Tuesday, September 4, 2012

Just How Big IS The Bakken?

This looks like a press release, but it's a huge story, nonetheless, at the Bismarck Tribune.

BNSF has created a special Unit Energy Desk to plan trains to and from the oil patch, with unit trains up to 118 oil tankers.

BNSF has increased its capacity to haul up to 1 million bopd out of North Dakota and Montana. North Dakota now ships in excess of 660,000 bopd, the most recent reporting period in June. Pipeline capacity is 450,000 bopd. Another 200,000 bopd of pipeline capacity will come on line by the middle of next year, but the gap between pipeline capacity and production will continue to widen before it narrows, according to the linked story.

BNSF currently has eight oil terminals with two more coming on line this year. [There are currently 16 CBR facilities in North Dakota; I don't know if "two more" is part of the sixteen or are we looking at 18 CBR facilities?]

BNSF says it has invested almost $200 million, and has hired more than 560 employees to fill existing and new positions in North Dakota and Montana.
"BNSF has been hauling Bakken crude out of the Williston Basin area for over five years. In that time, we have seen the volume increase nearly 7,000 percent, from 1.3 million barrels in 2008 to 88.9 million in 2012," said Dave Garin, BNSF group vice president, Industrial Products.
Just how big is the Bakken? At least one company thinks it could be a trillion-barrel reservoir with 45 billion bbls of recoverable oil.  

"He Didn't Build It" -- Boy, That's For Sure -- The August ISM Numbers

From Bloomberg, the committee's official statement, released September 4, 2012:
The PMI registered 49.6 percent, a decrease of 0.2 percentage point from July’s reading of 49.8 percent, indicating contraction in the manufacturing sector for the third consecutive month.

This is also the lowest reading for the PMI since July 2009.

The New Orders Index registered 47.1 percent, a decrease of 0.9 percentage point from July, indicating contraction in new orders for the third consecutive month.

The Production Index registered 47.2 percent, a decrease of 4.1 percentage points and indicating contraction in production for the first time since May 2009.

The Employment Index remained in growth territory at 51.6 percent, but registered its lowest reading since November 2009 when the Employment Index registered 51 percent.

The Prices Index increased 14.5 percentage points from its July reading to 54 percent. Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies.” 
Wow, that's an understatement.

Lowest readings since July, 2009.

It's been too long since the last recession to call the coming recession a double dip recession. This next recession will get a new moniker

I did not watch CNBC this morning when this came out; I can only imagine the spin. This is really quite incredible.

Lowest readings since July, 2009.


Construction numbers

And then this headline from Bloomberg: Construction spending in US unexpectedly dropped in July.

Brings new meaning to "he didn't build it."


US Slips in Competitiveness Ranking

The United States has slipped further down a global ranking of the world's most competitive economies, ....

The world's largest economy, which was placed 5th last year, fell two positions to the 7th spot --marking its fourth year of decline.

A lack of macroeconomics activity, the business community's continued mistrust of the government and concerns over its fiscal health ...


FedEx cuts estimates for June - August quarter


Record 46 million Americans on food stamps

This Is Truly An Incredible Human Interest Story From The Bakken

Link here to the Bismarck Tribune. More at the link.

By-line: Alexander, North Dakota.

Entrepreneurial start-up: mobile shower, laundry facilities

Seed money: $15,000; selling muskrat pelts to Chinese firm at $10/pelt; past two years
He pitched the idea to his parents back at their farm near Lake Preston in eastern South Dakota. His father and other relatives helped him convert a 53-foot semitrailer into a five-stall shower center with an office and laundry facilities.

A 6,000-gallon semi tanker alongside the trailer provides fresh water and collects the graywater.
Jensen paid for the renovation with $15,000 he earned in the past two years trapping muskrats, whose fur is sent to China to be fashioned into coats, slippers and earmuffs. Each pelt fetches about $10.

“That’s a pile of muskrats,” Jensen said after the construction was done.

The mobile venture, called Better Showers, rolled into an RV campground in the heart of the oil patch in June. A shower costs $10, with a half-price discount for residents of the RV park where the business is located. Towels and washcloths are $1 extra. The water pressure is strong, the soap is free and there is no time limit.

