Friday, February 15, 2013

Plans For One Of The World's Largest LNG Terminals on North Slope, Alaska

Rigzone is reporting.

Data points:
  • Exxon Mobil, ConocoPhillips, BP, and TransCanada
  • Alaska's North Slope
  • $45 billion to $65 billion
  • 800-mile pipeline
  • capacity: 3 to 3.5 billion cubic feet of natural gas
  • gas will be produced on the North Slope, near Prudhoe Bay
  • liquefaction plant: 400 - 600 acre site; process 15 million to 18 million tons of gas/year

Enbridge 4Q13 Transcipt

Link here to SeekingAlpha.

From an interesting Q and A exchange:
I think you had a question about light oil as well. And particularly, in the St. James market, New Orleans, there's a tremendous demand for Bakken crude. There's nearly 400,000 barrels a day of Bakken crude moving by rail and maybe some by barge or boat. The barge movement to New Orleans at the moment tend to be more heavy crude coming down the Mississippi. So there's a good market for both.
But certainly, there's a strong light market that the Trunkline project with Energy Transfer will intend to facilitate.
The other thing is that looking at the very large volume of imported crude, the largest percentage of imported crude from abroad moves into the Gulf Coast market today. And inevitably, with greater and greater American and Canadian supply, that's going to back out those imports. And so there's an opportunity for backing out the imports in the Gulf Coast, and that's what's going to happen.
The other thing when you talk about the LLS pricing, that would be related to Brent. And inevitably, with diverted cargoes in fairly significant volumes to other markets, I think the inevitable is that Brent also falls. And so while there is the issue of clearing that differential that exists today with more and more pipe capacity into that Gulf Coast market, I think we're also going to see that there's ample opportunity for Bakken and Canadian crude in that market to displace foreign imports.
And as far as pricing goes, I think we'll watch. Differentials are funny things. But the market is very efficient at removing large arbitrages, and I think that's what you're going to see happen as we move these volumes there.

Nine (9) New Permits -- The Williston Basin, North Dakota, USA

Bakken Operations

Active rigs: 181 (down one, creeping toward the intra-boom low of 179 again)

Nine (9) new permits --
  • Operators: Samson Resources (2), Whiting (2), CLR, Fidelity, Sinclair, Legacy, Oasis
  • Fields: Hardscrabble (Williams), Bully (McKenzie), Ross (Mountrail), Heart River (Stark), Sanish (Mountrail), Red Rock (Bottineau)
  • Comments:
Wells coming off the confidential list:
Something was strange today. The wells that I expected to come off the confidential list were not reported. Two wells that were posted on the daily activity report as having coming off the confidential list (two Baytex wells) are still listed as confidential on the scout tickets. So, we will see next week (Tuesday) what's going on.

Two producing wells completed:
  • 23772, 531, Whiting, Verne Hagey 13-12TFX, Sanish, t1/13; cum --
  • 23181, 318, CLR, Domindgo 1-22H, East Fork, t1/13; cum --
Permitted for re-entry:
  • 23049, re-entry, CLR, Chicago 4-26RH, Banks, 4-section spacing; 

Okay, This Is A Huge Story -- Sort Of Related To The Bakken

I get countless comments from folks worrying that the Bakken will come to a standstill any day now, and, then of course, the Atlantic article the other day. But companies would not be pouring this much money into the US oil industry if they thought drilling was going to stop any time soon.

Here's a story Don spotted, adding more evidence that the US is now attracting big international players. Mywesttexas is reporting that the Argentine-based specialty steel pipe company will be building a massive $1.3 billion factory south of Houston.

Data points:
  • $1.3 billion
  • world's #1 producer of steel tubing for the oil industry
  • receiving $6 million from Texas Enterprise Fund
  • 1 million-square-foot facility
  • 600,000 tons of pipeline annually

The Bakken Impact on Fargo

I am being told some upper-income workers from the Bakken are settling their families .... in Fargo. Not Minot. Not Bismarck. But Fargo. That's about as far as one can get from the Bakken and still be in North Dakota.

Directions from Fargo to Williston are easy, two three four data points:
  • drive east 300 miles from Fargo to Belfield
  • stop for gas and a snack
  • turn right -- drive 150 miles north to Williston
  • replace windshield
  • Delta, starting at $500 roundtrip, one-stop
  • United, starting at $850 roundtrip, one-stop
  • multiple other choices starting at $915 roundtrip, one-stop
Firearms will probably have to be checked. Prices will vary; this was a simple quick random look. You can probably do better.

See first comment. I completely forgot about Amtrak: $57 one-way this time of the year according to Amtrak's web page.

See third comment. I also forgot about Jefferson bus lines: $53 daily, one-way, according to website.

New Industrial Park in the Dickinson Area: Five Diamond

Don spotted this earlier today.

