Saturday, November 30, 2013

It's Gonna Get Cold In The Bakken (50 Degrees Below Freezing): Home Of Economy/Carthartt Is Gonna Be Busy; Maybe Time For A Little Bob Dylan?

The temperatures are going to keep falling through this next week. By Saturday, the temperature will be down to 17 degrees. Below zero. The mean for this time of the year is about 20 degrees. Above zero. 

 For newbies, this is "Fahrenheit." It freezes at 32 degrees Fahrenheit. So 17 degrees below zero is about 50 degrees below freezing. Before the wind. 

One almost wishes there was more flaring to warm the surrounding air. Wanna bet where deer and antelope are gonna be hanging out next weekend?

Great weather forecasts at this site, my favorite weather site for quick look at the current weather and the forecast. It will be interesting to see the new records set due to all this global warming.


A Note to The Granddaughters

I was listening to Ian and Sylvia's cover of This Wheel's on Fire, written and recorded by Bob Dylan in 1967, when I received a note from Don relating to the Vietnam War. I recalled the Julie Driscoll cover that became a hit a year later, 1968:

This Wheel's On Fire, Julie Driscoll & Brian Auger, Trinity

When I received Don's note, I was listening to the Ian and Sylvia album and reading a book review in yesterday's Wall Street Journal: Wil S. Hylton's Vanished: The Sixty-Year Search for the Missing Men of World of War II.

Not one thing, I suppose, would connect those three "things" (Dylan's song, a note from Don regarding the Vietnam War, and then the book review about finding final resting places of aircrews lost in the Pacific during WWII).

Except somehow all three "things" ended up co-located in one of my medial temporal lobes.

From the WSJ's book review:
Nearly 50 years before, on Sept. 1, 1944, the 11-man crew of a B-24 Liberator that would come to obsess Mr. Scannon tumbled from the Pacific sky over Palau, their heavy bomber's left wing blasted off by Japanese antiaircraft cannons.
Mr. Hylton's compelling "Vanished: The Sixty-Year Search for the Missing Men of World War II" tells the story of that B-24's crew and the six decades of anguish that MIA status inflicted on their families.
But it also relates the tale of Pat Scannon and the epiphany that changed him from a scientific squint into a committed "wreck chaser," infused with a sense of "duty and responsibility" to ferret out the stories of the lost men, find their crash sites and repatriate their remains. As Mr. Scannon wrote in his journal: "I am interested in how individual crews, albeit in a lesser campaign, came under intense fire, lost their lives, and have, by necessity, been forgotten. . . . It is time someone acknowledges their efforts and perhaps lays to rest the outcome for their family members."
Later:
Mr. Scannon came back from his first trip to Palau, Mr. Hylton writes, and "disappeared into his home office to pore over old mission reports that oozed from his fax," determined to understand the air fighting over Palau that spanned the last 18 months of the war. He would return to Palau in 1994 hoping to find the wreckage of three missing B-24s. Within 48 hours he had located two of his target aircraft. The third eluded him, and as he left Palau, he swore that "he would scour the [ocean floor] for as long as it took to find the last plane."
And finally:
It took him 10 more years to fulfill that promise. As he set about his task, he collected data from books, archives and veterans themselves, and he developed a fascination with the Palau missions of the B-24-equipped 307th Bomb Group, "the Long Rangers." (This was the same unit that Louis Zamperini, the hero of Laura Hillenbrand's best seller "Unbroken," served in.) The 307th suffered crushing losses while prosecuting their attacks against Palau. In just one week of missions, in the late summer of 1944, they lost five planes—and more than 50 men.
One of those was Jimmie Doyle, the 25-year-old Texan who was the tail gunner of Mr. Scannon's third B-24. Officially missing in action, Jimmie Doyle had left at home a young bride and son, Tommy, who was only 15 months old when his father went to war. The pain of that loss—and the cruel family rumor that the MIA tail gunner had survived the crash and was living in California with no interest in his Texas family—haunted Tommy Doyle's life. "Tommy pushed the questions down, but they were always there," Mr. Hylton writes. "The slightest mention of his dad would bring [him] to tears."
I assume there is no comparison, and somehow looking for final resting places of those who gave all for their country is much more noble than looking for oil, but I suppose, for me, Harold Hamm's success in the Bakken is due to the same passion and "sense of duty and responsibility" that Pat Scammon possessed.

