Thursday, September 13, 2012

What We Will Be Talking About Friday; Wells Coming Off Confidential List

Oil futures up almost $2.00 [Friday, 6:30 a.m]. The hypocrisy is glaring: if "speculators" push the price of oil up, the media is all over the issue; but let the Fed do it by printing more money, and no one seems to mind. I suppose this is the difference: no one knows how the "speculators" are manipulating the market; but it's easy for everyone to understand why the price of oil jumped with the recent Fed action. On another note, for investors, one of the oldest adages in investing: don't fight the Fed.

**************************

Without question, the #1 topic will be whether we will see profit taking Friday, but at the moment, oil is up about two dollars [Friday, 6:30 am], in futures, but as my daughter says, "futures mean squat."

*************************
The growth of the rail industry in North Dakota: story at Minot Daily News:
  • crude unit train facilities are served by BNSF at the following stations: Stanley, Tioga, Dore, Eland, Epping, Trenton, Republic and Manitou;  two more should be fully operational by end of 2012 -- Fryburg, Berthold
  • see CBR at the "Top Ten" lists at the sidebar at the right
  • here are apparently two facilities at Berthold, one north of the station; one south of the station. The Enbridge CBR facility is south of the station; a Sand Source Services operation is north of US Highway 2.
  • a Canadian Pacific Railway CBR facility is up and running near Van Hook
  • it's not just CBR but also frack sand-by-rail (FSBR)
************************
Wells coming off the confidential list Friday:

  • 8317, 109 (Red River), Encore Energy, Wegman 11-30, Horse Creek; this is an old Red River well that has already produced a total of 274K bbls of oil, and is still producing about 300 bbls/month from the Red River; it is located in Horse Creek, and is located about 16 miles east of the Montana border, and two miles north of the South Dakota border; on March 18, 2012, Encore applied to re-enter said well and drill a short lateral; I don't see any new information; the most recent production is still only from the Red River and probably relates to the "old" vertical well;
  • 21335, 466, MRO, Marky Sveet 34-21H, Strandahl, t6/12; cum 6K 7/12; 
  • 22238, 878, ERF, Knucke 149-92-19C-18H, Heart Butte, t7/12; cum 115K 4/13;
  • 22374, 320, Whiting, Quale 21-30, wildcat; a Red River well; t6/12; cum 29K 4/13; (not bad for a directional Red River well)


*************************

Others are saying the same thing:
  • in the long term, what the Fed is doing could very possibly end up creating a financial disaster; but,
  • right now, the 1%-ers, the wealthy, are doing very, very well; investors are seeing their assets grow in value; paper profits; but, 
  • the "man-on-the-street" will see the price of gasoline and groceries rise
  • the gap between the haves and the have-nots will simply increase (so, what else is new?)
  • someone once said in a financial crisis, either the investors will win or the "savers" will win; right now, investors are winning; "savers" are losing
Pretty simplistic? See welcome/disclaimer for this blog. You know, this seems a lot like "trickle-down" economics.

*************************


For investors only:
  • OAS and KOG: SeekingAlpha.com; and this was written before today's wild ride; 
  • Several Bakken-related stocks, including HK which is of significant interest right now; 
  • Many stories easily found and many more with QE3 driving share prices of gold and oil higher
For newbies only:

A Completely Random Thought Which I Will Probably Remove Later ...

... or not...

Anyway, we all know that the Secretary of Energy has stated his goal during his tenure was to raise the price of gasoline in this country to match that of Europe (or so the myth goes).

Today's Federal Reserve action pushed the price of oil higher --> gasoline price to follow --> Secretary of Energy is smiling.

But we're only halfway there; with gasoline about $4/gallon here in the states, we're still well under the $8 overseas (or so I've heard).

But the president has said a number of times, he needs another four years to get the job done, to get the things completed that he started. So it's starting to come together.

Now, the price of gasoline spiking just as we go into the final stretch of the election, when folks are actually starting to pay attention (as evidenced by the fact that the president is scheduled to be on the David Letterman show), the price of gasoline spiking just as we go into the final stretch of the election, as I was saying, Gertrude Stein-style, can't be good for the incumbents. So, tomorrow, just after the news cycle for the week ends, say, about 6:00 p.m. EST, we should be getting word that the president has released oil from the Strategic Petroleum Reserve, also known as the SPR.

I have no inside information and if this actually happens, I won't remove this post. Otherwise, I may in fact put it in "DRAFT" form to be hidden "forever," or at least for a very long time, whichever comes first.

