Public Service Announcement -- Federal Taxes

Federal taxes for 2013 will include a new tax that could affect a fair number of North Dakotans: the 3.8% investment tax.

• joint filers with income >$250,000 (singles >$200,000)
• an additional 3.8% tax on interest, dividends, and capital gains IN ADDITION to all other taxes due on this income

The WSJ is reporting:

The tax, which took effect January 1, applies to the "net investment income" of married joint filers who have more than $250,000 of income (or $200,000 for singles). Only investment income—such as dividends, interest and capital gains—above the thresholds is taxed. The rate is a flat 3.8% in addition to other taxes owed.

"Affluent investors who ignore this tax will be in for a total shock next April 15," says David Lifson, a certified public accountant specializing in tax at Crowe Horwath in New York. Such income is typically not subject to withholding, and people won't be factoring it into their estimated taxes. Lower-bracket taxpayers who receive a windfall large enough to owe the tax will also be in for a surprise.

The linked story goes into much more detail. 

Six (6) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 187

Six (6) new permits --

• Operators: QEP (4), Statoil, American Eagle
• Fields: Grail (McKenzie), Colgan (Divide), Briar Creek (McKenzie)
• Comments: QEP has permits for four (4) more wells in the "Helis Grail"

Again, second day in a row, NDIC did not release initial production numbers for wells coming off the confidential list.

Producing wells completed:

• 21419, 535, CLR, Lovdahl 3-16H,  Sauk, 4-section spacing;  t4/13; cum --
• 24730, 578, Whiting, Finsaas 31-16-2H, Hay, t3/13; cum cum --
• 24728, 1,461, Whiting, Lacey 12-12H, Sanish, spacing is ICO,  t3/13; cum --
• 22406, 737, Oasis, Mitbo Federal 6092 42-14H, Cottonwood, t3/13; cum --
• 24557, 890, Whiting, Ogden 12-3-2H, Sanish, t4/13; cu --
• 23810, 825, Whiting, Tank 31-18H, Dollar Joe, t3/13; cum --

Note: Sauk oil field is pretty much 4-section spacing.

Random Update Of Chevy Volt Sales: Tesla Cannibalizing Chevy Volt Sales

Last October 2, 2012 (updated from the original January 5, 2012 post): August and September have been great months for auto sales, including the Volt:

With 2,831 sold, August was a good month for sales of the Chevrolet Volt. In fact, it was the most Volts sold in the U.S. in a single month, ever. Critics questioned whether those sales were legitimate, but there's no question the Volt is on a roll. Could Chevy orchestrate a repeat? September has answered that question with a resounding yes, and then some: GM sold 2,851 Volts last month. In September 2011, Chevy sold 723 Volts. With 210,245 vehicles sold across all brands, GM says that this was the best September, U.S. sales-wise, since 2008. [2,851 / 210,245 --> 1.3%. Pretty impressive.]

So, last autumn, GM sold about 5,700 Chevy Volts in two months.

How did GM do in 1Q13?

In an article comparing 1Q13 Tesla sales with the Chevy Volt and the Leaf, Bloomberg is reporting: 

Tesla expects to report at least 4,750 deliveries of the electric Model S in the U.S. and Canada when it releases first- quarter results on May 8, said Shanna Hendriks, a company spokeswoman, reiterating a March 31 estimate. That compares with 4,421 Volt sales in North America and 3,695 deliveries of Nissan Motor Co.’s Leaf, based on data provided by the carmakers.

So, 5,700 Volts in two months last autumn; 4,400 Volts in the past three months, albeit slow months for car sales.

TransCanada Pushes Back In-Service Date for the Keystone XL As Late As End Of 2015

The Oil & Gas Journal is reporting:

TransCanada Corp. is pushing back the in-service date for its Keystone XL pipeline from late-2014 or early-2015 to second-half 2015.

The move follows on-going delays in issuing the US Presidential Permit for the project and comes just days after Canada’s Natural Resources Minister Joe Oliver remarked at the Center for Strategic and International Studies in Washington, DC, that stopping Keystone XL construction would not keep Alberta’s oil sands resources “in the ground.”

Hope springs eternal.

24 Wells On One Pad May Be Coming; Three Orders Have Been Signed For 18 Wells Per Pad

The other day I had a piece on what we would be discussing this summer. One of the things mentioned was up to 24 wells on one 2560-acre spacing unit and 12 wells on one pad. I had not seen that in any specific article, but I was simply projecting based on what I was seeing in the NDIC hearing dockets.

Then the Williston Wire, today, linked an article from Petroleum News Bakken:

In terms of well density per pad, Helms said the largest number of wells on a single pad thus far is 14, although not all of those 14 wells are yet on production. But he added that three orders have been signed approving 18 wells per pad, which is the highest number approved to date.

