Friday, January 31, 2014

Another Spill -- This One Near Jackson, Mississippi

Reuters via Rigzone is reporting:
A Canadian National Railway Co train carrying fuel oil and other hazardous materials derailed and was leaking in southeast Mississippi on Friday, forcing the evacuation of nearby residents, officials said.
No one was injured in the incident which involved the derailment of 21 railcars, eight of which have spilled their contents, a Canadian National Railway spokesman said. Several of the cars were carrying hazardous materials including fertilizer and methanol, but there was no fire, he said.
And this is why it's going to be difficult to come up with tighter standards on rail cars. It's not just Bakken oil. 

For QEP Grail-Bakken Mineral Owners

Mineral owners involved in making a decision regarding "unitization" of the Grail-Bakken as proposed by QEP might want to read the February NDIC hearing dockets in light of that proposal or vice versa, specifically, perhaps, looking at cases: 21824, 21825, 21826, 21828, 21758, 21755, 21756, 21751, 21757.

NDIC February, 2014, Hearing Dockets

Wednesday, February 26, 2014

21748, NDIC, Patent Gate-Bakken, amend stratigraphic limits, McKenzie County,
21285, cont'd
21645, cont'd
21749, Statoil, Williston-Bakken, proper spacing, Williams,
21351, cont'd
21750, CLR, Avoca-Bakken, redefine field limits, Williams,
21646, cont'd
21751, CLR, Battleview-Bakken, amend field rules, Williams,
21752, CLR, Ellisville-Bakken, alter definition of the stratigraphic limits, Williams,
21753, CLR, Lindahl-Bakken, alter definition of the stratigraphic limits, Williams,
21754, CLR, Tioga-Bakken, alter definition of the stratigraphic limits, Burke, Mntrl, Wms
21755, CLR, Leaf Mountain-Bakken, spacing for Vibe #1, #25799, Burke,
21756, CLR, Oakdale-Bakken, spacing for Whitman #3, #20212, Dunn,
21757, CLR, Charlson and/or Elm Tree-Bakken, establish an overlapping 2560-acre unit on a section line between an existing  640-acre unit and a 1280-acre unit, McKenzie
21758, CRL, Elm Treek, reducing the setback rules of multiple sections, McK, Mntrl
21650, cont'd
21651, cont'd
21476, cont'd
21478, cont'd
21474, cont'd
20926, cont'd
20927, cont'd
20928, cont'd
15225, cont'd
14935, cont'd
21629, cont'd
21630, cont'd
21631, cont'd
21759, Forestar Petroleum, Bailey, Moccasin, and/or Wolf Bay-Bakken, establish a 1280-acre unit, 1 well, Dunn,
21622, cont'd
21625, cont'd
21627, cont'd
21628, con'td
21287, cont'd
21760, WPX, McGregory Buttes-Bakken, establish a 640-acre unit, 4 wells; establish a 1280-acre unit, 7 wells, Dunn
21761, WPX, Van Hook-Bakken, establish a 2560-acre unit, 14 wells, 5/6/7/8-150-91, McLean;
21642, cont'd
21643, cont'd
21762, Sinclair, Cherry Creek, recomplete the Robert Peterson #11 into the Souris River Formation,  McKenzie
21763, Corinthian, North Souris-Spearfish, rework the Corinthian Skarphol #8, water injection, Bottineau
21765, Encore, Tree Top-Madison, recomplete the Anheluk 24; Billings
21796, Cedar Hills, Denbury, convert CHSU Clark #31 to SWD, Bowman,
20658, cont'd
21358, cont'd
21359, cont'd
21766, Samson Resources, commingling, Divide,
21767, Samson Resources, commingling, Divide,
21768, Samson Resources, commingling, Divide,
21769, CLR, pooling,
21770, CLR, pooling,
21771, CLR, Alkali Creek-Bakken, existing 1280-acre, 14 well, McK, Mntrl
21772, CLR, commingling, Dunn
21773, CLR, commingling, Mountrail,
20814, cont'd
20815, cont'd
21581, cont'd
21375, cont'd
20816, cont'd
21774, Emerald, Boxcar Butte-Bakken, two existing 1280-acre units; 7 wells each, McK
21775, Statoil, pooling,
21776, Statoil, pooling
21777, Corinthian, pooling,
21778, Corinthian, pooling,
21779, Corinthian, commingling, Bottineau,
21780, SHD, pooling,
21781, Newfield, risk penalty legalese, Bernice #2, McKenzie,
21782, Fidelity, risk penalty legalese, Shirley Anne #34-9H, Mountrail,
21783, Fidelity, Stanley-Bakken, flaring,
21784, Fidelity, commingling, Stark,
21785, Hunt, risk penalty legalese, Frazier #1, Divide,
21786, Hunt, risk penalty legalese, Hawkeye #1, Divide,
21787, WPX, Reunion Bay-Bakken, flaring, Mountrail,
21788, WPX, Reunion Bay-Bakken, flaring, Mountrail,
21789, WPX, Reunion Bay-Bakken, flaring, Mountrail,
21790, Legacy, SWD, Bottineau,
21791, Enduro, Newburg-Spearfish-Charles Unit J-706, water injection, Bottineau,
21792, Enduro, Newburg-Spearfish-Charles Unit J-708, water injection, Bottineau,
21793, Enduro, Newburg-Spearfish-Charles Unit K-707, water injection, Bottineau,
21794, Enduro, Newburg-Spearfish-Charles Unit L-708, water injection, Bottineau,
20975, cont'd,

