More Pipelines Needed -- Obama Administration

Rigzone has a fairly long article on the new Secretary of Energy. Buried in the story, the new SecEnergy said:

Moniz said an upcoming quadrennial energy review will give the federal government a chance to reflect consequences of the country’s oil and gas abundance because it will involve many agencies and departments, and address infrastructure vulnerability.

[The quadrennial review] also will consider the need for more pipelines to transport oil and gas produced from tight shale formations from the wellhead to markets, he said.

“The US pipeline infrastructure clearly isn’t sufficient to address new production,” Moniz observed. “Improving it will need to be a top priority involving several federal departments and agencies, and the quadrennial energy review will provide a perfect opportunity for us to do that.”

And then this zinger:

• Overall, he added, “we think the energy security landscape is different—and more interesting—than it was in 1973.”

1973: the year of the OPEC embargo. 

Velvet Underground, Self-Titled, 1969

Seventeen (17) New Permits -- The Williston Basin, North Dakota, USA; Miscellaneous Energy News

Active rigs: 181 (holding steady)

Two Gullickson Trust permits were renewed. 

Seventeen (17) new permits --

• Operators: HRC (5), Triangle (4), Petro-Hunt (3), Whiting (2), Samson Resources (2), Oasis
• Fields: Strandahl (Williams), Ambrose (Divide), Four Bears (McKenzie), Little Knife (Dunn), Parshall (Mountrail), Ellsworth (McKenzie), Willow Creek (Williams)
• Comments:

Wells coming off the confidential list were posted earlier; see sidebar at the right. 

Three (3) producing wells completed:

• 19863, 1,190, Emerald Oil, Mongoose 1-8-5H, 
• 23909, 1,461, Emerald Oil, Arsenal [Federal] 1 -17-20H,
• 24641, 680, Hess, HA-Nelson 152-9503328H-5, 

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

Traded at new 52-week highs today: MDU, Comcast.

Tesoro Logistics LP restarts Mountrail County, North Dakota pipeline:

Co is restarting its Mountrail County, North Dakota pipeline following shutdown on Sept. 29 due to a crude oil spill. Permission to return the line to service was granted by the Pipeline and Hazardous Materials Safety Administration (PHMSA) following:

• Acceptance by TLLP of a Safety Order from PHMSA;
• Review by PHMSA and TLLP of the preliminary mechanical analysis of the failed segment;
• PHMSA approval of a detailed restart plan submitted by TLLP. 

The damaged portion of the pipeline was removed and sent to an independent laboratory for analysis. While final results are pending, the preliminary report indicates that the likely cause of the small diameter hole in the pipeline was from electrical discharge. The source of the electrical current remains under investigation. According to the initial lab report, there were no signs of corrosion or other defects at the failure location. As of Oct 31, more than 4,500 of the estimated 20,000 barrels released have been recovered from the site. There have been no injuries or known impacts to water or wildlife as a result of this incident.

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KMI Pipeline In The Northeast

July 17, 2015: Kinder Morgan, Inc., today announced that its board of directors authorized KMI’s subsidiary, Tennessee Gas Pipeline Company (TGP), to proceed with TGP's Northeast Energy Direct (NED) project's “market path” segment from Wright, New York, to Dracut, Massachusetts, a $3.3 billion investment designed to serve natural gas utilities and electricity generation customers in New England. 

According to the independent electric system operator ISO New England, New Englanders paid over $7 billion more for electricity during the winters of 2013/14 and 2014/15 than what they paid for electricity during the winter of 2011/12, largely as a result of the existing lack of pipeline capacity servicing the region. Independent studies have concluded that the New England region will require 2 Bcf/d of gas capacity over the coming years. 

Since first proposed in 2014, TGP has said that the NED project could involve a combination of 30-inch and 36-inch diameter mainline, and provide between 1.3-2.2 Bcf/d of incremental capacity for the region’s needs.