By the way, Spain is a very gentle country. The Spanish government has asked "oil firms" to cap their prices.
Spain's energy minister said he would urge oil companies on Wednesday to cap petrol prices at the pump to help efforts to control inflation in the country. 
Spanish consumer prices rose 2.7 percent in August after 2.2 percent rise in July, due mainly to higher gasoline prices. Consumer prices are likely to rise again in September after a recent 3-percentage-point hike in value-added tax.
Wow, two comments:

  • maybe the government should cap taxes for awhile -- a 3 percentage point hike in the VAT? Wow!; and, 
  • fortunately the Federal Reserve sees no inflationary pressure in our own United States

What a great country!

Just idle chatter waiting for next event. And, yes, this whole post probably won't stand the test of time.

Fourteen (14) New Permits; ND Oil Production Tops 20 Million Bbls/Month -- New Record; Out-Produced Alaska By 60%

Wells coming off confidential list were reported earlier; results can be accessed at the link near the top in the sidebar at the right.

In addition, these producing wells were completed:
  • 21965, 3,000, BR, Ole Boe 41-14MBH, McKenzie, Haystack Butte, t7/12; cum 4K 7/12; 
  • 22156, 1,766, Whiting, Joy TTT 42-30XH, Mountrail, Sanish, t8/12; cum 00
  • 20386, 999, Murex, David Roger 18-19H, McKenzie, Glass Bluff, t12/11; cum 21K 7/12; 
  • 21778, 328, CLR, Cass 1-9H, Williams, Oliver, t7/12; cum 14K 7/12; 
Comment: unlike the CLR well that had an error in its IP the other day, I can almost guarantee that the 3,000-bbl IP reported by BR is NOT an error. BR is known for some great wells.

Fourteen (14) new permits were issued:
  • Operators: CLR (4), Triangle (4), Whiting (2), WPX, Petro-Hunt, Fidelity, Hess
  • Fields: Big Butte (Mountrail), Ragged Butte (McKenzie), Wolf Bay (Dunn), Pleasant Hill (McKenzie), North Tioga (Burke), Heart River (Stark), Corral Creek (Dunn)
***********************

Another Record
Has Out-Produced Alaska For Five Consecutive Months
Out-Produced Alaska by > 60% in July

The graph is pretty spectacular at the link -- North Dakota produces 20 million bbls in July -- sets new monthly record. 
North Dakota produced 62% more oil than Alaska in July, marking the fifth consecutive month that North Dakota has out-produced Alaska. The Peace Garden State surpassed Alaska’s oil production for the first time in March to become the country’s new No. 2 oil state, behind only Texas now.  
The number of oil wells in North Dakota increased to 7,303 in July establishing a new state record for active wells. Over the last year through July, an average of almost seven new oil wells were put into production every business day, and each of those new wells is the equivalent of adding a new $8-10 million business to the state’s economy, see recent CD post for more details. 
I love it.

Overlapping Spacing Units

This seems to be the hot topic for enquiring minds.

I am probably missing something but this seems pretty straight forward: "each well is its own well." Each well is its own industry.

An existing well on 1280-acre spacing will remain a well on 1280-acre spacing regardless of future wells, future spacing.

That's all one needs to know, assuming it is accurate. I don't own minerals and haven't read the rules and the definitions, but that seems to be the gist of what I am hearing, reading elsewhere.

Having said that (that's all one needs to know), it begs the question: can there be multiple spacing units affecting the same acre. For example, we have seen 1280-acre spacing on top of 640-acre spacing. A year from now, could we see 2560-acre spacing on top of the 1280-acre spacing? I don't know why not. I would assume there needs to be a way to identify which spacing unit a proposed well will be defined. For example, assume there is an overlapping 1280-acre unit on a 640-acre unit, and a new operator wants to drill a new well in that section. Will there be a way to identify a well based on its name / legal description whether it's a 640-, 1280-, or a 2560-acre well, or something else?

I Almost Missed This .....

Stunningly bad jobs report --> Fed now has to act --> inflationary pressure --> hedge --> oil spikes (now up over a buck; flirting with $100 again).

Watching the Fed is beginning to look a lot like watching Apple events: leaks/expectations --> hype/lots of talk --> the event --> less than expected --> disappointment.

As noted before, I hope the Fed acts: I'm curious to see what it has left in its quiver. [Later: so that was it! $40 billion/month to buy mortgages. Hmmm. I honestly don't get it. I assume most folks need a job before they can buy a house, but again, that's just me. I don't think this makes it easier for anyone to buy a house; mostly just allows some more re-financing and keeps more people from losing their homes. But the immediate effect, it seems is this: commodities rise significantly. Oil jumped in price --> price of gasoline and diesel will increase --> hurt employers buying gasoline for their drivers (who care not how they drive company vehicles) and hurts individuals filling up their own tanks. So, we go into a period of increasing the price of gasoline?]

