Recap -- New Permits: January 2013 -- The Williston Basin

217 permits in January, 2013 (annualized: 2,555)  There were 146 permits in January, 2012.

Selected operators:

• BEXP: 15
• CLR: 39
• EOG: 2
• Fidelity: 3
• Hess: 15
• KOG: 13
• Oasis: 9
• OXY USA: 8
• Petro-Hunt: 15
• Slawson: 6
• Triangle: 8
• Whiting: 22

Selected Counties:

• Dunn: 31
• McKenzie: 65
• Mountrail: 33
• Williams: 49

Random Look At Two More EOG West Clark Wells in Clarks Creek -- the Bakken

EOG reported two producing wells that were completed in Clarks Creek; see today's daily activity report.

Just out of curiosity, checking to see status of two more EOG Clarks Creek wells:

22962, conf, EOG, West Clark 5-2425H, Clarks Creek:

Date	Oil Runs	MCF Sold
12-2012	27192	16142
11-2012	404	251
10-2012	26	101

22963, conf, EOG, West Clark 102-2413H, Clarks Creek:

Date	Oil Runs	MCF Sold
12-2012	12044	20782
11-2012	15063	25131

In addition to these looking like nice oil wells, note that both are already hooked up to natural gas pipelines.

Rail Will Be The Way Bakken Oil Is Moved: Pipeline to Move Oil to Crude-By-Rail Terminals -- Spokesperson

The second of two very interesting stories sent in by a reader: Tesoro Logistics could reverse a pipeline system in North Dakota as quickly as March of this year, so it could move oil output from southern drilling areas of the Bakken formation to rail terminals in the north of the state -- Argus Media.

The company estimates most North Dakota takeaway capacity has been built out north of Lake Sakakawea, but oil output has been almost equal on both sides of the lake. That means there will be “a lot of demand in the future” to move barrels from south to north in order to access outbound infrastructure, Tesoro vice-president of logistics Rick Weyen said today at the Bakken Product Markets and Takeaway Capacity conference in Denver, Colorado.

Crude producers are continually looking for feasible ways to reach more outbound capacity, he said. Tesoro's High Plains pipeline system, which currently moves crude from north of the lake to its 70,000 b/d refinery in Mandan, North Dakota, via a 12-inch line could be that solution.

“A lot of rail companies are awfully close to our pipeline. We're working hard with a lot of rail facilities to come up with connection agreements,” Weyen said, adding Tesoro could make announcements on rail facility connection agreements over the next couple of months.

“We think rail is long term, it's going to be the way Bakken crude is moved…the pipeline is there to serve and help the shippers get the crude from the production area to the rail facilities,” he said.

I have no idea how this will all end, but I do remember some folks commenting that once the pipeline is all in place, it's all over for rail. Here is a very different opinion. I find this very, very intriguing, to say the least.

Barges to Carry Bakken Crude to West Coast (California, Washington) Refineries

First of two very interesting stories sent in by a reader (thank you): barges will soon carry Bakken crude to West Coast refineries -- Platts.

US barge owner Kirby said Thursday that Bakken crude oil would soon find a rail route to the West Coast, where vessels would pick it up to deliver to California and Washington refineries.

"There are investments being made to facilitate that as we speak," CEO Joe Pyne told analysts during a fourth-quarter earnings call.

While Kirby executives have previously considered the possibility of West Coast routes for Bakken oil, it was the first time they sounded confident that the trades would happen.

Pyne did not go into detail about what share of that market Kirby hopes to snag or how soon the shipments might start.

North Dakota's booming oil production has shaken up midstream markets, with railroads, river barges, coastal barges and a few Jones Act tankers picking up the slack while pipelines get built.

Pyne said those dynamics for crude oil transportation will keep shifting for several years before a more permanent trend takes hold.