The business is parked along U.S. Highway 85, the busiest two-lane highway in western North Dakota, where about 100 trucks pass by every 10 minutes. The showers are open from 4 to 11 p.m., the time when most people are getting off work.
Throw in a mobile office: laptop, scanner, printer, internet connection, and it will be complete. Oh, and soft drinks. No beer.

By the way, the target audience carries a fair amount of cash; $10 for many of them is nothing.

Frac Sand For Sale

Frac Sand for sale:  e-mail frac.sand@prairieblue.com or call Bruce Conway at 701-770-2221 for price and availability.

Purely Coincidental: US Debt Crosses the $16 Trillion Mark; DNC Convention Opesn

Just saying.

Link here.

Heckmann To Buy Power Fuels -- The "Face" of Watford City


March 13, 2013: Heckmann Corporation - together with Heckmann Water Resources, Power Fuels and Thermo Fluids - will become "Nuverra Environmental Solutions."   

October 1, 2012: Human interest story on Heckmann / Power Fuels, FargoForum.

September 23, 2012: Encana with mobile LNG refueling stations.

September 13, 2012: Heckmann acquires another fracking water treatment company -- Appalachia Water Services; to serve the Marcellus. Note press release of April 5, 2011: Heckmann to have largest fleet of LNG or CNG vehicles in North America.

September 10, 2012: story at Dickinson Press/InsideClimate News.

September 5, 2012: see first comment. To make it easier, click here to see video on Heckmann on CBNC/Cramer.

September 4, 2012:  Heckmann had a huge day today; popped a dollar from $2.70 to $3.70. Google "Heckmann natural gas trucks." Some of the google hits:
Don suggests this: the Heckmann / Power Fuels deal will be the catalyst to shift "all" trucks in the Bakken to natural gas; it will start with all Heckmann Power Fuels trucks in the Bakken refueling at the natural gas processing plants that are springing up throughout the Bakken; natural gas corridors are being developed from Wyoming to California;

Some may see this as just another merger, but this provides Heckmann with a huge entry into one of the biggest hydrocarbon laboratories in North America. This could end up being a much bigger story than it seems on the surface. It would be a hoot for me to come back to North Dakota to see natural gas refueling stations throughout the oil patch. Developers/proponents of the proposed diesel refineries in western North Dakota are probably watching this development closely.

Original Post
Link here. (A huge "thank you" to "anon 1" for alerting me to this story. I doubt I would have seen it until later this week. I will be curious to see if any of the "big" sites pick up this story today.)

Heckmann to pay $125 million in cash and 95 million shares (currently trading about $3.25).

95 x 3.25 -->  $300 million --> about a $500 million deal when all is said and done. Folks will correct me if I have the numbers wrong, which wouldn't be surprising.

Heckmann's market capitalization is not quite $500 million. With $5 million in cash and $6 million in cash flow, this is quite a chunk to bite off.  (Again, from Yahoo!Financial if I'm reading the numbers correctly.)

I've blogged about PowerFuels a number of times; pretty much a Watford City story (Power Fuels website).

From Heckmann's website:
Heckmann Corporation is an environmental services company. The Company operates through two business segments.

Heckmann Water Resources (HWR) is dedicated to the movement, treatment and disposal of water generated by energy companies involved in the discovery and production of oil and natural gas.

Heckmann Environmental Service (HES) is a one-stop-shop for collection and recycling services for oily waste products, including used motor oil, oily wastewater, spent antifreeze, used oil filters and parts washers. Heckmann Corporation is building a national footprint across its environmental service offerings. The Company has more than 1,500 employees and operates in 52 locations in the U.S. 
In this announcement:
"Just three years ago, in the summer of 2009, we set out to build the largest environmental services company in the United States, operating in a completely new market segment. We are well down that path, and one billion dollars in revenue is within our reach."
Note: he said the largest environmental services company in the United States, not in the Bakken. I constant theme of this blog has been to emphasize the national (and international) influence of the Bakken. 

From this blog, regarding Power Fuels:

Buyout Candidates -- Second Half of 2012 -- The Bakken

Mike Filloon link here, buyout candidates in the Bakken, Part III.

See first comment regarding Part I and Part II of this series.

