Sunday, October 27, 2013

Signing Off For Now

I've updated this week's "Top Stories."

I've also updated Todd oil field and Alkali Creek oil field.

On Track For 2,631 New Permits In The North Dakota Williston Bakken

As of Friday, October 25, 2013, there were 2,148 oil and gas permits for calendar year 2013 (this does not include salt water disposal well permits). That puts the state on track for 2,631 permits for calendar year 2013.

This time last year with 2,108 permits, the state was on track for 2,582 permits. The state ultimately issued 2,251 permits for calendar year 2012; about 30 of those permits were permanently canceled.

On another note, this month set a record for the number of wells coming off the confidential list:
  • August 2013: 158
  • September 2013: 186 (record, previous 181, at the time this was first posted)
  • October 2013: 199 (record, previous 195, at the time this was first posted)
I track the list at this post

But then look at the coming months; I can hardly wait for January, 2014:
  • November 2013: 153
  • December 2013: 170
  • January 2014: 206 (this might be a record; previous record, 199, October, 2013)

Just For The Fun Of It -- Satellite Views Of The Oil Patch

If you have absolutely nothing else to do today, you might have some fun looking at CLR's 14-well Atlanta pad in Baker oil field southwest of Williston.

Go to Google maps.

Find Williston.

Pan to the Missouri River bridge, US Highway 85, about six miles southwest of Williston.

Make your viewing area big enough to include US Highway 85 (the bridge over the Missouri River) on the east (right side) and State Highway 1804 on the west (left side). Place the river at the bottom of your viewing area.

Midway between State Highway 1804 on the left and US Highway 85/bridge on your right, you will see a large industrial area. This is obviously an old satellite photo; the pad is completed, and about half of the wells are completed; it is possible all fourteen are drilled to depth, or very close.

Now that you have found the 14-well pad, either zoom out or pan north about one mile to another great satellite view, a pad with one pumper and 12 tanks clearly visible:
  • 24742, 911, Zenergy, K2 Holdings 31-32H, Todd, t5/13; cum 37K 8/13;
Todd oil field, is, of course, the field of dreams. Smile.

Electric Vehicles -- Why They Will Never Be Mainstream In My Investing Lifetime; GM Appears To Be Outsourcing Ad-Writing To The Chinese ... Or The Nigerians


September 2, 2015: the new 2016 Chevrolet Volts are here. They were designed with Boston in mind. See original post: the average Boston driver drives 49 miles/day. GM designed the new Chevrolet Volt to meet the needs of the average Boston drive with four miles to spare. The new 2016 Chevrolet Volt has a range of 53 miles. Four miles more than necessary; one hopes the grocery store is on the way home, and there are no unexpected detours. LOL.

Original Post
I see this "Chevrolet Volt" ad, disguised as a news article, is still being posted on the internet. Here's a screen shot of this ad:

The headline caught my attention: range of 96 miles. Which, of course, cannot possibly be true. Then I saw the narrative, which is accurate: 80 - 96 km. At best, that is less than 60 miles and at worse, only 48 miles. I assume one gets 48 miles in city; 60 miles on the highway (going downhill with a tailwind).

I saw this "ad" a long time ago. In fact, I think I even linked it without the screenshot. I posted it again, because I was surprised the US government hasn't called GM out on false advertising,  but as but as a "news story," typographical errors are allowed. LOL. That is the loophole. Interesting, huh.

Now, just to spice up this story a bit. Think of the city that fits this profile: a) noted for its innovation; b) noted for 25 universities and colleges in its metropolitan footprint; c) noted for "going green"; d) noted for being one of the most densely settled cities in the US; e) it loves bicycles; f) it loves ZipCars.  Any city that would fit that profile should be a natural for electric vehicles, one would think. 

The city: Boston.

One would think that Boston would be a natural fit for electric vehicles. It turns out that 20% of Boston's metropolitan driving demographic drives an average of 29 miles per day, thus a great fit for electric vehicles, for day use.

The other side of the coin: 80% of Boston's metropolitan driving demographic averages 48 miles or more per day which means the Volt is inadequate for 80% of the Boston driving demographic.

If the Volt is inadequate in Boston, it cannot possibly be adequate anywhere else, including New York City.

The electric vehicle will have a niche in the US, mostly among the ultra-rich, like Jay Leno, who will buy a $200,000 electric Lamborghini or a $100,000 Tesla as a car to sit polished in the garage for an occasional outing, but electric vehicles will not be mainstream in my investing lifetime.

A random note: the averages are skewed down because many folks do not drive their cars on a daily basis, taking public transportation. In addition, even those folks who do drive, are like to take public transportation or walk during the day, thus keeping the mileage down. It is likely that close to 90% of folks who drive a car in the Boston area drive in excess of the 48 mile-range of the Chevrolet Volt.

