Tuesday, December 31, 2013

Eight (8) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 185

Eight (8) new permits --
  • Operators: XTO (5), Oasis (3)
  • Fields: Murphy Creek (Dunn), Charlson (McKenzie), Willow Creek (Williams)
  • Comments:
There were no wells that came off the confidential list today.

Three (3) producing wells were completed:
  • 25062, 1,400, Hess, AN-Prosser-152-95-0211H-3, Sanish, t12/13; cum --
  • 25463, 1,542, Hess, EN-Freda 154-94-2635H-1, Alkali Creek, t12/13; cum --
  • 25226, 883, Hess, BW-Sorenson 145-99-1324H-3, Cherry Creek, t12/13; cum --

Wells Coming Off The Confidential List Tomorrow -- Will Be Reported Thursday 
In Lieu Of That List, A Global Warming Update
From DrudgeReport, Others

StevenGoddard is reporting:
Before NASA and NOAA start tampering with the data, 2013 is one of the ten coldest years  in the US since 1895, and has had the largest year over year decline on record.
NOAA of course won’t talk about this, and will massively tamper with the data before releasing it.
Not much global warming in Minnesota these days. MinneapolisStarTribune is reporting:
The average monthly temperature for December in the Twin Cities was 13.9 degrees, the Weather Service said. That figure was boosted somewhat by Saturday’s high of 47 degrees, forecaster Tony Zaleski said. But, while it’s still almost 6 degrees below normal, it isn’t close to 1983, when the coldest December in modern history was recorded, with an average temperature of just 3.7 degrees.
It wasn’t even close to the fourth-coldest December, in 2000, when the average was 7.6 degrees. The second- and third-coldest Decembers happened in the late 1800s. Nevertheless, Zaleski said, Sunday’s high of 0 and expected low of 15 below in the Twin Cities was far short of the normal high of 24 and low of  9.
Freezing temperatures and up to ten inches of snow to hit Chicago New Year's Eve
“The two really cold spots will be New England and Wisconsin,” said Bruce Terry, a forecaster with the weather service. Minnesota and North Dakota will also be frigid, he said.
Lows in Wisconsin, Minnesota and North Dakota could reach 40 degrees below zero on Tuesday night, he said.
More record lows than record highs in the United States in 2013 -- and remember, the northern hemisphere was to have more global warming than the southern hemisphere -- another inconvenient truth. USA Today.

Keystone XL 2.0 South To Start Flowing January 22, 2014, A Little Over One Year After Construction Began

The AP is reporting via Yahoo!Finance
The operator of a $2.3 billion pipeline between Cushing and the Gulf Coast expects to begin shipping oil Jan. 22. TransCanada began injecting crude oil into the 485-mile, 36-inch pipeline in early December.
Spokesman Davis Sheremata said the process involves injecting about 3 million barrels of oil into the system at Cushing and moving it to the Houston area. Construction began in August 2012 and involved more than 11 million hours of labor by 4,844 workers in the U.S., Sheremata said.
The number of workers employed in the operational phase has not been established, he said.
The Keystone XL "journey" is tracked here

Has Oasis Broken The Code In Montana With Regard To The Bakken?

Oasis reports some very nice wells in Roosevelt County, Montana:
  • Romo Bro Louise 2759 43-9B, TD of 20,300 feet, with an IP of 1,658.
  • Romo Bro Margaret 2759 43-9B, two laterals with TDs of 10,979 feet and 20,350 feet, with an IP of 1,612. I don't quite understand later with a TD of 10,979. See comments below, regarding the CLR well with two laterals.
  • Romo Bro Ray 2759 43-9B, TD of 20,380 feet, with an IP of 1,209
CLR reports a completed Bakken well in Richland County, Montana:
  • Stoney Butte-Prevost HSU, two laterals with TDs of 12,307 feet and 20,678 feet, with an IP of 273 for the Bakken formation well. The way that is worded suggests the other horizontal is tapping into another formation.  
Going west of Williston, on US Highway 2, just crossing into Montana, Roosevelt County is on the north side of the highway (west of Williams County), and Richland County is on the south side of the highway (west of McKenzie County).

Down in Wibaux County, Montana, an operator will be targeting the Lodgepole Formation. Wibaux County's eastern border is the North Dakota state line, directly west of Dickinson. The well/permit:
  • Rieckhoff 16-1, with a probably total depth of 14,069 feet

So, How Did Europe's Renewable Energy Plan Play Out? Russian Natural Gas Exports To Europe Hits A New Record


February 26, 2016: Russia losing dominance in Europe.

