Tuesday, June 25, 2013

For Investors Only

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.

Two stories on Emerald, sent to me by Don.

A short note on EOG.

"Snapshots" of operators in the Bakken are posted here

First Emerald:
Second, EOG:
It's time to readjust portfolios towards energy to remain safe in more turbulent bond and stock markets, TheStreet's Dan Dicker writes; investing in a staple commodity requires buying staple-like oil companies, especially E&P names that can monetize a sticky and high price for oil. Yield generators such as XOM and CVX will lag, while higher beta names such as APC, NBL and EOG will outperform. 

Eight (8) New Permits -- The Williston Basin, North Dakota, USA; Several Big Wells Reported Today; Two Wells Coming Off Confidential List Wednesday (CLR Should Be Reporting A BIg Well) -- June 25, 2013

Active rigs: 187 (steady)
Eight (8) new permits --
  • Operators: Statoil (6) , QEP (2)
  • Fields: Banks (McKenzie),  Grail (McKenzie)
  • Comments: I'm sure glad Statoil decided to slow down in the Bakken, to take a longer strategic view.
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Two Denbury permits (#16907 and #23137) were canceled.

Seven (7) producing wells were completed:
  • 21723, 477, Hess, BW-Ethyl Larson 149-100-0805H-1, Ellsworth, t6/13; cum --
  • 23116, 2,176, Statoil, Cora 20-17 6TFH, Poe, t5/13; cum --
  • 23434, 2,044, Statoil, Roger Sorenson 8-5 5H, Alger, t5/13; cum --
  • 23545, 2,446, Statoil, Albert B. 27-34 3H, Nameless, t5/13; cum --
  • 23118, 1,563, Statoil, Cora 20-17 3TFH, Poe, t5/13; cum --
  • 24120, 2,405, BR, Blegen 34-24MBH, Blue Buttes, t6/13; cum --
  • 24119, 2,981, BR, Blegen 34-24TFH, Blue Buttes, t6/13; cum --
Wells coming off the confidential list Wednesday:
  • 23477, 493, CLR, Durham 2-2H, North Tobacco Garden, t4/13; cum 166K 10/14;
  • 23973, 2,995, Statoil, Rose 12-13 2TFH, Avoca, t8/13; cum 97K 10/14;

23477, see above, CLR, Durham 2-2H, North Tobacco Garden,

DateOil RunsMCF Sold

Today's Big Energy Story: The President Appears To Tie The Keystone XL Project With His "War On Coal"; Also, Update On Two New Grocery Stores In The Bakken

Under time pressure, so will come back to these stories to comment later in the week, when I get caught up, and if I remember. But here are the stories I need to come back to:

Keystone XL and "War On Coal" Linked
Economic development in the Bakken: two new grocery stores in the Bakken (I think I've posted these stories earlier; there may be some additional data);
Minneapolis-based Oppidan Investment Co. broke ground on two retail developments in North Dakota’s Bakken region last week.
In Stanley, Oppidan broke ground on a 23-acre development that will include Cash Wise Foods, Holiday Station Stores, O’Reilly Auto Parts, Tractor Supply Co. and Main Stay Suites. The first tenant is expected to open in January. Oppidan expects to develop an additional 10 acres adjacent to the site in 2014.
In Tioga, Oppidan broke ground on a 36,000-square-foot Cash Wise Foods that is expected to open in October.

Texas' Next Crude Oil Bonanza -- WSJ

Link here.
The pipelines, all set to come online by the end of next year, mark a new phase in the U.S. oil boom. 
Hydraulic fracturing has pushed U.S. oil output to its highest level in 17 years, but without adequate pipelines, much of the crude has been trapped at storage facilities, including domestically produced light, sweet crude at the massive storage hub in Cushing, Okla. 
Because that Oklahoma crude is relatively stranded, its price is depressed compared with prices of oil stored in other parts of the U.S. and in Europe. But with the new pipelines, as well as increased use of rail cars and barges to move crude, Cushing prices are expected to rebound.
Light, sweet crude at Cushing is now trading at a discount of about $6 a barrel from imported European Brent crude, but far less than the $20 discount in February. Goldman Sachs Group Inc. says the discount could narrow to $5 by the third quarter as more pipeline capacity becomes available.
Another nail in the Keystone XL coffin. 
"We think the U.S. Gulf Coast gets saturated" with U.S. and Canadian crude once the pipelines are completed, said Greg Garland, CEO of Phillips 66, the independent refiner which spun off from ConocoPhillips last year. If that occurs, Mr. Garland said more crude will instead have to move to the East and West coasts by rail. 
The arrival of more U.S. light, sweet crude on the Texas coast is displacing imports of similar crude from Nigeria and Angola, which dropped to their lowest levels in about a quarter of century last year, a concern that was aired at the most recent OPEC meeting in May.

