For Investors Only: Bakken Shale Offering Lots of Investment Opportunities

As reported by Yahoo!Finance/CNBC:

The United States, the world's largest consumer of oil, is ramping up its own energy production in a way that looks likely to add some ballast to a still lackluster recovery. U.S. oil production is at its highest levels in a generation, with the boom greased by new technologies and more streamlined industrialization. 

And again, the Bakken is emphasized:

Energy sector watchers often cite EOG Resources and Hess, both of which are very active in the Bakken region of North Dakota and Montana - a hotbed of U.S. energy development. Over the last year, EOG has surged about 13 percent, while Hess is up about 18 percent.

"EOG is obviously a leader in oil shale, and one of the first companies to invest quite a bit" in the alternative energy source, said Brian Youngberg, senior energy analyst at Edward Jones. The firm maintains a buy rating on both EOG and Hess.

Oddly enough, "the larger companies are not necessarily the big players" in emerging U.S. regions, said Fadel Gheit, senior energy analyst at Oppenheimer. He said that energy giant ExxonMobil is still a largely peripheral player in Bakken.

This still remains one of my favorite posts. Jane Nielson says:

Frequent Internet users are getting emails about the Bakken Formation in North Dakota and Montana, supposedly a great oil bonanza just waiting to be tapped if only nasty enviros would let it happen. The emails and websites say that Bakken would solve all our petroleum “needs.” (What, me worry about  global warming?)

Don’t believe it. There’s some oil to be gotten out of Bakken, and it’s going to be exploited. But the “bonanza” is nothing but hype.

Jane has not updated this post. Jane must have given up. Her last post was dated July 23, 2012. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read, or what you think you read, at this blog. Having said that, I think the milliondollarway has been more accurate than Jane Nielson over the years.

Snopes is not much better than Jane Nielson. 

More Evidence The Earth Quit Warming Sixteen Years Ago

UK may have to ration natural gas due to excessive demand during cold weather -- and it's spring. Mail Online is reporting:

• plunging temperatures forced millions to turn up their heating 
• shortfall could add more than £200 to family bills, analysts warn G
• gas stores at their lowest level for three years with snow forecast 
• government insists gas needs are 'continuing to be met'
• Britain relying on pipelines from Norway and shipments of liquefied gas 
• energy giant SSE was of 'very real risk' of lights going out 
• Downing Street spokesman said: 'It is absolutely clear that supplies are not running out' 

Meanwhile, The (London) Express is reporting:

Up to 16 inches of snow will fall over high ground with several inches likely across much of the UK, the Met Office said last night.

Over 1,000 schools were shut and transport was disrupted as any hopes of spring were dashed by yet another onslaught of snow and flooding today as temperatures fell as low as -12C (10F).

Emergency services saw an early surge in weather-related call-outs as some parts of the country were hit by blizzard conditions. Government agencies issued a string of warnings urging the public to take care on the roads.

The South-west, which will escape the worst of the winter blast, faces flooding with up to 100mm of rain – almost two months’ worth – over the next 24 hours as yesterday's heavy rain continues.

Back in the 1980's we were stationed in Great Britain for four years. I never recall any winter this severe.  After we left, warming must have continued, but then, sixteen years ago, the earth quit warming and began to cool.

The Williston Wire

Headlines only; no links; it is easy to subscribe to the Williston Wire.

• More information continues to be revealed about how ripe the area northwest of Watford City is for oil production.  Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission says the Three Forks Well, which is in the Banks Field and owned by Tarpon Federal, is just one of two wells, northwest of Watford City, found to be mega-producers.

• Top 3 Bakken wells by IP rate in McKenzie County -- posted earlier.

• Mike Filloon argues that there is still room for significant inventory in the Bakken -- posted earlier.

• North Dakota still has lowest unemployment rate in the US. I never thought about this before, but even if one takes out the Bakken (which amounts to about six counties out of 53 North Dakota counties, it is pretty impressive that North Dakota has the lowest unemployment rate. Bismarck, Fargo, Grand Forks, Devils Lake, all have to hold up their end of the deal if ND is to remain number one. Pretty impressive; it's not just the Bakken.

• Enbridge unveiled a new $160 million rail loading facility at Berthold -- previously posted.

• MDU to break ground on diesel refinery near Dickinson March 26, 2013.

• BLM office in Great Falls, MT, 450 miles from the Bakken is helpig ND NDIC review and approve permits.

• Retread tire business supporting the Bakken booms in Billings, MT.

• Fracking sand may be sourced from western South Dakota (Black Hills). The Bismarck Tribune is reporting:

The Black Hills gold rush could turn into a latter-day sand rush aimed at the Bakken oil fields in North Dakota.

South Dakota is the latest of states that may turn its quartz sand deposits into cash just like it turned its hills into gold a century ago.

Millions of tons of sand are used in the Bakken every year to prop open deep hydraulic fractures to force oil to flow. All of that sand is imported by truck and train into the oil patch, where it’s huge business.

Cambrian Enterprises, of South Dakota, has registered silica sand mining claims in three counties encompassing Deadwood, Rapid City and Custer.

The company’s attorney, David Ganje, said the claims contain a conservative estimate of 80 million tons of silica sand.

“This is the closest known claim to the Bakken. I think this is an excellent idea for participating in the economic event called the Bakken,” Ganje said.

I Don't Even Want to Check Egypt

Not that anyone cares, nor does it matter:

• Russia-US relationship is toxic -- Christian Science Monitor.
• Obama's Middle East policy in tatters; in the Mideast the US less popular today (under Mr Obama) than under George W Bush -- USA Today. 
• Most Palestinians hate Mr Obama -- The (London) Telegraph
• Jordan gets it -- Aljazeera

So, that's Russia and the Middle East. What's left? Oh, yes, China.