Thursday, February 27, 2014 

21797, Zavanna, objection to Emerald Oil imposition of risk penalty proceeds, Pirate wells, McKenzie
21798, Spring Creek Exploration, objection to Emerald Oil imposition of risk penalty proceeds, Excaliber and Caper wells, McKenzie,
21799, WPX, revoke the Enerplus permits to drill several wells; Dunn
21800, WPX, Spotted Horn, amend, establish one new overlapping 1280-acre unit; 14 wells; 
21801, Apollo, waste processing plant, McKenzie,
21609, cont'd
21424, cont'd
21802, EOG, Lake Trenton-Bakken, spacing and field limits, Williams,
21803, Oasis, Foreman Butte-Bakken, flaring, McKenzie,
21804, CLR, Pleasant Valley-Bakken, spacing and field limits, Mntrl, Wms
21805, Hess, Ray-Bakken, establish an overlapping 2560-acre unit, 1+ wells, Mntrl
21807, Hess, Sandrocks-Bakken, establish an overlapping 2560-acre unit, 1+ wells, Mntrl
21619, cont'd,
21471, cont'd,
19399, cont'd
21808, Petro Harvester, Portal-Madison, establish two 320-acre units; 1 well each, Burke,
21809, Petro-Hunt, Charlson-Bakken, establish a 2560-acre unit, 3 wells, McK, Wms
21810, Petro-Hunt, Charlson-Bakken, establish a 2560-acre unit, 3 wells, McK, Wms
21811, Petro-hunt, Charlson-Bakken and Keene-Bakken/Three Forks, establish an overlapping 2560-acre unit, 2 wells, McKenzie,
21812, Petro-Hunt, Charlson-Bakken, 4 wells on an overlapping 3840-acre unit, McKenzie,
21813, Petro-Hunt, Charlson-Bakken, establish an overlapping 2560-acre unit, 2 wells, McK,
21814, Petro-Hunt, Charlson-Bakken, establish an overlapping 2560-acre unit, 2 wells, McK,
21815, Petro-Hunt, Charlson-Bakken, 6 wells on each of two existing 1280-acre units, McK
21816, Petro-Hunt, Charlson-Bakken, establish an overlapping 2560-acre unit; 2 wells; McK
21817, Petro-Hunt, Charlson and/or Elm Tree-Bakken, establish an overlapping 2560-acre unit, 2 wells, McKenzie
21818, HRC, Antelope-Sanish, establish an overlapping 2560-acre unit, 1+ wells, McK,
21819, QEP, Spotted Horn, the Clarks Creek, and/or the Blue Buttes-Bakken, establish an overlapping 2560-acre unit; 1+ wells, McKenzie,
21820, QEP, Spotted Horn and/or Blue Buttes-Bakken, establish an overlapping 2560-acre unit, 1+ wells, McKenzie,
21821, QEP, Blue Buttes-Bakken, establish an overlapping 2560-acre unit, 1+ wells, McKenzie,
21822, MRO, Murphy Creek-Bakken, establish seven overlapping 2560-acre units, 1+ wells each, Dunn,
21823, OXY, Cabernet-Bakken, flaring, Dunn,
21605, cont'd
21824, Whiting, Park-Bakken, establish six overlapping 2560-acre units; 1 well each, Bilings,
21825, Whiting, Park and/or Bell-Bakken, establish three overlapping 2560-acre units, 1 well each, Stark, Bilings
21826, Whiting, Bell-Bakken, establish nine overlapping 2560-acre units, 1 well each, Stark
21827, Whiting, Bell-Bakken and/or Zenith-Bakken, establish an overlapping 2560-acre unit, Stark
21828, Whiting, Zenith-Bakken, establish four overlapping 2560-acre units; 1 well each, Stark,
21829, Whiting, Fryburg-Bakken, establish an overlapping 2560-acre unit; 1 well, Billings,
21830, Whiting, Fryburg and/or Bell-Bakken, establish an overlapping 2560-acre unit, 1 well, Stark,
21611, cont'd
21831, North Plains, pooling, Divide,
21832, BR, Blue Buttes-Bakken, 14 wells on each 1280-acre unit within zones III, IV, V, VI, VII, Mckenzie,
21833, BR, Camel Butte-Bakken, 14 wells on each 1280-acre unit within Zone II, McKenzie
21834, BR, Dimmick Lake-Bakken, 14 wells on each 1280-acre unit within Zone I and II, McK,
21835, BR, North Fork-Bakken, 14 wells on each 1280-acre unit within Zone IX, McKenzie,
21836, BR, pooling, McKenzie,
21837, BR, pooling, McKenzie,
21838, BR, pooling, McKenzie,
21839, BR, pooling, McKenzie,
21840, BR, pooling, McKenzie,
21841, SM Energy, Bear Den-Bakken, 7 wells on a 640-acre unit, 25-149-96, McKenzie;
21842, SM Energy, pooling, McKenzie,
21843, SM Energy, pooling, McKenzie,
21844, SM Energy, pooling, McKenzie,
21845, SM Energy, pooling, McKenzie,
21846, SM Energy, commingling, Divide,
21847, KOG, pooling, Williams,
21848, KOG, pooling, Williams,
21849, Oasis, Sanish-Bakken, 21 horizontal wells on a 640-acre unit, 4-153-93, Mountrail,
21850, Oasis, Enget Lake-Bakken, 16 wells on some or all of the 1280-acre units, Mountrail,
21851, MRO, McGregory Buttes-Bakken, ten wells on a 2560-acre unit, Dunn,
21852, MRO, Chimney Butte-Bakken, 8 wells on a 1280-acre unit, Dunn
21853, MRO, pooling, Williams, 
21854, MRO, pooling, Dunn,
21855, Whiting, Bell-Bakken, 6 wells on each of 3 1280-acre units, Stark,
21856, Whiting, pooling, Golden Valley,
21857, Whiting, pooling, Stark,
21858, Hess, Tioga-Bakken, 5 wells on each of 2 1280-acre units; Williams,
21859, Hess, East Tioga-Bakken, 5 wells on a 1280-acre unit, Mountrail,
21860, Hess, Ross-Bakken, 4 wells on a 1280-acre unit; 5 wells on a 1280-acre unit; 6 wells on a 1280-acre unit, Mountrail,
21861, Hess, Capa-Bakken, 7 wells on each of 2 640-acre units; Williams,
21862, Hess, Alger-Bakken, 10 wells on a 1280-acre unit, Mountrail,
21863, Hess, Alkali Creek-Bakken, 4 wells on a 1280-acre unit, Mountrail,
21864, Hess, Robinson Lake-Bakken, 12 wells on a 1280-acre unit, 15/22-154-93, Mntrl,
21865, Hess, Robinson Lake-Bakken, 13 wells on a 1280-acre unit, 29/32-154-93, Mntrl,
21866, Hess, Truax-Bakken, 8 wells on a 1280-acre unit, McKenzie, Williams,
21867, Hess, Blue Buttes-Bakken, 10 wells on a 2560-acre unit, McKenzie,
21868, Hess, pooling, Williams,
21869, Hess, pooling, Williams,
21870, Hess, pooling, Williams,
21871, Hess, pooling, Williams,
21872, Hess, pooling, Williams,
21873, Hess, pooling, Williams,
21874, Hess, pooling, Williams,
21875, Hess, pooling, Williams,
21876, Hess, pooling, Mountrail,
21877, Hess, pooling, Mountrail,
21878, Hess, pooling, Mountrail,
21879, Hess, pooling, Mountrail,
21880, Hess, pooling, Mountrail,
21881, Hess, pooling, Mountrail,
21882, Hess, pooling, Williams,
21883, Hess, pooling, Williams,
21884, Hess, pooling, Mountrail,
21885, Hess, pooling, McKenzie,
21886, Hess, pooling, McKenzie,
21887, Hess, pooling, McKenzie,
21888, Hess, pooling, McKenzie,
21889, Hess, pooling, McKenzie,
21890, Hess, pooling, McKenzie,
21891, Hess, pooling, McKenzie,
21892, Hess, pooling, McKenzie,
21893, Hess, pooling, McKenzie,
21894, Hess, pooling, McKenzie,
21895, Hess, pooling, Dunn,
21896, Hess, pooling, Dunn,
21897, Hess, pooling, Dunn,
21898, Hess, pooling, Dunn,
21899, Hess, pooling, Dunn,
21900, Hess, pooling, Dunn,
21901, Hess, pooling, Dunn,
21902, Hess, pooling, Dunn,
21903, Hess, pooling, Dunn,
21904, Hess, pooling, Dunn,
21905, Hess, pooling, Dunn,
21906, Hess, pooling, Dunn,

