Wednesday, June 5, 2013

Add The Chinese To The List Of "Everyone" Looking To Drill The Arctic For Oil

Back on May 11, 2013, it was noted that "everyone" except the US was looking to drill for oil in the Arctic:
President Obama won't have to worry about any "conflict" in the Arctic. As long as the US stays out, the Canadians, Danes, Norwegians, and Russians will be more than happy to split the spoils. If the president can't even come to a decision on a pipeline, he will never come around to a decision on the Arctic.
It turns out that "everyone" will include two more countries: Iceland and China. Rigzone is reporting
China National Offshore Oil Corp., or CNOOC, is partnering with Iceland's Eykon Energy in an application for a license to explore and produce oil and gas in Arctic waters offshore Iceland, the country's hydrocarbon licensing manager told Dow Jones Newswires Wednesday.
If the application is successful and a license is awarded, it would mark the Chinese company's first foray into offshore Arctic oil drilling, a new area the industry's biggest players are scrambling to enter in efforts to replenish reserves, but which has become increasingly controversial.
And so it goes. It looks like the table will be set for six: Russians, Canadians, Danes, Norwegians, Chinese, and the Icelanders. The US will most likely be a spectator.

PetroChina Will Out-Spend XOM This Year

Wall Street Cheat Sheet is reporting:
For the first time since the 1980s, Chinese oil company PetroChina is expected to outspend Exxon Mobil Corp., according to data collected by analysts at Barclay’s. 
Spending for oil companies worldwide is expected to skyrocket this year. Barclay’s estimated oil companies will spend $678 billion globally in 2013. That figure is up 10 percent from last year. Most of the money will be used for expanding international markets.
PetroChina is expected to spend $36.6 billion in the next year, coming out ahead of Exxon Mobil’s expected $33.9 billion. 
The companies’ actual spending will likely exceed the estimates, as Barclay’s only underestimated oil spending once. That mistake occurred in 2010 after the Deep Water Horizon accident that put a freeze on drilling in the Gulf of Mexico.
A Note to the Granddaughters

The two of you attended an elementary school in a suburb of Boston for the past several years.  I am told that one of Mitt Romney's children attended kindergarten at the same school, although I did not confirm that; it could simply be a rumor. The school has a lot of children of foreign parents who are visiting professors or students at Boston-area universities. There are a lot of Chinese, for example.

Your two closest friends, Kiki and Angie, are half-Chinese. Their Chinese maternal grandparents were both engineers and worked for PetroChina their entire lives. Upon graduation from her university in China, their mom was accepted to a prestigious university in Massachusetts, and ended up marrying a New Jersey native who is not a software programmer for a technology company. Their Chinese mother is in the same field of work, but working at a different company now. [She is now an American citizen; she says she paid into social security even when she was not yet an American citizen. Just a side note.]

Last night I had the opportunity to talk at length with the Chinese mother about growing up with parents who both worked for PetroChina. She, of course, did not understand the oil operations, or the engineering, but she shared a lot of insight regarding the culture and the experience of growing up in an "oil family" in China. Very, very fascinating.

I also got some basic questions about the Chinese language answered about which I have always been curious.

Only One (1) New Permit -- The Williston Basin, North Dakota, USA; Eight (8) Producing Wells Completed; Oasis Has A Number Of Good Wells Coming Off Confidential List Thursday

Active rigs: 191 (interesting, moving up, higher end of range). The post-boom high was 194, hit on May 15, 2013. The post-boom low was 179. Active rig milestones are tracked here.

One (1) new permit --
  • Operator: Whiting
  • Field: Sanish (Mountrail)
  • Comment: Hmmmm.....
Wells coming off confidential list were posted earlier; see sidebar at the right.