• China will have a bigger economy than the US by 2016 -- The (London) Telegraph

And Obama's approval in the US? 47% (dynamic link; accurate on date posted)

Four (4) New Permits -- The Williston Basin, North Dakota, USA; Oasis Has A Gusher; Bakken Hunter Has A Nice Well For Its First Time Out

Active rigs: 187

Four (4) new permits --

• Operators: EOG (2), Liberty Resources, MRO
  Fields: Parshall (Mountrail), East Fork (Williams), Murphy Creek (Dunn)
• Comments: Hmmmm.....pretty quiet, considering no permits Monday due to the server being down

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

Five (5) producing wells completed:

• 22560, 846, Petro-Hunt, Fort Berthold 148-94-21A-20-1H, Eagle Nest, t2/13; cum --
• 23403, 2,148, XTO, FBIR Smith 11X-10A, Heart Butte, t1/13; cum 5K 1/13;
• 23462, 3,054, Oasis, Elery H 5200 14-20T, Camp, a trip gas of 6,474 units was measured; no completion report yet;  t2/13; cum --
• 23475, 554, Oasis, RJ Titus 6093 42-20H, Gros Ventre, t2/13; cum --
• 24732, 376, Bakken Hunter, BH HZ 35-26-164-97 3S, Crosby, t3/13; cum --; taking steps to minimize flaring;

By the way, look at some of these Oasis wells in the Camp oil field:

• 23462, 3,054, Oasis, Elery H 5200 14-20T, Camp, trip gas of 6,474 units; t2/13; cum --
• 22428, 4,341, Oasis, Casey 5200 13-30B, Camp, t7/12; cum 91K 11/12;
• 22399, 3,330, Oasis, Lefty 5200 13-30H, Camp, t7/12; cum 86K 11/12;
• 22306, 2,180, Oasis, J O Anderson 5200 31-28T, Camp, t5/12; cum 43K 11/12;

So, where does permitting stand compared to last year at this time? With 563 permits so far this year, "we" are on track for 2,537 permits for the calendar year 2013.  Last year, on this date, 438 permits had been issue, projecting 1,974 permits for the year. In the end, 2,521 permits were issued in 2012, with 30 or so ultimately canceled.

JCP Going Cashless

Last night or the day before, I forget, I wrote a long note to the granddaughters about "the next big thing." I wrote this:

That brings us to a "cashless" society. Cyprus may be a "cashless" society by next Monday. Apple stores are cashless. I do think someone big is going to go cashless and that will change everything. Could Wal-Mart go cashless?  For those who don't have a credit card, or some type of mobile payment (SmartPhone, for example), they pay for a company cash card at customer service when they come in the door. 

So, I about fell off the couch when this story was aired a few minutes on the local CBS evening news: JCP (JC Penney) is going cashless. Well, it turns out, I was "out of the loop." That was old, very old news. On the net, back on July 27, 2012:

Cash registers could join the ranks of pay phones and typewriters sooner than you think. J.C. Penney will say farewell to cash registers, checkout counters and cashiers by 2014, said Ron Johnson, the chain's CEO, during the Fortune Brainstorm Tech conference, reports Time. Penney's plan evokes Apple's mostly cash-register free stores -- and that comes as little surprise: Johnson was the head of Apple Retail and is considered the mastermind behind its success. He left Apple in November to take the top spot at J.C. Penney. His plan is to eliminate cashiers, cash registers and checkout counters, replacing them with a patchwork of technology solutions, such as WiFi networks, mobile checkout, RFID (radio frequency identification) tracking systems, as well as self-checkout options. 

And, doing a google search, you can find all kinds of stories on JCP going cashless. I missed it. Amazing. 

For Archival Purposes -- Alberta's Take on North Dakota's Prolific Bakken

Updates

March 22, 2013: no sooner had I posted the article below, suggesting that it was a bit dated, and perhaps not an accurate reflection of what is going on in the oil patch today, than I see the Motley Fool article, same subject, posted today. 

Canada has a problem. While it might have the world's second-largest crude oil source, right now its oil is way too cheap. Before you start to get excited that the price might come down at the pump, I should warn you: The reason that oil is cheap is that its stuck up there. Blame the lack of pipeline capacity to take that oil to the refining marketplace. So, just how cheap is Canadian crude oil you ask? Take a look at the chart below -- see the chart at the link to see the discount Canadian oil is faced with. 

Then read the rest of the article. Motley Fool suggests this situation may not last much longer. 

In case the link is broken, here's the graphic:

Original Post

I wasn't going to post this; I've posted a lot today and need to take a rest, but I thought: if I don't do it now, I will probably forget. The story at the linked article is very, very long. I didn't read it very closely; events are moving too fast for articles even a couple of months old, but for archival purposes, I decided to post it.  Because I read it quickly I may have missed more important story lines, and I may have come to wrong conclusions. Having said all that, it's an article worth reading and archiving.

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

A reader sent me the link to this article. Note the date of the article: old, but not all that old, just last November, 2012. And since then, not much has changed. Well, actually one thing: the US just denied another huge pipeline, this time the Enbridge Sandpiper pipeline.

From the Alberta perspective, due to  a) prolific Bakken production; and, b) lack of takeaway capacity, Canadian oil sands are in a world of hurt.

“Canada has a real problem,” said Al Monaco, chief executive officer of Enbridge Inc., the pipeline company that has long been the prime mover of Canada’s oil. Combine rising U.S. oil output with declining consumption and the lack of other markets for Canada, and “none of that bodes well for prices if you’re a producer – nor if you’re a government that has royalties at play. Nor if you’re the federal government for tax revenue.”