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA

Bakken Operations

Active rigs: 185

Thirteen (13) new permits --

• Operators: KOG (6), BR(3), Oasis (2), CLR, Whiting
• Fields: Hawkey (McKenzie), Pembroke (McKenzie), Corral Creek (Dunn), Willow (Williams), Banks (McKenzie), Cow Creek (Williams), Bonnie View (Golden Valley)
• Comments:

Wells coming off the confidential list were reported earlier; see sidebar at the right.

Producing wells completed:

• 22977, 944, SM Energy, Holm 14-12HA, Siverston, t12/12; cum 17K 12/12;
• 23328, 1,598, Whiting, Bartleson 13-18XH, Sanish, t12/12; cum --
• 23565, 935, Whiting, McNamara 41-26XH, Sanish, t12/12; cum --
• 22360, 1,394, Whiting, Garpon Federal 21-4-1H, Twin Valley, t12/12; cum--
• 20334, 1,324, EOG, West Clark 1-2413H, Clarks Creek, t10/12; cum 54K 12/12;
• 20333, 449, EOG, West Clark 2-2425H, Clarks Creek, t9/12; cum 32K 12/12;
• 22772, 968, Hess, EN-Skabot Trust 155-93-0631H-3, t12/12; cum --

$12 Million Not Enough for Dickinson's Infrastructure

Updates

February 1, 2013: see comment below regarding possibilities for Dickinson:

Calumet is proposing a diesel plant for the South Heart area. Also more natural gas plants in local area. Potential for Carbo Ceramics proppant plant further east. Dickinson has a big tank fabricator that needs to expand. Watford City, with 20,000, and Killdeer, with 5000+, will need a regional center to shop at and get services, as retail and consumer services can't get labor or housing for labor. Dickinson will be the Minot for the Bakken south of the river. 

Original Post

Link here to The Dickinson Press.

An additional 22,000 people are expected to settle in Dickinson over the next seven years, further stretching the city’s infrastructure as it struggles to keep up with water supply, wastewater and other issues.

At the end of the current biennium, the city is looking at $42.1 million of debt incurred from borrowing from the state’s revolving fund loan program for infrastructure costs, and could add $40.5 million of debt more on top of that if the state doesn’t step in to help.

Under a bill sponsored by Rep. Robert Skarphol, R-Tioga, $12 million would be granted to Dickinson to help fund water infrastructure needs through a change in the state’s oil and gas production tax allocation and impact aid program.

But Dennis Johnson, president of the Dickinson City Commission, said that is not nearly enough.

I can never keep track of the North Dakota budget, but at this link, posted back in May, 2011:

• Total state budget, 2011 - 2013, $9.92 billion, an increase of 12.2 percent

Long Article in NY Times on the Bakken Boom -- "North Dakota Went Boom"

A huge "thank you" to the reader who alerted me to this NY Times article on the boom.

"North Dakota went boom."

Record Paid for North Dakota Oil and Gas Mineral Acre -- $19,500/Acre

Results of the BLM Montana/Dakotas lease sales yesterday (January 30) in Billings, MT, as reported in The Dickinson Press. [This was the "federal" auction -- the BLM auction. I believe the next North Dakota state auction is February 5, 2013.]

Data points of the BLM auction:

• Total bonuses to be shared by the federal government and the states: $11.4 million
• Acreage: 3,000 acres
• BOE calc: $3,800/acre

• North Dakota: 2,831 acres (94% of the acreage)
• Highest single tract: Slawson, 80 acres in Mountrail County; $1.6 million; $19,500/acre

• North Dakota: will receive almost 50% of the proceeds ($5.5 million); the federal govt the rest; both entities will get 12.5% royalties on production

• Next auctions: May, July, and October

• Leases are good for ten (10) years or as long as they continue to produce oil

From the story:

Thanks in part to the development of the Bakken play, the U.S. currently is importing less than 50 percent of the oil consumed nationwide, according to BLM statistics. Those same statistics also show that the price drilling companies are willing to pay for onshore parcels has more than tripled in the past three years, roughly the time period when the Bakken began to explode on the scene.

Ah, yes, I do remember the naysayers. Opportunities missed.

