Saturday, August 10, 2013

For All Those Bakken Fishermen From Louisiana -- The Walleye Fishing Should Be Great This Year In The Oil Patch

The Bismarck Tribune is reporting:
This was a good year for raising walleyes at the Garrison Dam National Fish Hatchery — a record-setter in terms of the number of walleyes stocked in North Dakota lakes.
Thanks to new pond liners at the hatchery and some weather-related issues, more than 11 million walleyes were stocked in state lakes this year, a record for the North Dakota Game and Fish Department.
The U.S. Fish and Wildlife Service's hatchery at the dam and the Game and Fish Department for years have worked in harmony to grow multiple species for not only North Dakota lakes, but for other states as well.
Rob Holm, hatchery manager, said the biggest change that has resulted in increased production has been the installation of new pond liners.
One wonders if these new liners are/were related in any way to the liners operators use on pads for waste pits.
Holm said in 2009, the last of the old clay-lined, sand-bottomed rearing ponds at the hatchery were retro-fitted with 40-mil polyethylene liners.
He said the new liners, at a cost of about $90,000 apiece, have increased the efficiency of how the hatchery is able to raise not only walleyes, but other species of fish in a number of ways.
So, how successful was the effort this year?
This year's 9.7 million walleyes produced at the hatchery is third on the list for all-time production.
Two years ago the record of 10 million was set and last year that number was 9.9 million.

Wow, The Keystone Story Just Got A Bit More Complicated -- This Is Huge -- Yes, Virginia, There Is A Santa Claus


August 29, 2019: update here, same as the January 26, 2017, update.

January 26, 2017: update, dated August 22, 2016. 

Original Post
For background: back in the 1990's it was clear that the US needed a new source of oil. Studies suggested that western Canada could supply the US all the oil it needed, but it was heavy oil and US refineries were built to refine light oil.

So, US refineries spent billions converting their ability to refine heavy oil (including Venezuela heavy oil) in existing refineries along the coast. No one even imagined there would be any issue transporting Canadian heavy oil to the Gulf coast refineries. But then something funny happened in Nebraska.

The Keystone XL was killed; all hell broke loose; there was a resurgence in the US railroad industry, pipelines were reversed; and engineers starting working the problem of refining all that light sweet oil no one knew about in the 90's in refineries that had been converted to heavy oil at great, great expense.

I believe the issue of converting refineries is still being worked, and I believe RBN Energy recently had an essay about blending light and heavy oil that the current US refineries could use.

That brings me up to date. Whether it's accurate or not, I don't know. That's my worldview.

Now, what would happen if like a Greek tragedy, deus ex machina, a reservoir of heavy oil, just like Canada's heavy oil happened to be located right next to those US refineries along the Gulf coast that had expected to refine western Canadian heavy oil?

It would be too fantastic. It would a true deus ex machina. It would be even something Hollywood could not make believable on the big screen.

But that's apparently what the Financial Post is reporting: God, or Allah, or someone more powerful than President O'Bama is so upset about the Keystone being killed, that he/she/it placed 7.5 billion bbls of Canadian heavy oil right next to the Gulf coast refineries. To put an exclamation point to the story, he/she/is placed 350 million bbls of that oil just 50 feet below the Alabama and Mississippi surface.

At the linked article:
The two southern US states signed a memorandum of understanding over the weekend to explore the potential of oil sands resources in the Hartselle Sandstone play that stretches from north-central Alabama to northeastern Mississippi.

The development is estimated to contain 7.5 billion barrels of oil sands, with 350 million barrels located within 50 feet of the surface, according to the MoU, citing evaluations done in the 1980s. The two states are situated close to the Gulf Coast refineries that consume heavy oil from Canada.
From the linked article at wiki, deus ex machina is:
a plot device whereby a seemingly unsolvable problem is suddenly and abruptly resolved, with the contrived and unexpected intervention of some new event, character, ability, or object. Depending on how it is done, it can be intended to move the story forward when the writer has "painted himself into a corner" and sees no other way out, to surprise the audience, to bring a happy ending into the tale, or as a comedic device.
I cannot make this stuff up. This is quite incredible.

And we haven't even explored the "peak oil" angle of the story.