Information on the self-described "newest" industrial park in the Dickinson area: the Five Diamond Industrial Park.

I remember watching similar industrial parks sprout up west of Williston. Absolutely fascinating. Think LEGO building blocks on an epic scale with all the trucks and accessory pieces.

Located on the west side of Highway 22 going towards Killdeer, with 30th Street southwest its southern boundary. If I recall correctly ... well, I'll let readers tell me ... something tells me this is three streets south of the bypass -- in other words, the northern edge of the industrial park is going to be very, very close to the bypass. Again, I could be wrong. I'm not from Dickinson.

But, if so, someone was able to act fast.

Something similar -- incredibly similar -- happened west of Williston with the "newest" industrial park and the proposed bypass route.

Current Issue of the National Geographic With A Piece on the Bakken


February 21, 2013: The Dickinson Press provides a bit of background to this story.
A national magazine criticized in 2008 for running a story about North Dakota’s abandoned farm houses is covering the state again.
This time, in an ironic twist, National Geographic sent a crew to cover the growth of the state, specifically in the Bakken region.
The story, titled “America strikes oil: The promise and risk of fracking,” graces the cover of the March 2013 edition. Its photos were shot by Eugene Richards, the same man who photographed abandoned farmhouses for the January 2008 edition that sparked widespread derision from North Dakotans.
And then this:
It’s the second time this month a national publication has prominently featured the boom in North Dakota. The cover story of the Feb. 3 edition of the New York Times Magazine was, “Luckiest Place on Earth: In the belly of the boom in North Dakota.”
It’s a far cry from the 2008 National Geographic article profiling North Dakota’s abandoned farmhouses and ghost towns, a piece called “The Emptied Prairie.”
That story prompted a furious response from many in North Dakota who though it was unfair. For instance, Sen. John Hoeven, then the state’s governor, criticized the coverage as “way off the mark.”
Original Post
A reader provided this link.

From the March, 2013, issue of National Geographic, a photo-journal of the Bakken (again).

At the end:
Meanwhile, for a generation to come, and maybe longer, plenty of jobs will be available for roughnecks, construction workers, and truck drivers. To someone like Susan Connell, riding a roller coaster of mini-booms is better than the alternative. Besides the money, even though it fluctuates greatly, and the pride she takes in what she does, she says there are intangibles she’s come to value. “I’m on a well, it’s night, I’m alone.” Stars overhead, gas flares in the distance, maybe the far-off cry of a coyote. Connell’s standing on the catwalk, high above the ground, opening the hatch on a tank of clear salt water that came from thousands of feet beneath the surface, in the middle of the continent. She leans forward and breathes deeply. “It smells just like the ocean,” she says.
Wow, such nice writing.  The alliteration (coyote, Connell, catwalk; the metaphor of the roller coaster of mini-booms; the verbal painting of the night-time scene.) I wish I could write so well.

So many story lines, not least of which, the job opportunities opening up for women in the Bakken. Glass ceilings are being broken along with pay caps. 

NoDaks will know exactly what Ms Connell is talking about: the solitude of the North Dakota night. Even with the Bakken, that's not going to change. One just might have to drive five more miles from Williston, or three more miles from Watford City. If you think otherwise, check out Vern Whitten photography.

Folks don't realize how big the Dakotas are; most folks also don't know how little geographically of North Dakota is actually impacted by the Bakken. Four western counties in North Dakota are getting the "brunt" of the Bakken; five or six additional counties are seeing increased economic activity, but outside of that small area, not much has changed. If anyone has any doubts, put a video camera on the hood of your F-350 and drive from Grafton, ND, in northeast North Dakota, to Bowman, ND, in southwest North Dakota, via Devils Lake, down through Carrington, to Jamestown, south across the state line to highway 10 in South Dakota, and then meander over to Mobridge, South Dakota, before angling back up on highway 10 back into North Dakota and eventually unto highway 12 into Bowman. Until you get to Bowman you won't see any wells, and you won't see any rigs.

New Albany Shale -- Natural Gas in Illinois

Rigzone is reporting that this natural gas play may not be productive, but it could shape fracking rules in Illinois.
The New Albany shale play could add jobs and economic growth to the southern Illinois economy – but only if environmental protestors don't succeed in banning hydraulic fracturing statewide.
A minimum of approximately 1,000 jobs would be created or supported each year through exploration of the play, which is in its infancy. However, more than 47,000 jobs per year, or more than $9.5 billion of economic impact, could be created or supported if the study's highest scenario is realized, according to the study conducted by Dr. David G. Loomis, professor of economics at Illinois State University.
Loomis conducted the study for the Illinois Chamber of Commerce Foundation in response to environmental groups' push for a moratorium on hydraulic fracturing as the Illinois General Assembly seeks to create regulations governing fracking.
While the play might not turn out to be productive, particularly with current natural gas prices, crafting a regulatory model on hydraulic fracturing will create a roadmap for the industry so oil and gas companies know where to go.