The Links

In a few minutes we will start with the WSJ links, where I assume the headline story with be the contracting GDP.

An early guest on CNBC this morning was not impressed with the "spin" that others had regarding the explanation for the first quarterly contraction since 2009. Bottom line, end of the day, end of the month: a bad report. He mentioned that some were attributing the contraction to a decrease in defense spending. Okay. No one has asked the question: how did the analysts get it so wrong? One report: analysts said the decrease in defense spending knocked 2.5 points off the GDP, and analysts had expected a GDP of around 2.0%. Defense spending is an open book. That's the one thing the analysts should have had access to; consumer spending is the challenge, and consumer spending was healthy.

WSJ links.

The story for the day: BlackBerry

The non-story of the day: BlackBerry

Boeing: "business as usual"

Some unions wary of ObamaCare which they backed

Section D (personal journal): maybe later, not enough time right now.

Section C (money and investing): 
BlackBerry release is no perfect 10. In fact, reading between the lines: a disaster.  Spending millions on Super Bowl ads in early February (almost January) and of the two phones, one won't be available until mid-March; the other won't be available until April. By that time, those Super Bowl ads are all but forgotten (unless they are really, really good and they end up going viral on YouTube).

Section B (marketplace): and there it is again -- huge front page, headline story: finally, a BlackBerry -- but more delays. No link. Easy to find if interested.

Chesapeake investors tired of the 'Aubrey discount.'

Boeing plays down 787 woes; net falls 30%. The company says it is "business as usual." Something tells me they will regret that "que sera sera" attitude. Oh, by the way, from CNBC this a.m.: the term for Boeing 787  lithium batteries that start on fire: "non-passive failures."

And yet another story (an interview) about RIM/BlackBerry. Won't read.

Chrysler's aging cars pose hurdles.

Section A:

Recovery shows a soft spot. The contraction. Foreshadowing the Great Recession of 2013.

Cue up Connie Francis: some unions grow wary of health law they backed. This may be the only WSJ story I read thrice today. Cue up Connie Francis.

Labor unions enthusiastically backed the Obama administration's health-care overhaul when it was up for debate. Now that the law is rolling out, some are turning sour.

Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents' plans until they turn 26.

To offset that, the nation's largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance.

This is so much fun. I am helping my older granddaughter with cursive writing. Bless her teacher: the latter takes cursive writing seriously. On the front page of the WSJ: the new script for teaching handwriting is no script at all.

Her teacher, by the way, introduced her to no less than three different ways to multiply multi-digit numbers (not using the abacus, calculator, or computer), including lattice multiplication of which I was completely ignorant. Very interesting. Will be interesting to look at the origin of that method. Probably Indian.

Page 3 and we've talked about page 3 often: Illinois yanks bond amid pension woes. OH, OH.

Illinois took the rare step Wednesday of postponing a bond auction just hours before it was expected to launch, as concerns grew among investors over the state's deep pension hole.

While Illinois still has ready access to capital markets, state officials feared a jump in interest costs to attract buyers if they went forward with plans to sell $500 million in bonds for school and transportation projects. Bond investors have become increasingly leery of the state because of a deadlock in the Illinois Legislature over how to fill a $96.8 billion pension shortfall, considered by researchers as the worst among U.S. states.

"It's the first real market indication that, because of our fiscal condition, we couldn't sell bonds," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, referring to his home state. His firm had no role in the Illinois bond sale. 

This story I might read thrice, also. Fits into David Graeber's book that I am reading: Debt: The First 5,000 Years. It also explains why Geithner's idea of getting rid of the debt limit makes sense to some folks.

More from the Illinois story:

The potential jump in borrowing costs is the latest sign of growing fiscal challenges in Illinois. The state already is paying the highest interest rates—at about 3.2% on its 10-year bonds, according to Thomson Reuters Municipal Market Data—among U.S. states, and the Illinois government is behind on its bills to hospitals, doctors and pharmacies by an estimated $8.4 billion, according to the state comptroller's office.