Oasis: 21 Wells In One 640-Acre Drilling Unit

Updates

Oct 1, 2018: production data update; otherwise no changes; there appears to be no change in the map at the NDIC. 

July 25, 2016: these wells were updated this date; note that SI/NC wells have now become TATD. Screenshot as of this date:


November 26, 2015: in addition to the four wells (two 2-well pads) noted in the original post, there are now eight more wells, all short laterals in this section:


25319, 1,969, Oasis, Christa 5393 12-9B, ICO, t7/13; cum 129K 8/18;
25320, 2,009, Oasis, Kray 5393 12-9T, ICO, t7/13; cum 210K 8/18;

29342, SI/NC-->TATD, Oasis, Helix 5393 41-4 3B, 2/15; 12/16;
29343, SI/NC, Oasis, Helix 5393 41-4 4T2, 2/15; 12/16;
29344, TATD, Oasis, Helix 5393 41-4 5T, 7/16; 12/16;
29345, SI/NC-->TATD, Oasis, Helix 5393 41-4 6T3, 1/15; 12/16;
29346, SI/NC-->TATD, Oasis, Helix 5393 41-4 7B, 1/15; 12/16;
29347, SI/NC-->TATD, Oasis, Helix 5393 41-4 8T2, 1/15; 12/16;
 
Original Post
 
Folks may want to re-read the "Bentek 2.2 million" study while reading the post below. The truth is out there.

Disclaimer: this post has not been edited or thought about much. It is not ready for "prime time" but regular readers know the routine. I assume there are errors that will need corrections, and, of course, most of it is opinion.