Oil Falls in Price

WTI/Bakken spread: $1.00

WTI/Brent spread: $22

Director's Cut: December, 2012, Data

Link here to the NDIC site.

  • new all-time highs in production
  • more than 400 wells awaiting completion
  • new metric: 90 new wells/month needed to maintain current production
Additions to gathering and processing capacity are helping with the percentage of gas flared holding at 29%. The historical high was 36% in September 2011.
  • Dec: 768,853 bopd (5% increase over previous month; 3% over previous high)
  • Nov: 733,078 bopd (~ 2.0 % decrease; see comments from director below)
  • Oct: 747,212 bopd
  • Sept: 729,248 bopd
  • Aug: 701,409 bopd
Producing wells
  • Dec: 8,224  (preliminary) (new all -time high)
  • Nov: 8,101
  • Oct: 8,035
  • Sept: 7,899
  • Jan: 218 (note the increase)
  • Dec: 154 ( significant decrease)
  • Nov: 211 (all-time high was 370 in Oct 2012)
  • Oct: 370 (all-time high)
  • Sept: 273
  • Aug: 261
  • Jan: $88/bbl (note the nice increase)
  • Dec: $77/bbl
  • Nov: $81/bbl
  • Oct: $87/bbl
  • Sept: $85/bbl
  • Aug: $81/bbl
Rig count
  • Jan: 186
  • Dec: 184
  • Nov: 186
  • Oct: 188
  • Sept: 190
  • Aug: 198
  • operators were continuing to transition to higher efficiency rigs
  • operators still cautious about fracking regulations (SOTU address did not give them any reassurance)
  • at end of the year (2012), 413 wells were waiting to be completed (estimate)
  • 90 new wells per month to maintain production (estimate)
  • takeaway is adequate
  • majority of ND oil now shipped by rail to east coast, gulf coast, and west coast
  • rig count stable
  • drilling permit activity was up significantly in January 
  • sufficient permit inventory to accommodate more multi-well pads, the desire to use already built locations during winter, and time required to publish hydraulic fracturing rules if required
  • construction of processing plants and gathering systems will be severely affected by weather until the spring thaw
  • flaring has held at 29%; historical high was 36% in September 2011
  • BLM received over 170,000 comments on hydraulic fracking and has withdrawn "the rule"; a new proposed rule is expected second quarter 2013
  • pressure on the federal budget has led to a significant amount of rhetoric from the administration regarding tax treatment of intangible drilling costs and the depletion allowance 
Maintain production:
  • new metric: 90 new wells/month required to maintain production
  • 185 active rigs x 0.75% --> 140 new wells/month excluding completion
  • one rig --> 8 wells/year --> 123 new wells/month/excluding completion
  • recent operator stated 38 days well-to-well with one rig -- 365/38 days --> 9.6 wells/year
  • in previous reports, NDIC/Director has stated that average time to total depth: < 20 days

Enbridge to Flow Oil From Midwest to Eastern Gulf Coast -- A First -- Keystone XL Replacement/Alternative

The eastern Gulf Coast market is a highly attractive market for Canadian and Bakken crude, but is not currently accessible by pipeline. The Trunkline conversion would create the first pipeline transportation option for transportation of crude oil to the eastern Gulf Coast from the midwest U.S.   -- MSN Money (see below)

Reuters is reporting that Enbridge in a joint venture with Energy Transfer Partners will flow crude oil from the midwest to the eastern Gulf Coast.
Energy Transfer Partners LP plans to convert parts of a gas pipeline to carry crude oil under a joint venture with Enbridge Inc, helping move soaring supplies from Canada and North Dakota to refineries in the eastern Gulf Coast.
The pipeline, expected to be in service by 2015, will be the first to transport crude oil from the U.S. Midwest to the eastern Gulf Coast, the companies said in a statement on Friday.
A unit of Energy Transfer currently owns the gas pipeline, which will be able to carry between 420,000 and 660,000 barrels of oil per day from the storage and blending hub of Patoka, Illinois. Patoka is connected to western Canada and North Dakota's Bakken shale field through a network of existing oil pipelines.
Wasn't there just a story that Enbridge pipelines out of North Dakota were being under-subscribed due to rail?  If accurate, maybe just a regional thing. Despite the surge in CBR, something tells me "pipeline" is not dead.

