Monday, December 24, 2012

The Wind Tax Credit -- The Billings Gazette Two-Part Series

Second part: Link to The Billings Gazette.
First part: Link to The Billings Gazette.

This is the two-part article I referenced earlier about the inexpensive energy in the northwest. This is the first part of the article.

From the first part:

There's quite a bit to the article but this bit on wind is interesting:
Qualifying wind farms get a $22 tax credit for every megawatt hour of power they produce. If the market price of power falls below that amount, they still get the money.
In fact, during the past 12 months, wind-power producers at times have actually paid electricity buyers to take their power, because they could still get positive income on the deal through the tax credit, regional power officials say.
This phenomenon is known as “negative pricing,” when the market price for power has been less than zero during off-peak hours, usually the middle of the night. A wind farm might pay the wholesale buyer $5 per mwh to take the power the farm is producing at off-peak, but, with the tax credit, it still makes $17 per mwh. [Elsewhere, there is a story out of Idaho that requires utilities to buy wind power even when they don't need it, like in the middle of the night. The utilities pass these costs on to the consumers. But I digress.]
“There is no commodity in the world that can be sold for a negative price, unless you’re making money somewhere else,” said David Hoffman, manager of external affairs for PPL Montana. “They’re willing to get less than the full tax credit, if they get a portion of it.”
Coal-fired plants are being mothballed. The champagne is flowing in Hawaii. 

From the second part:
“They go build a wind farm, they’re there for three-to-six months,” said Bob Winger, a union boilermaker from Billings and vocal critic of wind-power subsidies. 
“Coal mines and coal-fired power plants are jobs day-in, day-out. … Who are all of these people (in wind) that they say are employed?” 
 According to figures compiled by the state and the wind power industry, wind projects in Montana have created about 1,300 construction jobs the past seven years — but only 86 permanent jobs. 
Montana coal mines, whose product is burned to produce power, employ about 1,100 people, and coal-fired power plants here employ at least another 400. The wind power production tax credit pays project owners $22 for every megawatt hour (mwh) of electricity they produce. 
In the Pacific Northwest right now, spot-market prices for electricity are averaging $25 per mwh. So, while sellers of other types of power get $25 per mwh, a wind-power plant will get $47 per mwh, with the subsidy. 
Great article.

Wow, This Global Warming Punch Getting Stronger By The Hour


December 27, 2012: "Anonymous" noted that even with this storm, 2012 will go down in US history as the warmest year on record. No one has yet told me what the correct temperature for the earth is, and who sets the thermostat. Since 1880, the earth's temperature has risen 0.6 degrees. Since 1940, the earth's temperature has risen 0.5 degrees. Half-a-degree. The biggest green house gas is water vapor, accounting for 95 to 97%. CO2 accounts for less than 3% and only a portion of that is anthropogenic.  However, the bigger question to ask: are there benefits with a warming climate? Longer growing seasons? Shorter passage to Asia through the Northwest Passage? Lower utility costs for heating? More research spending on drought-resistant crops?

Original Post

MDW first started blogging about "Draco" "Euclid" two or three days ago; the storm keeps getting bigger.
Far more potent than the snow event headed to the Northeast just in time for Christmas, this storm will unload windswept and burying snow on its northwestern flank.
While snow will push through the Rockies--including Denver--into tonight, the worst of the snowstorm will take shape Christmas Day across the southern Plains.
The nation desperately needs the snow pack.

The snow will continue for several days after (Christmas Day). Wouldn't it be a hoot if Congressmen (and the President) couldn't get back to Washington before the end of the year? Mr Santelli will really have something to yell about.

Some data points:
  • the last time there was snow in Oklahoma City on Christmas Day was almost a century ago, 1914, as in one hundred years ago
  • more than 150 million Americans could see snow when they wake up Christmas Day (the granddaughters are hoping)
  • meteorologists predict snowfall could blanket nearly half the nation on Tuesday - from Dallas to Maine - as a massive snowstorm moves from the Great Plains and up into the Northeast
  • Pittsburgh is expected to take the biggest hit of any major metropolitan area, with 10 to 18 inches possible by Saturday evening
That will shut the city down. 