I don't know. Maybe that's a bridge too far.

If your memory serves you well
We're going to meet again and wait.
So I'm going to unpack all my things
And sit before it gets too late.
No man alive will come to you
With another tale to tell,
And you know that we shall meet again
If your memory serves you well.
 -- Bob Dylan and Rick Danko

As good as anything Emily Dickinson ever wrote.

Harold Hamm Featured In Newsweek/NBC News; Enough OOIP To Meet The Nation's Needs For Hundreds Of Years

I don't often have articles that I consider must-read articles (maybe only ten/week), but this is one of them: Harold Hamm feature in Newsweek/NBC News.
In the history of oil, this fall is a tipping point, the moment America gurgles past Saudi Arabia and Russia to become the world’s petroleum king.
The man most responsible is Harold Hamm, 67, a drawling, blue-eyed billionaire, a sharecropper’s son who grew to be the richest energy mogul in America. He was the first to profitably “frack” North Dakota oil wells, leading a revolution in the way the nation coaxes energy from the earth and draining momentum from the search for cleaner fuel sources. His company, Continental Resources, has quintupled in value in a matter of years, emerging as a swaggering promoter of eco-friendly, effectively infinite oil — along with all the supposed good that flows from it.
And more:
Last month, when U.S. Department of Energy data projected that America had become the globe’s new fuel pump and fuse box, Texas remained the biggest producer of crude oil. North Dakota, however, showed the fastest growth, approaching a million barrels of oil a day, up from 10,000 barrels a day in 2003 — and powering the largest five-year petroleum increase in U.S. history.
“This is a new era,” the head of the U.S. Energy Information Administration said at the time, “that you wouldn’t in a million years have dreamed about.”
Hamm did more than just dream about it. He recognized the potential of North Dakota’s Bakken oil field, which now produces more crude than Alaska’s Prudhoe Bay, and his company remains the area’s largest lease holder.
This month Continental Resources told investors that the region contains enough recoverable oil to double the official count of U.S. reserves and enough "oil in place" to meet the nation’s needs for hundreds of years. While those claims have not been verified by regulators, Hamm’s track record makes them hard to doubt
Last week President Obama awarded sixteen men and women the Presidential Medal of Freedom. All sixteen are very, very deserving, but I can identify four in the following list that pale in comparison to what Harold Hamm has done for this country.

Here were the recipients:
Ernie Banks, Ben Bradlee, former President Bill Clinton, Daniel Inouye (posthumous), Daniel Kahneman, Richard Lugar, Loretta Lynn, Mario Molina, Sally Ride (posthumous), Bayard Rustin (posthumous), Arturo Sandoval, Dean Smith, Gloria Steinem, Cordy Tindell "C.T." Vivian, Patricia Wald, and Oprah Winfrey.
Politicians, artists, a talk show host, a minister, an athlete, a coach, a teacher, but no room for one "harold hamm." And so it goes.

Snapshot: Status Of the 2012 Permits -- As Of December 1, 2013

This will be updated on an irregular basis until all permits have been "executed" for 2012: either producing, canceled, or abandoned. Updated December 31, 2012.

But as of December 31, 2012, some random data points for the 2012 permits.  [A tally of the 2011 permits can be found here.]