The Sandpiper pipeline was also mentioned:

Some 235,000 barrels a day of Bakken crude now run through a pair of Enbridge pipelines that connect to the Mainline. That brilliant new pipe near Stanley will help boost the total volume to 395,000 in 2013. By 2016, Enbridge expects to complete construction on Sandpiper, a new $2-billion pipeline that will scoop up another 225,000 barrels a day from North Dakota.

It will be interesting to see if Enbridge re-applies. If not, another huge win for a) rail; and, b) existing pipeline operators. But a huge loss for a) consumers; and, b) operators trying to get their landlocked oil to the coasts.

US Regulatory Body Denies Enbridge Permit for the Sandpiper Project; A Huge Win For Rail

Link here to The Globe and Mail:

The U.S. Federal Energy Regulatory Commission has blocked plans by Enbridge Inc. for a massive new pipeline to carry oil out of North Dakota’s fast-growing Bakken field.

In a decision released Friday, FERC denied an application by Enbridge to set tolls, or costs to move oil, through its $2.5-billion (U.S.) Sandpiper project. By blocking those tolls, it has at best delayed the project, as Enbridge will now have to present an alternative way to pay for the large new pipeline, which would carry oil 603 kilometres from North Dakota to Minnesota.

And so it goes. 

A number of companies involved in moving oil out of the Bakken had loudly protested Enbridge’s proposed tolls. EnWest Marketing LLC told FERC that “the amount of [Sandpiper] capacity was not necessary in view of rail and pipeline alternatives.” Another protestor, WPX Energy Marketing LLC, accused Enbridge of staging “an attempt to double the price of transportation while receiving a risk-free guaranteed rate of return.”

Others said the Enbridge proposal would force shippers to shoulder the full extent of increased costs if Sandpiper is not filled to capacity. They also argued that Enbridge sought to pay off the pipeline in 15 years instead of the standard 30 and, they said, few supported the project.

Chesapeake Announces Plans to Further Develop the Eagle Ford

Oil & Gas Journal is reporting.

Data points:

Chesapeake let a contract with Strategy Engineering & Consulting for the design of a central production unit in the Eagle Ford shale

• San Pedro sweet-oil unit: 30,000 bopd
• to start 3Q12
• Strategy Engineering and CHK working on full field development of CHK's Faith Ranch acquisition (Dimmit, Maverick, and Webb counties)

About Faith Ranch (from the website):

Faith Ranch was carved out of the Indio and Chupadera Ranches.  Houston lumberman and oil man J.M. West, Sr. purchased the 78,000 Chupadera Ranch (Dimmit, Webb, and Maverick Counties) in 1932 and the Indio Ranch (Maverick and Webb Counties) in 1940.  His son, Wesley West, divided these ranches with his brother’s family in 1960.  Wesley took the contiguous middle of these two ranches and called it the Faith Ranch.  The Faith Ranch spans over 40,000 acres and is today owned by the descendants of J.M. West, Sr.

The three counties are contiguous, two bordering Mexico, and the third touching Mexico, along the Rio Grande, north of Laredo and south to include Laredo, in Webb County.
Chesapeake's Faith Ranch prospect: about 38,000 net acres; all hydrocarbons: oil, wet, dry gas

EOG: "Best of Breed" But Don't Buy It -- SeekingAlpha Contributor

SeekingAlpha is reporting:

EOG's aggressive move to increase oil production has helped the company's bottom line and benefited its shareholders. While EOG's stock price has increased by 13% over the last 52 weeks, the stock prices of its competitors have slumped ... While I think that EOG is "best-of-breed" amongst the large exploration and development companies, because of its revenue growth, expanding profit margins, and relatively low debt level, I would not recommend buying the stock. I do not foresee any significant gains for stocks in the gas and oil exploration industry as a whole. The combination of low gas and oil prices, fierce competition, and a flat U.S. economy will prevent any of these companies from achieving significant earnings increases.

Say what?

Let's go through that summary: the writer says EOG is "best of breed," because of its revenue growth, expanding profit margins, and relatively low debt level. What the heck does the writer want: that sounds pretty good to me -- revenue growth, expanding profit margins, and relatively low debt level.

Now for the second part: "... low gas and oil prices, fierce competition, and a flat U.S. economy."

Natural gas prices are low; that was the whole point of the article: EOG writing off its natural gas assets and simultaneously switching from being a natural-gas-centric company to a crude oil company. And, is EOG succeeding? I don't know but the write seems to think so: he says the company is "best of breed."

Low natural gas prices: yes. But that's an old story. And it may be a changing story. There's not much talk of natural gas returning to its old lows.

Low crude oil prices: absolutely inaccurate. Compared to what. The average price of crude oil in 2012 set an all-time record -- again, the average over the entire year. And the price of crude so far this year has exceeded last year's average and there are no signs of the price of crude dropping. In fact, even as the dollar has gotten stronger, the price of crude oil has gone up. Not supposed to happen.

With regard to pricing, three other points: a) the WTI/Brent spread is narrowing; b) Bakken at Clearbrook, MN, is actually selling at a premium to WTI; and, c) EOG has its operations in the best two oily plays in the US: the Bakken and the Eagle Ford.

"Fierce competition." Say what? Isn't that what capitalism all about? And the author states that EOG is "best of breed." Talk about an argument being internally inconsistent. 

And finally, "a flat US economy." Like so many American investors, journalists, and Congressmen, they think only about the US and forget about China. China now makes and sells/buys more automobiles than the US, just as one example. Tea leaves suggest the US economy is improving and will continue to improve, but even if the US economy remains flat, the Fed is going to keep "printing money."

EOG has had a terrific run and whether it's a good entry point or not, I don't know. This is not an investment site and I am clearly out of my comfort zone with regard to recommendations for investing. But the arguments of the writer at the linked article are either based on inaccurate interpretation of the data, or are internally inconsistent: "best of breed, because of revenue growth, expanding profit margins, and relatively low debt level but don't buy."