We Knew It Was Bad; We Just Didn't Know It Was This Bad

Data points regarding the Chicago teachers strike:
  • at least 100 of the current 681 public school campuses are low-performing (compared to what?) and under-enrolled
  • the 2012 - 13 $5.3 billion budget is not yet approved; we are well into the 2012 - 13 school cycle
  • the 2012 - 13 $5.3 billion budget will raise property taxes 1.5% (that is not trivial); on a $100,000 house, that's more than $100 a month, maybe two tanks of gasoline
  • the 2012 - 13 $5.3 billion budget would drain its reserves which are needed to plug a $665 million hole -- wow, $665 million
  • significantly more Chicagoans support the teachers (unions) than support the mayor (wow); I guess they like increasing the pay for the highest-paid teachers in the nation despite dismal results
The lonely man at the top:
Mr Record Man, Willie Nelson
On a completely different note, when I listen to these old songs, it certain seems Willie Nelson has invented himself/re-invented himself at least three times, perhaps four times. He is a survivor. Most of his buddies have faded. He endures. Bob Dylan remains an enigma for me, but he, too, is a survivor, and has sort of re-invented himself, but nothing like what Willie Nelson has done.

I don't know if I just missed these earlier, even though I had been looking for them, or whether YouTube "knows me better," tracking what I surf. Regardless, this is a lot of fun. Listen to the great bass, especially in the middle and near the end. It's a cover but I don't remember the original. Wow, what a great country.
I'm Gonna Dry My Eyes, Hillbilly Moon Explosion

Economic Development in the Williston Basin Oil Patch -- the Williston Wire

No links; one can subscribe to the Williston Wire. Just some quick bullets.

Peterbilt to break ground on new dealership in Williston today

Williams County continues crew camp moratorium, but existing camps with more than 200 units can add to them.

Mercy Medical Center celebrates grand opening of new addition (I believe this has been posted earlier; perhaps just the announcement that it would have a grand opening)

Trinity Health officially opens new Williston facility (ditto)

Aaron's, Inc, opens in Williston (ditto)

"The Williston" celebrates grand opening (ditto)

Value Place Hotel to celebrate grand opening

Concrete overlay on roads may prevent rutting

Outside the oil patch: a technology boom, particularly in the Fargo area (but Bakken horizontal drilling and fracking is all about technology)

Watford City's 77 one-acre country home lots subdivision to celebrate grand opening today


Great News For the Administration: Latest Bad News Can Be Blamed On .... a Tropical Storm; Even More Surprising (Not): Last Week's Unemployment Numbers Revised Upwards!

Remember: the magic number is 400,000 (and we're edging ever closer)

There are few things I look forward to more than the weekly spin on the reason why first-time claims for jobless benefits increase.

This week, no exception. The stunningly high increase was blamed on a tropical storm. Not a hurricane, but a tropical storm. I don't recall a tropical storm being blamed in the past but then I've only followed the weekly unemployment claims for a couple of years now. Memo to self; google jobless claims Hurricane Katrina

Anyway, I digress.
The number of Americans filing new claims for jobless benefits rose more than expected last week, with several states reporting an increase related to Tropical Storm Isaac.  
Initial claims for state unemployment benefits rose 15,000 [insert "wow" here"] to a seasonally adjusted 382,000, the highest in two months, the Labor Department said on Thursday. [You mean it was higher only three months ago, when there was no storm?]
The prior week's figure was revised up to show 2,000 more applications than previously reported. Economists polled by Reuters had forecast claims rising to 370,000 last week.
The only word missing in the first sentence was "much" as in "rose much more than expected last week."

And, again, the previous week's numbers were revised upwards. I don't recall ever seeing the previous week's numbers revised downwards.

I guess even the analysts didn't think a tropical storm would cause such an increase. By the way, does anyone even remember Isaac? I had forgotten all about it.

Let's see. I haven't even gotten to the part where "they" talk about the more meaningful four-week trend. Let's see how they handle that one:
But even accounting for the storm, the report suggested little improvement in the labor market after job growth slowed sharply in August. The four-week moving average for new claims, a better measure of labor market trends, climbed 3,250 to 375,000, the highest since the middle of July.
"Suggested" little improvement. First of all, we've been reading the same stories for four years, so we are way past "suggested." Perhaps, "confirmed."

Second, "little improvement." How about "no" improvement. In fact, it's another setback.