Permits from January 2, 2012 to December 31, 2012:
Permits: #22171 - #24692
2,521 total oil and gas permits (this does not include salt water disposal well permits)
  • 1,781 wells have a reported "IP" -- initial production 
  • 368 wells are on confidential status; generally that means the wells have at least been spudded
  • 144 permits are shown as PNC -- "permit now canceled"
  • 88 wells are on "DRL" status: generally that means the wells have reached total depth, and waiting to be fracked; we will be seeing more and more of this with multi-well pad drilling
  • 66 wells are "LOC" -- permitted, but no further action
  • 47 permits are shown as producing wells, but still on the confidential list
  • 18 wells were reported as "DRY"
  • 5 wells are listed as "WI" -- water injected
  • 4 wells were TA (2), PA (1), or IA (1) (often IA wells come back on-line) [temporarily abandoned, permanently abandoned, inactive]
(Adds up to 2,521 permits.)

Note: there may be errors in the tabulations (obviously there is at least one). It is based on my database taken from NDIC daily activity reports. In addition, this was done in between helping the granddaughters with Thanksgiving centerpieces. 

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

Of the 2,521 permits, 143 permits were canceled by the operator

Of the 2,521 permits, 70 locations still show no activity; permits only.

Not all 2,521 permits were Bakken wells. I suppose about 30 were non-Bakken/Three Forks wells (e.g., Madison, Red River, Spearfish).

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

The IPs ranged from a high of 5,417 bbls to a low of 5 bbls (a Madison well).

Of the top 20 "IP" wells: Statoil/BEXP (11); Whiting (4), Oasis (3), Murex (1), BR (1).

IPs:
  • Greater than 5,000 bbls: 3 wells
  • 4,000 to 4,999 bbls: 14
  • 3,000 to 3,999 bbls: 51
  • 2,000 to 2,999 bbls: 252
  • 1,000 to 1,999 bbls: 422
  • 750 to 999 bbls: 237
  • 500 to 749 bbls: 306
  • 250 to 499 bbls:  274
**********************************
So,
  • 420 wells are still on confidential status
  • 96 wells are still on "DRL" status
  • 70 wells are still "LOC"
  • 63 permits are currently shown as producing wells, but still on the confidential list
.... adds up to 649 wells yet to report IPs for permits issued in 2012

(Obviously, these numbers will change over the weekend but this gives us some idea where things stand.)

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

Of the original 2,521 permits, 143 permits were canceled (5.7%).

The 649 wells yet to report IPs represents (25.7%).

So, we are almost to the end of calendar year 2013, and almost a quarter of permitted wells (not including PNC) have yet to report.

Wal-Mart: Most Successful Black Friday in Walmart's History

Wal-Mart issues statement on Black Friday events: 'most successful Black Friday in Walmart's history':
Co also stated, "For our part, we want to be absolutely clear about our jobs, the pay and benefits we offer our associates, and the role retail jobs play in the U.S. economy. Walmart provides wages on the higher end of the retail average with full-time and part-time associates making, on average, close to $12.00 an hour. The majority of our workforce is full-time, and our average full-time hourly pay is $12.81 an hour. We are also proud of the benefits we offer our associates, including affordable health care, performance-based bonuses, education benefits, and access to a 401K."
Compare this with the minimum wage, the federal wage, in Washington, DC, high cost area where most Wal-Mart employees do not work (thank goodness): $7.25. Source: WSJ. Other than a questionable $15/hour minimum wage in SeaTac, the highest minimum wage comes nowhere close to Wal-Mart's average of $12.00 an hour + benefits.

Bakken Pricing Rises, Firms -- Refinery Maintenance Completed; $11 Discount To WTI; LSS Sells At $3.45 Premium; Alaskan At $13 Premium

Update

November 30, 2013: a reader says that his royalty checks reflect nothing less than $96/bbl for the past three months. I find that very, very interesting, and why it is very, very difficult for analysts to sort out future earnings for operators. The discrepancy reflects:
  • the "TV crawler" and Bloomberg data below are daily spot prices and futures
  • operators contracted six months ago on current deliveries
  • operators contract with hedges, collars, floors, ceilings which have been previously discussed
  • price of Bakken oil is priced at Clearbrook (I believe); it varies at other locations
You have no idea how much I appreciate getting data from readers on prices they are getting for their Bakken oil. It is very, very helpful.
 
