Monday, March 18, 2013

Brent / WTI Spread Narrows; Bakken Sells For A Premium to WTI at Clearbrook

Brent / WTI spread: $15 (about as low as it's been in quite some time)
  • WTI: $94
  • Brent: $109
Meanwhile, Bakken is selling for a premium (albeit, only 25 cents) at Clearbrook.

Hess To Sell Some Eagle Ford Assets to Sanchez


March 20, 2013: Hess activists are unhappy with the sale.
Original Post
Rigzone is reporting:
Hess Corp. has agreed to sell assets in the Eagle Ford shale in south Texas for $265 million to Sanchez Energy Corp. as it continues to whittle its operations.
The deal includes around 43,000 acres in the Eagle Ford shale in Dimmit, Frio, LaSalle and Zavala Counties, and was effective March 1.
The deal comes as Hess has been selling assets to fund drilling and exploration concerns and reduce costs, and amid shareholder pressure to focus its operations.
The transaction is expected to boost the smaller oil and gas explorer Sanchez' production by around 4,500 barrels of oil equivalent a day, more than doubling its production from its rate of 3,800 boe in the first two months of 2013. The acquisition also increases Sanchez' total proved reserves by 13.4 million boe, and increases its proved developed reserves by around 6.6 million boe. It adds 50 wells, for a total count of 84 producing wells.
$265 million/43,000 acres = $6,000/acre minus current production.

One story line: Hess sold Eagle Ford acreage, not Bakken acreage.

Memo to Self: File Under "In Case You Haven't Heard..." And Again, It's All About The Bakken

Rigzone is reporting that rail will be key play in crude oil transportation:
While America has gone through an energy transformation, so have railways, thanks to shale production growing faster than available pipeline space. Although rail is typically more costly than pipelines, railcars are able to reach markets that pipelines don't, particularly North Dakota's Bakken formation, yielding higher prices for producers. [At Clearbrook, Bakken is selling at a premium to WTI. This is a dynamic link; it will change daily.]
This trend is not temporary. Small amounts of crude have long been transported by rail, but since 2009, the increased movements have been significant. U.S. railways have seen a boost in transportation of crude oil and petroleum products in the first half of 2012 by about 38 percent, compared to the same period in 2011, according to the U.S. Energy Information Administration.
"Rail is the new player in the infrastructure expo for oil. Five years ago nobody was talking about rail infrastructure," said IHS' Vice President of Upstream Research Andrew Slaugher at the recent IHS CERAWeek conference.
Rail deliveries of crude oil and petroleum products in June 2012 jumped 51 percent to 42,000 tanker cars from a year earlier to an average weekly record high of 10,500 tanker cars for that same month.
Furthermore, North Dakota produced 747,000 barrels a day in October 2012, up 50 percent from 2011, and an estimated 52 percent of the crude moved was by rail, versus 38 percent by pipeline, according to the North Dakota Pipeline Authority.
Again, all about the Bakken. 

I still remember "anonymous" some months ago opining that rail was a temporary phenomenon. Maybe.

NBC/CNBC Profiles America's Energy Miracle

From CNBC via CarpeDiem:
Randy Foutch calls it a renaissance, but when you listen to the veteran Texas oilman and others describe America’s nascent energy boom, it sounds more like a miracle.
Politicians have been warning for decades that the U.S. must wean itself from foreign energy, but just a few years ago their words seemed like so much wishful thinking: The U.S. was facing what seemed like ever-rising oil prices and was importing about 60 percent of its supply. Natural gas inventories were shrinking, and the country was considering importing a liquified form from the Middle East.
But in a turnaround that industry insiders describe as nothing short of amazing, the picture has drastically changed. Oil and natural gas drilling is now booming in places like Eagle Ford, Texas, and the Bakken formation in North Dakota, bringing jobs and prosperity to those regions. And believers say the newfound resource is so much bigger than anticipated that it can help drive economic growth nationwide for years to come.
Technological innovation — primarily the growth of horizontal drilling and hydraulic fracturing, or “fracking” as it’s commonly known — is driving the new production, enabling oil and gas to be extracted from geological formations once considered impregnable.
If I was in the mood I would write a lengthy note opining why the Bakken boom happened; an angle that I've talked about once before -- a long, long time ago.  In a way, yes, it was a miracle, but not for the reason people think. When the book is written on the shale oil boom, there will be a chapter devoted to the miracle of fracking and why it happened.

The Atlantic Monthly Might Be Talking About The End of the Bakken Boom; NY Times Talking About the End of the Ethanol Era

Link here to the New York Times:
Five years ago, rural America was giddy for ethanol. 
Backed by government subsidies and mandates, hundreds of ethanol plants rose among the golden fields of the Corn Belt, bringing jobs and business to small towns, providing farmers with a new market for their crops and generating billions of dollars in revenue for the producers of this corn-based fuel blend.
Those days of promise and prosperity are vanishing.
Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce.
A dip in gasoline consumption has compounded the industry’s problem by reducing the demand for ethanol.
The situation has left the fate of dozens of ethanol plants hanging in the balance and has unsettled communities that once prospered from this biofuel.
“It’s a more somber mood,” said Todd Sneller, the administrator of the Nebraska Ethanol Board. “The growth opportunity that existed some years ago is still out there in theory, but the reality that it’s going to take an awful lot of time, money and political battles to realize that opportunity” is causing consternation. 
The president's Energy Security Trust can't be funded soon enough. Ethanol. Wind. Solar. Algae. Cold fusion. Dyson Sphere/Dyson Array.
A Note To the Granddaughters

I am personally tired of this song (actually, I never cared for it except when sung by its writer, Leonard Cohen), but the other night, your grandmother and I were watching music videos on the iPad, and she wanted to hear this one, her favorite.