November 30, 2014: large German utility to get out of conventional energy, concentrate on renewable energy:
German utility company E.ON SE says it plans to spin off its nuclear, oil, coal and gas operations to focus on renewable energy and power distribution.
E.ON said in a statement late Sunday that the new strategy will see it quit conventional power generation, global energy trading, exploration and production.
The move comes against the backdrop of Germany's plan to shut down all nuclear plants by 2022 and ramp up power generation from renewable sources.
E.ON, which is struggling with massive debts, also says it expects to book a 4.5-billion euro ($5.62 billion) charge on its operations in southern Europe this year. The company says it will sell its businesses in Spain and Portugal to Australian investment firm Macquarie for 2.5 billion euros ($3.12 billion).
November 30, 2014: Germany goes brown

October 4, 2014: Germany's energy policy -- a Rube Goldberg cartoon.
Original Post
Rigzone is reporting:
Russian gas exports to Europe in 2013 jumped 16 percent year on year to reach a record high of 161.5 billion cubic metres, preliminary data from Gazprom Export showed on Monday, as shipments from Norway and other sources decreased.
Europe, where the Kremlin-controlled company meets a quarter of gas demand, is a source of over 50 percent of Gazprom's revenues, which stood at almost $56 billion in 2012. Gazprom's previous record high for exports to Europe was 159 bcm hit in 2008, just before a global financial crisis hit.
I track Europe's big energy issues here

Just To Be Sure ....

North Dakota tax office feels it is getting "most" of the tax that is due from royalties paid to residents from out-of-state. But to be sure (and for other stated reasons), the state made a slight change in tax law that goes into effect January 1, 2014. The Dickinson Press is reporting:
Out-of-state mineral rights holders will be affected by another change.
Most of House Bill 1198 took effect July 1, but a key provision that becomes effective Wednesday will require companies producing at least 350,000 barrels per year of oil or 500 million cubic feet of natural gas to withhold taxes on royalty payments to nonresident individuals or businesses.
More than half of oil royalty payments go to out-of-state residents, said Ryan Rauschenberger, the state’s incoming tax commissioner. The production threshold of 350,000 barrels per year will cover more than 90 percent of the state’s oil production, he said.
Instead of receiving a Form 1099 at the end of the year, out-of-staters receiving royalty payments will have income taxes withheld at the highest marginal rate, which is 3.22 percent for individuals, Rauschenberger said. The state will hold the money until the person files their state income tax return, at which point they may have to pay in or receive a refund.
The change is designed to speed up the collection process and make it easier for nonresidents, some of whom earn so much in royalty payments that their accountants advise them to make estimated quarterly tax payments to avoid getting stuck with a big bill at the end of the year, Rauschenberger said.
“It’s kind of paying as you go instead of waiting to write us one big check,” he said.
It also captures tax revenue from those who may slip through the cracks if they don’t file their 1099s, though Rauschenberger said he believes the state is collecting most of the nonresident royalty income owed to it.
“So, there’s a compliance issue too that this fixes,” he said.
I don't know about you, but a tax bill of $5,000 on April 15th is a sizable bill to pay. So, how much royalty income are we talking about here? Three point two two percent of "what" yields $5,000?

0.0322 x ? = $5,000

Total royalties would equal = $155,000. Rounded down. 

Warren Buffett, Berkshire Hathaway, And Energy

These links all come from the same source, but I link them because in a day or two those links will disappear into the ethernet.

I've noticed the same thing as a SeekingAlpha contributor. It seems Berkshire Hathaway / Warren Buffett, at least the public persona, is morphing from an investment company / investor to an operating company / operator ...
... recent major acquisitions have begun a transformation into a New Berkshire Hathaway, which is less an investment company and more an operating company. I saw this transformation as a positive ongoing development which held the promise of renewed and sustained growth.
From Investor's Business Daily
The acquisition of the flow improver business, which makes chemicals to boost pipeline flows, is the latest energy deal for Berkshire Hathaway.
Last month, it reduced its ConocoPhillips (COP) stake to 13.5 million shares from 24.2 million in June and disclosed a 40 million-share stake in Exxon Mobil (XOM).
In May, Berkshire doubled its stake in oilfield equipment maker National Oilwell Varco (NOV) to 7.5 million shares or $529.5 million.
Berkshire Hathaway's BNSF Railway has also benefitted from the U.S. energy boom by hauling crude from shale fields. But on Monday, a Burlington Northern train carrying crude oil crashed into another train in North Dakota causing an explosion that left 10 cars on fire. No injuries were reported.
And from Motley Fool:
Warren Buffett has long liked the consistency of energy stocks, but he's stepped up his energy buying in 2013. He bought a $3.5 billion stake in ExxonMobil in the second half of this year and agreed to pay $5.6 billion to buy utility NV Energy in May. 
Last night, it was announced that Buffett's Berkshire Hathaway would use about 19 million of its long-held shares of Phillips 66  to acquire a unit of that energy company that makes chemicals to improve the flow of pipelines. The unit will essentially be folded into Lubrizol, which was another Berkshire acquisition in 2011.  