Eight (8) producing wells completed:
  • 22585, 1,429, Statoil, Lonnie 15-22 4TFH, Ragged Butte, t4/13; cum --
  • 22915, 1,136, Statoil, Roger Sorenson 8-5 2TFH, Alger, t4/13; cum --
  • 22916, 1,972, Statoil, Roger Sorenson 8-5 3H, Alger, t4/13; cum --
  • 23131, 486, Hess, SC-Norman 154-98-3130H-5, Truax, t5/13; cum --
  • 23425, 1,299, Statoil, Roger Sorenson 8-5 6TFH, Alger, t4/13; cum --
  • 23573, 1,065, Hess, An-Bohmbach 153-94-2734H-5, Antelope, t5/13; cum --
  • 23825, 1,008, Hess, EN-State D 154-93-2635H-4, Robinson Lake, t5/13; cum --
  • 24211, 219, SM Energy, Jeglum 3-29HNA, Colgan, t4/13; cum --
Three (3) permits canceled:
  • 19330, PNC, Whiting, Gorrell 11-34TFH, Bicentennial, Bakken, McKenzie
  • 21074, PNC, Whiting, BSMU 2005, Big Stick, Billings
  • 23186, PNC, Whiting, Tomchuk 21-17PH, North Creek, Bakken, Stark
Wells coming off confidential list Thursday:
  • 22643, 1,371, Oasis, Emie Federal 5792 24-9H, Cottonwood, t1/13; cum 31K 4/13;
  • 22710, 615, Fidelity, Niemitalo 24-13H, Sanish, t1/13; cum 44K 4/13;
  • 23119, drl, Statoil, Cora 20-17 5H, Poe, no data,
  • 23343, 590, Oasis, Desmond Federal 5792 13-12H, Cottonwood, t12/12; cum 30K 4/13;
  • 23480, 1,174, Oasis, Leanne 5201 41-24B, Camp, t1/13; cum 56K 4/13;
  • 23497, 1,043, Oasis, Mercedes 5502 41-7T, Squires, t1/13; cum 17K 4/13;
  • 23498, 1,058, Oasis, Marlee 5502 41-7B, Squires, t12/12; cum 31K 4/13; 
  • 23527, 1,365, Oasis, Nguyen Federal 5693 44-27T, Alger, t12/12; cum 38K 4/13;
  • 23528, 1,874, Oasis, Bui Federal 5693 44-27T, Alger, t12/12; cum 48K 4/13;
  • 23530, 978, Oasis, Ginny H 5693 41-35T, Alger, t12/12; cum 34K 4/13;
  • 23765, 615, Oasis, Nevis 6092 12-18H, Lucy, t12/12; cum 26K 4/13; 36 stages; 4.4 mill lbs sand;
  • 23860, drl, Statoil, Hovde 33-4 2H, Sandrocks, no data,
  • 23914, 1,554, Oasis, Klevenberg 6093 11-2H, Gros Ventre, t1/13; cum 36K 4/13;
  • 23956, drl, Hess, EN-D Cvancara S-154-93-0904H-4, no data,
  • 24330, drl, Crescent Point, CPEUSC Sylven 11-2-158N-100W, no data,

22643, see above, Oasis, Emie Federal 5792 24-9H,

DateOil RunsMCF Sold

 22710,  see above, Fidelity, Niemitalo 24-13H, Sanish:

DateOil RunsMCF Sold


23343, see above, Oasis, Desmond Federal 5792 13-12H:

DateOil RunsMCF Sold

 23480, see above, Oasis, Leanne 5201 41-24B, Camp:

DateOil RunsMCF Sold

23497, see above, Oasis, Mercedes 5502 41-7T, Squires:

DateOil RunsMCF Sold

23498, see above, Oasis, Marlee 5502 41-7B, Squires:

DateOil RunsMCF Sold

23527, see above, Oasis, Nguyen Federal 5693 44-27T, Alger:

DateOil RunsMCF Sold

23528, see above, Oasis, Bui Federal 5693 44-27T, Alger:

DateOil RunsMCF Sold

23530, see above, Oasis, Ginny H 5693 41-35T, Alger:

DateOil RunsMCF Sold

23765, see above, Oasis, Nevis 6092 12-18H, Lucy:

DateOil RunsMCF Sold

23914, see above, Oasis, Klevenberg 6093 11-2H, Gros Ventre:

DateOil RunsMCF Sold

CVX Investors: Remember This Date -- June 5, 2013

On Wednesday, June 5, 2013, the Argentine Supreme Court lifted an embargo on $19 billion-worth of assets held by Chevron’s subsidiary in the Latin American country. -- Forbes, article linked below.

