I started accumulating Union Pacific. For years, I had trouble deciding between BNI or Union Pacific, but Warren's purchase made it easier. I kept BRK-B and started accumulating Union Pacific. [Disclaimer: this is not an investment site; make no investment decisions based on what you read here. This is simply information, education, and entertainment.]

I never fail to waste my time reading the comments. Based on the comments, I am still amazed how uninformed some folks are.

Hotel/Motel Construction in Minot, North Dakota
Overbuilding? No

Interestingly, two different readers sent me comments about new motel/hotel construction in the oil patch.

One noted:
Minot is only running about 85% occupancy and they are adding 50% to inventory, so it tells me they will drop to the 60% range near term.
My reply, cleaned up a bit:

You know, the interesting thing is this: folks don't add "quality" to the mix.

When I was in Williston last summer, I went out to visit a "motel." It had been there since the 1950's. It appeared some years ago to have been either shuttered or condemned. How it was brought up to code for the boom, I do not know. But the "in-the-right-place-at-the-right-time owner" opened it back up, and immediately reached 120% occupancy. 

That "motel" with 120% occupancy raises the average, but as soon as a "nice" motel is built next door, and occupancy across Williston is 95%, the aforementioned "motel" will close. 

There are too many variables to simply look at occupancy rates to determine if things are being overbuilt. 

When I see the new construction stories coming out of Minot, I don't see "overbuilt." I look to see what the developers are seeing: what do they see coming into Minot three to four years from now. I guess the United Pulse story, the Port of North Dakota story, and the BNSF yard upgrade, etc., got me really energized about Minot.
One of the variables has to do with measuring occupancy rates. Is the "85%" occupancy rate the annual average; or, is it a snapshot in time? Are rates raised during periods of 100%+ occupancy such as during the Hostfest? Could more affordable hotels result in more men living in crew camps moving to the city? What hotels/motels currently operating are scheduled for closure, or would have closed had there not been a boom or a flood? These are all rhetorical; I don't plan to turn the blog into "All Minot, All The Time."

For a list of new hotels and hotels under construction in Minot, click here.

Hotel/Motel Construction in Minot, North Dakota
Developers: Speechless

So, I'm writing/thinking about Minot hotels and motels, and then this story pops up, sent to me by Don: 
The building of hotels in Minot has been so extensive over the last several months that the a total of new rooms available, or about to become available, changes almost daily. Minot's hotel growth is nothing short of astonishing, and not just for North Dakota.

"I can tell you everybody we talk to in the CVB world, the hotel developers and long-term planners, are just speechless. They are not seeing this anywhere else in the country. This is so rare. Nothing is growing as rapidly as this," said Wendy Howe, Minot Convention and Visitor's Bureau.
Go to the link for the full story and the numbers. Regional links break early and break often. I may do a separate post on this story; the "fact box" at the site ... well, it leaves me speechless.

"...are just speechless. They are not seeing this anywhere else in the country." Wow, we've been blogging about this and talking about this for three, four, or five years. I guess if the mainstream media only reads the NY Times, a few things get missed.  [Despite the admonishment: if you have a business, you didn't build it.]
Band of Brothers

Don also sent me a nice human interest story about the "band of brothers," called roughnecks.  Cowboys and roughnecks: North Dakota, Montana, Wyoming, Utah, and a few other places.

CO2 Emissions At Lowest Level in 20 Years
NY Times Spin: Okay, Now It's Methane We Should Be Worried About

The NY Times "Green" section noted that CO2 emissions are at their lowest peak in 20 years. That was noted some days ago; it took awhile for the NY Times to figure out how to respond. So, what do they do? They shift the discussion: back to methane. That, too, is an overworked story. I post it here only for archival purposes. But, and this is the huge story: the NY Times did NOT disagree that CO2 emissions are at their lowest peak in 20 years, and they explicitly or implicitly or directly or indirectly said it was all due to the wonderful oil and gas industry for forging ahead, despite governmental obstacles, permitoriums and demagoguery, to press on with fracking to provide natural gas so cheap, the aforementioned wonderful oil and gas industry is stacking natural gas rigs (see next blurb). Wow. So many story lines. But the NY Times now "sees" methane as the next threat. Ronald Reagan (RIP) talked about cows and methane a long, long time ago. There are rumors that President Obama will appoint a "Methane Czar" to monitor methane emissions.

What Was That Saying? Swords Into Plowshares?

Speaking of the president: someone told me that the Obama administration is buying these stacked natural gas rigs and converting them into slicers and dicers.

That's All, Folks

Okay, I'm going to stop here. Re-group. Start a new post: Enbridge, Saudi oil, Mexican oil, Montana rigs, etc., all stories / links that Don has sent me. It's going to be a long, long day. This post has not been proof-read; I assume there are typographical errors and broken links. I will sort them out later. 

Maximum Production -- Question From Reader

A reader asked: what do they mean by "allow maximum production"? This probably has to do with the hearing dockets.

See FAQ #54.

Or go directly to this post.

To minimize flaring, the state has established rules limiting how much oil can be produced from a given well (or even the entire field, I believe), while wells continue to flare natural gas.

Carpe Diem Provides Data and Links Regarding The Bakken, Summer, 2012

Link here.

Elsewhere (not at the link) there has been quite a bit of chatter regarding the decreasing rig count in North Dakota. There are several data points at the link that directly impact drilling rigs and the Bakken. 

One data point regarding rig count in North Dakota was not noted in the link above: that an unspecified number of Bakken rigs have moved across the state line from North Dakota to Montana.

I'll leave it up to the readers to determine if current change in rig count in North Dakota from 218 (record) to about 199 (recent tally) is significant.