Oh, By The Way ... That BLM Auction in California: $10/Acre


November 26, 2016: the Monterey Shale is "much ado about little."Harold Hamm: there's a reason the Monterey Shale is not being developed.
Original Post
Remember that story from Bloomberg saying Monterey Shale was the next BIG THING and would overtake the Bakken and Eagle Ford combined?

A reader sent me the results of the recent Califonia/BLM lease sale in Monterey County. It speaks volumes how incredible this field is:
West Coast Land Service, Bakersfield, paid the highest total bid price, $23,200 for a 2,320-acre parcel.  That was also the highest amount per acre at $10 per acre.  The parcel is located in Monterey County.
It looks like the BLM almost had to give it away, or pay someone to take if off their hands, and hope royalties would cover the loss.

For newbies, acreage in the Bakken is going for $5,000 to $15,000/acre. 

Random Update on Three Brooklyn Oil Field Wells Per Reader's Request

An individual asked about these three wells, in Brooklyn oil field, northeast of Williston. 
  • 20491, loc, CLR, Charleston 1-22H, Brooklyn,
  • 20183, 282, CLR, Rolf 1-20H, Brooklyn, t6/11; cum 111K 10/12;
  • 20475, 808, CLR, Olympia 1-27H, Brooklyn, t10/11; cum 107K 10/12;

Monday Morning Energy Links

Update on wells coming off confidential list over weekend and today have been posted. See below.  

Rare Christmas Day snow forecast for Dallas. Yup, all that global warming. 

RBN Energy: This is Part 5 in RBN's series covering crude oil terminals in the Gulf Coast region.
The Louisiana Offshore Oil Port (LOOP) is the nation’s largest waterborne crude oil import terminal. Capable of handling 1.2 MMb/d of crude throughput and with associated storage topping 67 MMBbl, LOOP is connected by pipeline to 50% of the nation’s refineries. As shale crude and increasing Canadian imports rush toward the Gulf Coast pushing out waterborne imports, the terminal needs to redefine its future.  Today in the first of two blogs on LOOP we look at how the port operates today.
The Newfield well that blew out on Friday night was capped early last evening (Sunday).


This may be a stand-alone post later: a nice two-part series on plunging price of electricity. Putting pressure on wind and coal.
But the lowest wholesale electricity prices in 15 years are definitely making waves in the power-production industry in Montana, as some coal mines, coal-fired generators and wind developers scratch to stay profitable in the down market.
Greatest country on earth.


For investors only: Oasis set to take off -- Steve Zachritz at

EOG continues to shift to oil; sells LNG terminal; Chevron Canada will purchase
Under the terms of the agreements, Chevron Canada Limited will acquire all of the interests currently owned by affiliates of EOG Resources Canada Inc. and Encana Corporation in the proposed Kitimat LNG Project and PTP. 
Thereafter, Chevron Canada Limited will equalize interests with an Apache Corporation subsidiary, resulting in Chevron Canada Limited and Apache each holding a 50 percent interest in both the Kitimat LNG Project and PTP. Operatorship of both facilities will transfer to Chevron Canada Limited. 
The proposed two-train Kitimat LNG Project, currently progressing through the Front-End Engineering and Design (FEED) phase, has a Canadian National Energy Board license to export 10 million tons per annum of LNG. Additionally, Chevron Canada Limited will acquire approximately 110,000 net acres in the established Horn River Basin from Encana, EOG and Apache, and approximately 212,000 net acres in the Liard Basin from Apache. Chevron Canada Limited and Apache will each hold a 50 percent interest and Apache will operate these two natural gas resource developments.
For more on LNG processing units, called "trains," click here.  It appears EOG acquired the Kitimat terminal back in 2010

Wells Coming Off Confidential Over The Christmas Period; Comment On Flaring

December 22, 2012, Saturday
20218, 524, OXY USA, State Dvorak 1-9-16H-141-96, St Anthony, t6/12; cum 20K 10/12;
20701, 746, Whiting, Kordon 11-8TFH, Elkhorn Ranch, t6/12; cum 30K 10/12;
20752, 567, SM Energy, Karomojo 2-4H, Ft Buford, t11/12; cum 4K 10/12;
21631, 1,463, MRO, Waljen USA 43-8H, Reunion Bay, t9/12; cum 42K 10/12;
22332, drl, MRO, RH 34-31H, Bailey, producing, see below
22879, 1,873, QEP, Gabbert 4-2/11HR, Grail, t9/12; cum 40K 10/12;