I can't make this stuff up.

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

For the record:

• EOG closed up $.08 to $124.98
• One week ago: closed at $130.42
• Two weeks ago: closed at $126.68

If I remember, I will check in on EOG in one year.

File Under: "Presidential Memos": Make The Sequester As Painful As Possible

Congress won't let the post office stop Saturday mail delivery, but the president will let the FAA close 149 air traffic control towers. Both are non-stories. By Monday, the story will be forgotten.

Bloomberg is reporting:

The U.S. will close 149 air-traffic control towers run by contractors at small- and mid-sized airports on April 7 as a result of automatic budget cuts at government agencies, a trade group said.

The Federal Aviation Administration spared 24 towers on its original list of 173 subject to closing, the Contract Tower Association, which represents companies running the facilities, said today in an e-mail. All towers being shut down are run by private companies, not the government as at larger facilities.

Advocates for pilots and airports said shutting the towers will harm safety and impose economic hardship on businesses such as flight schools that rely on controllers to guide planes. 

This will have no effect on the "flying public." This onlyu affects "general aviation" -- i.e., the small, private planes, and jets. Private jets and planes can still use these runways, but they will have to take-off and land on their own. Sort of like North Dakota and Alaska bush pilots have been doing for decades.

The closure will only affect "contract" workers, contract towers.

But, the memo from the White House, and I'm paraphrasing: make this as painful as possible. Send out the press release but don't provide the impact. Which. Is. None.

What amazes me is that the US government was funding 149 airports that weren't needed. Probably more.

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

By the way, the 2016 GOP presidential nomination speech has been written. The president provided the boiler plate today (no link; the story is easily found):

"Something has been broken in Syria, and it's not going to be put back together perfectly immediately — even after Assad leaves," Obama said. "But we can begin the process of moving it in a better direction, and having a cohesive opposition is critical to that."

That was the boiler plate. Here's the 2016 GOP presidential nomination speech:

"Something has been broken in the United States, and it's not going to be put back together perfectly immediately — even after Mr Obama leaves. But we can begin the process of moving it in a better direction, and having a cohesive opposition is critical to that."

And so it goes.

If A New Yorker Hasn't Heard of The Bakken By Now ....

...they have now.

The New York Post is reporting the CLR/Hamm/Divorce story.  Huge "thank you" to a reader.

That Hess Well WIth An IP of 8,683? Never Mind

A reader just notified me that NDIC has corrected the scout ticket. The IP is 863:

NDIC File No: 23374     API No: 33-061-02192-00-00     County: MOUNTRAIL     CTB No: 216928
Well Type: OG     Well Status: A     Status Date: 1/18/2013     Wellbore type: HORIZONTAL
Location: SESE 23-156-94     Footages: 4 FSL 516 FEL     Latitude: 48.312957     Longitude: -102.721922

Lateral 1 Start Coordinates 163 S 31 E From Wellhead, End Coordinates 10274 S 38 W From Wellhead

Current Operator: HESS CORPORATION
Original Operator: HESS CORPORATION
Current Well Name: EN-ORTLOFF 156-94-2635H-2
Original Well Name: EN-ORTLOFF 156-94-2635H-2
Elevation(s): 2076 KB   2051 GR   2050 GL     Total Depth: 19898     Field: BIG BUTTE
Spud Date(s):  9/19/2012
Casing String(s): 9.625" 2217'   7" 10420'  
Completion Data
   Pool: BAKKEN     Perfs: 10420-19898     Comp Dt: 1/18/2013     Status: F     Status Dt: 2/1/2013     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 17475     Cum MCF Gas: 16200     Cum Water: 5227
Production Test Data
   IP Test Date: 2/1/2013     Pool: BAKKEN     IP Oil: 863     IP MCF: 826     IP Water: 279

Time For a New Poll

Time for a new poll.

First, the results of the current poll, which asked: Do you believe that Hess has reported a Bakken well with an IP of 8,683 bopd?

• Yes: 37%
• No: 63%

NDIC has just corrected the scout ticket. NDIC now reports that well had an IP 863, not, 8,648.

Now, for the new poll:

Now that XTO has announced it will withdraw its permit request for a new well near the Elkhorn Ranch, do you feel it's time to make the entire Elkhorn Ranch Oil Field off limits to new drilling?

Don't Ask: Why I Love To Blog

This is pure serendipity.

Doing something randomly brought me to this blog, Outrun Change. Another great blog.

It will be added to the sidebar at the right.

Easy Come, Easy Go For Some Mineral Owners: XTO Will Withdraw Permit Request To Drill Near Elkhorn Ranch

This is great news. It will relieve the commission -- the NDIC -- from having to make a tough decision. No link; the story is easily found.

I thought I posted the "XTO Elkhorn" story a couple of days ago, but I can't find it now. Most likely I wrote it up and then realized it was a typical "Debbie Downer" story and deleted it.

In fact, as if anyone would care, during the five days when the NDIC website was down, I deleted over 150 posts that were in draft status. Most were very, very old, and had lost any relevancy. Others were "Debbie Downer" stories that needed to be deleted.

I assume those deleted drafts are on a google server somewhere in Silicon Valley. The Department of Homeland Security is probable scanning them now.

Elkhorn Ranch oil field has no less than 50 oil wells (some abandoned) and North Elkhorn Ranch oil field has another 30 or 40 oil wells (some abandoned), but I guess one more well -- especially a well that was going to be completed with the controversial process known as fracking where gazillions of gallons of water and billions of pounds of sand and an unknown quantity of unknown chemicals are forced into the earth's underground was just too much for faux environmentalists.

The well probably would not have been all that great anyway. The wells aren't all that good in the Elkhorn, producing about 150,000 bbls in less than two or three years.