According to Watson, “Our decision to proceed with the 30-inch pipeline option stems from continual outreach and dialogue that began in 2014, including ongoing negotiations with customers, reviewing various state initiatives designed to address the high cost and volatility of natural gas into the New England region, and continuing discussions with stakeholders. As a result of our dialogue and feedback, we have made numerous adjustments to the proposed right-of-way in order to minimize potential impacts on nearby towns and communities, resulting in approximately 91% of the proposed NED market path segment being co-located along existing utility corridors, and we have also eliminated the need for two of nine proposed lateral lines and related facilities.

Since first proposed in 2014, TGP has said that the NED project could involve a combination of 30-inch and 36-inch diameter mainline, and provide between 1.3-2.2 Bcf/d of incremental capacity for the region’s needs. According to Watson, “Our decision to proceed with the 30-inch pipeline option stems from continual outreach and dialogue that began in 2014, including ongoing negotiations with customers, reviewing various state initiatives designed to address the high cost and volatility of natural gas into the New England region, and continuing discussions with stakeholders. As a result of our dialogue and feedback, we have made numerous adjustments to the proposed right-of-way in order to minimize potential impacts on nearby towns and communities, resulting in approximately 91% of the proposed NED market path segment being co-located along existing utility corridors, and we have also eliminated the need for two of nine proposed lateral lines and related facilities.

Original Post

Kinder Morgan Partners subsidiary, Tennessee Gas Pipeline, places projects in service to move more Marcellus Shale natural gas:

Tennessee Gas Pipeline, a subsidiary of Kinder Morgan Energy Partners, placed the fully subscribed Northeast Upgrade Project (NEUP) in service on schedule Nov. 1. The ~ $500 million project boosts capacity on TGP's 300 Line system in Pennsylvania and New Jersey by 636,000 dekatherms per day (dth/d) and provides additional takeaway capacity from the Marcellus shale area. TGP also placed into service its a~ $65 million Marcellus Pooling Point project as scheduled on Nov. 1. The fully subscribed project provides about 240,000 dth/d of additional firm Marcellus transportation capacity on TGP's pipeline system in Pennsylvania.

Google the Tennessee Gas Pipeline to see how much of an environmental challenge it was to get this pipeline laid, especially in New Jersey. Incredible.

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Taking only thirteen days at a cost of $8,000, Surrealistic Pillow launched The Jefferson Airplane to international fame.

Surrealistic Pillow, The Jefferson Airplane

Two Permits Of Reader's Concern Were Renewed

Wow, I love to blog.

Sometime ago a reader was concerned about two permits expiring. At the time, based on the data available, my hunch was the permits would be renewed, and I provided documentation supporting my hunch. Whew!

Today, they were renewed:

• #21826 - Triangle, Gullickson Trust 150-101-36-25-2H,
• #21828 - Triangle, Gullickson Trust 150-101-36-25-4H,

Several other permits were also renewed:

• #21833 - CLR, Micahlucas 2-5H,
  #24332 - CLR, Steele Federal 4-24H,
  #24333 - CLR, Steele Federal 3-24H,
  #24334 - CLR, Lansing 4-25H,
  #24335 - CLR, Lansing 3-25H,
  #24344 - OXY USA, Michael Fitzmaurice 1-16-21H-141-97,
• #24346 - HRC OPERATING, Pederson 1-8-5H,

Economy Did Much Better With The Government Shut Down: Chicago Purchasing Managers; Institute For Supply Management's Manufacturing Index; 24 Seconds Of Nebraska

Because of my recent traveling, I haven't kept up with The Wall Street Journal.

By the way, speaking of traveling, here's a short documentary which I have titled "24 Seconds Of Nebraska." I'm not expecting an Oscar nomination for Best Short Documentary, but if a PowerPoint Presentation can win a Nobel Peace Prize, ....

24 Seconds of Nebraska

Coincidentally, this video was "shot" near where the Keystone XL would have been in the northwest corner of Nebraska.