This should get some folks talking, from the February NDIC hearing docket:
  • 21849, Oasis, Sanish-Bakken, 21 horizontal wells on a 640-acre unit, 4-153-93, Mountrail,
[For newbies: when the drilling started in the Bakken back in 2007, the "word on the street" was one well per section. Folks got excited when they heard talk of four wells in a 1280-acre spacing unit. Now: 21 wells in one section, one 640-acre spacing. Who wudda thought -- just in the past three or four years. I think it's incredible. And that's why the Bakken never ceases to amaze me.]

This section (4-153-93) and the section directly south (9-153-93) are the only two sections still spaced as 640-acre drilling units in this immediate area: "everything else" in the immediate area is 1280-acre unit spacing.

Currently in section 4-153-93 (two two-well pads)
  • 24760, 1,654, Oasis, Knox 5393 44-4T, t7/13; cum 133K 8/18; -- went off line 8/18;
  • 24761, 1,957, Oasis, Gloria 5393 44-4B, t7/13; cum 155K 8/18;
  • 21767, 1,246, Oasis, Helix 5393 43-4H, t2/12; cum 194K 8/18;
  • 25025, 1,164, Oasis, Folda 5393 43-4T, t7/13; cum 145K 8/18;
640 acres / 21 wells = 30-acre spacing. 

Some random comments follow:
  • Four Bakken formations: middle Bakken, TF1, TF2, TF3 = 6 wells in MB; 5 wells in each of the other three.
  • Except that it sounds incredible (21 wells in 640-acre spacing), the density is the same as being tested by CLR and KOG on 1280-acre spacing units.
  • Regardless of how many wells one drills in a specific area (aka "well density), the fact is, operators are not going to drill wells if they are not economical. My hunch is that operators in the Bakken won't drill a well if they don't expect a EUR of at least 450,000 bbls. 
  • EOR is about the only "thing" left to do when one gets to 30-acre spacing (20 wells/640 acres). 
  • 21 wells x 450,000 bbls x $50 / 640 acres = $740,000 / acre; and that's just primary production. That does not include EOR. 
  • The jury is still out, but there are operators suggesting that fracking a new well near an existing well improves the production from the existing well. I said that from the beginning. So, we'll see. 
  • By the time they get to these 17 new wells, the operator will have had several years of experience; by the time they get to these 17 new wells, the operator will have had the opportunity to study "best completion methods" available. 
  • Think of the cost savings. 
  • One rig, 17 wells; about 17 months. Full-time employment for a lot of folks for almost two years, and if it works, then do the same thing in the 640-acre drilling unit to the immediate south.
  • 17 wells x $8 million = $140 million. 
  • This section is two miles west of the incredible Whiting Sanish.

Belfield Utilities "About Maxed Out"

The Dickinson Press is reporting:
A representative from American Landmark Group, which is planning a 42-acre “Belfield Crossing” multi-use development north of downtown, informed city representatives that the development would require new utilities infrastructure because the city is almost maxed out of power and natural gas.
Zoning members seemed somewhat surprised to hear how close the city was to being maxed out. But MDU Resources Group has plans for upgrades to both natural gas and electricity for Belfield.
Belfield Mayor Leo Schneider said he too didn’t know much about the city’s utilities situation until ALG brought it to the zoning board’s attention.
Belfield is the southern gateway to the North Dakota Bakken. Driving cross-country from the south, Belfield is always, always a welcome site: I know I am back home. 

Chevron Reports: Less Production, Higher Costs; Exploration Costs Double From Year Ago; Opportunity For Investors

Updates

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

Saturday, February 1, 2014: investors are noting the opportunity to invest in Chevron.
4-year high yield: Chevron is currently yielding about 3.60%. Chevron last yielded more than 3.5% back in August 2010. Yes, not even during the 2011 October mini-crisis was Chevron yielding this much. Needless to say, Chevron has continued increasing its annual dividends through thick and thin. As a comparison, Exxon Mobil yields just 2.70%, in spite of its own recent share price depreciation.
Original Post
 
MarketWatch is reporting:
Chevron reported its fourth-quarter profit fell 32% to $4.93 billion, or $2.57 a share, from $7.25 billion, or $3.70 a share, a year earlier.
Operating revenue fell to $53.95 billion, down 4% from $56.25 billion a year earlier, the oil company said Friday.
Total revenue, which includes income from equity affiliates, was $56.16 billion, down from $60.55 billion.
Analysts had expected earnings of $2.58 a share on revenue of $66.41 billion, according to FactSet. Production fell to 2.58 million barrels of oil-equivalent production per day, down from 2.67 million barrels per day. Exploration expenses rose to $726 million, roughly double from a year ago. Shares in Chevron were down 0.9% in premarket trading.
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. 

From AP from Rigzone:
Chevron profit fell 32 percent in the fourth quarter on lower oil and gas production and lower prices for refined fuels relative to the cost of crude.
Chevron Corp. reported Friday net income of $4.93 billion on revenue of $53.95 billion for the final three months of 2013. That's down from net income of $7.25 billion on revenue of $56.25 billion during the same period of 2012.
The nation's second-biggest oil company earned $2.57 per share, a penny less than analysts polled by FactSet had expected. Chevron shares were down 3 percent to $112.93 as the market opened. Chevron had signaled that results would be relatively weak in a recent update for investors, and the company met those diminished expectations, says Brian Youngberg, an analyst at Edward Jones. He called the results "not disappointing, but more like mediocre."
Despite the U.S. oil and gas boom, Chevron's domestic production fell 4 percent in the quarter as increases in Pennsylvania and Texas were offset by declining production in older fields. Chevron's international production fell 3 percent in the quarter.
Chevron, based in San Ramon, California, has been championed by investors in recent years for providing the best growth among major integrated oil companies. But growth stalled last year and the company said Friday that production would rise less than 1 percent in 2014. Better growth is now expected in 2015 and 2016.

