Friday, July 12, 2013

What's Up, Doc?

Rigzone is reporting:
Change is coming to downtown Midland in the form of a new high-rise office tower that was designed by international architect Michael Edmonds and will be built by Midland-based developer Energy Related Properties.
When it opens in 2015, Energy Tower at Midland’s City Center will reach 58 stories into the sky, making it the sixth-tallest building in Texas. Not only will the new tower dramatically transform downtown Midland, but it is also one of the most progressive building projects ever seen in Texas.
The mixed-use Energy Tower will – when completed in 2016 – have more than 990,000 square feet of Class A space. It will combine commercial office space with retail, shopping, dining facilities, as well as a hotel and residential condos. It is LEED-certified, meaning that it has been rated for environmental merits. The new skyscraper, which is being built on a two-block site at a cost of around $400 million, will help meet both Midland and Permian Basin-business needs.
The first commercial oil well in the Permian Basin was completed in 1921. Close to 100 years and going strong; getting its second (or third or fourth) wind. The Bakken is just an infant compared to the Permian.

For newbies: click here to see a graphic comparing the relative size of the Bakken with the Permian. You can't miss the Bakken; the Permian is the small green dot in west Texas.

A Note To The Granddaughters

Thank goodness North Dakota schools do better than this. The Wall Street Journal is reporting:
When the Hempstead Union Free School District, Long Island, put together a summer reading list this year, students and parents were introduced to some unfamiliar new titles.
Among them: "The Canterbury Tale," by Geoffrey Chaucer; "The Lovely Bone," by Alice Sebold; and, most notably, F. Scott Fitzgerald's "The Great Gypsy."
School officials in the Long Island community said Thursday that they had disciplined an employee who made the dozens of spelling errors and typos in the 13-page list outlining recommended summer reading for students.
The list was riddled with embarrassing mistakes. It sheared an "s" off of Frederick Douglass's last name; called the author of "Jane Eyre" Charlotte Bonte instead of Charlotte Bronte; and identified the author of "Animal Farm" as George Ornell, not Orwell.
And, of course, it's not "Bronte," but rather Brontë -- but, ... whatever. That would really be a bridge too far for this school district, it appears.

This is the Hempstead UFSD's mission statement, from their website:
The mission of the Hempstead School District, a Long Island Model suburban-urban culturally diverse public school system is to ensure that students achieve personal growth and academic success and become productive citizens in a global society, by engaging students, staff, family and community in a comprehensive, challenging curriculum and effective instructional program which responds to each student's needs and aspirations in a safe and nurturing environment.

Graduates of this school, no doubt, go on to become news readers:

Asiana Airlines Pilots, San Francisco Crash, 2013

Blame it on the intern. CNN is reporting:
Campbell's apology followed by one day an apology by the National Transportation Safety Board for the "inaccurate and offensive" names that were erroneously confirmed by a summer intern.
"Earlier today, in response to an inquiry from a media outlet, a summer intern acted outside the scope of his authority when he erroneously confirmed the names of the flight crew on the aircraft," the NTSB said Friday in a statement.
Wow, these interns are everywhere. 

So many story lines, but not worth the time or effort. 

The NTSB blaming this on a summer intern. Perhaps KTVU should have gotten a second confirmation ... the "names" were just too obviously made up. 

Gasoline Demand

This is an interesting chart from the US Energy Information Agency (EIA). The graph is at the very bottom of the page at the link.

It looks like "gasoline demand" on a monthly basis for 2012 - 2013 might be lagging slightly -- ever so slightly -- compared to 2011 - 2012, but the four-week moving average (from April, 2013, to July 2013; the red dots/line) is very, very interesting. That's a four-week moving average.

The price of gasoline is set to surge. That should take some wind out of that sail.

I remember folks saying the price of Bakken oil would fall if the Keystone XL pipeline was approved. For all intents and purposes, CBR and pipeline reversals have pretty much eliminated choke points at Cushing, without the need for the Keystone. The result: WTI is close to parity with Brent.

On Track For 2,396 Oil And Gas Permits For CY 2013

Through July 12, 2013, this calendar year: 1,267 oil and gas permits have been issued which extrapolates to 2,396 new permits for 2013. Monday morning that will drop to 2,372 because no new permits will be issued over the weekend.

At this time last year, July 12, 2012, with 1,095 oil and gas permits, the state was on track to issue 2,071 new permits. The actual number of new permits issued in 2012 was 2,251 permits of which about 30 were canceled.