This should be a wake-up call for faux environmentalist activists: now is the time to get the legislature to designate more land in western North Dakota off-limits to the oil industry. This time "we" dodged the proverbial silver bullet. Without more "red zones" "we" may not be so lucky next time.

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

Note: The Bismarck Tribune's lead story today: the governor of North Dakota owns stock in the company that wanted to drill the well discussed above. Which, of course, is not true. One can't invest in XTO or own shares in XTO. XTO is a wholly-owned subsidiary of Exxon. Heaven forbid a governor invests in Exxon. The Bismarck Tribune makes that clear in the article; the headline is, I suppose, technically correct. No link; the story is easily found.

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

In the same edition, the newspaper notes that the North Dakota Game and Fish Department is reminding folks not to disturb the nests of bald eagles. There was no mention that wind farms have been given legal immunity to slice and dice bald eagles. And whopping cranes. And ducks. No link; the story is easily found if one googles "slice and dice, bald eagles, milliondollarway." --- Okay, how incredibly funny. I did that, just for grins. I googled "slice and dice bald eagles milliondollarway" and this is what popped up: http://outrunchange.com/2013/03/13/more-on-selective-enforcement-of-laws-against-killing-raptors/

So, while individuals are being admonished not to disturb nests, huge, anonymous, cruel corporations are given free rein to slice and dice products of those nests.

I can't make this stuff up. A huge, huge "thank-you" to whomever writes "Outrun Change."

Biggest Non-Bakken Story of The Day: Rosneft Is Huge; Forms Alliance With Exxon; Bigger Than Cyprus -- CEO

Bloomberg is reporting:

OAO Rosneft’s $55 billion takeover of TNK-BP creates an empire stretching from Russia’s Far East to Venezuela that pumps almost 5 percent of the world’s crude. 

As Chief Executive Officer Igor Sechin integrates Russia’s largest and No. 3 oil companies, he will steer an upgrade of Soviet-era refineries, a drilling program in uncharted Arctic waters, the creation of a natural gas business and a global alliance with Exxon Mobil Corp. 

The new company, created yesterday, will be about 70 percent-owned by the Russian state and will employ 218,000 people, more than Exxon and Royal Dutch Shell Plc  combined. Rosneft sales per employee will be $729,000 this year, compared with more than $5 million at Shell, representing the scale of potential cost savings. Sechin plans to find $10 billion of efficiencies through the TNK-BP deal. 

“This is the biggest acquisition in history in terms of production and reserves,” said Daniel Yergin, author of The Prize, a history of the oil industry, who will sit on an integration committee overseeing the takeover. The companies “recognize the scale and complexity, but they also see the scale of opportunity.” 

By the way, I first read The Prize some years ago; the Pulitzer-Prize-winning best seller came out in 1990; the current edition, paperback is dated 2008. I've read it a second time, and bits and pieces since then. It lies lays sits at my bedside.

The good news: Rosneft, now in financial whitewater, won't have the flexibility to buy into the Bakken.

ObamaCare: Let's Just Make Sure It's Not a Third-World Experience -- Obama Administration; Could China Buy Range Range Resources, Chesapeake, Africa?

It seems like today is the day for ObamaCare stories.

Everything else is quieting down. Expectations in the Middle East have been lowered. The area is quiet again. The Kurds and the Turks have called a truce. Everybody's feeling better about Cyprus; by Monday, it will have disappeared (not the story, the country -- as a viable tourist destination). The price of oil is going back up but trading in a reasonable range. And, except for the C-companies (CHK, COP, and CLR), things in the oil patch are going swimmingly well.

So, now back to the subject at hand. It seems like this is the day for ObamaCare. From the administration as being reported by The Washington Examiner:

With time-running out before the major provisions of President Obama’s health care law are set to be implemented, the official tasked with making sure the law’s key insurance exchanges are up and running is already lowering expectations.

“The time for debating about the size of text on the screen or the color or is it a world-class user experience, that’s what we used to talk about two years ago,” Henry Chao, an official at the Centers for Medicaid and Medicare Services who is overseeing the technology of the exchanges said at a recent conference. “Let’s just make sure it’s not a third-world experience."

Chao also described himself as “nervous.”

Wow, that's lowering expectations.

“Let’s just make sure it’s not a third-world experience."

I don't know if folks saw the button Colin Powell was wearing some months ago, but the button is more relevant than ever: "it could be worse."

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

Another "C" word: China. Over at Minyanville, this story: what's going on with the Chinese buying spree and who's next?

In fact, we’ve seen Chinese oil companies embark on an aggressive international energy asset buying spree. In 2012, China’s state-owned oil companies coughed out a record $35 billion buying oil and gas assets all over the world. There was, for example, CNOOC’s $15.1 billion offer to buy Canada’s Nexen, Sinopec’s $2.2 billion purchase of Devon Energy’s shale gas assets in the US, and PetroChina’s $1.63 billion buyout of BHP Billiton’s holding in Woodside Petroleum.

What's behind all this?

.... most experts say that Chinese oil companies have been snapping up foreign assets for two reasons: to secure its own domestic energy needs and to pick up expertise in shale gas and oil sands drilling and extraction.

“Over 90% of the energy used in China comes from low grade coal, and the Chinese are literally choking on it. Nuclear energy is on the way with more than 50 plants in operation or under construction,” ...“However, they require oil now for transportation and infrastructure needs, and China, while it has oil of its own, does not have prolific oil fields or reserves and must look abroad for both technology and reserves.”

So, what's next on China's list to buy? Chesapeake and Range Resources. Go to the link to see more.

This Will Make The President Happy: He Gets a Two-Fer; Industry Bids On Less Than 5% Of All Off-Shore Gulf Tracts Offered By Mr Obama; For Investors Only -- Energy Is Surging Today; CLR Continues To Falter

The president can brag that his administration offered up way more leases than operators bid for.