Update On Tighter Rules For CBR Following The Canadian Disaster


August 13, 2013: I still don't want to talk about it, but for sake of archives, here's update on the runaway freight train story. Bloomberg's is reporting:
Crude oil shipped by railroad from North Dakota is drawing fresh scrutiny from regulators concerned that the cargo is adding environmental and safety hazards, something that analysts say could raise costs.
The U.S. Federal Railroad Administration is investigating whether chemicals used in hydraulic fracturing are corroding rail tank cars and increasing risks. Separately, three pipeline companies including Enbridge Inc. warned regulators that North Dakota oil with too much hydrogen sulfide, which is toxic and flammable, was reaching terminals and putting workers at risk. 
Until last month, safety advocates’ chief worry was spills in derailments. After tanker cars blew up July 6 on a train in Quebec, investigators in Canada are considering whether the composition of the crude, which normally doesn’t explode, may have played a role in the accident that killed 47 people. The oil was from North Dakota’s Bakken shale. 
Original Post

Barrons is reporting a long, long article on tightening the rules on CBR in light of the recent Canadian disaster. For the archives.

But for now, I don't want to talk about it.

I Don't Want To Talk About It, Rod Steward and Amy Belle

Back on July 9, 2013, Reuters reported this story:
Shares of Dakota Plains Holdings (DAKP.OB), which has a joint venture with World Fuel and owns rail-loading facilities in North Dakota's Bakken shale field, where railcars involved in the Quebec disaster were filled, fell 24 percent to $1.90 on Tuesday.
Dakota Plains did not respond to a request for comment. 
World Fuel's annual revenue has more than doubled since 2008, the start of the North American shale boom.

Saturday Morning Notes

This is mostly for the archives, for my granddaughters. If you came here looking for the Bakken, scroll to the right (the sidebar), scroll down, or later, scroll up. There are plenty of Bakken articles, including the top stories for the past week, just posted a few minutes ago.

But now, I'm relaxing. I just skimmed through the Saturday edition of the Wall Street Journal and am very, very excited. There are at least two long articles in the book review section that look very, very interesting.

First: a full page review of Scott Anderson's Lawrence in Arabia. I have never read a biography of "Lawrence of Arabia" but have always been fascinated. Perhaps it is time. The question that Mr Anderson raises: "Britain committed vast quantities of materiel and a million men to fighting in the Middle East during World War I. How did an archaeologist with no military training and the largely ineffectual Arab Revolt get all the credit?"  This should be absolutely fascinating.

And then this: a long review of Robert Wilson's biography of Mathew Brady. You all remember Mathew Brady, right? Brady was the photographer who shot all those iconic photos of the US civil war. The blurb: "Brady's efforts to collect portraits of every notable American helped create a sense of a single nation in a time of turbulent change."

The Mathew Brady book might not normally interest me but our older granddaughter shows an interest in the civil war. Some years ago I developed a fairly impressive programmed learning text on the Civil War in the western theater for middle school students. It was based on General US Grant's memoirs.

Those two reviews would be enough but then there's a full page article about a movie director's look at the "problems" of US education (public school elementary through high school). The director: M. Night Shyamalan. I never had any clue that he would be interested in education. It's a nice article and he comes up with some nice conclusions.

Spoiler alert! Spoiler alert! One should read the entire article, but if pressed for time, the article might be summed up here:
"That was the click," says Mr. Shyamalan. It struck him that the reason the educational research was so inconsistent was that few school districts were trying to use the best, most proven reform ideas at once. He ultimately concluded that five reforms, done together, stand a good chance of dramatically improving American education. The agenda described in his book is: Eliminate the worst teachers, pivot the principal's job from operations to improving teaching and school culture, give teachers and principals feedback, build smaller schools, and keep children in class for more hours.
Over the course of his research, Mr. Shyamalan found data debunking many long-held educational theories. For example, he found no evidence that teachers who had gone through masters programs improved students' performance; nor did he find any confirmation that class size really mattered. What he did discover is plenty of evidence that, in the absence of all-star teachers, schools were most effective when they put in place strict, repetitive classroom regimens.
Interesting. I think back on my own principal who taught sixth grade back when I attended Wilkinson School in Williston. She already knew all that.

That's about all I remember from today's WSJ. 

There was one article on page A3 (and we've talked about the importance of page 3 stories in the past) that caught my attention. If one wants to see the O'BamaCare train wreck up close and personal, watch the impending debacle in Oregon. And Oregon has generally been considered a front-runner among the states in implementing O'BamaCare.  
Oregon's health-insurance exchange—the marketplace created by federal law to let consumers shop online for coverage—will open for business on Oct. 1, but with a glitch: Consumers won't be able to access it online.
In Oregon, for at least the first couple of weeks of the enrollment period, people will have to visit an agent's office, or find one willing to come to their houses for that, Ms. Fauver said. Or, they can wait until the site goes live.
This is very, very interesting. Talking to experts in the field, it turns out that it is very "dangerous" for homeowners to insure their own homes on-line -- there are so many little things the average person does not think about when insuring a home, and only a good insurance agent can point those things out. There is risk in going-it-alone when insuring a home. Think about that. If the average person takes on risk insuring one's home, which should be pretty straightforward, think about finding a health program on-line by oneself.