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA; Whiting With Two Gusher

When you look at the Whiting wells in Westberg oil field, note that Westberg is 15 miles northeast of Watford City, right in the bull's eye of the Bakken. The narrative places the Skaar wells in Westberg oil field, but the GIS map server shows them clearly in Twin Valley, one mile to the west. There are three wells on the Skaar Federal pad. These wells are one mile west of the incredible Tarpon Federal well. Two of the Tarpon Federal wells are mediocre at best; 10-stage fracks; the third Tarpon Federal is a record-setter, 30 stages. 

Active rigs: 186 (steady)

Thirteen (13) new permits --
  • Operators: BR (5), Statoil (4), CLR, Petro-Hunt, Fram Operating, American Eagle
  • Fields: East Tioga (Burke), Westberg (McKenzie), West Greene (Renville), Colgan (Divide), Williston (Williams), Noonan (Divide), Charlson (McKenzie)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Four (4) producing wells completed:
  • 22101, 1,041, Petro-Hunt, Thorson 159-94-7A-18-3H, North Tioga, t7/13; cum --
  • 22388, 4,956, Whiting, Skaar Federal 41-3-3H, Westberg, middle Bakken; Pioneer 74 Flex rig; gas averaged 276 through the lateral but spiked to 3,895 units and above; did not see completion data;  t6/13; cum --
  • 22386, 4,456, Whiting, Skaar Federal 41-3-1H, Westberg, middle Bakken; Pioneer 74 Flex rig; gas averaged 484 throughout the lateral, but spikes of 7,000 units and above were noted; did not see completion data; t6/13; cum --
  • 23222, 413, Fidelity, Pavel 14-23H, Zenith, t6/13; cum -- 

ATT To Buy Cricket (Leap Wireless)

The Previously Announced KOG Deal For Liberty Resources Has Closed; Pricier Than Initial Numbers?

It's a little bit difficult for me to sort out exactly how much this deal cost KOG. From the press release:
  • The announced purchase price for the asset package was $660 million. Post-closing adjustments were $52 million, including $31 million in working capital items and $21 million of cash flow adjustments to reflect the acquisition's March 1, 2013 effective date.  The Company paid an additional $20 million for acquisition costs associated with increased working interests acquired by Liberty subsequent to the effective date.
If I interpret that correctly:
  • $660 million was the announced price
  • an additional $52 million to reflect the acquisition's effective date
  • an additional $20 million for acquisition costs
$660 + $72 = $732 million, making this pricey acquisition even pricier.  But again, I may be misinterpreting these numbers.

Mike Filloon used $660 million in his calculations when he looked at the deal: KOG's purchase of Liberty Resources could make or break its 2013.

Looking at share prices today, it's a bit difficult to see how the market views this new information. Maybe next week we will see some clarity. KOG is down 2.4% for the day; OAS is down 0.12%. CLR is flat, and WLL is down 1%.

Pipelines: Oil Spills::Geothermal Energy: Earthquakes. For The Archives

Something tells me we won't be seeing this story again -- it will be conveniently ignored by activist environmentalists....but facts are facts, and geothermal renewable energy projects in southern California are causing small earthquakes along the San Andreas fault.

Some worry that these small tremors could set off the BIG ONE.

And "they" can't have it both ways: if geothermal brine injection is KNOWN to cause earthquakes along the San Andreas fault, the argument that fracking MIGHT caught cause micro-tremors is taken off the table. One can't have it both ways. 

The Los Angeles Times is reporting:
The geothermal power plants at Southern California's Salton Sea don't just produce electricity, they also trigger thousands of temblors not far from one of the West Coast's most dangerous earthquake faults, a new study says.
Research published online Thursday in the journal Science found that as production rose at the Imperial County geothermal field, so did the number of earthquakes. From 1981 through 2012, more than 10,000 earthquakes above magnitude 1.75 were recorded in the area.
"That group of earthquakes …. is connected to the production," said Emily Brodsky, a UC Santa Cruz geophysicist and the paper's lead author.
US Santa Cruz is one of the more avant garde universities in the UC system. We probably won't hear from Emily again, any time soon. Smile.