Unions Starting To Feel The Pinch Of ObamaCare

Updates

February 1, 2014: union labor officials say President Obama betrayed them in health-care rollout -- The Washington Post. I'm shocked! I'm shocked! The unions believed another honest Abe from Chicago. LOL.

January 31, 2014: the contract was approved. The Bismarck Tribune is reporting:
The contract includes 3 percent pay raises and a company-matched 401K. The 3 percent has been the standard increase for utilities employees across the state, ...
In exchange, workers have agreed to pay 15 percent to 20 percent of health care costs, Keslch said during the interview.
Keslch said in the interview Minnkota was the last power company still paying the full cost of health care for employees. Others companies’ unionized employees pay a portion of health care. All of Minnkota’s other employees across the state were paying a portion of their health care already. 
Thank you, Mr Obama for bringing the reality of health care costs to the union.

Original Post

Technically, this has absolutely nothing to do with ObamaCare ... yet. But ObamaCare provides the top cover that was needed by corporations to do this. The Bismarck Tribune is reporting on contract negotiations at MinnKota:
Kelsch said the most concern was with health care. Depending on their wages, employees will contribute 15 to 20 percent of the cost of their health care coverage. In the past the employees at the plant had not paid any of their health care costs.
Kelsch said Minnkota was the last power company still paying the full cost of health care for employees. Others, like Basin Electric Power Cooperative and Great River Energy employees, also paid a portion of health care. All of Minnkota’s other employees across the state were paying a portion of their health care already.
Kelsch said the change is still going to hit employees hard because they are going from zero cost. For example, the cost of a family plan will go from nothing to $275 a month.
A 401K with 2 percent company matching was added to the offer, something Minnkota hasn’t had for plant employees in the past. The company’s two retirement offerings will go unchanged.
*****************************
A Note to the Granddaughters

The company my son-in-law works for offers a similar company-wide 410K matching program but with no limitations placed by the company (limitations placed by the IRS, however). I feel so strongly about the importance of a retirement program, I told my daughter I would cover (or "match") whatever he puts into their 401K by sending an equal amount to them each month. They signed up but never told me. I had to ask. It's a win-win for all of us. I feel good, and they have an additional retirement program. My first check goes to them next month.

Venezuela Faltering

Updates

Updates: now at this link

March 30, 2017: court gives "absolute" power to Maduro; this is pretty much one-man rule. The "new" Fidel Castro.

May 13, 2016: president declares 60-day state of emergency.

May 9, 2016: more of the same. No end in sight

April 28, 2016: Venezuela does not have enough money to pay for the ink and paper required to print more money.

February 15, 2016: Venezuela's lights go out.

February 3, 2016: Venezuela's crude oil production falls short; must import oil

December 11, 2015: EIA update on Venezuela; may hold 513 billion bbls of oil

December 2, 2015: bartering surges in Venezuela as things go from bad to worse

February 17, 2014: it looks like Venezuela is about ready to implode. Bloomberg is reporting: government forces and opposition forces preparing to take to the street to rumble. This reminds me of scenes in Dr Zhivago, the Bolshevik revolution. The DrudgeReport headline, the big headline for the day: "Venezuela on the brink." I posted the original post (Venezuela faltering) on January 31, 2014, over two weeks ago. Glad to see Drudge is finally picking up on the story. LOL. Venezuela isn't selling much oil any more, but all things being equal, this should support oil prices.

February 4, 2014: Bloomberg is reporting:
Venezuela’s plummeting oil sales to the U.S., its biggest export market, are exacerbating a collapse in the nation’s debt securities.
Bonds issued by Venezuela sank 3 percent on Jan. 31, a day after data released by the U.S. Energy Information Administration showed that 2013 energy sales to the country are headed for a 28-year low. The sell-off pushed losses this year to 12.4 percent, more than three times the average 3.93 percent drop among notes from the least-creditworthy developing nations, according to data by Bloomberg.
The tumble in oil exports, Venezuela’s biggest source of dollars, comes as President Nicolas Maduro faces a shortage of U.S. currency that’s caused consumer prices to soar 56 percent and foreign reserves to plunge to a decade-low of $21 billion.
Petroleos de Venezuela SA, the state-run oil producer known as PDVSA, is sending hundreds of thousands of barrels a day to China to repay loans totaling more than $40 billion since 2008, at a time when its production is shrinking.
Original Post

Warming the cockles of my heart:
“Venezuela is losing out by selling crude to China, which is a market where they are netting back a lower amount of money,” John Auers, a senior vice president at industry consultant Turner Mason & Co., said by telephone from Dallas. “They have been doing it in spite of themselves, as they do not want to sell to the U.S.” 
By the way, wasn't Venezuela the country that gave free heating oil to Massachusetts residents?

It was never my impression that Venezuela, under Marxist leadership, was all that interested in making money in the first place. Whatever.

So, if they are making less money selling to China, why are they doing it? 