Of course, the 120-mph Tesla will easily go more than 48 miles in Boston suburbs -- at 25 mph. LOL.

The screenshot of the driving patterns in Boston was taken from The Hub's Metropolis: Greater Boston's Development from Railroad Suburbs to Smart Growth, James C. O'Connell, c. 2013. This, book, by the way, is an incredibly good book, one I highly recommend for anyone who would enjoy a history of Boston.

By the way, if you've read this far, you might as well read the rest of the post. Go back to that "ad" disguised as a news story. Here is a quote from the narrative: "GM says that the model should be between 80 and 96 km of autonomy that option and can reach even more. The change is part of a strategy to make more attractive the electric Chevrolet. In studies, GM was found that 80% of drivers rotating hybrid on average less than 64 km per day, showing that the potential exists to increase."

It looks like GM outsourced their marketing / ad-writing to the Chinese, where English is not their first language. If anyone can tell me what "80% of drivers rotating hybrid on average less than 64 km per day" even means, please let me know.

Reader Comments

After posting the above note, I received this note:
[The ad is incorrect;] however [your] electric car premise is incorrect IMHO.  I own a Toyota Rav4EV (which uses the Telsa drive train from their base model bolted onto a Rav4 body.   I bought it in May and have not driven my "other" car which is a 1991 Nissan Pathfinder on more than a few occasions since then.

I live in the Bay Area (Fremont) and work in Mountain View, 20 miles from my house (it takes 13-16 miles of "electric range" to get there by the way).  

The Rav4 has 103 miles of range according to the EPA, and 125 miles or so in "reality" (like with gas cars, the EPA rating is pessimistic for electrics).

The key to getting electric cars out there is more for gas car drives to experience driving one for two reasons
  - 1) range anxiety is something you get over. Yes, you have to "refuel" the car more often, but also, when you're driving your gas powered car, most people aren't used to the idea that you can know, fairly exactly, when the car will stop. I "routinely" drive my electric car until it has only 5 miles of range left. I never did that when I drove a gas car. The difference being, you develop trust in the range monitoring, and you learn where the refueling points are, and how much range you "need to have" to pass one without stopping.   Its easier than you think, especially if you've never owned or used an electric vehicle. 
 - 2) the driving experience is awesome. Having 100% of your torque available at any speed is killer in traffic. If you liked driving a muscle car, you'll love driving an electric (except for the lack of engine noise - sorry...) The cars just "move."  No turbo lag, no waiting around.  Power at the speed of light, so to speak.  (This by the way is why Tesla is selling everything they can make).
So investing thesis:
  - this is the point of your blog post so let's get back there....

1) i suppose I've already made back more than half the cost of my electric vehicle because I bought Tesla stock before I bought the car. Now, Tesla is over-valued, because it has become a "Wall Street Fashion."  I've sold half, now I'm waiting to sell the other half.

2) if other metro areas follow Northern California (where electric cars are selling like hotcakes because we have a lot of charger infrastructure in a "relatively" dense area (not as dense as Boston or New York, but fairly dense), then there will be investing opportunities.  (One can imagine charging infrastructure for sure, as "workplaces" adopt charging.   Google has "hundreds" of car chargers now, and more are needed constantly due to the # of employees driving electric now.
One can expect other workplaces to follow.    It is a much cheaper benefit than Healthcare :-)

I'll be the first to say that the "price" of electric cars has been a barrier in the past, but you're missing a trend here.   Most manufacturers (who aren't Tesla) are now "discounting" their electric cars.   You can get a Rav4EV for instance, in California for a net price of like $35K "and you can lease it on favorable terms."   (Toyota is pushing the lease option).  I got $10K off list price when I bought mine for instance (and the deals have gotten better since then).  Plus Nissan is discounting on the leaf.

This means, yes, there's a resistance to electric cars from people who don't own them, but they're being priced to sell.  And the number I see on the freeways is growing like mad.   There's something magic about the $30Kish price point.  Once you get down there, everything sells - probably because it's not that much different than a gas car at that point, and the economics of not having to buy gas start working there.  (Plus in California, we still subsidize a little - $2500 on each purchase of an all-electric car).

I think we're 1-2 years away from manufacturers figuring out the price point/range combination that works (my guess is 100km @ 30K will sell, 100 "miles" at 30K would fly out of the showrooms).

Tesla made the huge bet by selling an expensive, 300 mile-range car.  It worked, because they can sell them to the 1% (which is still, a lot of people and a lot of cars.  The top 1% of wage earners is still > 1 million people, they all drive cars and Tesla only makes 20K cars/year.    Not hard to do that math.