In addition, Helms said he knows of some proposals that will be submitted in coming months to attempt several 24-well pads. “It is a positive thing,” he said, “because it decreases the footprint, increases the production and allows us to recover more of the Bakken and Three Forks oil.”

"Three orders for 18 wells/pad." I don't know if that is three separate orders for six wells each on the same pad (a total of 18 wells on that one pad), or if it is three separate 18-well pads (56 total wells).

Time for a new poll.

But first the results of the current two polls:

First poll: Where will the next natural gas processing plant be located:

• northeast McKenzie County, in Watford City area: 36%
• on the Fort Berthold Indian Reservation: 12%
• just off the reservation, to the west: 10%
• western Mountrail County, in the Stanley area: 24% (MDW voted this choice)
• in Whiting's Pronghorn Prospect, Stark County: 17%

Second poll: On the morning of August 14, 2013, how many active rigs will there be in North Dakota as reported by the NDIC?

• 190 or fewer: 25%
• 191 - 200: 31%
• 201 or more: 44%

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Now the new poll:

Lynn Helms recently said: "three orders have been signed approving 18 wells per pad, which is the highest number approved to date."

Who will be the first to drill 18 wells on one pad (the choices will be placed in reverse alphabetical order):

• CLR
• EOG
• Hess
• Slawson
• QEP
• XTO 

[Note: some readers may have noted I did not include one of the five in the original poll a few minutes ago. I consciously did not include one of the five first time around, but a reader alerted me to the fact that I was wrong to have left one out.]

Williston Wire -- Book Recommendation on North Dakota

Headlines only; it is easy to subscribe to the Williston Wire.

Job seekers continue to flock to Williston.

ND oil production still on the rise.

USDA to make it easier to qualify for home in the oil patch.

Williston implement dealer to close after 23 years; can't find workers to staff his business.

Editorial: the oil patch in the west also greatly (positively) impacts the Red River Valley on the east.

New book: Northern Utopia: Rebirth of American Dream, Mat Chaudry -- a must-have guide book for folks moving to North Dakota. 

Tesoro and Savage announce joint venture to construct/operate a CBR terminal at Port of Vancouver.

Williston Basin exports by rail surpass 70%.

Evolution continues: densities could reach 24 wells/pad; 6,000 wells over next three years.

Continental Resources' Three Forks Third Bench is a significant development in the Bakken. [Comment: until I see more, I equate this with the enthusiasm  we saw for the Tyler.]

ND state auction: May 7. 14,808 acres; 195 separate tracts; 13 counties; average tract: 76 acres.

Paddlefish season to open May 1.

2012 - 2013 Proposed Energy Corridor For The United States

At CleanEnergy. 

A Note To The Granddaughters

I always loved maps as a kid and the map at the link has me really excited. One just feels that the United States is the tipping point of a huge manufacturing burst due to the advantage we hold over Europe and Asia. It appears that no matter how hard the administration and activists try to slow the growth of the United States, America's growth will continue. Although the GDP was not great this morning, going from 0.4 percent to 2.5% is huge.

One could argue that there might be a "snowball rolling downhill" effect as each day passes and we get closer to the next presidential election. I'm not thinking of any actual policy changes, or changes coming out of Washington, but just a feeling of anticipation, excitement.

I assume that it is very much like the anticipation, enthusiasm that 47% (maybe more) of Americans felt when George W. Bush's second term was coming to an end. Right, wrong, or indifferent, many Americans were looking for a change. I think that the same anticipation and excitement will start to become more evident going forward. Even members of his own party, contemplating running for presidency probably understand Americans like "morning in America" speeches better than the "malaise in America" speeches, and that enthusiasm is infectious.

With OPEC no longer holding America hostage and cheap energy to boot, we certainly could be at a tipping point.

Or maybe I'm simply in a hyper-manic stage 'cause I'm back in Texas.

Which reminds me. I think I saw a headline over at Drudge linking Peggy Noonan. Here it is: the Obama fatigue factor, at the Wall Street Journal. I have not read the article, except what I saw in the first sentence while putting up the link, but my hunch is that her thoughts and my thoughts complement each other.

Ice Gas (No, Not North Dakota) -- Another Incredible Energy Story And Moves Peak Fossil Fuel Curve To The Right

I happened to come across this story while browsing the news stands at Chicago's O'Hare's airport yesterday. It might have been The Atlantic Monthly; I forget which publication. Doesn't matter. Rigzone is reporting:

The news in early March that a Japanese company had finally successfully extracted natural gas from methane hydrate deposits under the seabed offshore Japan was hailed as a breakthrough for the energy industry around the world. There are large deposits of methane hydrate, or "ice gas", in several locations around the planet which means, if successfully exploited, they could bring to many regions around the world the low gas prices currently seen in North America as a result of the shale gas boom.