Additional information from MSN Money:
The project will involve the conversion from natural gas service to crude oil service of certain segments of pipeline that are currently in operation as part of the natural gas system of Trunkline Gas Company, LLC, a subsidiary of Energy Transfer Partners, L.P. and Energy Transfer Equity, L.P. This agreement is subject to approval by the Federal Energy Regulatory Commission (FERC) of Trunkline''s July 2012 request to abandon certain designated segments of pipeline from natural gas transmission service. The converted 30-inch diameter crude oil pipeline is expected to be in service by 2015. It will have capacity of up to 420,000 to 660,000 barrels per day (bpd) depending on crude slate and the level of subscriptions received in an open season to be conducted in the near future. 
Crude oil can reach the Patoka hub from both western Canada production and from the Bakken play in North Dakota through a variety of existing pipelines as well as through Enbridge's Southern Access Extension pipeline, which is already under development. The eastern Gulf Coast market is a highly attractive market for Canadian and Bakken crude, but is not currently accessible by pipeline. The Trunkline conversion would create the first pipeline transportation option for transportation of crude oil to the eastern Gulf Coast from the midwest U.S
Once completed, the project will span more than 700 miles, including a new lateral from central Louisiana, near the town of Boyce, to the refining market and the crude oil hub at St. James, Louisiana. The St. James hub will provide access to refineries in the eastern Gulf Coast, as well as dock access for water-borne shipments.
With regard to the Keystone XL:
Shipper interest in Keystone XL remains strong, TransCanada said, with the pipeline having firm, long-term contracts to transport more than 500,000 b/d of Western Canada Sedimentary basin crude to existing US Gulf Coast refineries. TransCanada’s Bakken Marketlink, using facilities which form part of Keystone XL, currently has firm, long-term contracts to transport 65,000 b/d of Bakken crude oil from the Williston basin in North Dakota and Montana. Keystone XL’s initial capacity will be 830,000 b/d. -- May 4, 2012, Oil & Gas Journal.
So, Keystone's XL initial capacity stated by the company to be 830,000 bopd; the Enbridge-ETP joint venture above comes in at 420,000 to 660,000 bopd. 

SeekingAlpha Article on the Bakken, Apparently Targeted For Folks Who Have Not Yet Heard Of The Bakken

Link here to SeekingAlpha.

From Oil Boom To Corn Boom

Don provided the link.

The Dickinson Press is reporting:
Corn may have North Dakota producers seeing green this spring, as a shortfall in acres nationally last year could entice farmers to boost their planting of it this year, many ag experts predict.
According to the U.S. Department of Agriculture’s monthly national production and usage report and future predictions released Feb. 8, more than 12 billion bushels of corn were used last year, while only 10.8 billion bushels were produced.
“There’s about a 1.8 billion bushel discrepancy, so someone has to quit using 1.8 billion bushels,” Frayne Olson, North Dakota State University crops economist told producers at Tuesday’s Taylor Farm Institute. “So, who’s going to use less corn? The ethanol industry? Exports? The livestock sector? The answer is everybody.”
I assume The Atlantic is getting their staff ready to report, "Is The Miraculous Agricultural Boom in North Dakota Already Over?"

Not much talk about the Buffalo Commons any more. 

Major Wind Farm Transmission Line Coming To Completion -- Enbridge

Don provided the link.

The Billings Gazette is reporting:
"It's our largest span on the project," said Rocky Elliott, a safety representative for Enbridge, the developer of the power line, watching as a large spool on the back of a flatbed truck began to turn pulling wire across the river, from one bank to the other.
The U.S. stretch of MATL, a 230-kilovolt transmission line that eventually will span 214 miles from Great Falls to Lethbridge, Alberta, is nearing completion, said Darryl James, a government and public affairs consultant for Enbridge. Crossing the formidable Marias River is the final hurdle in Montana.
It's taken seven years of planning and construction to get this far. Enbridge is estimating total costs in the neighborhood of $300 million.
Planning of MATL first began in 2005. It was permitted in 2008. Construction started in 2010.
The span across the "formidable" Marias River:
Tim Bury, the construction manager, said most of the conductor spans on the MATL project were 900 to 1,000 feet, but the Marias River crossing is 3,089 feet.
I assume to developers this has improved the scenic view; for others, perhaps not so much. And unlike oil rigs, this transmission line will be here "forever." Connected to wind farms that will also be there "forever," precluding dual-use. The faux-environmentalists should be celebrating this milestone.

But that's fine. Enbridge, the appropriately named energy company, is bridging America's energy needs to the future. 

On a completely different note, a different story line: years ago, I had an "aha" moment with regard to the importance of successful companies defining what industry they are in. I've mentioned many, many times, Burlington Northern "took off" when it defined itself as a transportation company and not simply a railroad company. Likewise, Enbridge, over the course of the Bakken boom, and perhaps because of the Bakken boom, has re-defined itself as an energy-delivery company, and not simply a pipeline company. In addition to wind energy transmission, Enbridge is also involved in solar.