But there you have it.
The largest quake during the three-decade study period was magnitude 5.1. The vast majority of quakes were small. But they are occurring about 12 miles from the southern end of the San Andreas fault, which seismologists predict will eventually rock the Southland with a devastating temblor.
Researchers wonder if the many small quakes could trigger larger ones on the nearby fault.
And, folks have known this "for decades."
Geothermal power production began in the Salton Sea field, on the sea's southeastern edge, in 1982 and includes one of the largest and hottest geothermal wells in the world. Plants extract superheated water from thousands of feet beneath the Earth's surface and use it to produce steam that drives turbines to generate electricity. The remaining brine is then injected back into the ground.
It has been known for decades that injecting fluids into the Earth can lead to seismic activity. Previous studies have also linked earthquakes to geothermal production.

WTI And Brent Almost At Parity

Link here to Bloomberg

Flashback: June 12, 2013, from Bloomberg via Clearbrook Newsire:
Bakken oil priced in Clearbrook was unchanged at a premium of $15.69 a barrel more than the Plains Marketing LP posted price for Williston Basin Sweet Crude at 4:12 p.m., according to data compiled by Bloomberg. It’s the highest level since Dec. 20.
The spread between the two prices had narrowed in recent months as producers loaded oil directly onto trains headed to refineries on the East, West and Gulf coasts, where waterborne crude is more expensive. About 71 percent of Bakken oil was transported by rail in March, compared to 20 percent by pipe, according to the North Dakota Pipeline Authority.

Irony In The Dreamliner Fire Today: Country Of Origin

The Dreamliner that caught on fire at Heathrow? From Ethiopia.

First country to bring the Dreamliner back on line when FAA approved new battery design: Ethiopia.

And so it goes.

As Predicted By MDW Some Days Ago: Delaying Employer-Mandates Is One-Sided And Likely To End Up In Court

Yahoo!Finance is reporting:
The president himself may have opened the door to those challenges.
Weeks ago President Obama announced a one-year delay in the mandate for larger employers to provide health insurance for workers, or face penalties. Those companies, with 50 workers or more, now have until 2015, instead of 2014, to provide insurance coverage.
Business leaders welcomed the grace period and most Democrats and liberal groups said little. Dr. Ezekiel Emanuel, a health policy expert, wrote in The New York Times that the delay will have little impact on employees because those working for big employers likely already have coverage and those who don’t can still get it from the health care exchanges that start early next year.
But now some Republicans and conservative groups are saying the delay is too one-sided and the law’s requirement should be delayed for employees as well.
Maybe "approval of O'BamaCare" should be tied in with "approval of the Keystone XL." One has to chuckle. The government has spent about 10 years studying the effects of the Keystone XL and still hasn't come to a decision on whether to approve. O'BamaCare was written, not read, and passed, in less than a year. O'BamaCare will change the nation forever and will be bigger than Social Security before it's all over. The Keystone XL will be but one of a thousand pipelines, approved or not approved, when we look back on this debacle ten years from now.

Earlier posts on this one-sided delay:
In the big scheme of things, whether the one-sided inequality ends up in court or now really doesn't matter. Forty-seven percent (47%) of Americans will simply ignore the employee mandate.

Chariots On Fire -- Now -- Parked Airliners; Will They Or Won't They -- Ground The Aircraft

July 13, 2013: UK agency says "no evidence" batteries related to Ethiopian Dreamliner fire

Later, 12:39 pm PDT: The original post was some hours ago. I have not read yet whether the FAA will ground the Dreamliner. It seems to me the company should take the lead on this, ground the aircraft, until this is sorted out. But I guess, as long as the chariots ignite while parked, there may be no need to ground them.
Original Post

The WSJ is reporting:
Boeing Co. shares are falling sharply Friday on word a 787 Dreamliner experienced a fire at London’s Heathrow Airport.
The stock had been up before taking a dive when word of the fire first hit. The reports say the plane was parked when the fire occurred. The causes of the fire weren’t immediately known.
WSJ is reporting no one was on board the 787, which was an Ethiopian Airlines plane, when the fire started. WSJ also is reporting that arrivals and departures at Heathrow have been suspended.
So much for that FAA-approved battery fix.