Argentina Supreme Court lifts freeze on CVX assets. MarketWatch is reporting:
Argentina’s Supreme Court has lifted a freeze on Chevron Corp. assets in the country, opening the way for Chevron to invest $1.5 billion to develop a vast oil and gas shale formation in west-central Argentina.
The freeze was a side effect of Chevron’s decades-long legal wrangling with indigenous groups in Ecuador.
The champagne must be flowing in Chevron’s legal department, as it scored a second victory over a legal thorn-in-the-side. Earlier this year, Chevron resolved litigation in Brazil involving a small oil spill.  Production at the field, Frade, has resumed.
A consultant hired by YPF said last year Vaca Muerta holds nearly 23 million barrels of oil equivalent in reserves. The area covers 7.4 million acres, with YPF holding rights for more than 3 million acres.
Initial results have shown the area to be 70% oil — more lucrative.
Forbes calling it Chevron's dream:
Argentina’s relationship with the global economy has become immensely complex since the 2001-2 default. In its attempts to develop what could potentially be one of the most important global hydrocarbon discoveries of the past several years, the Argentine government has sought to close a deal with Chevron, through recently nationalized oil company YPF. And, in order to close that deal, they had to tie a few loose knots.
The Supreme Court reversed a ruling on Wednesday that came through an appeals court which froze Chevron’s assets in Argentina in connection to alleged environmental damage in the Ecuadorian rain forest.  The original suit goes back to 1993, when U.S. lawyers asked for a class action in favor of 30,000 residents of the Ecuadorian Amazon near the Lago Agrio oil field, accusing Texaco of environmental damage, according to Argentine daily Ambito Financiero; Chevron bought Texaco in 2001.
As Chevron has no assets in Ecuador, the plaintiffs pursued suits in Canada, Brazil, and Argentina to secure assets to pay for damages.  Basing his decision on an international treaty between Argentina and Ecuador, Judge Adrian Elcuj Miranda gave way to an Ecuadorian court’s ruling, ordering an embargo of Chevron’s Argentine subsidiary’s assets, dividends, and 40% of future bank deposits worth approximately $19 million (mirroring a ruling in Ecuador).
In a five page ruling, the Argentine Supreme Court unanimously agreed to lift the embargo, noting Chevron Argentina and the other involved entities were separate from Chevron Corporation, and therefore not parties to previous litigation.  The Argentine Supreme Court’s decision followed a Canadian court which on May 1 said it had no jurisdiction, therefore securing Chevron’s assets in Canada.
Just a month ago, Canada told the plaintiffs to go elsewhere, as noted above.

Let's see Brazil, strike one. Canada, strike two. Argentina, strike three. 

Disclaimer: this is not an investment site. Do not make investment decisions based on anything you read here or think you might have read here.

For Investors Only: Helmerich & Payne Triples Their Dividend

Helmerich & Payne increases quarterly dividend to $0.50 per share from $0.15 per share.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you might have read here.


Take My Breath Away, Berlin, Top Gun

Peak Oil? What Peak Oil? Possible Oil Glut in 2014 -- Raymond James


Later, 7:35 pm:  I received a note from a reader suggesting that Saudi fields may be depleting, citing an analyst's newsletter. In that analysis it was noted that Saudi produces 89% of their oil from five (5) fields which are now 56 years old, and are starting to show signs of depletion.

It's hard for me to believe that fields that are 56 years old aren't show their age (no pun intended). I am in the camp that believes that Saudi cannot ramp up as fast as they say they can. I talked about that many, many times early in the blog, but haven't talked about it in a long time. This was a very interesting post about this subject.

Original Post
For the archives. From SeekingAlpha.
Stepping away from the pack, Andrew Coleman of Raymond James Equity Research is making a contrarian forecast for an oil glut in 2014. Shale oil production is on the ascent, with the United States joining Saudi Arabia on the supply side, while China's hunger for oil may be sliding and demand in developed countries remains in decline. In this interview with The Energy Report, Coleman explains his thinking and names the producers best positioned to capitalize on the turbulence ahead.
The Energy Report: Why are you expecting an oil glut in 2014?
Andrew Coleman: Because of the evolution of North American shale oil plays, we are on track to add about 3 million barrels [3 MMbbl] of new supply over the next five years. Yet we know oil demand has been falling across the developed nations and is still weak coming out of the global financial crisis. Those developments point toward a glut.
This linked article is directed toward investors.

Disclaimer: This is not an investment site. Do not make any investment decisions based on what you read here or what you think you might have read here.

Platts Tweet On US Production Vs Imports

US crude production surpasses imports for first time since 1997, EIA data shows: 7.3 mil b/d last week, compared to 7.268 mil b/d in imports.


Dukes of Hazard Theme Song, Waylon Jennings

For Investors Only -- For The Archives -- I Don't Follow

Summit Midstream Partners announces $460 mln of acquisitions in Bakken and Marcellus Shale plays; raises 2013 Adj. EBITDA and distribution guidance as a result: Co announced two separate acquisitions of unrelated natural gas gathering systems totaling $460 million in the Bakken and Marcellus shale plays.

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

34 Acres, $1.3 Million, Dickinson Interstate On-Off Ramp, Exit 59 -- Near The MDU-Calumet Refinery

The Dickinson Press is reporting
Five Diamond Fund Managers will pay just more than $1.3 million for 34 acres of real estate that will represent about one-third the land mass of a large-scale, mixed use development, [near Interstate 94’s Exit 59] said Five Diamond spokesman Brian Hymel.

“We believe this is the best piece of property in all of southwestern North Dakota,” Hymel said after the auction.
This ramp is relatively near the new MDU-Calumet refinery going up southwest of Dickinson. But I believe the MDU-Calumet refinery is west-north-west of Patterson Lake, west of exit 59. Northwest of Patterson Lake is a CBR terminal easily visible on Google maps.