Japan Oil, Gas and Metals National Corporation reported March 12 that it successfully extracted natural gas from methane hydrate deposits from around 1,000 feet under the seabed offshore Japan.

Methane hydrate is a compound in which a large amount of methane is trapped within a crystal structure made up of water, so forming a solid that is similar to ice in its composition (although it looks like slush). For methane hydrate deposits to form the right conditions in terms of pressures and temperatures are required.

A Feel-Good Story On The Bakken From The Minot Daily News

A feel-good story from The Minot Daily News: 

Some excerpts:

Sandstrom said with the current technology, each well is expected to produce for about 30 years, and each one will produce about 550,000 barrels of oil.

"It costs approximately $10 million to drill a well, according to our last economic impact survey," she said. "Each one garners about $20 million net profit. It pays about $4.4 million in taxes, $7.6 million in royalties, $1.6 million in salaries and wages and considering that we have 8,500 wells operating, those numbers add up."

When the group did its first economic impact study in 2005, she said it showed about a $4.4 million impact on North Dakota's economy. She said that has increased now by almost 600 percent to $34.4 billion.

There are about 40,856 industry jobs in North Dakota, she said. Along with the roughnecks, truckers and others working with the drilling and other operations in the oil patch, she said it includes legal services, administrative, communication professionals, human resources everything that might be supporting the oil and gas industry.

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

A Note To the Granddaughters

Don alerted me to this story in CNN about the quick reaction force to be stationed at Moron Air Base, Spain.

This quick reaction force at Moron AFB, Spain, is really, really interesting.

I am quite familiar with Moron Air Base. It was one of several poor step-children of the US military when we were assigned overseas. The base became less and less vital as the Cold War wound down.

I visited the base once. It is near the home of famous Seville steel. I think their workmanship deteriorated over the centuries (or others got better). I think the USAF Academy swords come from Germany now; at least at one time they did.

I threw almost all my USAF memorabilia away when I retired. I had moved on, never wanted to look back at the USAF. Pretty much lost all contact. Not that I disliked the Air Force. I loved it. But I didn't want to look back; I only wanted to look forward.

But I did keep a few things. The two pieces of memorabilia that I treasure most I will give to my younger daughter (who has asked from them). They are: a) my F-15 helmet; and, b) my USAF sword. Technically it's not a USAF sword. It was not made for the Air Force. A German secretary had it made especially for me at the German factory when I was stationed there. I knew nothing about it until I was reassigned and she gave it to me as a going-away present. It is engraved with my name, etc., and is a spectacular piece of workmanship. I can't even begin to imagine how much hospital personnel must have contributed to acquire it in the first place.

But I digress.

This article is really about the US military had a quick response team in southern Spain to cover northern Africa. The article noted that the US Marines can respond without getting okay from any government (including Spain, I assume), and that has to be huge. I'm sure Spain has some close friends in northern Africa and to allow US to base out of Spain .... a big deal.

I wouldn't be surprised if the Spanish economy made it easier for the Spaniards to say "si" to the American proposal. The Americans will spend a lot of money in that area.

GDP: All That Talk Of 3.5% Or Thereabouts. Not To Be: A Good But Not Great Number: 2.5%

At least it's believable. Unlike some numbers we've been getting out of Washington lately. Will it be revised up or down?

CNBC guest:

• consumption number strong, but not going to last.
• inventory build: likely picked up; also not going to last

The CNBC folks didn't sound too excited. But it sure beats what is going on in Europe.

Rick Santelli points out something we forget: the underground economy. 

Actually I'm very happy with the number. It's believable. It's sustainable.

WTI-Brent Spreads

Reuters is reporting:

Brent crude oil slid below $103 a barrel on Friday after rising $3 in the past two sessions as investors were cautious over the tepid outlook for growth in the world's two largest oil consumers, the United States and China.

• Brent: slightly lower than $103
• WTI: $93
• Spread: $10 

Source: Bloomberg

Another Solar Company Goes Bust: Oregon Taxpayers Funded; US Taxpayers Did Not Fund

The Oregonian is reporting:

SoloPower, the startup pitched as the most innovative player in Oregon solar manufacturing, will suspend its Portland operations in June and gut its remaining workforce.

It's unclear whether production will ever start back up, or whether the state will recoup millions of dollars in incentives meant to fuel the company's growth and create hundreds of well-paying jobs.

The development apparently came as a surprise Monday to the two state agencies charged with tracking its performance.  

Solar industry analysts, though, have long anticipated its demise. They point to its rush to market -- hurried along by eager government officials and private investors -- with an expensive product that was only partly developed, and just as the solar market was tanking.