Here's the rest of the story being reported by Bloomberg:
Venezuelan energy sales to the U.S. are heading for the lowest levels in 28 years as President Nicolas Maduro steps up shipments to his main lender China and the shale boom floods North American refineries.
Venezuelan exports of crude and petroleum products to the U.S. averaged 792,000 barrels a day in the first 11 months of 2013, which would be the lowest annual rate since 1985, according to data published yesterday on the U.S. Energy Information Administration’s website.
State-run Petroleos de Venezuela SA is sending hundreds of thousands of barrels a day to China to pay back government loans. At the same time, refiners along the U.S. Gulf Coast are sourcing more domestic supply as a surge in drilling shale rock sends output to the highest in a quarter-century. 
I wonder if Jane Nielsen is reading this. For newbies, Jane was the individual who famously said the Bakken might have some oil, but it won't make a difference. LOL. Search for her on the blog. She shows up often.

For Investors Only

National Oilwell Varco beats by 17 cents.

Dividend watch -- some kind of record: 25 companies declare increased dividends, including Wellpoint which will increased health care premiums 36% in California. Something tells me this will catch the eye(s) of the California regulators. Others raising their dividends:
  • California Water Service Group 
  • DCP Midsream Partners
  • Dow Chemical
  • Dupont Fabros Technology
  • Energy Transfer Partners
  • Fidelity National
  • Magellan Midstream
  • Praxair
  • Sunoco Logistics Partners
  • Tupperware Brands Corp

Job Watch: US Job Market Has Improved So Much The President Now Makes That His Top Priority

Weatherford, after a poor earnings report, will cut 7,000 jobs.
Oilfield services company Weatherford International Ltd said it would cut 7,000 jobs and warned that its fourth-quarter profit would miss its forecast, hurt by severe winter in North America and operational disruptions in the Middle East.
The company, which had about 70,000 employees at the end of 2012, said in November profitability at its North American operations would improve in the fourth quarter.
***************************************

Talk about cognitive dissonance: for the past four years I've read nothing but positive reports from Reuters, Bloomberg, and the White House about how the job market is improving. Even yesterday, when the number of first time applicants for jobless benefits surged, Reuters said it was a sign that the job market was healing. I can't make this stuff up.

But now, after all these reports about how well the job market is, the headline story over at Yahoo!Finance: Obama brings CEOs to Washington, asking for help hiring long-term jobless. Three quick points of advice:
  • substitute a mirror for the teleprompter
  • think like a businessman, not a lawyer (or community organizer)
  • issue an executive order to fast-track Keystone XL to show times have changed

Friday -- Last Day Of January

Active rigs:


1/31/201401/31/201301/31/201201/31/201101/31/2010
Active Rigs19018520416390

RBN Energy: a brief history of hydraulic fracturing.

The Wall Street Journal

US says Syria delaying disarmament. I'm shocked! I'm shocked!

US starts to hit growth stride. I guess that's why the DOW is down 150 points in pre-market futures.

Looks like bondholders will get the short end of the stick (again). Detroit debt proposal favors pension plans.

Relief for kids with peanut allergy. Children with peanut allergies who were fed small but escalating amounts of peanut flour were able to eat a significant quantity of peanuts with no reaction, a new study found.

I love the euphemism ("misstatement"): Texas Democratic gubernatorial candidate Wendy Davis finds herself on the defensive amid criticism that she has exaggerated her story of being a single mom who rose from a trailer park to Harvard Law School. I don't even know where to begin.

Amazon posted a big jump in revenue but the results missed estimates. Result: shares plummet.

The Los Angeles Times

Anthem will raise premiums as much as 25%: up to 365,000 Californians with older, individual Anthem health insurance policies -- unchanged by Obamacare -- are subject to the rate increases. There are two story lines here that probably aren't discussed: a) the insurance industry is now starting to get bashed, as predicted, taking the heat for Obamacare; and, b) they are raising the prices because these older policies are needed to subsidize the newer policies required by Obamacare. The LA Times is technically correct: the premiums are not increasing because th policies have changed to comply with Obamacare, but rather to help subsidize Obamacare in gneral. By the way, why are these older policies allowed if they don't meet Obamacare requirements?
Walter and Kathy Warner of Westlake Village are facing a 25% rate increase, for a total of $1,822 per month. Their premiums had already jumped 53% since 2010, not including this latest change.
The California Department of Insurance and the state Department of Managed Health Care are reviewing Anthem's proposed increase, and they are awaiting additional information from the company. Anthem is a unit of WellPoint Inc., the nation's second-largest health insurer.
The Affordable Care Act makes it easier for people in this situation to switch coverage because insurers can no longer deny applicants on the basis of preexisting conditions or charge them more because of their medical history. But changing plans isn't an appealing option for some consumers who like the benefits they have now and worry about losing access to their doctors.
Anthem Blue Cross said its plan to raise rates reflects that escalating healthcare costs are an economic reality industrywide. The company said customers do have new options thanks to the healthcare law.

Thursday, January 30, 2014

Liberty Resources Re-Enters The Bakken -- January 30, 2014

Updates

Saturday, February 1, 2014: evidence of the global reach of the Bakken. A reader provides a link to a video of Liberty Resources presenting to the UK Parliament, House of Lords, on January 14, 2014.
 