Yes, I look forward to the weekly jobs report for its creative writing. And, of course, a comment from Chester which won't get posted.

**************************

Flashback:
July 18, 2012: Obama's job council has not met in 6 months. They've either given up, or they are working on their own resumes pending the November election. Regardless, they have a fairly easy job to do and could solve the major "job problem" with one simple "recommendation": require all EPA regulations to be reviewed by the jobs council before posting the new regulations. And only if the Jobs Council concurs.

Remember That 85 MPH Raceway Between San Antonio and Austin? -- Now the 67,000-Square-Foot Convenience Store

Google roadside stopper: can something be too big in Texas? -- WSJ, page A1.
Billed as the world's largest convenience store, the 67,000-square-foot colossus on Interstate 35 between Austin and San Antonio is 20 times the size of a 7-Eleven and longer than a football field. It features 60 gasoline pumps, 80 soda dispensers, 31 cash registers, 23 flavors of fudge and entire aisles devoted to varieties of popcorn and beef jerky. The pi├Ęce de r├ęsistance: 84 gleaming toilets, each with its own dispenser of hand sanitizer and shined at all hours by a small army of attendants.
This will become a "must-see, must-stop" potty break.

**************************

Whooping Cough Shots Questioned -- WSJ, page A2.

For "seniors," those DPT shots we got were horrendous, due to the "pertussis" component, the "P" in "DPT."  The diphtheria component was bad, and the "full-strength D" cannot be given to adults due to severe side effects.

But the "P" was horrendous. But it worked.

It appears the new and improved acellular "P" vaccine loses its efficacy over time. It appears that the efficacy of the current "P" vaccine diminishes about as badly as Bakken wells decline in production. A study has ...
...found that protection against the disease diminished substantially over five years in immunized elementary school-aged children. That age group was once considered well immunized against the highly contagious disease after receiving five doses of diphtheria, tetanus and pertussis vaccine—the last given between the ages of 4 and 6.
North Dakota's pertussis rate is 2 to 3 times the national average. At the link, a graphic shows the whooping cough rate across the United States. Not surprisingly, the northern tier states are the hardest hit.
**************************

A great op-ed in today's WSJ, page A15: Striking Teachers, Divided Antipathies. The best observations:

  • No chance here of the adversaries declaring their true concerns. If they did, the union would announce its desire for more money and less outside interference by way of enforced teacher evaluations, pay raises based on merit, the imposition of a longer school day, the disposition of the fate of teachers whose schools have been closed, and job security generally. The city would announce that in addition to being concerned about an expected $3 billion budget shortfall in education over the next three years, there is also the public-relations worry about an educational system producing such pathetic results. Something like 40% of the 350,000 kids who go to public schools here do not graduate from high school, which makes Chicago and those who run it look very bad indeed.
  • With rare exceptions, anyone in Chicago who can afford it avoids sending his kids to public school. (Mayor Emanuel, in the best limousine-liberal tradition, sends his children to the University of Chicago Lab School. In his position, let me add, I would do the same.)
  • ....the matter of finding enough good teachers is an even greater part of the problem. Nobody likes to mention it, but grammar and high-school teaching took a terrific hit from feminism. So many of the superior grammar and high-school teachers of the past were women—women, to be sure, who had little else open to them in the way of occupational choice. Now, with feminism having led the way, women are free to join the wider workforce and try to avoid becoming second-rate lawyers, otiose psychotherapists and real-estate salesmen. Ah, the old choreography of progress: one step forward, two steps back.
  • Mayor Emanuel wants to seem a leader in educational reform but has only a crude grasp of what is entailed in serious education. For example, his notion of an extended school day—that is, more of the same, but longer—can only mean more torture for kids not really receiving a good education to begin with.

No solutions but nice observations and great writing, regardless of which side of the debate you are on.

A random thought: based on several years of substitute teaching, and much of my life spent in an academic setting, I would shorten the amount of didactic instruction for the brighter, more-motivated students and increase the amount of didactic instruction for the students who need more one-on-one.  The length of the school day is a social issue (day-care, working parents, etc) and has little to do with quality of education.


**************************


Speaking of the "three R's," we now have the "three S's." -- WSJ, page A8.

If the Sunnis and Shiites weren't bad enough, now we have the Salafis. When I say "bad enough," I'm not talking about their beliefs, values, views, methods, or anything else that might get me in trouble with the PC crowd, I'm talking about the fact that it has become more difficult to keep these sects straight.

The "9/11 event" in Libya, which the administration seems to have ignored, is being blamed on the Salafis.