December 23, 2012, Sunday
20511, 2,647, KOG, Two Shields Butte 5-7-8-1H3, Heart Butte, t10/12; cum 29K 10/12;
21896, 1,080, OXY USA, State Gresz 1-35-26H-143-98, Hungry Man Butte, t6/12; cum 35K 10/12;
22858, 823, Hess, EN-Uran S 154-93-1312H-2, Robinson Lake, t11/12; cum 13K 10/12;
22930, 225, CLR, Lancaster 1-33H, Elk, t10/12; cum 10K 10/12;

December 24, 2012, Monday
21831, 806, OXY USA, Elroy Kadrmas 3-10-3H-143-96, Faytette, t6/12; cum 56K 10/12;
22909, 703, CLR, Charnwood 1-32H, St Demetrius, t9/12; cum 22K 10/12;
23098, drl, QEP, MHA 4-06-32H-150-92, Heart Butte,
23199, 1,258,  Slawson, Fox 3-28H, Van Hook, t9/12; cum 37K 10/12;

December 25, 2012, Tuesday
21653, 502, Petro-Hunt, Fort Berthold 152-93-18B-19-3H, Four Bears, t9/12; cum 54K 10/12;
22499, 814, Whiting, KR State 41-16H, Sanish, t6/12; cum 27K 10/12;
22859, 638, Hess, E-Uran S 154-93-1312H-3, Robinson Lake, t11/12; cum 9K 10/12;
23115, 773, Zavanna, Tomahawk 10-3 1H, East Fork, t9/12; cum 35K 10/12;

December 26, 2012, Wednesday
22052, drl, Baytex, Randy Olson 17-20-161-98H 1XB, Plumer,
22588, 548, EOG, Idaho 1-0132H, Ross, t8/12; 45K 10/12;
22053, 188, Baytex, Randy Olson 8-5-161-98H 1PB, Plumer, t7/12; cum 14K 10/12;
23048, drl, CLR, Chicago 3-26H, Banks,
23006, drl, BEXP, Gunderson 15-22 6H, Banks, s6/12;
22952, 469, Hess, GO-Dahl A 156-97-2536H-2,  Dollar Joe, t9/12; cum 18K 10/12;
22616, 748, CLR, Landblom 4-35H, Stoneview, t10/12; cum 18K 10/12;

NOTE: some of the wells are selling their natural gas as early as the first month that they are showing oil runs. This suggests to me that as the well density increases, new wells coming on line will have more immediate access to natural gas pipelines. Note that of the nine wells below, five of them sold natural gas the first month oil was sold. I haven't tracked this before, so I don't know yet if the assumption is valid, but it certainly makes common sense. My understanding is that, by law, natural gas cannot be put into a natural gas pipeline until it has been tested by one of the natural gas gathering companies, often ONEOK in this case. Again, I thought I read that somewhere but could be wrong.

21631, 1,463, MRO, Waljen USA 43-8H, Reunion Bay:

DateOil RunsMCF Sold

 22332, 1,318, MRO, RH 34-31H, Bailey:

DateOil RunsMCF Sold

22879, 1,873, QEP, Gabbert 4-2/11HR, Grail:

DateOil RunsMCF Sold

20511, 2,647, KOG, Two Shields Butte 5-7-8-1H3, Heart Butte:

DateOil RunsMCF Sold

21831, 806, OXY USA, Elroy Kadrmas 3-10-3H-143-96, Fayette:

DateOil RunsMCF Sold

 23199, 1,258,  Slawson, Fox 3-28H, Van Hook:

DateOil RunsMCF Sold

21653, 502, Petro-Hunt, Fort Berthold 152-93-18B-19-3H, Four Bears:

DateOil RunsMCF Sold

23115, 773, Zavanna, Tomahawk 10-3 1H, East Fork:

DateOil RunsMCF Sold

 22588, 548, EOG, Idaho 1-0132H, Ross:

DateOil RunsMCF Sold