Buying energy isn't just about buying big oil or utilities, like Buffett did with ExxonMobil and NV Energy. There's ways to profit from products energy needs as well. 
In recent years, the oil and natural gas pipeline business has become just as important as exploration and production because it makes recovered oil economical. New shale plays in North Dakota, Texas, and elsewhere have resulted in a surge in pipeline building and stress on some of the existing infrastructure. Creating products that help energy flow through pipelines is the bet here as the need for pipelines isn't going anywhere soon.
You could say the same for Berkshire's acquisition of Burlington Northern in 2009. That's not an energy company, but a large portion of its business involves moving coal and even oil around the country. Buffett was using the need for energy to his advantage in that purchase as well.

More Active Rigs In North Dakota Today Than One Year Ago; No Rigs On Federal Land In The Dakota Prairie Grasslands; I Knew The Market Was Good -- I Didn't Know It Was This Good -- The Best Since 1995; North Dakota To Have More Drones Than California? Frigid Temperatures Fueling Natural Gas Prices; What A Great Way To End 2013

Frigid temperatures fuel natural-gas prices -- The Wall Street Journal, section 3.
Natural-gas prices gained on expectations that continued colder-than-normal weather in the central and eastern U.S. will keep demand for the heating fuel high.
Natural gas for February delivery rose 5.9 cents to $4.427 a million British thermal units on the New York Mercantile Exchange. The 1.4% gain was the largest one-day rise since Dec. 19.  
Active rigs:

Active Rigs18718319715673

RBN Energy: provides a look back at the top RBN blogs this past year. The top blog -- Utica and NGLs.  
Number 2: Detailed survey of rail loading terminals in the Bakken.  Explores the impact of new terminals on crude markets and pipeline throughput
Number 5: CBR -- the year of the tank car
This certainly was not well publicized. I would not have known about it had a reader not told me. The Williston Herald is reporting that President Obama signed the bill to streamline the oil and gas permitting process on BLM land.
The bill allows BLM offices in Montana and other less stressed states to review and approve permits. Currently, as of the December report by the North Dakota Department of Mineral Resources, there are no drilling rigs in North Dakota on federal land in the Dakota Prairie Grasslands.
If that's the extent of the pilot project -- my hunch is one year from now, we will not see much difference in number of rigs in the Dakota Prairie Grasslands.

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

PSX is on a tear the last day of the calendar year. PSX is up over 2% and trading at yet another high. It was announced earlier this week that Warren Buffett, in a deal worth about $1.4 billion, will be buying a specialty chemical unit from PSX. There are many story lines here, but anything related to pipelines is not one of them. It will be interesting to see if The WSJ has a story; I will be looking at The WSJ in a few minutes. Yes, here is The WSJ story.

By the way, Batton's pointed out something that is very interesting regarding this deal:
PSX has had a huge run-up (before Warren Buffett bought a PSX unit with 19 million shares  of PSX / $1.4 billion).

Buffett is incredibly smart and is well-known to be tax-averse. Here he has 19 million shares of PSX (probably more) and PSX has had a huge gain. Time to sell; lock in that profit. The problem: huge capital gains tax on that gain.

So, what does he do? He simply exchanges the PSX shares he owns, to take control of a PSX unit.
  • eliminates the capital gains tax consequences of selling PSX 
  • 19 million shares of PSX goes back to PSX -- retired, and amounts to a PSX buyback which increased the value of existing PSX shares (some of which he probably still owns) 
  • he sees value in the "parts" of PSX and takes advantage of this unit being worth more than what might be reflected in the PSX share price.
If he turned around and sold that unit for exactly what he "paid" for it: no capital gains tax; in fact, there might be some things he could off as a loss against other capital gains. But, I'm sure he bought the PSX unit for a long term investment. 