I look at all the folks who shop at Wal-Mart. It is hard for me to imagine these folks signing up on-line at one of President O'Bama's health care exchanges. 

Train wreck might be too optimistic; the Asianic aircraft that crashed at San Francisco comes to mind.

But ObamaCare is for another day. The book reviews now, and NASCAR later today.

Week 32: August 4, 2013 -- August 10, 2013

National And International
37 US crude oil pipelines planned or under construction
Price of oil up on Chinese demand -- running about $105
China will become #1 net importer of oil in three months (October, 2013)
Various crudes are reaching parity
TransCanada's proposed Energy East Line

Bakken operations
The incredible Stockyard Creek oil field east of Williston
SBR terminal to be built in New Town, North Dakota
Triangle Petroleum acquires additional Bakken acreage
Random update on the Pyramid wells northwest of Williston
Results of the quarterly North Dakota state lease sales
More than enough water for fracking in the Bakken
BNSF hauls >50% of total North Dakota Bakken production

Spearfish Formation
Corinthian Exploration with a nice Spearfish well

Sand vs ceramics -- Filloon

It is possible to eliminate flaring in the Bakken

Minneapolis-based Oppidan to expand residential development in Watford City
Another ethanol plant going up in North Dakota
Waste Management acquires two Williston-based energy service companies

Non-Bakken stories
North Dakota state flour mill in the dough

Now It's Peak Oil Demand

The Washington Post is reporting:
For years, there’s been lots of debate over “peak oil” — the notion that, at some point in the near future, the rate of global oil production will bump up against a hard ceiling. This is generally considered a gloomy prospect.
But another, related concept has started to bubble up in energy discussions lately. It’s the notion of peak oil demand.
The article looks at two competing views:
  • Citi think the world’s thirst for oil could peak in a few years at around 92 million barrels per day (the gray-blue scenario) — as long as vehicle efficiency for cars and trucks keeps improving by about 2.5 percent per year
  • BP expects global oil demand to keep growing from 89 million barrels per day today to around 104 million barrels per day by 2030
This would make a great poll, but polls on something that far out are not all that interesting.

The article gives passing mention to China's automobile demand.

The most interesting data point for me: no one seems to be predicting that demand for oil will actually drop below 92 million bopd.

Note the statistic in the linked article above:
  • Citi think the world’s thirst for oil could peak in a few years at around 92 million barrels per day
Memo to Citi: the world will be already be consuming 92 million bopd next year.
Global consumption will increase by 1.1 million barrels a day, or 1.2 percent, to 92 million next year, the Paris-based adviser to energy-consuming nations said today in its monthly market report. The expansion is 100,000 barrels a day less than last month, when the estimate for 2014 was first introduced. Refinery operating rates will ease after a record surge in July, the IEA said.

The Semi-Finals: Your Favorite Bakken Operator

The results of the current poll on "favorite Bakken" operator:
  • KOG: 46%
  • OAS: 26%
  • Slawson: 12%
  • Halcon: 9%
  • BR: 7%
The results of the August 3, 2013, "favorite Bakken" operator:
  • CLR: 36%
  • WLL: 27%
  • EOG: 18%
  • BEXP (STO): 11%
  • HES: 8%
So, I suppose this third poll will be the semi-finals, voting on your "favorite Bakken operator":
  • CLR
  • EOG
  • KOG
  • OAS
  • WLL

37 US Pipeline Projects Planned Or Underway

That's the headline: "planned or underway," so I assume the article does not include the projects that have been completed since the Bakken boom began in North Dakota in 2007, and in Montana in 2000.