From Part III, the first link:
Exxon, Conoco, and even Chevron, will be looking for big purchases if and when it begins to acquire acreage. The companies will be looking for acreage on and around the Nesson Anticline as most of the big players have done. This is why Continental Resources becomes interesting. It has approximately 1 million acres, and continues to add. Of this acreage, a very large portion is in the vicinity of the Nesson Anticline. Although I find it hard to believe that Harold Hamm would be motivated to sell, all three companies could come up with the $19 billion to purchase this company.  
This would be a great introduction to the Bakken for Chevron.  
Whiting is another target. It has 712,000 net acres in the Bakken, but its acreage position differs from Continental and the company would be easier to buy. Whiting's acreage is not as good, but still interesting. Its Sanish acreage is probably its best from a Bakken/Three Forks standpoint, but its Tarpon acreage has the best well to date in the Bakken. It also has the largest acreage position with the Pronghorn Sands as the main target.  
All three could also be interested in Oasis and Kodiak. It is safe to say that at least one of the Big Three will be the top lease holder in the Williston Basin sometime in the future.

Monday Morning Energy Links; Development of the Bakken Is Seen As Accidental By Some

The IPs for wells coming off the confidential list over the weekend have been posted here.

With all the news of new ONEOK natural gas processing plants in the Bakken, one might be interested in learning about "frack spreads" as they apply to processing natural gas. In this discussion, this has nothing to do with hydraulic tracking to complete a Bakken well. RBN Energy explains.


Chrysler says its US sales rose 14 percent last month as the Ram pickup truck had its best August in five years. 
Meanwhile, Volt production will be halted sometime later this year so that production can catch up with demand. To the best of my knowledge, the federal government is not offering any incentives for folks to purchase Chrysler products.

Some irony in this story. Ohio may just be the most important swing state this election. And it is the "tracking boom" in Ohio that is giving a boost to Obama.
"We're moving to energy independence by accident," said Philip Verleger, who directed the US Treasury office of energy policy under President Jimmy Carter and is now an industry consultant.  
"Energy policy had nothing to do with it." 
The boom in oil and natural gas is setting up an election-year irony: a green-energy president who is getting a boost form fossil fuels. [Never mind his EPA will regulate tracking in his second term.] 
Oil and natural gas is on the rise largely because of hydraulic factoring, which has given drillers access to reserves in shale rock formations once too costly to produce. The so-called tracking injects millions of gallons of water, sand and chemicals thousands of feet below the surface to free fossil fuels trapped there, a process that Obama's environmentalist allies say increases air and water pollution.
Hmmm. "We're moving to energy independence not by accident" is right up there with "you didn't build it."

I wouldn't call what is happening in the Bakken an "accident."

If "we" get to energy independence it will be in spite of efforts by the current administration.


When you read this article, an article about a huge oil spill that may contaminate Albuquerque's drinking water, see if you can see what federal agency is not even mentioned:
As environmental disaster sites go, it doesn't look like much. A scattering of rushing wellhead covers and a machine noisily sucking hydrocarbon vapors from the earth scarcely hint at what has grown into a $50 million headache. 
But nearly 500 feet beneath this spot, a plume of aviation gas and jet propellant that leaked undetected for decades from an Air Force fuel depot has sunk into the aquifer, drifting toward wells that help supply Albuquerque's drinking water.
A "word search" of the article does not return "EPA."

Having said that, I assume the EPA is all over this one. Let's hope so for Albuquerque's sake.


The president grades himself on the economy: incomplete. Very, very scary considering where he wants to take the country. An entire term to turn things around: a trillion-dollar stimulus and we still have 12% unemployment in some states; 8% overall; gasoline nearing $5.00/gallon on East and West Coasts; and, those are just the headlines.

Speaking of Megaloads

Long-time readers know the background to this story. For others, you may want to check this link first.

As far as I know, moving "megaloads" across Idaho and Montana caused absolutely no environmental impact; they were moved at night and caused minimal problems for traffic.

Take a look at the photograph on the front page at the LA Times today
But for some residents in South LA, the excitement of the shuttle rumbling through their neighborhoods quickly faded when they learned that 400 trees will be chopped down to make room for the behemoth.
Just a bit of irony for faux environmentalists. So 400 trees will be chopped down for movement of the space shuttle. 

It will be decades before the new plantings reach the stage of these beautiful trees coming down. But paraphrasing Ronald Reagan, once you've seen one magnolia, you've seen 'em all.