But I had not linked it on any of my sites, and it's not that easy to find YouTube songs on the first version of the iPad tablet, so when choosing a video for this post, I remembered your grandmother wanting to hear this song.

So, here it is:

Hallelujah, Leonard Cohen, sung by Rufus Wainwright

Plenty of Money For Presidential Golf Outings; Not Enough Money for White House Tours; Not Enough Money For Easter Egg Roll; Still Unable to Fully Access NDIC Web Site; Parts Of It Seem To Be Coming Back Up, Albeit Very Slow; Was It A DOS Attack By The Chinese?


March 19, 2013: I can't make this stuff up. The White House can't afford White House tours any more, but not only can the White House afford presidential golf outings here in the US, it now turns out that the president will be golfing in Ireland in June, 2013.  Ireland is one of the PIIGS, by the way. As you can see by the link the PIIGS even have their own wikipage. Once you have your own wikipage, you are too big to fail. With Cyprus, C-PIIGS?

Original Post

Easter egg roll story here.

With regard to the NDIC web site: today's daily activity report has not yet been posted.

Cannot access Basic Services.

I was unaware that there was even a golf story out there, but here it is. I assume the media will start adding up the cost of the golf trips vs the weekly cost of White House tours.
I can't make this stuff up.

While we're waiting for NDIC to be back up and running:

Bakken Oil Unit Train

Time For A New Poll -- Goin' Fishin' -- Unable To Access Parts of The NDIC Website

Good luck to all. See you tomorrow. Maybe.

A reminder: the top 47 producing wells in North Dakota -- for the month of January, 2013. This is just the single month production for these 47 wells. Posted by request.

President Obama reiterates that he will transfer oil wealth for more Solyndra-like projectsThe Oil & Gas Journal is reporting:
Technological breakthroughs in the last few years have significantly improved the US energy situation, but more needs to be done, US President Barack Obama said on March 15. He specifically called for creation of an Energy Security Trust  to develop and deploy transportation alternatives that would be funded by federal crude oil leasing revenue.
Time For A New Poll

The results of the current poll: will White House tours resume by the end of the summer?
  • Yes: 67%
  • No: 33%
Now, for the new poll.

President Obama has reiterated that he will fund a new Energy Security Trust with federal crude oil leasing revenue. Because the increase of oil production from federal lands is lagging compared to what the states are doing,  the funding might be limited. To increase the funding, would you be in favor of transferring some of your mineral royalties from the state to help fund this new trust, so that your grandchildren would be assured of adequate energy?

Would you support transferring some of your royalty money, regardless of the source, to the new Energy Security Trust?

Monday Morning Links; I Am Unable to Access Some Pages At The NDIC Web Site


April 10, 2013: at the original post, I reminded readers that the US Postal Service would never end Saturday mail delivery (in my lifetime). Today, it was announced that the USPS proposal to end Saturday mail service has been "delayed" by Congress

Later, 9:14 pm EDT: nice update at Financial Times. Cyprus is wearing out its welcome in the EU. 

Original Post 

This is actually quite interesting, the EU-Cyprus story. You know, the one where some are saying the EU is "stealing" money from banks. (Much of the Cyprus money is Russian and probably "laundered" but I digress.) Back to the main point. This is actually quite interesting. Western governments, including the US, are requiring banks to increase cash on hand/deposits as a defense against "the too big to fail" problem. So, now that the banks have increased cash on hand/deposits, the governments go in and "steal" what they need. You have to love it. And, here in the USA, Homeland Security is buying more ammo than it could ever use --- unless they think they might need it if the streets get really nasty during a bank run. Just saying. I have to get back on my meds. [CNBC talking heads said the "Cyprus solution" was a one-off, that no other country would try the same thing. Not so fast, banker breath: New Zealand is considering the same:
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman. -- March 19, 2013, The Scoop, Parliament, New Zealand.]
Active rigs: unable to access.

Wells coming off confidential list today, over the weekend: unable to access.

RBN Energy: Nice analysis of BNSF's plan to try LNG-powered locomotives; a must-read today; not as easy as one might think

Wall Street Journal Links

Plenty of time to read the WSJ since I am unable to access the NDIC website.

Section D (Personal Journal):
  • A move to Ireland: how a Texas couple found a new life in the hills and valleys of County Sligo; no link; I'm sure no one is interested; have to ration my links
Section C (Money & Investing):
  • The Cyprus story and the "too-big-to-fail" story were linked at the very, very top.
Section B (Marketplace):
  • Page B7: the brackets. Unlike previous years, my hunch is that the #1 and #2 seeds in every region will advance to the third round: Louisville, Duke, Kansas, Georgetown, Gonzaga, Ohio State, Miami, and Indiana.
Section A:
  • Cyprus rescue risks backlash; no link; story everywhere;
  • Page 3 and we've talked about page 3 before: For sale, cheap, $500,000 homes in Fargo for $5,000
  • A science of signs of spring; naturalists study what warming temperatures would mean for plants, animals
  • Saturday postal pullback in limbo; MDW opined that we will not see the end of Saturday delivery; ever; and here it starts; Post Office made the announcement months in advance to allow activists to get organized on this issue; 
  • Life discovered in the deepest ocean; extremophiles; inside deep-water vents, despite living near chimneys that hear surrounding water to 635 degrees Fahrenheit; one more reason I'm not worried about global temperatures rising 1 degree over the next 100 years;
  • Op-ed: how taxes killed the Swing Era; very, very interesting; worth the price of the newspaper today; I always wondered why the "jitterbug" died so quickly, literally overnight