The president can brag that he continues to protect the Gulf from the oil industry.

Depending on which audience he is addressing.

But how bad was it, you ask? It was bad. Really bad.

Mr Obama offered drillers almost 40 million acres off Louisiana, Mississippi, and Alabama.

Less than 2 million acres drew bids, and no "block" drew more than six bids. [To put that in perspective, CLR has a million acres in the Bakken -- at least the company "had" a million acres. After the divorce, the number could change.]

But you have to ask yourself: would you bid on federal leases knowing that your permit applications will be slow-rolled. And then, heaven forbid, an oil sheen within a thousand miles of your drilling site.

At the headline, "industry bids for 4.4% of central gulf acres offered," the Oil & Gas Journal is reporting:

A total high bonus of $1.2 billion at Central Gulf of Mexico Sale 227 masked the fact that oil and gas companies made only 407 bids on 320 of the 7,299 blocks offered.

Only 58 blocks drew more than a single bid, the Bureau of Ocean Energy Management revealed in sale statistics. The 52 participating companies lodged 131 bids for blocks in 1,600 m of water or more, 78 bids for tracts in 800 m to less than 1,600 m of water, and 85 bids for blocks in less than 200 m of water.

Blocks totaling 1.7 million acres off Louisiana, Mississippi, and Alabama drew bids even though the government offered 38.6 million acres. No block drew more than six bids.
Shell Offshore Inc. bid high for 38 blocks, Anadarko US Offshore Corp. and ConocoPhillips 30 blocks each, and BHP Billiton Petroleum (Deepwater) Inc. 24 blocks. Statoil Gulf of Mexico LLC and Venari Offshore LLC submitted the high bids on 15 blocks each.

Statoil and Samson Offshore LLC put up the sale’s highest bid of $81.8 million for Walker Ridge Block 271. The block drew only one other bid. ExxonMobil Corp. made the sale’s second highest high bid, offering $66.1 million for Keathley Canyon Block 789.

And so it goes. The president is doing his best to make the nation energy independent. 

A post-script: some days ago it was reported that BP would not be bidding for anything in the Gulf this time around. Can you blame them?

It's possible CVX was on the list above but I didn't see it. It appears CVX trusts The African Congo more than the African-American Obama, reporting at Yahoo!Finance:

Chevron Corporation announced that its subsidiary Chevron Overseas (Congo) Limited will proceed with the joint development of the Moho Bilondo “Phase 1 bis” and Moho Nord projects as the company's latest deepwater developments offshore the Republic of the Congo.

“Moho Nord is among a strong queue of major capital projects that will provide Chevron with future growth,” said George Kirkland, vice chairman, Chevron Corporation. “With the project, we will enhance our position in this prolific deepwater basin.”

Situated approximately 46 miles (75 kilometers) offshore southwest of Pointe-Noire in water depths ranging from 1,500 to 4,000 feet (450-1,200 meters), the Moho-Nord joint development is the largest-ever oil and gas project in the Republic of the Congo. The Moho Bilondo “Phase 1 bis” project includes wells tied back to an existing floating production unit with a processing capacity of 40,000 barrels of oil per day. 

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I doubt if anyone has read this far, but if you have, I'm sure you've connected the dots by now.

Yesterday, it was noted that Mr Obama needs to lease a lot more off-shore oil if he's going to pay for his Solyndra Slush Fund (SSF, aka the nation's Energy Security Trust). It looks like the industry is not really interested in that initiative, having bid on less than 5% of new tracts available for leasing.  For those that want to go to the Oil & Gas Journal article directly, click on this link.

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For investors only:

Energy is surging today; CVX blasts through to a new high. ENB up, but not enough for a new high; EPD does blast through to a new high, however. SRE scored a new high.

CLR is down -- what was that saying, "hell hath no fury like a woman scorned." That phrase, I see, was written by "another" William.  CLR is just one more example why investing is a crap shoot. One can do all the financial analysis, all the due diligence, and then ... whamm.... Holy Catastrophe! By the way, I've noted the CLR story for a full day or so now; I see Yahoo!Financial/CNBC has finally made it a headline story.

Speaking of BP: just announced -- BP announces an $8 billion stock buyback.  Wow, oil companies must have a lot money. BP will be paying every American before all the lawsuits are over, and they still have cash left over for stock buyback.

Oil company BP said Friday it will buy back $8 billion of shares using money it earned by selling its stake in Russian producer TNK-BP. The announcement came after BP completed the sale of its 50 percent interest in TNK-BP to Moscow-based Rosneft, in a deal that gave it $12.5 billion pounds in cash and a stake in the state-owned oil company. The deal allowed Rosneft, the Russian oil giant, to tighten its grip on the country's lucrative oil industry.

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Note to the Granddaughters

The CLR debacle reminds me of a story. Many years ago, when the older daughter was in middle school (maybe younger, I forget) I invested some money in Exxon shares and placed them in her UGMA account. I was quite happy explaining to her how I invested in Exxon for her and what it meant. I doubt she understood a word I was saying.

Within a week of buying those Exxon shares, the infamous Valdez oil spill occurred. I remember the older daughter, your mom, coming home from school that day and asking if the shares I bought were the same company that just destroyed Alaska.

Smile.

[I just checked: the event occurred in 1989; your mom would have been ten years old. So I guess she would have been in 5th grade.]