Standard & Poor's Ratings Services on Friday downgraded the state's debt, aligning Illinois and California as the lowest-rated states. But while California's rate outlook is positive, the credit-rating firm warned of further downgrades of Illinois if the pension issue isn't addressed.

The decision by Gov. Pat Quinn, a Democrat, to delay Wednesday's bond sale sparked renewed calls for immediate action among lawmakers who have been debating potential fixes for more than two years. "The governor's delayed bond sale should direct our attention to the indisputable truth about pensions," said Illinois Senate President John Cullerton, a Democrat.

OH, OH.

France takes aim at jobless payouts. Wow, under Hollande? This speaks volumes about how bad things are in France. Wait for the strikes to begin this summer.

The euro-zone debt crisis has ground growth in France to a halt, pushing unemployment to a 13-year high and driving up state-backed jobless-insurance payments. The system is set to post a €5 billion ($6.71 billion) deficit this year, bringing its total debt to €18.6 billion, according to a report published last week by the Cour des Comptes, the country's national auditor.

The pension system is straining France's finances, too. In 2010, when the then-government passed a law to increase the minimum retirement age to 62 from 60, it hoped to balance the pension system's budget by 2018. But a state agency said in December that the pension system will show a shortfall of around €20 billion in 2020 if nothing more is done. This year, the deficit is estimated to reach €12 billion.

Op-ed: when hospitals become killers.

In 2011, the lethal germ known as CRK—short for carbapenem-resistant Klebsiella—raced through the National Institutes of Health Medical Center in Bethesda, Md. Antibiotics couldn't stop it. Infection-control precautions recommended by the Centers for Disease Control and Prevention could not contain it. Six patients died because of it, including a 16-year-old boy.

Last week, public-health researchers released alarming data in the journal Infection Control and Hospital Epidemiology showing that the same germ that swept through the NIH is invading hospitals across the country. Researchers writing this month in another medical journal, Emerging Infectious Diseases, warn that CRK poses "a major threat to public health."

Since the discovery of CRK in 2000, it has been found predominantly in New York City and the mid-Atlantic region. But Los Angeles County, one of the few places where CRK is being tracked, detected 356 cases in the second half of 2012. "Upwards of fifty percent" of patients who contract CRK die, according to NIH researchers. 

Op-ed: As contractions go ... zero growth in the fourth quarter, but don't worry, the Fed is here....exactly what I said yesterday: Ben has marching orders to spend as much as he needs to prevent a second consecutive quarter of contraction which is the definition of "recession" in some people's books. 

Op-ed: Worried about federal fracking regulations? America's growing minerals deficit. The US is now tied for last, with Papua New Guinea, in the time it takes to get a permit for a new mine.

Why Do We Even Bother? -- Jobs Report -- Flirting With The Highest Number in Five Weeks; Rise In American Income Almost Triples Expectations

Updates

Later, 8:26 pm: original post and subject line corrected. A huge "thank you" to three readers who noted the error. I assume the other readers noticed the obvious error and assumed it was just a typo.


Later, 3:19 pm: jobless claims go higher, income surges, spending up. -- CNBC

The number of Americans filing new claims for unemployment benefits last week stayed in a range consistent with job growth and incomes rose in December by the most in eight years, mildly positive signs for a still-fragile economy.

And that's the spin: the headline is correct -- jobless claims surge, and the story says the "number of Americans filing new claims for unemployment benefits last week STAYED in a range consistent with job growth ...."

First of all, they didn't STAY anywhere; they surged 38,000! Thirty-eight thousand increase. And this new number, CNBC says, the huge increase, is CONSISTENT WITH JOB GROWTH. The WQ: "Why, sometimes I've believed as many as six impossible things before breakfast."

And now on CBNC, from the Aetna CEO: we won't hire as many people this year as we normally would due to health reform [ObamaCare]. Cue up Connie Francis.