Don sent me the link; the Financial Post is reporting:
Oil pipelines in the United States are undergoing a historic realignment in response to new production in the Eagle Ford development in south-central Texas, redevelopment of older production in the Permian Basin and new flows of oil from the Midwest and Canada that have oversupplied Midwest markets.
Here is an updated list of 38 projects planned or under way in the United States, including the controversial Keystone XL.
Note to Don:

1. I don't know if you recall, but I have a similar page in which I keep track of pipelines that interest me; it looks like the Financial Post did the same thing but, of course, much better. I track the pipelines that interest me here (the page has not been updated in awhile):
2. I once said TransCanada should just announce they no longer need the Keystone, but I am wrong. Let them make President O'Bama make a decision on a pipeline that no longer matters with regard to oil. It only matters with regard to how our closest ally and our largest trading partner sees the US in the future. Actually, they know this has nothing to do with the US per se, just a jerk of a president who cares not who he throws under the bus.
3. 37 new, extended, and reversed pipelines. It's amazing how fast free market capitalism can respond. Sort of puts the Keystone XL into perspective, doesn't it?

By the way, note that the Seaway is bigger than the Keystone and I believe the first phase has already been completed. This one pipeline may have been the key pipeline in bringing WTI back to parity (or near parity) with Brent.

It Wasn't My Imagination

Yesterday I was getting a number of broken links at twitters from Platts. I thought it was just one of those things, maybe because I don't subscribe to Platts, I couldn't access their twitter tweets. Which, of course, didn't make sense.

Now I see it wasn't my imagination. Platts has noted a number of broken links, re-posted them, and has now even apologized for the broken links. A robot would not apologize. There is a real person between the Platts tweets. That's nice.

Speaking of nice, let's see what Jessie Veeder is up to this weekend. Oh, yes, it's about her pug. I read her post yesterday. Pretty funny. I'm not sure who I should feel sorrier for, her pug or her cat.

Price Of Oil Up On Chinese Demand

Because I don't have television -- oh, that reminds me -- Sports Bar this afternoon about 3:00 pm to see NASCAR race and golfing. It's really funny: because I don't have a television, I have to "prioritize" my sports viewing and it turns out I seem to enjoy it more. It's a real treat to get to see live sports, and then on top of that, I can watch it while enjoying a nice Texas barbecue. And there's always a chance I will strike up a conversation with ... but I digress..

Back to not having a television. I mentioned to someone, either on the blog or in a personal e-mail, that because I don't catch CNBC any more, I am out of the loop as to what folks are saying about the price of oil.

Don has told me that there has not been a lot of chatter (or at least hysterical chatter) about the relative "high" price of oil. In the past, $100 oil was always a huge matter of discussion. Even my favorite CNBC anchor, Joe Kernen thinks oil should be priced at about $50, based on his comments i the past. I wonder what they all think now.

So, I'm not in the loop, but I've posted that I assumed the rise in the price of oil was due to Chinese demand. And, lo and behold, Rigzone is reporting:
U.S. crude oil futures gained more than $2.50 a barrel in a sharp rally powered by signs of rising Chinese demand and concerns about supply disruptions in the Middle East.
Brent crude recovered from its lowest close in more than a month, but trading was more active in the New York market, with prompt-month September West Texas Intermediate (WTI) leading the gains.
The premium for September crude over December futures widened by 70 cents to $3.60, intensifying a market structure known as backwardation. Analysts cited upbeat data from China and more signs of a sharp fall-off in Libyan oil exports as possible causes for the appreciation of front contracts.
Market watchers also said that a rush to secure long positions in the front month contract ahead of the weekend also contributed to the rally.
There is a lot more at the linked article explaining what is going on, but the market is driven by fear and greed, and it looks like both are playing a role here.

So far, it appears that Bakken operators have collars too low for the current price of oil, and this could present a problem if the price of oil continues to rise.

I have no idea if that last paragraph is accurate, but it probably sounds as good as anything I might hear on CNBC. Smile.

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

Nothing New For Regular Readers

Rigzone is reporting:
The oil and natural gas industry has played an instrumental role in the recovery of the United States economy following the economic recession, the Energy Information Administration (EIA) said in its Today in Energy brief released on Thursday.
To put into perspective just how much the energy sector contributed to economic growth, consider that total private sector employment increased by more than one million jobs, or about one percent, during the six-year period of 2007 through 2012. The growth of oil and gas industry jobs alone during the same period increased by more than 162,000, or an increase of about 40 percent, the EIA said.
Three job categories – drilling, extraction and support – combined for much of the growth in oil and natural gas industry jobs – jobs that kept a support floor under private sector employment figures.
There were more than 90,000 drilling jobs by the end of 2012, according to the Labor Department’s Bureau of Labor Statistics (BLS). That was an increase of 6,600 jobs since 2007. The BLS characterizes drilling as any job related to the spudding and drilling of wells, or the reworking of wells.