Tuesday Morning Links And News

Active rigs: 186 (steady)

Wells coming off the confidential list have been posted; have to scroll down quite a ways.

RBN Energy: how the new gasoline sulfur rules will affect refineries.

No WSJ links at this time.

I am traveling. I am near Harrisburg, PA. Beautiful trip. Beautiful, beautiful country. More on my trip later. Maybe.

Update On Bakken Crude To California

See related story here.

A reader sent me this story (I couldn't find the link; when I find the link I will post it and will cut the post to highlights only. Until then, enjoy; a huge "thank you to the reader for sending me this):
Refiners in California railed in an average of 4,670 b/d of light, sweet Bakken crude from North Dakota during the first three months of this year, more than doubling average rail receipts of 2,174 b/d during all of 2012, according to the latest data from the California Energy Commission.
California's refineries did not receive any Bakken crude by tanker or barge in the first quarter of 2013, but received a total of 89,462 bl in this manner last year.
In February Bakken receipts by rail reached an unprecedented level of 7,363 b/d before sliding almost 55pc to 3,086 b/d in March. Golden State refiners first received Bakken crude in June 2010.
The erratic swings in Bakken crude import levels seen throughout the state data signal that the formation's crude-by-rail movements are likely manifest shipments that track pricing arbitrage opportunities rather than constant, ratable unit train flows. As pricing for the US crude benchmark, West Texas Intermediate (WTI) falls relative to other global benchmark crudes, opportunities to rail WTI-based crudes, such as Bakken, to markets that refine Brent and Dubai-based crudes emerge. When WTI gains strength relative to other benchmark crudes these pricing arbitrage opportunities narrow.
The current manifest freight cost to rail Bakken crude to Bakersfield, California, from North Dakota is $12.06/bl. August-injecting volumes of Bakken at the Enbridge pipeline-injection hub of Clearbrook, Minnesota, are currently being valued at a $3/bl discount to calendar-month August WTI.
Bakken crude loading onto rail cars in North Dakota are being valued around $1-$2/bl under the Clearbrook price. In the current pricing environment, Bakken could land at Bakersfield at a cost of $8.06/bl over August calendar-month WTI, well under prices for alternative light and medium crudes.
Russia's light, sweet ESPO Blend can be delivered to San Francisco, California, from the Kozmino terminal at a delivered cost of around August WTI +11.51, which is $3.64/bl costlier than Bakken. Medium, sour grade Alaskan North Slope (ANS) crude delivered into the region is currently pricing at an $8.85/bl premium to August WTI, or about $1/bl stronger than Bakken delivered by manifest rail car. Shipments of Bakken crude to California could increase in the coming months as Californian refiners seek an economical replacement for ANS production in their crude slates.
Production of the domestic medium sour, which commands strong prices, has been naturally declining since 1988 when production rates peaked over 2mn b/d to a current average of 489,941 b/d. 
In stark contrast to refiners in California, their Washington state counterparts have already largely developed crude-by-rail infrastructure and currently take between 80,000-100,000 b/d of Bakken crude by unit train shipments at a freight cost of about $7.96/bl, effectively backing out significant pricier foreign alternatives.

There are several proposals underway to bring increased volumes of discounted WTI-based crude-by-rail to California. Plains All American Pipeline will open a 140,000 b/d rail unloading site in Bakersfield during the first quarter of 2014 and US independent refiner Valero has submitted applications with state regulators to build a 60,000 b/d rail terminal at its 135,000 b/d refinery in Wilmington and a 70,000 b/d rail terminal at its 147,000 b/d refinery in Benicia. 
US independent refiner Tesoro plans to move North American crudes over the water to west coast refineries through a 120,000 b/d marine-loading facility in Vancouver, Washington, which is located across the Columbia river from Portland, Oregon. And NuStar is also considering a crude-by-rail project in Vancouver, Washington, where the company has two existing products terminals.

Terminal builder US Development Group will build a 50,000 b/d site at the Port of Grays Harbor on the coast of Washington state that will be capable of handling one unit train per day of North American crude. The crude could be offloaded to barges for transport to US west coast refineries.

The project is one of three crude-by-rail terminals proposed at the Port of Grays Harbor. Westway Terminals and biodiesel refiner Imperium Renewables are also weighing unit train projects involving crude that would expand their existing port facilities