Original Post
Press release:
Liberty Resources II LLC, a Denver-based oil and gas company, today announced that it has entered into an agreement to acquire oil and gas assets in North Dakota's Williston Basin for $455 million.
The properties to be acquired comprise approximately 53,000 net acres in Williams, Divide, Burke and McKenzie counties and over 4,000 boe/day of production from the Bakken and Three Forks formations, which Liberty II will continue to target as it furthers the development of the acquired properties.
The transaction represents the first acquisition by Liberty II since it announced in November 2013 a $350 million equity commitment from funds managed by energy private equity firm Riverstone Holdings LLC, including Riverstone Global Energy and Power Fund V and Riverstone Energy Limited, management, and other investors. Riverstone and Liberty II management previously partnered successfully in Liberty Resources LLC, an oil and gas company focused on the Bakken.
Over the course of two years and through thirteen discrete proprietary acquisitions, Liberty established a land position of approximately 43,000 net acres and drilled and completed 29 operated wells in the Bakken and Three Forks formations of North Dakota, ultimately achieving over 6,000 boe/day of net production. Liberty realized industry-leading recovery rates in the Bakken due to its application of unique and proprietary completion designs.
The majority of Liberty's assets were sold to Kodiak Oil & Gas in July 2013 for approximately $680 million.
It's not entire clear if one can assume the $455 million bought 53,000 net acres, but assuming it did, we have $455 million / 53,000 net acres = $8,600/acre.

"Snapshots" of Bakken operators are tracked here, which has actually turned out to be fairly useful.

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A Note to the Granddaughters
Video

I can't remember, but I think the first time I heard this song some time ago, I either a) did not like it, or, b) loved it. I can't remember. I heard it for the first time again, in a long time, today. And for some reason, it really hooked me. A great song.

I Hold On, Dierks Bentley

Busy, Busy Weekend Coming Up

The February hearing dockets should be released tomorrow which is one of the highlights of every month for me.

Mondays are also a huge highlight, when generally, when wells from three days come off the confidential list. If Monday is a holiday, Tuesday is the big day of the week.

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.

CVX will report 4Q13 earnings tomorrow. By the way, from Reuters:
Oil producer ConocoPhillips outshone larger competitors on Thursday with a quarterly profit that beat expectations as it moved to overcome the problems of high costs and lack of fresh reserves that have nagged at Exxon Mobil Corp and Royal Dutch Shell.
ConocoPhillips, the largest U.S. oil company without refining operations, said its profits were helped by the sale of its Algerian business and by higher crude oil production in North America.
The company shed its refining business in 2012 and has sold billions of dollars of lower-yielding assets to focus on more profitable oil production from North American shale basins such as the Eagle Ford in south Texas.
Analysts said Conoco's plan is beginning to pay off at a time when the industry faces pressure from shareholders to lift returns despite flat oil prices and rising costs for risky exploration work designed to replace reserves.
By the way, COP is the company Warren took a big bite of some years ago, for which he apologized, and pundits have taken him to task. He should have stuck to his guns and not changed his investing style. Whatever. 

COP has a huge presence in the Bakken through its wholly-owned subsidiary, which Reuters failed to mention, at least in that part of the story I actually read.

*************************
Apple

This is another incredible story.


Steve Jobs always talked about skating to where the puck is going to be, quote #50.

I have gotten tired of all the talk about iTV, iWatch, and how all the pundits suggest that Apple cannot innovate without Steve Jobs. Someone said, maybe it was Mr Jobs himself who said, that he left enough ideas behind to keep the company busy for a hundred years, or at least as long as the Bakken produced oil (okay, he didn't say that part about the Bakken. I made that part up. But he said that other thing).

Now a fact, not a rumor, from MacRumors:
Next week, Major League Baseball will begin rolling out thousands of iBeacons in ballparks around the country according to a source familiar with the plans who shared them with MacRumors.

The league is looking to have twenty parks outfitted with roughly 100 iBeacons each by Opening Day at the end of March. Boston, Milwaukee, San Diego, LA Dodgers, and San Francisco are among the teams that will have iBeacons installed.

The iBeacon deployment is one of the largest rollouts in the world, aside from Apple Retail's 254-store effort. MLB will be using iBeacons sourced from Qualcomm.

The iBeacons will work with primarily with MLB's At The Ballpark app, demonstrated at Citi Field last fall. The app should be updated by Opening Day with iBeacon support.

Functionality will vary by ballpark, with individual teams having significant input and control over what users will see. There are a number of potential use cases including point of interest information, concessions, loyalty and rewards programs, shopping, and more. Specific scenarios have yet to be determined for each ballpark and teams will share more information as it gets closer to Opening Day.

Separately, the NFL is rolling out a limited number of iBeacons at MetLife Stadium, the Super Bowl venue for this year, and in Times Square. The beacons will mostly be used to help users get to entry gates and to find Super Bowl-related tourist attractions in the area.
I can imagine Steve Jobs response when anyone brought up "near field communication."
Jobs: "So how far does NFC reach?"
Techhie: "About two inches."
Jobs: "WTF? Two inches? What can you do with just two inches? Come back when you have NFC out to a hundred yards. Then I'll listen. And we'll call it iBeacon.
This is a big deal. iBeacon capability was quietly slipped into all new iPhones. No one else has it.