The Wall Street Journal

The FAA will allow most electronic devices to be used on take-on and landings; texting and phoning will still not be allowed flights.

There's actually a story on Libya: the rebels are in the Syrian capital.

Some interesting court news: a Federal appeals court orders New York City's "stop and frisk" law to be re-instated. Similarly, a court ruled that Texas laws regarding abortion clinics must be followed during the appeals process.

It's gonna be a long three years: Republicans blocked the Senate from voting on two of President Obama's nominees, reviving the prospect of a broader fight over presidential nominations that both parties have said could poison relations and shut down all other business in the chamber.

It's gonna be a long three months: Problems with federally run website HealthCare.gov have placed "navigators" on the front lines, facing a deluge of questions and resorting to pen-and-paper applications to enroll consumers. [I just checked: the federal website is up and running; whether one can enroll or not, it another question. I don't go that far in the process.]

Of course, there are now security concerns about the government health care insurance site. Concerns about the security of personal information on the HealthCare.gov website are getting closer attention in Washington, potentially adding to the list of problems with the new federal health-insurance exchange. Remember: Consumer Reports recommends consumers "stay away" from the on-line enrollment process.

My wife has ATT U-Verse out in southern California; she has been very happy with it. TV service from Verizon and AT&T is expanding, affecting cable, as the phone companies experiment with delivering movies and TV programming outside the traditional pay-TV bundle.

GM is playing chicken with Ford on pick-up pricing. The No. 1 U.S. auto maker is trying to curb dealer and customer appetites for lavish sales incentives, arguing that it will hold the line even at the risk of losing market share to Ford in the lucrative pickup truck market.

This is very, very interesting. Just a year ago, ocean shipping companies were struggling. Now: shipping operators and investors are pouring billions of dollars into building new oceangoing tankers to transport diesel, gasoline and aviation fuel—scrambling to keep up with North America's energy boom.

Government shutdown? What shutdown?

Jack Welch suggested a year ago that "those Chicago boys" may not be entirely trustworthy when it comes to economic statistics.

The former General Electric Co. chief's skepticism and dig at the Chicago roots of President Barack Obama came in the context of the 2012 election and concerned a surprisingly strong employment report, which is compiled by government statisticians. The latest bit of upbeat data really did come from Chicago, but it is strictly a private-sector affair.

The Chicago Purchasing Managers Index for October, released Thursday, surged well past expectations, to 65.9. The 10-point jump -- economists has predicted a modest decline -- is the best reading since April 2011. 

Unlike employment data, the Chicago PMI will be followed immediately by a sanity check: the closely watched national survey of manufacturers by the Institute for Suply Management due Friday.

So, what was the ISM number?

U.S. manufacturing remained strong in October, according to a closely followed index released Friday. The Institute for Supply Management's manufacturing index climbed to 56.4% -- the highest level since April 2011 -- from 56.2% in September. Economists polled by MarketWatch expected a 55% reading, and any reading over 50% indicates expansion. Both the new orders and production indexes have registered above 60% for three consecutive months.

MasterCard net for 3Q13 rises 14% -- perhaps their credit cards saved the furloughed government civilian workers for those two weeks in October, or whatever it was.

Earthquakes And Fracking: A Rigzone Exclusive

I can't find the post now, but NDIC noted a study of water injection (water disposal) and earthquakes, found a likely cause and explanation, and took steps to prevent this problem.

The risk of fracking increasing the risk of earthquakes in general, and "economically" significant earthquakes in particular, appears not to be an issue. Rigzone has a 4-page (internet) posting on studies linking earthquakes and fracking.

About half a million earthquakes are thought to occur around the world annually. However, the majority of earthquakes are too small to be perceptible; only about one in five earthquakes can be felt, and the rest can be detected only by sensitive instruments.

In the United States, there are recognized areas along fault lines where earthquakes occur with some frequency. There are also areas, such as the state of Texas, where earthquakes large enough to be perceptible are relatively rare. The link between fracking and earthquakes is indirect.

The most common method of fracking in use today typically involves the use of a mixture made of sand, chemicals and water that is injected at high pressure into the surrounding rock. The amount of water used can vary with each well, but a typical well in the Eagle Ford might use 7 million gallons of water, according to the Texas Water Development Board.

When a well has been hydraulically fractured, about 20 percent of the water used returns to the surface, according to the Ohio Department of Natural Resources. This water, which is called flowback or produced water, must be disposed of.

It is the process of injecting this water into the underground storage wells, and not the actual fracking of the well, that is most often linked to earthquakes.

Related posts:

• Earthquake history for North Dakota
• No fault lines in North Dakota
• Study concludes: fracking adds little risk of earthquake

Just Taking A Re-Look At The Wells That Came Off The Confidential List Today; KOG Misses On Earnings

One word: incredible.

• 24570, 1,649, Oasis, Shields 5200 43-20T, Camp, t7/13; cum 27K 9/13;
• 24644, 1,773, Oasis, Newberry 5200 41-20T, Camp, t9/13; cum --
• 24905, 2,846, BR, CCU Prairie Rose 31-30MBH, Corral Creek, t8/13; cum 9/13;
• 24952, 2,765, Oasis, Leni 5693 42-11B, Alger, t7/13; cum 24K 9/13;
• 24956, drl, SM Energy, Cade 12X-19H, Poe, no production data,
• 25278, 2,605, BR, CCU William 24-20TFH, Corral Creek, TD = 22,550 feet;  t10/13; cum 

It's easy to lose site of how good these wells really are.

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

Crude oil continues to fall. KOG is down almost 6% today; Oasis is down about 3%.

KOG missed on earnings yesterday but:

Kodiak reported an overall 54% increase in sequential equivalent sales volumes with 3.3M barrels of oil equivalent sold, or an average of 35,400 BOE per day during Q3, as compared to 2.1M BOE, or an average of 23,200 BOE/d in Q2.

From Motley Fool:

For Kodiak Oil & Gas, the money is really flowing these days. The company announced robust gains in its Q3 results, revealing that for the period it took in revenues of just under $300 million. This was nearly triple the $112 million it posted in the year-ago quarter. Net income increased almost tenfold, coming in at $31.2 million ($0.12 per diluted share) against Q3 2013's $3.5 million ($0.01).

In spite of the increases, the company's net came in significantly below the average analyst estimate for EPS of $0.23. Collectively, those analysts expected a top line of $297 million. 

Following the announcement of the results, Kodiak's shares were down slightly in after-hours trading. They sagged by 0.2%, or $0.02, to $12.95 per share. 

So, the top line was somewhat more than what analysts expected: $300 million vs $297 million. This tells me that analysts can forecast top-line revenue pretty good in the Bakken -- which I've been saying for quite some time -- contracts are six-month contracts; and production is fairly easy to predict. But folks have said that KOG has high drilling expenses, and earnings coming in at 12 cents, significantly below the average estimate of 23 cents suggests analysts either believed KOG's CEO when he said he would bring down drilling costs, or the analysts were just early on the call.

It will be interesting to see if analysts talk about the cost of KOG's wells related to the rest of the Bakken operators. I don't know. I don't follow the industry that closely. Go back to my "welcome/disclaimer." This blog is simply about my attempt to understand the Bakken better; it is not an investment blog. I have sentimental feelings about my home state of North Dakota, and my hometown of Williston. How these individual companies do is not the purpose of this blog.

Friday

Wells coming off the confidential list today have been posted. Folks might want to think about what the IPs from the BR wells in Corral Creek are telling us. Remember, Corral Creek is unitized, and the BR horizontals are no longer than long horizontals elsewhere in the Bakken. I noticed the same thing, quite some time ago, with many wells that have been drilled on 2560-acre spacing elsewhere.

Active rigs: 180

RBN Energy: PIGs in the oil patch.

The impending trainwreck: yesterday I mentioned that the undercapitalized, new-to-the-game health care insurers underwriting the individual mandate would go the way of Solyndra in two to five years. (Remember: the big insurers opted not to underwrite the individual mandate portion of ObamaCare.) Today it is being reported that some of these small insurers may opt to leave the individual mandate program. But you have to read to the end of the article; this little bit of trivia is buried in these stories. By the way, this story (ObamaCare delay would send health premiums soaring) is the top story over at Yahoo!Finance right now.

Also, some smaller insurers may opt to leave the market, which would also cause rates to rise, Feyman said.

The line at the local Starbucks is reaching to the front door (actually the side door in this particular Starbucks, but it is the door everyone uses to enter). I normally wouldn't mention this, but Starbucks announced that it was doubling its dividend.  Starbucks is one of eight companies announcing increased dividends/distributions. Interestingly, Brunswick, the recreation company is also announcing an increased dividend.

Chevron misses by $0.14, misses on revs (EPS QoQ decline in line with pre-announcement) : Reports earnings of $2.57 per share, $0.14 worse than the Capital IQ Consensus Estimate of $2.71; revenues rose 0.8% year/year to $58.5 bln vs the $65.04 bln consensus. (Co pre-announced that Q3 earnings will be lower than Q2 -- Q2 was $2.77).

First Solar is up over 7% after cruising past earnings estimates by $1.44 on above-consensus revenue.

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

Ultra Petroleum is having a great day, up over 2%. Ultra Petroleum Corp., an independent oil and gas company, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. It primarily focuses on developing a tight gas sand trend located in the Green River Basin of southwest Wyoming; and assessing, exploring, and developing its position in the Marcellus Shale and other horizons located in the north-central Pennsylvania area of the Appalachian Basin. Earnings beat expectations.

Chrysler sales rise 11 percent in 3Q13.  Ford sales rise 14%. But this is the real story, as Don points out. The quarter ended yesterday. Chrysler and Ford released their results today. ObamaCare rolled out October 1, 2013. The government has not posted their numbers yet. CBS reports that six folks enrolled in ObamaCare on day 1. I think Apple sold several million iPhones on day 1. If one can count the number of ObamaCare enrollees on two hands, this is more than a trainwreck. The insureres have to be getting very, very nervous. Remember: this is what the insurers are facing:

• no lifetime cap on medical expenses; insurers are on the hook for millions for each cancer patient, each AIDs patient; most expensive: unlimited psychiatric care
• no discrimination between those at risk, those not at risk; everyone pays the same
• if only those at risk sign up, the insurers go broke
• undercapitalized insurers are underwriting the individual mandate; the big insurers opted out of the individual mandate program

Here's the CBS story on ObamaCare enrollments:

For 31 days now, the Obama administration has been telling us that Americans by the millions are visiting the new health insurance website, despite all its problems.

But no one in the administration has been willing to tell us how many policies have been purchased, and this may be the reason: CBS News has learned enrollments got off to an incredibly slow start.

Early enrollment figures are contained in notes from twice-a-day "war room" meetings convened within the Centers for Medicare and Medicaid Services after the website failed on Oct. 1. They were turned over in response to a document request from the House Oversight Committee.

The website launched on a Tuesday. Publicly, the government said there were 4.7 million unique visits in the first 24 hours. But at a meeting Wednesday morning, the war room notes say "six enrollments have occurred so far."

They were with BlueCross BlueShield North Carolina and Kansas City, CareSource and Healthcare Service Corporation.

By Wednesday afternoon, enrollments were up to "approximately 100." By the end of Wednesday, the notes reflect "248 enrollments" nationwide.

As difficult as it was to get insurance, one has to assume these 248 have serious medical problems, and it is not beyond the pale to suggest that if most of these 248 are insured by the same company in the same state, they could cause that insurer to go under. I truly doubt 248 healthy 27-year-old males put up with the website to enroll. 

Six crock pot / slow cooker mistakes.