The New York Times:
Boeing said it was aware of the problem, but neither the airport nor Boeing provided any information about the cause of the fire.
The incident took place about seven weeks after the innovative 787 Dreamliners returned to the skies after being grounded for four months because of hazards with a new type of battery. One of the lithium-ion batteries caught fire on a 787 parked at a Boston Airport on Jan. 9, and another began smoking in midflight a week later, forcing the 787 to make an emergency landing in Japan.
Regulators lifted the grounding orders after Boeing came up with a plan to refit the first 50 to 60 of the new jets with more insulation between the battery cells and a new system for venting smoke or hazardous gases out of the planes. Boeing said that while the planes were grounded, it also had made changes in electrical panels that had failed on occasion since the planes were introduced into service in late 2011.
A bit of trivia and irony in the story

Acme Tools To Open Store In Williston; Dakota Landing Nearing Completion

The Dickinson Press is reporting:
Acme Tools will open a new store here in late August, its fifth store in the state.
Twelve employees have been hired for the new Williston store, and the company has plans to add as many as a dozen more jobs when the store opens.
Meanwhile, Dakota Landing, a "residence hotel" is soon to open in Williston. But there seems to be some confusion on where it is located. The story says it is on the west side of Williston; I assume the story is from the corporate press release. A recent visitor to Williston says the hotel is actually about five miles north of Williston, and a search on google maps suggest the reader is correct. Google maps locates the hotel on the east side of US 2 & 85 about five miles north of Williston.  Regardless, the hotel has 257 rooms -- wherever it's located in the Bakken.

Filling In Some Time

How are things going in the market today? Just fine, thank you.

Motley Fool asks the question: which major oil company returns the most cash to shareholders? Worth a read. Spoiler: XOM. Along that line there is a nice article on SeekingAlpha on COP's dividend: this has been quite a story for long-term COP investors. EPD, with a 4.2% dividend, traded at a new 52-week high today.

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

Homeland Security's Napolitano to resign; become president of University of California system; triples her salary.

This truly is quite amazing: AAA -- the roadside automobile help agency -- has an ad touting Mt Rushmore in North Dakota.
AAA travel marketers can move mountains — even the famous faces of Mount Rushmore.
A recent AAA mailer for “Great American Vacations” suggests North Dakota is home to the Mount Rushmore monument.
The ad features a postcard of the Great Faces emblazoned with “North Dakota,” which provoked some heckling of the Mid-Atlantic AAA club that sent the mailing to members in Delaware, Maryland, Washington, D.C., and parts of Virginia, Pennsylvania and New Jersey.
You have to remember: these are the same states whose citizens tell North Dakota how to run their business.

Clay Jenkinson always has a nice column; today -- his 40th high school reunion.

These people need to get a life: folks who worry about providing their zip code at gasoline pumps

A Note To The Granddaughters

The granddaughters will be departing this weekend to continue their summer vacation with their other paternal grandparents. They have had a blast in southern California. One of the many highlights was helping Uncle Tim build a patio bench.

Yes, I know, next summer: safety glasses.

TGIF: Morning Links, News And Views

Active rigs: 186 (steady)

Wells coming off confidential list have been posted; scroll down (quite a ways).

RBN Energy: Making money with natural gas storage, 2nd in a series, I believe

Global warming --> Climate Change --> Extreme Weather -- Matt Ridley

WSJ Links

I never read Mansion but it is there for the Bakken millionaries.

Arena will have to wait; the market is too exciting today. Scanning through the section not much there, but this should be interesting: Andy Kaufman, who died in 1984, has his first comedy album release (soon). Some folks think he may have faked his death. Hmmmm.

Heard on the street: US oil prices -- due to better logistics, not new demand. Don't expect high oil prices to last. (By the way, that's a good thing for investors, as I've said many, many times, for several reasons. Companies in the Bakken can actually report "bad" quarters if oil gets too high.) The refiners will benefit from falling oil prices (VLO, HFC, PSX).

There's an interesting story in The Marketplace, asking who is #2 at Microsoft as Ballmer solidifies his grip on the company. Good question.

Verizon could be on the hook for a lot of unsold iPhones: #23.5 billion must be sold this year.

The Front Section looks like The Drudge Report today. Quite interesting. Following the coup in Egypt, a lot of folks were blogging that the US was not allowed to send aid to dictatorships. In fact, the law reads differently: the US cannot send aid to countries if a democratic government is thrown over by a military dictator: the O'Bama administration is now suggesting that the Morsi regime was not a democratic government. That will make for interesting coverage in the Mideast: a) Mr O'Bama throwing Mr Morsi under the bus; and, b) suggesting that Egypt still qualifies for $1.8 billion in US aid.

So, whatever happened to Syria?

Op-Ed: this is great. I've always said the same thing -- the stimulus program is "too big to fail."  John Taylor's headline: once again, the Fed shies away from tapering. The Fed can see the handwriting on the wall. I wonder if Bernanke is politicking to keep his job?