Page 3 Of The Wall Street Journal, Friday; Gradually, Piece-by-Piece, ObamaCare is Being Dismantled; The Energy Security Trust Trap; Bakken Still Selling at a Premium to WTI; Oil Up Today; Markets Up; For Investors, CLR Drops Due to Divorce Announcement; ObamaCare and Frequent Flyer Miles

Updates

Later, 12:02 pm: update on the ObamaCare links below. Six out of ten doctors will retire early because of ObamaCare. That's sixty percent.  Once ObamaCare is fully in place, your health care will be a lot like your "Frequent Flyer Miles." You will have lots of insurance (on paper) but no appointments will be available. Sort of like Frequent Flyer Miles with a lot of blackout dates. Cue up Connie Francis. Wow, I can't believe how one president can screw up a country in such a short time; it's gonna take a decade to undo all that he has done. If we're fortunate enough that it can be undone at all.

Later, 11:46 pm: it looks like Yahoo!Finance/CNBC get their stories from the same place I do, the Wall Street Journal. The ObamaCare links below, to the WSJ, are now the top stories at Yahoo!Finance/CNBC. I won't link because the link is dynamic and will change by tomorrow. But it is rather humorous that readers of the blog are getting the links before they become headline stories at Yahoo!Finance/CBC. And no advertising. What a deal.

Original Post

This has been posted (perhaps more than once) but the photographs are worth looking at again; a reader alerted me to the story again today. Thank you. 

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Two huge "page-3" stories, both worth reading in today's Wall Street Journal, on page 3 of Section A.

First, airlines dispute planned air-controller cuts; FAA says sequester forces employee furloughs, while industry argues passengers are being used as political pawns.

Flashback: President Reagan fires controllers; airline industry did not collapse; August 5, 1981; 11,345 controllers fired.

Then, this story: US Marine general officer expects Marine Corps to shrink due to sequester; don't be fooled; that's been in the works for some time; this provides excuse; the Nobel-peace-prize President has learned to love the drone; US Marines not needed for "drone warfare."
 

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Piece-by-piece, ObamaCare is being dismantled: buried deep in the newspaper, and it won't even be reported anywhere else, the Senate (symbolically) voted overwhelmingly (79-20) to pay for ObamaCare with a new tax on medical devices.

The Senate voted overwhelmingly Thursday night to repeal a tax on medical-device sales, despite the fact that the levy helps finance the health-care overhaul.

The vote was largely symbolic, but the 79-20 tally signals strong opposition to the 2.3% tax on device sales that went into effect Jan. 1. Even though the levy is meant to help foot the bill for the signature legislative achievement of President Barack Obama's first term, 33 Democrats as well as independent Sen. Angus King of Maine joined Republican senators in voting to repeal the tax.

The vote came as an amendment to the Senate Democrats' fiscal year 2014 budget, a partisan tax-and-spending blueprint that stands no chance of passing the GOP-controlled House. Still, the solid bipartisan support shows growing momentum for repealing the tax, which lawmakers have argued hurts U.S. competitiveness and costs highly paid jobs.

And this was an easy tax for Americans to accept. Wait until Congress gets an earful from constituents when their health care premiums double.

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Op-ed: Obama's energy security trap --

What's the best way for President Obama to revive interest in a costly green-energy program? Try a little Republican return-on-investment.

Mr. Obama sojourned recently to Illinois to devote an entire speech to the Energy Security Trust, a proposal he first floated in last month's State of the Union. The president wants to divert $2 billion of federal oil and gas royalties to a dedicated fund for research on post-fossil-fuel vehicles. He presents the fund as a win-win-win-win-win. The technology to emerge from the research will "break this cycle of spiking gas prices." The plan is "nonpartisan." It will strengthen "national security." It won't add "a dime to our deficit." It is about "saving money" and "saving the environment."

Actually, it is mostly about setting up the GOP to abandon the position it has taken on energy after the president's string of taxpayer-funded bankruptcies, from Solyndra to A123 Systems. Using the carrot of federal drilling and the stick of "bipartisanship," Mr. Obama sees a neat way to squeeze yet more subsidy money from a bleeding budget. More important, he sees a way to get GOP buy-in for his green agenda, and to blunt GOP opposition for future energy failures connected to his grants and subsidies. All that political upside for a mere $2 billion. 

Wow, it echoes exactly what was posted earlier. 

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Bakken still selling at a premium to WTI: at Clearbrook, MN, drillers are getting 50 cents more for Bakken than the WTI posted-crawler price.

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Both oil and the markets are up today. CVX flirting with a new high; quite a run. SRE near its high. EPD, too, could another high, after hitting a 52-week high earlier this week. ENB near it's all-time high. BRK-B, ditto.

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Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read, or what you think you read, here at this site.

Cyprus Ticking; Texas May Start Hoarding Goal; Oil Activity In The Minot Area -- Finally?

Clock ticks on Cyprus -- no link, story everywhere, front page of WSJ; so many story lines: will the EU buckle? how much is the Cyprus banking system worth to Russia? [Update, a few minutes later: Drudge is reporting that Russia rebuffs Cyprus; EU working on "Plan B."]

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Texas may start "hoarding" gold. Texas legislature needs to start moving a bit faster on a number of issues. It's a red state (or a blue state; I always get the colors mixed up), but that could change. Because of the terrible economy in California a lot of Californians are moving to Texas, bringing with them the California mentality with it comes to personal responsibility. In addition, it goes without saying that an increasing number of folks coming up from Mexico will tend to change the demographics of Texas. Has anyone visited Little Havana, Florida?

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Samson Oil & Gas -- from their press release.