The Wall Street Journal

Winners of 2013: boring investors
In the best year for U.S. stocks since 1995, the smart way to play the markets has been to follow the dumb money. So-called dumb-money strategies, which involve buying and holding a plain-vanilla portfolio of U.S. stocks, did much better than the more complex approaches employed by hedge funds and other professional investors.
Fueled by easy money from the Federal Reserve and signs of improvement in the economy, the Dow Jones Industrial Average goes into the final day of 2013 with a gain of 29% once dividends are included, while the S&P 500 index has climbed 32% with dividends.
Those gains far outpace the rally predicted by even the most bullish Wall Street strategists.
Many hedge funds were left in the dust, alongside investors who use "tactical" timing of the markets' ups and downs and those who spread their bets among a wide variety of assets such as commodities, emerging markets and exchanged-traded funds.
"The more colorful your pie chart, the worse you did," said Lawrence Glazer, managing partner at Boston's Mayflower Advisors, which oversees $1.5 billion.
My pie is pretty much one color: the color of crude.


The train derailment and subsequent crude oil crash in North Dakota.

This is why immigration reform is just a matter of time: US population grew at a snail's pace.

FAA authorizes commercial drone testingThe WSJ mentioned North Dakota first:
The winning applicants were the commerce department of North Dakota; the state of Nevada; a public airport some 250 miles north of New York City; the University of Alaska; Texas A&M University in Corpus Christi; and a partnership between Virginia Tech and Rutgers University. The first site is expected to begin operating within six months. California was NOT selected; see story below.
Show me the money.
Millions of new insurance policies purchased under the federal health-care law officially take effect on Wednesday, but many enrollees won't be able to use them to visit doctors or get prescriptions filled for days or weeks, insurers say.
Because problems with the online marketplaces forced the government to extend deadlines for enrollment to Christmas Eve, insurers are hustling now to complete those enrollments, to process payments and to issue membership cards. They say they won't be able to reach everyone by Jan. 1.
Small businesses anticipate breakout year ahead. Most of them will get health care premiums off their books, as they cost-shift employees to ObamaCare. (No, the story does not mention ObamaCare.) But this article does: the three obstacles facing small businesses in 2014: accessing capital, health-care costs, and 'Beltway' battles.

The Los Angeles Times

Air Force member (male) alleges that blowing the whistle on a "consensual" relationship with a male superior has brought him nothing but grief. A gazillion story lines in this article, starting with the tattoos. I found it refreshing that the male superior was given a weak slap on the wrist. (If you have trouble accessing the entire article, google key words.)


Incredible. Drone giant California loses bids for federal testing sites.
Disappointed California officials were at a loss to explain their failure to land a test site, though some suggested the state didn't do enough to win in the fierce nationwide competition.
The state lost out to Alaska, Nevada, New York, North Dakota, Virginia and — adding salt to the wound — longtime rival Texas.
Not only that but California was the only state with two groups submitting bids — one based in Ventura County and the other in Kern County.
"How California was left off the list, I haven't got a clue," said Bill Buratto, who, as president and chief executive of the Ventura County Economic Development Assn. helped pitch a bid for a test site in California. "It would seem to me that the FAA would look favorably on California." 
My hunch: the FAA didn't need a bunch of crap from activist Californians screaming about privacy issues


Back to paper. Remember all those paper bags you got for free at grocery stores. In Los Angeles, starting tomorrow, they will cost you 10 cents apiece. Supermarkets are going to be the big winners here.  I'm sitting here in Starbucks, and looking at the cutest looking little puppy, patiently waiting while its master finishes his coffee so they can resume their walk. But I digress.
Starting Wednesday, it will be illegal for big grocery chains, including retailers such as Target and Wal-Mart that sell groceries, to distribute disposable plastic bags. In July, smaller markets will have to comply with the ban as well. Customers will have to bring their own reusable bags or pay a 10-cent fee for each paper bag requested, according to the ordinance that Los Angeles City Council members passed in June.
As of Jan. 1, L.A. will be the largest city in the U.S. to ban plastic grocery bags. The ban was passed to prevent billions of plastic bags from clogging landfills, waterways and the ocean, where they kill marine life. Council members have said they hope to send a message to state lawmakers by enacting the law.
World's hottest pepper hits 2.2 million Scoville units.
Until recently, the Trinidad Moruga Scorpion was known as the world's hottest chile pepper. But according to the Guinness Book of World Records last month, it's now the Carolina Reaper grown by Ed Currie of PuckerButt Pepper Co. in South Carolina.
The pepper rates an average of 1,569,300 Scoville heat units, as tested by Winthrop University in South Carolina throughout 2012, says the Guinness entry.
A story by the Associated Press says the record is for the hottest batch of Currie's peppers tested, code named HP22B, which stands for "Higher Power, Pot No. 22, Plant B." The hottest individual Carolina Reaper came in at 2.2 million Scoville heat units. Last year, New Mexico State University's Chile Pepper Institute named the Trinidad Moruga Scorpion the hottest chile in the world, with a mean of more than 1.2 million Scoville heat units and individual plants with a heat of more than 2 million units.