Later, 10:31 am: as my daughter would text, "ROTFLMAO." I've been so busy updating the blog,  I haven't been able to get to the Drudge Report until just now. And now I see Mr Obama had the same thought: "Oh, why do we even bother?" On the other hand, as Mr Drudge has noted: "Mission Accomplished!"  Mr Obama has disbanded the administration's "job council." Council, I believe includes "to talk," something this group has not done for a year. And, of course, it hasn't done anything it was tasked to do, which was to ... oh, why do we even bother?

Later, 10:14 am: one of the themes MDW has expressed since the beginning was that the spread between the "haves" and the "have-nots" was widening. The Reuters story also noted that:

In a separate report, the Commerce Department said American incomes rose 2.6 percent last month. That was the biggest increase since December 2004 and well above analysts' expectations for a 0.8 percent gain.

However, much of the increases in personal incomes over the last two months have been due to special dividends and accelerated bonuses to beat tax increases that were due to begin this month.

The big rise in incomes suggests total consumer spending power entered the new year on a stronger footing, even if the gains may not have been distributed evenly throughout the workforce.

The report also foreshadowed the possibility of another recession later this summer. 

The economy faces the threat of across-the-board spending cuts scheduled for March, as well as the possibility the government might default later this later year and trigger another recession.

Ben Bernanke's marching orders: spend, spend, spend.

Original Post

Remember: the magic number is 400,000

I'm sure it's just "one of those things," but it certainly seems the unemployment numbers are being a) manipulated; b) reported before all the data is in on; and/or, c) the analysts are really confused.

Regardless, the spin is incredible.

Look at this Reuters lede and see if you can figure out what the writer was trying to say:

The number of Americans filing new claims for unemployment benefits bounced off five-year lows last week, pulling them back to levels consistent with modest job growth.

Last week, the numbers were outstanding, though no one believed them. But had they been accurate, it would have suggested the economy was turning around, at least in terms of unemployment.

But today, the lede reads as if things have gotten even better: "Bounce" is usually associated with good news. In this case, the "bounce" referred to an increase in joblessness. Bad. "Bounce" now means "bad." [Hey, Dad, remember that 'D' I got in math last quarter. Good news, I've bounced off that low. It's now an 'F'."]

Then this: a return to "levels consistent with modest job growth."

When you actually read the report one finds that the numbers were awful -- unless you are an investor and then it's great news. As long as joblessness stays high, the Fed will keep interest rates low, making it nice for borrowers and investors in equities.

And continued lousy reports suggest to me that a) there are tectonic shifts in the economy that the mainstream media is not talking about; and, b) manufacturers (and farmers) have gotten more productive with fewer workers.

So, back to the numbers: "Economists polled by Reuters had expected claims to increase to 350,000."

In fact, drum roll. ....  the number is back to a number consistent "more modest job growth." In other words, first time claims jumped well past 350,000, jumping 38,000 to .... 368,000.

Jumping 38,000. And no unexpected holidays. No Hurricane Sandy. No nothing to blame it on. But the story at the link will relate the "crazy" patter to the zodiac the calendar of 2008.

Note:

Initial claims for state unemployment benefits increased 38,000 to a seasonally adjusted 368,000, the Labor Department said on Thursday. The prior week's claims figure was unrevised.

As noted at the top of the post, this is consistent with the government releasing figures before the data is finalized and/or "adjusted." The prior week's claims figure was unrevised. Did they ever revise it?

Back on January 10, 2013, just a few weeks ago (yes, January 10 of this year):

First time claims benefits (unemployment) jumped to the highest number in five weeks (371,000) and the four-week moving average jumped significantly to 365,750, an increase of almost 7,000. 

Let's see what the four-week rolling average was:

The four-week moving average for new claims, a better measure of labor market trends, gained 250 to 352,000, suggesting a steady improvement in labor market conditions.

Look at that, again.  New claims up by 250. Two observations: first, that's an incredibly small number for an economy the size of the US. That number sounds like it came from a New York City suburb. And then the "roundness" of that number. Not 249, or 251, but 250 exactly. Lots of rounding going on.