Original Post

An $11 discount to WTI may make some folks unhappy, but Canadian oil sands is priced at $30 to $40 discount to WTI, and Canadian oil sands runs $20 to $40 more to produce. Maybe more. [Those are all "my" numbers; others will disagree.]

Bloomberg is reporting:
Bakken light crude strengthened on the spot market as refineries ramped up operation after seasonal maintenance.
The grade reached a four-week high against the benchmark West Texas Intermediate. Refinery utilization rates in PADD 2, or the U.S. Midwest, rose by 2.6 percentage points to 96.1 percent of capacity last week, according to data released today by the Energy Information Administration. The rates typically decline seasonally as plants perform maintenance before the start of winter.
Bakken crude delivered in Clearbrook, Minnesota, strengthened by $1 a barrel to an $11.50 discount to WTI, according to data compiled by Bloomberg at 3:03 p.m. New York time. Bakken crude production in North Dakota reached 867,240 barrels a day at the end of September.
Other pricing at the link:
WTI crude oil on the New York Mercantile Exchange fell $1.38, or 1.5 percent, to settle at $92.30 a barrel on the New York Mercantile Exchange.
Other spot market grades also strengthened. Light Louisiana Sweet oil gained 30 cents to a $3.45 premium to WTI, while Alaska North Slope crude strengthened for a fifth straight day, by 25 cents to a $13 premium. Southern Green Canyon gained 90 cents, narrowing its discount to WTI to $3.70 a barrel.
For newbies: Bakken has two disadvantages -- a) landlocked/transportation/takeaway/location; and, b) sweet oil.

Saturday Morning: Just The Wall Street Journal -- Nothing On The Bakken

The Wall Street Journal

Health site likely to miss Saturday deadline. That's the least of their problems.

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

Local minimum wage laws creates a patchwork across the nation; time for the Feds to intervene?
Some examples:
Colorado: $7.78
Florida: $7.79
Arizona, Montana: $7.80
 How do lawmakers even come up with these numbers?

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

OPEC rift developing over Iraq output; possible return of Iranian production; never mind US shale.

In Appalachia, coal struggles to compete with natural gas.

CNOOC seeks to export LNG from Canada's Pacific Coast. Good luck.

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

Book review:  Queen Anne by Anne Somerset
Queen Anne, who reigned over England from 1702 to 1714, was not the stupidest of the Stuart monarchs—that was her father, James II—but she was certainly not of sparkling intelligence. Nor was she in any way glamorous. In many respects, her life was wretched. By 40, she could scarcely walk. She had endured at least 15 pregnancies, and perhaps a couple of phantom ones, but only one of her children survived infancy, and he died just after his 11th birthday. Anne Somerset, in her biography of Anne, suggests that she was suffering from Hughes syndrome, which is linked to disseminated lupus erythematosus, an autoimmune disease.
Yet Anne was indeed not only a sovereign but one who attended to business diligently and whose opinions were never discounted by her ministers. Though she has now little in the way of a public reputation—certainly as compared with Elizabeth I or Victoria—her reign was one of the most momentous in English and British history. 
For the first time since the Middle Ages, English armies were consistently successful on the Continent. The Duke of Marlborough's four great victories—Blenheim, Ramillies, Oudenarde and Malplaquet—broke the power of Louis XIV's France. It was in Anne's reign, moreover, that the United Kingdom came into being, as a result of the Treaty of Union between England and Scotland. The crowns had been united since James VI & I inherited the English throne in 1603, but, though sharing a monarch, the two states had remained formally independent of each other. 
If Anne could claim no credit for the success of her armies, apart from the support she gave to Marlborough, she was a prime mover in the accomplishment of the union, something she had called for in her first speech from the throne.
****************************************