"It's really so unfortunate," said Paula Mints, founder of SPV Market Research in San Jose, Calif. "I do feel bad for the SoloPower people and for the loss of jobs in Oregon."
The California company's Portland operation was already on the decline. SoloPower executives and public officials had projected the first manufacturing line would start up in early 2012, with enough work to keep 140 employees busy. Once the planned $340 million factory was complete, its workforce was to grow to 450. 

Actually I don't think they are all concerned about jobs. The map shows this operation on the Oregon side of the river, near the Port of Vancouver. There are opportunities to increase the business at the Port of Vancouver but because it involves coal and/or crude oil, activists are trying to prevent this.

Friday Morning Links

Minimal blogging today; traveling; working.

Active rigs: 187 (steady)

RBN Energy: 2012 natural gas power burn

Last year natural gas power burn increased by 6 Bcf/d over 2011. This year power burn levels in the first quarter were down 10 percent from 2012. Peabody Energy reported last week that coal consumption for generation is growing this year versus 2012. Today we ask whether 2012 power burn was an anomaly and what we should expect in 2013.

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

WSJ Links

Section M (Mansion): I don't read.

Section D (Arena): later

Section C (Money & Investing):

• Heard on the street -- answer to smog in China: buy more SUVs.

China's middle-class consumers see SUVs as a status symbol and view them as a safer option on the country's notoriously dangerous roads, says China auto analyst Michael Dunne.

Ironically, air pollution might be playing a part, too.

China's government rolled out new fuel-efficiency regulations last month aimed at the country's air-quality problem. A quirk in those rules could juice the SUV market, says Bernstein auto analyst Max Warburton. Fuel-economy targets based on different car weights—including easier targets for heavier vehicles—mean manufacturers have an incentive to make more SUVs, Mr. Warburton says.

Section B (Marketplace):

• Pilot Flying J restraining order sought 

• Chilly North Sea comes back to life

• XOM's output falls again; US production increases by 2% due to the Bakken; overall global production drops for seventh consecutive quarter

• US, China boost Starbucks

Section A:

• Theory of Einstein's proved right -- again

• Kurdish group to pull its armed units from inside Turkey

• Europe's unemployment problems worsen

• Op-ed: nearly sideswiped by another green car 

For an excellent study in how green-energy cronyism works, look instead to the near miss (for taxpayers) of Next AutoWorks. That startup applied for a $320 million federal loan guarantee in 2009, promising a Louisiana factory that would produce cheap and fuel-efficient cars.

Next didn't, ultimately, get its loans. It wasn't from a lack of political lobbying. Emails referenced in a House Oversight subcommittee hearing this week confirm every suspicion about the degree to which powerful moneymen worked the system on behalf of their investments, pushing their political contacts to roll over Energy's credit department.

Next AutoWorks—founded in 2006 as V-Vehicle—was a green darling. It was backed by heavyweights like Google Ventures and T. Boone Pickens, though its star investor was Silicon Valley's Kleiner Perkins, which (back then) was making a huge green play. The venture capital firm had made an art of lining up its portfolio companies—Next, Fisker, AltaRock, Agrivida, EdenIQ—for President Obama's green handouts. It hired insiders like Al Gore, and its partners donated some $2 million to 2008 political campaigns—mostly to Democrats.

Minimal Blogging For Next Few Days

For Investors Only: NOV and CVX Report Tomorrow

National Oilwell Varco, analysts expect $1.36; before the market open.

Chevron, analysts expect $3.07; before the market open.

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

Active rigs: 187

Thirteen (13) new permits --

• Operators: Marathon (7), CLR (6)
• Fields: Sauk (Williams), Bailey (Dunn), Big Bend (Mountrail), Reunion Bay (Mountrail)
• Comments: it looks like the CLR permits in Sauk oil field will be 2560-acre spacing, three running south, three running north

The NDIC did not report any wells coming off the confidential list today. (?)

Producing wells completed:

• 22452, 1,168, MRO, Brent Kerr 21-17H, Lake Ilo, t3/13; cum --
• 24740, 1,753, Whiting, Lindseth 21-1H, Sanish,  t3/13; cum --
• 24123,1,368, XTO, Mariana Trust 12X-20G2, North Fork,  t3/13; cum --

Wells coming off the confidential list Friday:

• 23622, drl, Abraxas, Lillibridge 20-17-1H, Pershing,
• 23828, 525, American Eagle, Muzzy 15-33S-164-101, Colgan, t3/13; cum 12K 3/13;
• 23856, drl, CLR, Salo 7-35H, Hamlet,
• 23864, 50, Hunt Oil, Hawkeye 1-35-26HTF, Bluffton, t3/13; cum --