North Stockyard Field Development Plan

• will drill six infill development wells in the northern part of the field
• will target both the middle Bakken and the First bench of the Three Forks Formation
• a total of 14 wells approved in the 160-acre spacing order; 6 MB, 8TF
• drilling will commence next week; Frontier 24 has initiated movement
• the first pad: four wells; all 6,300 foot laterals; two MD, and two TF
• the initial four wells will be drilled consecutively
• during the drilling phase, a waste water pipeline will be constructed to lower trucking costs
• will install a gas gathering system to transport associated natural gas to a plant three miles away
• the natural gas liquids typically have a higher value than dry natural gas

South Prairie Project

• this is new: SSN has acquired an interest in South Prairie Project, located in Renville and War Counties
• prospective for conventional oil in Mississippian 
• 76-square-mile 3-D seismic grid was acquired in 2012; now mapped and analysed
• three individual prospects; the Forfar prospect is the priority target
• expects to be drilling on June 1, 2013

The Forfar Prospect

• 420-acre, dip closed structural feature similar to the Glenburn South Field which is northeast of the Forfar
• will drill to a depth of 4,900 feet to get the Glenburn zone of the Mississippian Mission Canyon Formation
• cost: $1 million gross
• wells in this are from the same Glenburn zone: EURs with 350,000 bbls of oil
• if successful, 9 development locations on 40-acre spacing

Natural Gas Blazes a Path To Higher Prices -- WSJ

From today's Wall Street Journal: natural gas blazes a path to higher prices.

Colder-than-normal weather in many parts of the U.S. is lighting a fire under natural-gas prices.

Natural-gas prices rose above $4 a million British thermal units during intraday trading on Thursday and are up 73% from a year ago.

After watching prices of the heating fuel fall for more than four years, some commodities traders are getting bullish on natural gas. A chilly start to spring brought natural-gas stockpiles nationwide closer in line with average levels for this time of year. Further stoking the rally, traders and investors said, are signs that the boom in U.S. gas output is slowing, which could trim supplies even more.

Did you all notice the operative phrases in that story? For those who might have missed the operative phrases, here they are again: "colder-than-normal weather"; "a chilly start to spring."

The earth quit warming 16 years ago.  -- British government; report quietly released.

ChicagoLand: Sweeping School-Closure Plan Squeezes Chicago -- Wall Street Journal; RBN Energy Update On Charitable Group

Another headline story on front page of the Wall Street Journal with huge photo; the story is on page A2: Sweeping school-closure plan squeezes Chicago.

School officials here said Thursday they plan to close 53 elementary schools and one high school, one of the largest mass school closings in the nation's history, as Mayor Rahm Emanuel seeks to fill a gaping budget hole.

Barbara Byrd-Bennett, the chief executive of Chicago Public Schools, said the closings would not be easy, but the city "must make tough choices," and by consolidating schools, "we can focus on safely getting every child into a better-performing school close to their home."

The move to close about 11% of the 472 elementary schools in the nation's third-largest school district this fall sparked anger from the teachers union, some elected aldermen, parents and neighborhood groups who vowed to fight the move. 

The Chicago Board of Education, appointed by Mr. Emanuel, a Democrat, must approve the final plan.

Wanna bet that that plan won't be approved without major revision. Each alderman will vote to save his/her personal neighborhood school(s) and in the end, one or two schools might close. Closing 53 elementary schools in Chicago has as much chance as the US Postal Service shutting down Saturday mail delivery.

Flashback: A gold star for the Chicago teachers strike, September 23, 2012:

After more than a decade of top-down dictates, disruptive school closures, disregard of teachers' and parents' input, testing that squeezes out teaching, and cuts to the arts, physical education and libraries, educators in Chicago said "enough is enough." With strong support from parents and many in the community, teachers challenged a flawed vision of education reform that has not helped schoolchildren in Chicago or around the country. It took a seven-day strike—something no one does without cause—but with it educators in Chicago have changed the conversation about education reform.

These years of dictates imposed upon teachers left children in Chicago without the rich curriculum, facilities and social services they need. On picket lines, with their handmade signs, teachers provided first-person accounts of the challenges confronting students and educators. They made it impossible to turn a blind eye to the unacceptable conditions in many of the city's public schools.

Teachers and parents were united in the frustration that led to the strike. Nearly nine out of 10 students in Chicago Public Schools live in poverty, a shameful fact that so-called reformers too often ignore, yet most schools lack even one full-time nurse or social worker. The district has made cuts where it shouldn't (in art, music, physical education and libraries) but hasn't cut where it should (class sizes and excessive standardized testing and test prep). The tentative agreement reached in Chicago aims to address all these issues.

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On another positive note, RBN Energy has a great article on the LPG Charity Fund. 

The Disaster Continues; Wells Coming Off The Confidential List; BEXP Has Another Gusher; American Eagle Has a Huge Well Near The Canadian Border;

I'll get to the wells that came off the confidential list today, but more important things first.

Yesterday this was posted:

Killing coal, killing Keystone XL, and now killing the nation's fuel supply system seems to be the perfect trifecta. It is amazing what one president can do in one term, when his party controls the Senate. He will leave quite a legacy.

To that list one can add another sector that was working until this administration came along: the health care. Today, the headline story, front page, Wall Street Journal, Health Insurers Warn on Premiums.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation's biggest firm projecting that rates could more than double for some consumers buying their own plans.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate. 

The House sees the debacle coming down the road, but the House is powerless. Cue up Connie Francis. 

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Okay, now the wells coming off the confidential list today:

21557, drl, QEP, MHA 1-31-36H-150-92, Heart Butte,  this is a short little lateral, the well file report is not available;
23320, 3,611, BEXP, Porter 35-26 2H, Alexander,  t1/13; cum 18K 1/13;
23375, 669, EN-Ortloff 156-94-2635H-3, Big Butte, t2/13; cum 4K 1/13;
23465, 851, American Eagle Energy, Haagenson 3-2-163-101, Colgan, t12/12; cum 39K 1/13;

It will be interesting to the results of the Ortloff well above compared to its sister well reported earlier this week:

• 23374, 8,683, 863, Hess, EN-Ortloff 156-94-2635H-2,  Big Butte, t2/13; cum 17K 1/13; [UPDATE: a reader just sent me a note: NDIC updated the error. The IP is now being reported as 863 bbls.]