To be mainstream though, the 30K/100 mile criteria is where I bet the market is going.
I replied that I cannot disagree with any of the points, except that at $50K (where prices are not subsidized), EVs are too expensive (for mainstream), which was also noted above. EVs have a niche, and folks can make a lot of money investing in some manufacturers, but EV's won't become mainstream in my investing lifetime (10 more years).

Nothing was mentioned about resale value and need to replace batteries after several years. My hunch is that most commuters will keep their EVs for the life of the battery.

Like Apple Inc. vs Microsoft the debate between all-EVs and conventional gasoline engines has become "a religious debate." Both sides have great points, and we will know ten years from now how this all works out.

Those folks who invested in Tesla earlier, did well. Those folks who invested in the "list of 38" did not do quite so well, at least if they held on to their investment too long.

By the way, for investors there is a very, very good point raised by the reader: Tesla is selling its power train to other manufacturers. I was unaware of this. This is a very, very interesting point, and why I love to blog.

Random Update On Tank Cars for CBR Out Of The Bakken

A huge "thank you" to a reader for sending me this story.

ChicagoBusiness is reporting:
Manufacturers making trucks and dozers, like Navistar International Corp. and Caterpillar Inc., may be struggling. But companies producing rail cars used to haul crude oil and other liquids can't churn them out fast enough. If you order a crude oil tank car today, know this: There are 48,000 ahead of you, and it'll be nearly three years before you see it.
The flood of orders started with the ethanol boom. Then an abundance of crude oil was found in North Dakota, out of reach of a viable but underutilized pipeline—industry folks call it “stranded oil.” And so, for nearly a decade—minus a yearlong recessionary dip—tank car makers such as Chicago-based Union Tank Car Co., owned by Berkshire Hathaway, have seen record high sales.
“It's a dream for a tank car company,” says Gordon Heisler, senior logistics consultant at PLG Consulting Inc. in Chicago. “They can't make them fast enough.
This short video is of the Epping CBR facility east of Williston. Note the tracks are raised on a "dike" surrounding the operations which are inside, completely out of view of passer-by; the tunnel leads to the operations.

Epping, North Dakota, CBR Terminal

For Investors Only: Bogle On Capitalizing Social Security

There is a great article discussing Bogle's views on investing / capitalizing social security over at SeekingAlpha. I agree completely.

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

Wells Coming Off The Confidential List Monday, Weekend; MRO With A Huge Well; OXY Has Another OXY Well; Petro-Hunt With A Huge Well In Union Center

Monday, October 28, 2013
  • 23784, drl, CLR, Brandvik 3-25H, Corral Creek, no production data,
  • 24012, 2,159, MRO, Cummings USA 41-6H, Van Hook, t8/13; cum 18K 8/13 (20 days)
  • 24676, 481, CLR, Jerol 3-27H, Lindahl, t9/13; cum --
  • 24677, 362, CLR, McGregor 4-22H1, Lindahl, t9/13; cum --
  • 24717, 103, OXY USA, Richard Longfellow 1-22-15H-142-98, Saddle Butte, t5/13; cum 8K 8/13;
  • 25280, 1,964, BR, CCU William 34-20TFH, Corral Creek, t10/13; cum --
  • 25325, drl, XTO, Olson 34X-19D, Arnegard, no production data,
Sunday, October 27, 2013
  • 21253, 2,616, XTO, Esther Federal 34X-28G, Lost Bridge, t9/13; cum --
  • 24358, 206, CLR, Mack 6-2H, Antelope, a Sanish well; t8/13; cum 3K 8/13;
  • 24411, drl, Statoil, Broderson 30-31 3H, Banks, no production data,
  • 24751, 374, SM Energy, Mosser 2-30HNB, Colgan, t8/13; cum 3K 8/13;
  • 24954, 1,638, WPX Energy, Spotted Rabbit 14-23HW, Van Hook, t8/13; cum 28K 8/13;
  • 25272, drl, American Eagle, Lester 16-33-164-101, Colgan, no production data,
  • 25316, 369, Slawson, Mamba 3-30H, Van Hook, t9/13; cum 16K 8/13;
Saturday, October 26, 2013
  • 22515, 437, XTO, Thaxton 24X-35F, West Capa, t9/13; cum --
  • 23734, drl, BR, Bryce11-5TFH, Westberg, no production data,
  • 24227, drl, Oasis, Nellie John Federal 5300 14-25B, Willow Creek, no production data,
  • 24412, drl, Statoil, Garmann 19-18 3H, Banks, no production data,
  • 25048, 1,759, Petro-Hunt, Sorenson 152-96-24D-13-7H, Union Center, t8/13; cum 31K 8/13;
  • 25326, drl, XTO, Olson 34X-19H, Arnegard, no production data,

24717, see below, OXY USA, Richard Longfellow 1-22-15H-142-98, Saddle Butte:

DateOil RunsMCF Sold