A reliable source tells me the exit 59 parcel is 3 miles east and 1.5 miles north of the refinery. So, now you know as much as I do. My hunch: they are going to put in a 34-acre drive-through Starbucks. And casino.

Canadian National Railway Advancing Timeline On Rail Upgrades To Accommodate Bigger Rail Sand Cars; Winona County, MN, Approves New Sand Mine -- First After Moratorium Ended


August 30, 2013 Minnesota County approves another sand mine over local activist environmental objections; still requires state approval.
Original Post
Two stories here:

First story: A reader tells me Winona County, Minnesota, approved a new sand mine this past week. [Just after posting that note, a reader sent me the link. Thank you.] News8000 is reporting:
Winona County commissioners voted 3-2 in favor of allowing the first frac sand mine in the county.
The initial application for the 20-acre mine in Saratoga Township was denied after the county imposed a moratorium on frac sand mining in 2012. A second application was submitted after the moratorium expired.
The county commissioners approved a permit that includes 37 conditions such as air quality requirements, road use restrictions, and times of operation.
Second story/link sent by same reader. The LaCrosseTribune is reporting:
Canadian National Railway is fast-tracking a $33 million rail upgrade near Whitehall to accommodate the booming frac sand industry.
The railroad had planned to improve its lines in the area over the next four years but is shortening its timeline to quickly allow for more sand to travel its tracks.
Frac sand mining has exploded in Wisconsin since 2010, when the state had just a handful of permitted mines. There are now more than 100, and western Wisconsin has been ground zero for the boom.
The new lines would allow for heavier loads — a single car could haul up to 286,000 pounds of frac sand, said Mark Hallman, CNI’s director of communications and public affairs.
EOG is now using 10 million pounds of sand for a single long lateral frack: 10 million/286,000 lbs = 34 new larger cars.

Flashback, March 11, 2012
Just last month, dozens of Winona residents took to the street near the heart of downtown, waving protest signs in front of a 50,000-ton pile of sand they derisively call Mount Frac. "Short-term profit, long-term problems,'' read one placard.

Job Watch -- Job Growth Has Slowed

I haven't read the story, just the headline. The private sector added 135,000 jobs in May.

As you know, I am never impressed with the jobs report. Two comments:

First: with regard to the "added" jobs: before the recession recovery never took hold, the "magic number" for "new jobs added" was 200,000. Then it was lowered to 125,000.

Second comment: yesterday on CNBC the talking heads were pretty much in agreement that anything less than 150,000 would be a "bad number."

So, regardless how Reuters spins this story, a number of 135,000 is a "bad" number.


Okay, now, I've read the story. I was correct: the analysts had forecast 165,000. 

135,000 is a bad number.  But not a horrendous number.

The 88,000 jobs added in March was a horrendous number. And in April, not a whole lot better: 113,000 (and that was revised downward from the previously reported 119,000).

It goes without saying that the original figures for both "new jobs" and "news jobless claims" are always better than the revised numbers. The administration has learned that folks never pay attention to "revised" figures; people don't pay attention to "corrections" it the newspaper either. It's human nature. We are always moving on. Week-old data is just that: a week-old. And everyone knew the number would be revised anyway. James Gleick's book The Information provides background to this phenomenon: predictable/predicted data is not information.

We will close with this boiler-plate quote: "We continue to see expansion of the workforce ... but growth has slowed since the beginning of the year."

Wednesday Morning News And Links

Active rigs: 189 (steady)

RBN Energy: Alaskan North Slope getting its mojo back?
This week BP announced plans to spend $1 Billion increasing production at the company’s Prudhoe Bay Alaska field. Years of declining Alaska North Slope (ANS) crude output have threatened state oil revenues and the safe operation of the Trans-Alaskan pipeline system  that transports crude to the southern Port of Valdez. A new tax regime offers more upside potential to encourage producers like BP to invest. There is still a market for medium sour crudes like ANS on the US West Coast and in Asia. However Alaskan producers must overcome regulatory hurdles to compete successfully in these markets and competition for their drilling dollars from shale boom plays in the lower 48. Today we review the prospects for an ANS production renaissance.
WSJ Links

Section D (Personal Journal):

Section C (Money & Investing):

Section B (Marketplace):
Delta to cut flights, jobs at Memphis hub
Delta Air Lines Inc. informed employees at its Memphis, Tenn., hub on Tuesday that it plans to shrink its operations there, as high fuel costs hamper the efficiency of regional jets.
Atlanta-based Delta said it intends to reduce the number of its daily flights in Memphis to 60 (from as many as 96) in early September and eliminate 28% of the company's 830 local jobs.
Section A: