Wells Coming Off The Confidential List Tuesday; KOG Has a Huge Well

24198, 2,282, KOG, P Evans 154-99-2-4-9-16H, Stockyard Creek, t8/13; cum 30K 9/13;
24318, 222, Hunt, Antelope 1-33-28H, Sather Lake, t10/13; cum --
24690, 602, Baytex, J. Olson 27-34-162-98H 2XM, Whiteaker, t5/13; cum 39K 9/13;
24705, 828, OXY USA, Stag 1-35-23H-142-96, Russian Creek, t5/13; cum 28K 9/13;
24814, drl, CLR, Rollefstad Federal 12-3H-3, Antelope, no production data,
25060, drl, Hess, AN-Mogen Trust-153-94-3229H-1, a Sanish well; Antelope, no production data,
25442, drl, QEP, Kummer 2-6-7BH, Grail, no production data,

**********************************

24198, see above, KOG, P Evans 154-99-2-4-9-16H, Stockyard Creek:

Date	Oil Runs	MCF Sold
9-2013	15271	19481
8-2013	13966	8843

Flaring: One Pesky Problem

 Updates

April 24, 2016: See North Dakota natural gas production / milestone: http://themilliondollarway.blogspot.com/2016/04/directors-cut-is-out-february-2016-data.html. 

Original Post

Disclaimer: my long notes, often done quickly, are not always proofread the first time they are posted. There may be typographical errors, and there may be factual errors, but hopefully folks can understand the point I'm trying to make. Except for the data at the bottom of the post, this is all opinion. 

Motley Fool is reporting a solution to the flaring problem as espoused by certain Bakken operators: mega-pads with a single natural gas pipeline going to the mega-pad.

I am going out on a limb here, beyond my comfort zone, because I could be way, way wrong, but I was told that unlike crude oil which can go directly into a local line and then into a region/national line, natural gas cannot be shipped via regional/national pipeline until it has been processed.

Again, I am being told that natural gas must first be gathered and processed by a processing plant before it can be placed in the "national natural gas pipeline system."

Natural gas can only (for all intents and purposes) be flared or removed from the well by pipeline; trucks are not used in the Bakken to transport natural gas from the well head.

If that is accurate, and again, I could be way, way wrong, but if that is accurate, one can easily tell from the NDIC "ticket stubs" whether wells are flaring and, to some extent, why they are flaring.

1. The first thing to do is look to see if any natural gas is being produced, sold, and/or flared. If natural gas is being produced/sold and absolutely none, zero, nada, zilch, is being flared, one can safely assume the well is hooked up to a pipeline.

2. Even if a well is hooked up to a natural gas pipeline, natural gas might still be flared. If a ticket stub shows that some natural gas is being sold, and some being flared, then one can safely assume that the well is hooked up to a natural gas line, but for some reason, not all of the natural gas was sold; some was flared.

3. If that's the case, some was sold, and some was flared, there is no way to know why. There are two main reasons: a) the processing plant was down for maintenance; b) the processing plant had reached capacity. I think there are ways to sort that out using just the ticket stubs, but it would be difficult, time-consuming, and still, just an educated guess.

So, with all that in mind, I picked, entirely random a starting point to pick ten Bakken wells. I picked #19001 to be the starting point. I could have picked #18000 or #17957 or #19745 or #25687, but I chose to pick #19001. Go with it.

I then took the first ten wells that were productive (#19003 was dry). The data is below. I only took enough data to determine whether the well was hooked up to a natural gas pipeline. Again, I am way beyond my expertise here and it's possible this whole post is inaccurate, but let's continue.

If I am correct, all ten (10) of the wells below are hooked up to a natural gas pipeline, and to a processing plant.

All ten (10) wells are by operators well established in the Bakken, so they understand the flaring issue.

All ten (10) wells are in the heart of the Bakken; no one can say these wells are in the remote sections of the North Dakota Bakken. In fact, some of the fields are downright saturated with Bakken wells: Sanish, Indian Hill, Van Hook, and especially Stockyard Creek east of Williston.

So, plenty of time, densely situated, and all hooked up to a natural gas pipeline, and yet eight of them still flare gas. Either the processing plants were down for maintenance (which is possible in some cases) or the processing plants were at capacity.

But simply placing more natural gas pipelines to mega-pads, as the article linked above suggests, seems not to be as simple as it sounds. We need to see some more natural gas processing plants being built. Don tells me (while writing this note), that it is fairly "easy" to expand existing natural gas processing plants, and if the mega-pad solution works, we should see new processing plants being built. So, we'll see. But just more pipeline is not the answer. (And maybe, to defend Motley Fool who are much smarter than I, they are implying that "natural gas pipeline" means the entire natural gas gathering and processing system.)

Again, I'm way out on a limb here; I could be way wrong, but this is how I learn about the Bakken. It is based on what readers have told me.

Two problems I have with the Motley Fool article. First this from the article:

The most effective way to do this would be, of course, to install natural gas pipelines to each pad, but, again, the amount of gas coming from a well or two makes it a very uneconomical decision. If you could install a gathering pipe for several wells, then you have a chance at making it happen.

The fields where these wells are located are saturated with wells; it's already equivalent to pad drilling and we still don't see an adequate number of natural gas processing plants, or better said, I suppose, an adequate capacity.

And the second point is simply a pet peeve. Motley Fool:

In fact, gas flaring is so prevalent in the region that it can be seen from space. 

In fact, one can see a lit cigarette from space. "Gas flaring is so prevalent in the [Bakken] that it can be seen from space." That quote is perpetuating a myth that the photo taken of the Bakken from space streamed around the world was, in fact, about 90% lighting from rigs and man-made structures associated with wells, farms, and communities; and, maybe 10% was actually flared gas. But all that "light" from the Bakken at night is hardly due to flaring natural gas. Just a pet peeve.

Anyway, here's the data. Ten (10) wells that have been around long enough to have had natural gas pipelines in place; in dense enough areas to warrant natural gas processing plants, and more than enough time to make it happen, and yet, of these ten wells, eight wells still flare, and in some cases, significantly so.

By the way, a takeaway from this little exercise: the operators have done their part in all ten of these wells: they have hooked up their wells to a natural gas pipeline. It is the "system" that has let them down, inadequate natural gas processing plants/capacity.

Again, this is my 2 cents worth, coming from someone with no formal education, training, or experience in the oil and gas industry, so I could be way wrong, but I'll throw it out there for consideration.

Hess, by the way, has a very, very strong natural gas history and it is not surprising that one of the two wells noted below that is not flaring, is a Hess well. The other one is a Slawson well, on the reservation, and in a fairly active area.

******************************

19001, 618, Zenergy, Stepanek 8-5H, Indian Hill, t12/10; cum 151K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	16	695	449	814	673	90	511
BAKKEN	8-2013	30	2093	2246	2350	2029	312	1582

 19002, 2,130, Statoil, Smith Farm 23-14 1-H, Cow Creek, t10/10; cum 199K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	2912	2730	3093	2270	2221	49
BAKKEN	8-2013	31	3309	3105	3420	2684	2681	3

19003, DRY.

19004, 1,440, EOG, Mandaree 12-07H, Squaw Creek: 

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	1493	1576	755	1820	1508	163
BAKKEN	8-2013	31	1521	1427	598	1676	882	640

19005, 1,289, Whiting, Satterthwaite 43-1H, Sanish, t2/11; cum 127K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	2132	2095	1008	2445	2445	0
BAKKEN	8-2013	31	2476	2399	1350	3124	3020	104

19006, 823, KOG, 20711 Kreidle 3229 1H, Stockyard Creek, t7/11; cum 195K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	3813	3811	4274	4242	0	4152
BAKKEN	8-2013	31	4331	4327	3660	4201	14	4098

19007, 372, Hess, EN-Will Trust B-157-94-2635H-3, Big Butte, t12/10; cum 69K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	5	192	209	230	655	655	0
BAKKEN	8-2013	31	1254	1250	937	3007	3007	0

 19008, 2,804, Statoil, Brakken 30-31 1H, Catwalk, t12/10; cum 164K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	2757	2161	3001	2639	0	2639
BAKKEN	8-2013	30	2626	3454	3532	1797	0	1797
BAKKEN	7-2013	31	1976	1694	2648	1026	0	1026
BAKKEN	6-2013	17	1237	625	1487	573	9	564
BAKKEN	5-2013	31	1929	2366	2712	1684	6	1678
BAKKEN	4-2013	30	2622	2533	1975	3449	48	3401
BAKKEN	3-2013	31	2672	2923	1948	3216	0	3216
BAKKEN	2-2013	28	2808	2652	1854	3302	19	3283
BAKKEN	1-2013	29	2949	2963	1544	2523	482	2041

 19009, 651, CLR, Bonneville 3-23H, Rattlesnake Point, t12/10; cum 199K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	3347	3421	1450	3547	3547	0
BAKKEN	8-2013	31	3718	3640	1533	3976	3976	0
BAKKEN	7-2013	31	4113	4145	1775	3591	3536	55
BAKKEN	6-2013	21	2271	2472	1092	2103	2067	36
BAKKEN	5-2013	31	3935	4014	1719	4024	3909	115

 19010, 847, Slawson, Armada Federal 1-14-13H, Van Hook, t10/10; cum 245K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	3178	2745	1848	2072	1922	0
BAKKEN	8-2013	10	590	630	1061	69	19	0
BAKKEN	7-2013	25	3039	3398	1101	1660	1410	0

19011, 725, CLR, Bridger 3-13H, Rattlesnake Point, t12/10; cum 206K 9/13:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2013	30	3544	3281	862	3810	3810	0
BAKKEN	8-2013	31	3826	3898	923	4401	4401	0
BAKKEN	7-2013	31	3683	3700	918	3564	3534	30
BAKKEN	6-2013	30	3878	3984	947	4282	4160	122
BAKKEN	5-2013	31	4247	4408	983	4395	4275	120
BAKKEN	4-2013	30	4354	4221	1053	4208	4208	0

Six (6) New Permits -- The Williston Basin, North Dakota, USA; MSNBC For The Archives

Active rigs: 183

Six (6) new permits --

• Operators: Hess (5), Fidelity
• Fields: Hawkeye (McKenzie), Alger (Mountrail)
• Comments: The Hess permits were all "HA-Nelson" wells; four appear to 1280-acre spacing; one appears to be 2560-acre spacing; I believe three "HA-Nelson" permits were canceled last week; these appear to be replacing those that were canceled; there are now 9 wells/permits sited in 33-152-95, Hawkeye oil field

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

*****************************

For The Archives

Nothing About The Bakken

It appears MSNBC has become just another blog, and a foul-mouthed blog at that. I no longer watch TV -- more on that in a moment, but this from realclearpolitics and it's really clear that if this guy is not sacked, MSNBC has lost all touch with its audience. This was the opening from his apology:

Last Friday, on this broadcast, I made some comments which were deeply offensive and directed at Governor Sarah Palin. I wanted to take this opportunity to say sorry to Mrs. Palin and to also offer an unreserved apology to her friends and family, her supporters, our viewers, and anyone who may have heard what I said.

My words were wholly unacceptable. They were neither accurate, nor fair. They were unworthy of anyone who would claim to have an interest in politics, and they have brought shame upon my friends and colleagues at this network, none of whom were responsible for the things that I said. And at a place where we try every day to elevate political discourse and to focus on issues that matter to all of us. 

The link does not say what he said. Apparently this is what he said (it is at the link, but because the link might break, I will post the offending words): Sarah Palin should be defecated, pissed on.

If he actually said that during prime-time hours, I am shocked. Shocked.

Wow, that's incredible. That's the first time I had seen that. I am surprised he is not already sacked.

It's been my experience that folks usually mean what they say, and that what folks say is seldom far from how their mind works on a regular basis. In other words, I think this guy thinks like this, and he talks like this when he is not on camera.

Tom Brokaw was a long-time anchor at NBC. I don't know who the NBC Nightly News anchor is any more.

The "MS" in MSNBC is Microsoft, as in Bill Gates, Steve Ballmer, et al. 

Oh, back to television. As noted above, I no longer watch television, with one exception. There used to be two exceptions, but I have even given up watching NASCAR. The one exception is The Big Bang Theory, often with adult innuendo and adult themes but it is what it is. I watch it because it's the one show my wife absolutely loves and we enjoy watching it together.

The interesting thing is I have no interest in watching television at all. We watched a re-run last night of TBBT and I found the three minutes of advertising between "scenes" very difficult. I think in some cases there were more than six 30-second ads between scenes. And to think that on top of that I'm paying TWC for basic television (i.e., ad-supported).

Update On KOG's Pilot Project 2.0

In case you missed the initial post on this subject, here is the link.

Richard Zeits provides an analysis of KOG's pilot project to drill 16 wells in one 1280-acre spacing unit in the heart of the Bakken, including six wells targeting the upper Three Forks, and two wells targeting the lower Three Forks.

Maria Bartiromo, CNBC, Moving To Fox Business Network --

DRUDGE has learned that Maria Bartiromo is jumping to FOX BUSINESS NETWORK with an announcement expected sometime soon. Sources close to the situation say there have been ongoing conversations throughout the fall. The new deal calls for Bartiromo to anchor a daily market hours program on FOX BUSINESS. Insiders say there will be a role on FOXNEWS as well... DEVELOPING...

American Eagle To Be Listed On NYSE This Wednesday

Link here.

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.

I Can't Make This Stuff ... I Can't Take The Credit For It -- A Big "Thank You" To My Readers .......

Community organizers had anticipated at least 300 would show up at Enbridge and TransCanada regional headquarters in Calgary, Alberta, Canada, (that country to the north of us) to protest "global warming."

But due to a winter storm, only fifty or so folks who had access to gas-guzzling and diesel-guzzling SUVs were able to make it.

I can't make this stuff up.

The Calgary Sun is reporting:

Originally about 300 people were slated to participate in the Calgary protest, but due to a snow storm only about 50 showed up. [Those in gas-guzzling, diesel-guzzling SUVs; I assume all those who made it will be staying overnight in Winnebago RVs.]

“We have to take advantage of our knowledge at this point and really change our behaviour, change our way of development. [Change our way of development, whatever that means.]

“We can’t keep developing infinitely on a finite world.” [Quoting Malthus, I'm sure.]

Chagnon said it was important to hold a peaceful gathering in Calgary, because the city is home to the headquarters of several energy giants. [The jolly green giant is an exception.]

The protest was held as world leaders in Poland for the United Nations Climate Change Conference discuss plans for international co-operation on the issue.

"We have to take advantage of our knowledge ... " when asked where Poland was, several of the protestors said Poland was the outermost planet in the solar system.

Yes, I made that part up. About the Poland being the outermost planet in the solar system.

ObamaCare...This Says It All ... And This Is Why The Insurers Are Running Scared ...

Yahoo!News is reporting:

With all the problems facing the rollout of President Barack Obama's health care overhaul, nowhere is the situation worse or more surprising than in Oregon, a progressive state that has enthusiastically embraced the federal law but has so far failed to enroll a single person in coverage through the state's insurance exchange.

Despite grand ambitions, an early start, millions of dollars from the federal government and a tech-savvy population, Oregon's online enrollment system still isn't ready more than a month after it was supposed to go live. The state has resorted to hiring or reassigning 400 people to process insurance applications by hand.

"We're all surprised and frustrated that we're in the position that we're in now," said Jesse O'Brien, a health care advocate at the Oregon State Public Interest Research Group, which lobbied for the exchange.

Remember: the federal government is only reporting how many have "put something in their shopping cart." Putting something in one's shopping cart is not the same as paying for it/buying it.

The bad news: Oregon has its own enrollment site. The Oregon site is in worse shape than the federal government's enrollment site. The federal government's enrollment site is in such bad shape, the government now considers an "80% success" of access as "smoothly operating" and "fixed"; previously reported. For the 20% of Americans who will never be able to access the federal website, the administration is now working with insurers to find ways around the on-line exchange: like telephone calling, pencil, and paper. 

We're not "some banana republic" -- President Obama, September 20, 2013. No, the banana republics are actually getting things done.

Germany Announces Largest New-Build Program For Hard Coal Stations Since 1998; Ten New Plants Coming On Line Over The Next Two Years

Earlier I posted this update at "coal central" (note the date: a reader sent me the article today; I had missed it back in October):

October 14, 2013: coal will surpass oil as the key transportation fuel by 2020 -- Mail OnLine.

Coal will become more in demand than oil by 2020 driven by growth in China and India, despite campaigns to reduce carbon emissions across the globe, a new report reveals.

Marking a return to an era reminiscent of Britain's industrial revolution, the rapidly expanding economies in the East are turning to coal since it is cheaper and more reliable than oil or renewable energy sources, energy consultancy firm Wood Mackenzie said on Monday.

Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies.

Coal demand in the United States, Europe and the rest of Asia will hold steady.'China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel,' said William Durbin, president of global markets at Woodmac.

'Unlike alternatives, it is plentiful and affordable.' China - already the top consumer - will drive two-thirds of the growth in global coal use this decade. Half of China's power generation capacity to be built between 2012 and 2020 will be coal-fired, said Woodmac.

So, that was posted earlier this morning.

Now, Don sends me a story that could be interpreted at least two different ways:

• Germany is blowing off concerns about global warming
• Woodmac saw this coming

The story, being reported by Bloomberg:

Germany, Europe’s biggest energy market, is in its largest new-build program for hard coal stations since 1998. Ten new plants with a combined capacity of 7,985 megawatts are scheduled to start producing in the next two years, according to information from German grid regulator Bundesnetzagentur and operators.

$26/Gallon Transporation Fuel Vs Benefits For Active Duty

Back on July 19, 2012: US Navy to pay $26/gallon for transportation fuel.

The Los Angeles Times is reporting:

When the U.S. Navy sailed an imposing fleet near Hawaii that was powered in part by algae and used cooking grease, environmentalists weren't the only ones who were thrilled.

Executives at bioenergy startups in the San Francisco Bay Area, Chicago and elsewhere — and the venture capitalists backing them — had reason to cheer. The Obama administration has made the military, the largest consumer of energy in the country, a financial lifeline for cash-strapped alternative fuel innovators.

But the pilot voyage of the Navy's "great green fleet" came with a troubling aspect: price.

The fleet's green fuel costs $26 a gallon, several times more than conventional diesel and jet fuel. And the costly experiment came just as the military moved into an era of deep budget cuts.

Republicans in Congress have howled over the price tag, and they're not alone. Some independent energy experts doubt the military's projections that spending on pioneering technology will yield sufficient benefits.

And, of course, earlier this morning, from The Wall Street Journal, I posted that the military is ready to cut benefits for those on active duty because of cost:

Military eyes cuts for military benefits.

Off the table for now are changes in the retirement system. Because the military hopes to allow current service members to keep their existing retirement plans, it will be two decades until any savings from changes in military retirement are realized, making shifts in the program less urgent. 

Wow, what a bunch of hypocrisy. It's not benefits for active duty that need to be cut. The general officers who approved the plan to contract for $26/gallon of transportation fuel (vs $3.00/diesel) need to be cut/retired. Or court martialed. 

iBeacon Update

 Updates

November 21, 2013: Macy's already adapting iBeacon, along with Apple stores, of course. Folks will visit Macy's just to see how it works. Meanwhile, state governments (Oregon) and the federal government cannot even get a simple website up and working.

Original Post

Back on September 17, 2013, I wrote:

This is huge: an Apple story over at SeekingAlpha.  I'll jump right into it. Near field communication has limited range: 20 cm but the practical range is an incredibly lousy 4 cm. Watch how close folks have to hold their Androids to a sensor next time for NFC to work. Apple is ignoring NFC. Why? They have incorporated iBeacon, which does the same thing, only better and more, and has a range of ... 50 meters. That's a bit farther than half the length of a football field. It was interesting that although Apple is already incorporating the technology, it did not mention this technology at their two most recent public presentations. But iBeacon sounds just like Steve Jobs. If someone came to Jobs and said NFC had an effective range of 4 cm he would jump up, yell, and say, "you've got to be kidding. I want an effective range of at least the length of a soccer field." This is a huge story. I don't invest in AAPL, never have, never will. I am just impressed with their technology. One company consistently beats all the rest, with very, very rare missteps.

Today, it is being reported that Apple retail will incorporate iBeacon into their stores. This will be fun to watch. Coincides with Apple's new senior vice-president in charge of retail stores. I was just over at our neighborhood Apple store this weekend; one had to have a walk-in reservation to buy "anything." They were that busy. Folks met you at the door and logged you into an appointment time on an iPad or iPad mini. The mini-retinas were still not available in the store; apparently on-line/in-store pick-up was working fine. I am currently padless, having sold my version 1 iPad back to Target for $200. With wi-fi everywhere, I don't miss the iPad. Yet.

"...Major Producers Such As Halcon Resources And Continental Resources." -- Work Over Rigs

I mention this infrequently, and it doesn't help that I alternate between "workover" and "work over."

Recently I mentioned that the next big story in the Bakken will be workover rigs.

Yahoo!News is reporting:

PetroTech Oil & Gas today announced that they have entered into a joint venture with Rolling Hills Oil and Gas LLC of North Dakota to obtain financing for two 20,000 foot-completion and work over rigs.

The joint venture calls for Rolling Hills to arrange funding from one of their equipment lines, and PetroTech would, once purchased and manufactured per specs, will contract the two rigs with one of the major producers in North Dakota such as Halcon Resources, and Continental Resources.

"This is an opportunity for our company to participate in a venture to secure a huge revenue source over the next Three to Five years that will exceed anything we have done to date, with no expense on our part or any additional debt to our   company." Said Eddie Schilb president of Petro Tech Oil and Gas, "These two rigs once put into production will bring in $40,000.00 per day at 24 days per month."

The most surprising line in that story was the nexus of Halcon and Continental Resources.

Folks Waiting For The Rocky Ridge-Fritz / Tyler Will Have To Wait A Bit Longer; Link Back To MRO Tyler Wells In Slope County

The first of four in this area:

• 25347, drl, Williston Exploration, Rocky Ridge-Fritz 1, Rocky Ridge, Heath, t-- 

From an earlier post:

Williston Exploration is drilling a well in this same field, at the northwest end of the field:

• 25347, conf-->rig on site-->conf, Williston Exploration, Rocky Ridge-Fritz 1,

That's all interesting, but if one is reading the tea leaves, this is the most interesting bit of trivia. Near this Rocky Ridge-Fritz 1 well, they are also drilling a SWD well which is also on the confidential list. The arrow in the image points to the SWD (on confidential list). It's my impression after following the Bakken boom for the past several years, they don't drill SWD wells just anywhere; this to me suggests they think they will be doing a lot of drilling in this area.

Devon Shire Over At SeekingAlpha: Why Warren Bought Huge Stake In XOM

Over at SeekingAlpha:

The questions many people would like answered is why Exxon and why now? I'm not sure about the why NOW part as Exxon's shares have been around this price for quite some time, but I think I've got a pretty good idea about the why.

Despite the recent media cries of an American oil glut I think that Buffett believes that oil prices are going higher in the future. How do I know that Buffett thinks oil prices are going higher? His partner Charlie Munger told me so.

Earlier this year I came across a roundtable conversation that included Berkshire Hathaway's eighty-eight year old vice-chairman Charlie Munger. Munger is one of the most rational thinkers the investment world has ever seen and he and Buffett are almost always on the same page.

Here is some of what Munger had to say about future oil prices and what he thinks should be proper energy policy:

"Oil is absolutely certain to become incredibly short in supply and very high priced. The imported oil is not your enemy, it's your friend. Every barrel that you use up that comes from somebody else is a barrel of your precious oil which you're going to need to feed your people and maintain your civilization. And what responsible people do with a Confucian ethos is suffer now to benefit themselves and their families and their countrymen later. The way to do that is to go very slow in producing domestic oil and not mind at all if we pay prices that look ruinous for foreign oil.

I remember that interview. I don't recall if I posted the link at the time. There were parts about the interview I did not agree with, but his underlying thesis was right on target.  

Oh, yes, here it is: my original post on Munger back on July 25, 2013.

Lead Story Over At DrudgeReport: A Common Theme On The Blog -- The Gap Between The "Haves" And The "Have-Nots" Widens

The Washington Post is reporting:

The income gap in America has been widening for decades and the modest three-year recovery did little to change that, according to new Census data.

The new data suggest that despite modest recoveries in many states, the middle class has been shrinking while households have been added in the lowest and highest income brackets. 

The state-by-state data compare incomes from a pair of three-year periods: 2007 through 2009, a span that included the Great Recession, and 2010 through 2012, a period that included the ongoing and modest recovery.

For years, the wealthiest 1 percent have amassed income more quickly than the rest. From 1979 through 2007, for example, the top 1 percent of households saw income grow by 275 percent, according to a nonpartisan Congressional Budget Office study.

Compare that to the bottom fifth of households, which saw income gains of only 18 percent over that time. Recent Nobel Prize winner for economics Robert Shiller, who is known for creating a closely tracked home-price index, last month called income inequality “the most important problem that we are facing now today.”

And just last week, President Obama’s nominee to lead the Federal Reserve, Janet Yellen, called income inequality “an extremely difficult and to my mind very worrisome problem.”

Wow, wow, wow. Look at what I wrote back on October 29, 2013:

I don't quite agree that "most" people will "rocket" toward the top or drift toward the bottom. I think about 20% of educated, investing Americans -- many employed by the US government, including the military -- will "rocket" toward the top; another 47% will remain among the lower-middle class, lower class, and the "homeless"; another 40% (which we used to call the working middle class) will actually drift toward the bottom.

The upper-middle class (the 20% noted above) will disappear ( most will become rich, but not super-rich, who in turn will be different than the hyper-rich). The middle-middle class (the 40% noted above) will drift toward the lower middle class.

Counter-intuitively, ObamaCare will make the situation worse. The poor won't become any less poor, but the middle-middle class and the lower-middle class will definitely drift lower.

ObamaCare To Result In Increased Costs For Small Groups Next Year (And For Large Groups In 2015)

For newbies, there are three parts to ObamaCare:

• the employer mandate: delayed for one year
• the individual mandate: (sort of) delayed for one year
• taxes on medical devices (and a whole bunch of other things, including oil royalties)

The one-year delay in the employer mandate allowed insurers to see how much this was going to cost them (previously reported on the blog; it's now being reported -- see linked story below). [That's why it will individual premiums will actually be increased if customers/insurers agree to "re-issue" canceled polices per President Obama's announcement last week.

For North Dakotans: group plans will increase by as much as 30% next year.

Increasing demand for health care services and new provisions under the Affordable Care Act will combine to drive up insurance costs for many individuals and small groups next year.

Beginning Jan. 1, Blue Cross Blue Shield of North Dakota has approval to increase premium rates for group plans.

Generally, group plans that were in place when the health reform law was passed in 2010 and meet the law’s provisions will see increases ranging from 10 to 20 percent, according to the insurer, which covers about 400,000 North Dakotans.

For small groups, those that cover fewer than 50 employees, the increases are sharper and range from 20 to 30 percent.

The "increasing demand for health care services" is a direct result of ObamaCare. 

What's not being reported yet is that group plans will eventually subsidize individual health care plans.

The article does not report on cost shifting by employers.

The article goes on:

The increases will depend largely on individuals’ previous coverage. Those who had coverage with comprehensive benefits will not see dramatic changes, while those with leaner-benefit, high-deductible plans will see sharp rises, Keefer said.

For small groups, those with 50 or fewer employees, the average increase will be about 30 percent, Keefer said.

The increases are largely due to the Affordable Care Act, said Jim McManus, a Blue Cross Blue Shield of Minnesota spokesman.

“This is all being driven by changes the law is bringing to the market,” McManus said. “Price is an indicator of those changes.”

Thousands of individual insurance customers have received notices informing them that their coverage is being discontinued because it does not meet coverage and affordability standards under the Affordable Care Act, the reform law also known as Obamacare.

I Knew It Was Big; I Did Not Know It Was This Big

I was aware of Warren Buffett's foray into XOM. I did not know it was his biggest stock "bet" in two years.

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

Bloomberg reports: Berkshire Hathaway reported a stake in Exxon Mobil valued at about $3.7 billion as Warren Buffett’s company disclosed its largest new holding since IBM in 2011.

Rail Cars And The Bakken; Barron's Posts A Warning

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

A reader caught this story in Barron's over the weekend: railcar maker may have overbuilt. This is a long two-pager article; well worth the read.

As oil gushes from North Dakota and Western Canada, far away from most pipelines and refineries, railroads are carrying record volumes of crude in trains a hundred tank cars long. One of the best investment plays on this rising crude-by-rail traffic has been the shares of railcar manufacturers, whose backlog on tank-car orders happily stretches out to 2015. In the four years since the recession's bottom, the stocks of Trinity Industries, American Railcar Industries, and Greenbrier Cos. have more than tripled, outpacing the S&P 500's 60% gain. The tank-car upturn attests once more to the smarts of guys like Warren Buffett, whose Berkshire Hathaway owns industry leader Union Tank Car, and Carl Icahn, whose Icahn Enterprises controls American Railcar.

But the railcar makers may have become too successful for their own good.

I did not know both Warren and Carl owned/controlled two railcar makers. the Keystone XL story gets curiouser and curiouser. [Wow, I love to blog/connect the dots. A big "thank you" to the reader for alerting me to this Barron's story.]

It should be noted that RBN Energy has had many stories related to rail cars and CBR. And, of course, I mentioned that the most recent issue of BloombergBusinessweek had a short article on CBR and Warren Buffett.

Three Dots To Connect -- And, Yes, It's A Bakken Story

George Soros recent equity position.

American Airlines -- US Airways merger.

East coast refineries.

The most recent Bloomberg Businessweek issue -- the "special issue" -- did provide an "aha" moment for me.

On page 126 of that issue: a great graphic of "the fallout from fewer carriers."

How many US national carriers will remain after the AA - US Airways merger? Four. And one of the four might be considered a regional airline by some folks, albeit a "huge" regional. Here are the four: United, Delta, American Airways, and Southwest.

Four.

The George Soros connection.

Now the Delta connection.

WTI: $93

LTO: $71

I can't do the math but I can connect the dots.

Monday: The Unlimited Liability Facing Health Insurers; Leonid Meteor Shower Peaks Tonight; Doris Lessing Dies

Active rigs: 184

RBN Energy: How all that crude will be distributed across the Gulf Coast (a continuation of the series)

We estimate that over 4 MMb/d of new crude transportation capacity will have opened up to the Texas Gulf Coast by the end of 2015 – to a region with just under 3.7 MMb/d of nameplate refining capacity. With crude exports restricted by Federal law, some of that crude is going to need to find a home – most likely at Eastern Gulf refineries in Louisiana and Mississippi. Today we look at how some of the incoming flood of crude could be redistributed across the Gulf Coast region.

Three companies, including MDU announce increased dividends/distributions.

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

The Wall Street Journal

Military eyes cuts for military benefits.

Off the table for now are changes in the retirement system. Because the military hopes to allow current service members to keep their existing retirement plans, it will be two decades until any savings from changes in military retirement are realized, making shifts in the program less urgent. 

We've been blogging about this from the beginning: ObamaCare's death spiral and high-risk patients. Now a front page story in TWSJ: high-risk patients fuel more health-law worries.  For now, some states are keeping the pools, but long-term will probably result in higher rates for everyone. Good news for insurers for now.

So-called high-risk pools for people rejected by commercial health-insurance companies were supposed to be largely phased out when President Barack Obama's health law kicked in. Instead, they are gaining a brief second life in some states due to the problems with the federal health-insurance exchange created by the law. The development may represent short-term good news for the law, because it would keep some people with costly medical conditions out of the new policies, at least temporarily. But it adds to the uncertainty for insurers, analysts say, increasing concerns that could cause rates to rise for everyone next year.

Health-law fracas leaves Congress in limbo. 

Furor over the botched implementation of President Barack Obama's health-care law has allowed Congress to engage in a familiar activity: procrastination. Prospects already were dim for substantial legislation in the dwindling days of 2013, but the headline-grabbing fights over the federal health exchange and canceled insurance policies have given House Republicans no incentive to change the subject. The issue has drowned out talk of an immigration overhaul, taken the focus off high-stakes budget talks and stalled efforts to rewrite the tax code.

Nobel author Doris Lessing dies at age 94. 

Insurance costs may hurt customer spending -- Wal-Mart. This may be the big story in 2014. Yellen doing everything she can to prevent a downturn in the US recovery due to high health care insurance premiums.

Bloomberg's news division to lay off about 50 employees. What interesting timing, see my post on BloombergBusinessweek from yesterday. There was one interesting "dot-to-connect" in that issue; if I remember, I will post it later. It actually has something to do with the Bakken.

The Los Angeles Times

The Leonid meteor shower peaks tonight. The Leonid meteor shower occurs each November when the Earth passes through a stream of debris left in the wake of comet Tempel-Tuttle. The icy comet orbits the sun once every 33 years, shedding dust and detritus as it zips through space. When bits of that detritus burn up in our planet's atmosphere, we see meteors. Apparently, the viewing might be in prime time, 7:00 to 10:45 pm.