It's In: The Vote Is 2 - 1 On QEP's "Helis" Grail "Unitization"

The Dickinson Press is reporting:
The North Dakota Industrial Commission voted 2-1 to approve a proposal from QEP Energy Co. to develop 25,000 acres in McKenzie County as one large drilling unit known as the Grail-Bakken Unit.
But individual mineral owners will still have the final say. QEP needs 60 percent approval from mineral owners and working interest owners in the unit.
Lynn Helms, director of the Department of Mineral Resources, recommended approval because QEP estimates it will be able to recover an additional 2.7 million barrels of oil by developing the area as a large unit.
PrairieMagazine.com reports (same writer):
An oil drilling proposal that drew opposition from many mineral owners moved forward Wednesday in a split vote with Gov. Jack Dalrymple objecting.
The North Dakota Industrial Commission voted 2-1 to approve a proposal from QEP Energy Co. to develop 25,000 acres in McKenzie County as one large drilling unit known as the Grail-Bakken Unit.
But individual mineral owners will still have the final say. QEP needs 60 percent approval from mineral owners and working interest owners in the unit.
Lynn Helms, director of the Department of Mineral Resources, recommended approval because QEP estimates it will be able to recover an additional 2.7 million barrels of oil by developing the area as a large unit.
I assume that first paragraph could have been written: "...that was supported by many mineral owners in which the commission voted 2 -1 ."

I have no dog in this fight, and I will hold off comments for now (the subject is full of landmines, which I don't need).

However, I have very, very strong feelings about this on so many levels, and some day, I will write about some of them, if the spirit moves me. 

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; Two Nice Wells Reported; HRC Reports A "High IP" Well

Active rigs:


1/30/201401/30/201301/30/201201/30/201101/30/2010
Active Rigs19018620416390

Fourteen (14) new permits --
  • Operators: Enerplus (5), Slawson (3), CLR (2), MRO (2), BR (2)
  • Fields: Antelope (McKenzie), Big Bend (Mountrail), St Demetrius (Billings), Sadler (Divide), Chimney Butte (Dunn), Elidah (McKenzie)
  • Comments:
Wells coming off confidential list were posted earlier; see sidebar at the right.

Two (2) producing wells were completed:
  • 23178, 1,812, Enerplus, Prairie Dog 150-94-04A-09H, Spotted Horn, t1/14; cum --
  • 24753, 1,589, Enerplus, Fox 150-94-04A-09H, Spotted Horn, t12/13; cum --
Wells coming off the confidential list Friday:
  • 25399, 2,271, HRC, Fort Berthold 152-94-13A-24-4H, Antelope, Sanish, t11/13; cum 12K 11/13;
  • 25422, drl, XTO, Alice 44X-34D, Siverston, no production data,
  • 25432, 720, Slawson, Mauser Federal 4-18-17TFH, North Fork; t11/13; cum 36K 12/13;
  • 25638, dry, Petro-Hunt, Lardy 139-105-24B-3-1, wildcat (24-139-105), no production data, out in the middle of nowhere; far southwest corner of the state; 7 miles southeast of Beach;
  • 25835, drl, XTO, Duke 34X-31F, Siverston, no production data,
When the last well comes off the confidential list tomorrow, that will end the month of January, 2014, the month that holds the record for most wells to have come off the confidential list in any one month.

TrainWreck

Pennsylvania is a swing state.

No Comments Necessary



Let's See If The Activist Environmentalists Will Help "Fast-Track" This Project

Let's see if the activist environmentalists will help us "fast-track" this project.

Yahoo!Finance is reporting:
WBI Energy, Inc., the pipeline and energy services subsidiary of MDU Resources Group, Inc., announced that planning for a 375-mile natural gas pipeline stretching from western North Dakota to northwestern Minnesota is underway and an open season seeking capacity commitments has begun.
“The Dakota Pipeline offers another avenue to move Bakken-produced natural gas out of the area and complements our other ongoing activities to build connections to several natural gas processing facilities,” said David L. Goodin, president and CEO of MDU Resources.
“The increase in natural gas pipeline capacity out of the region will provide additional transportation opportunities for new production as it comes on line, as well as more capacity for natural gas captured through industry’s efforts to reduce the flaring of this valuable resource.”
Pipeline of interest are tracked here

Physician Wait Times

Fox is reporting:
How long do you typically wait to see your doctor?
Well if your physician is in D.C., you will most likely wait about 17 days.
A survey of physicians nationwide found the average wait time for a new patient is nearly 19 days.
The longest wait time was in Boston at 72 days and the shortest is in Dallas with 10 days
That's just the waiting time once you get to the clinic. Can you imagine how long it takes to make an appointment?

Glad I live in Dallas, not Boston. Boston was the blueprint for ObamaCare or as Harvard grads like to say, the "ur-Obamacare."

Wagon Wheel, Old Crow Medicine Show, song by Bob Dylan

EPA May Move To Act: Making Coal Ash (AKA Fly Ash) 'Non-Hazardous' Material

Updates

Later, 2:28 pm CT: Don provided some background but first, from the blog:
Don said about the same thing with a reference to Kerr McGee burning coal/lignite in large kilns west of Bowman (Griffith) and Belfield, North Dakota, in the 1950's for the uranium. The coal came from the area around Ludlow, South Dakota. 

Original Post
I don't follow this issue, so I don't know the significance. From Yahoo!InPlay:
EPA may move to act making coal ash 'non-hazardous' material.
Headwaters announces a U.S. Environmental Protection Agency action that will lead to regulatory certainty for coal ash as a "non-hazardous" material. A Consent Decree signed by Headwaters and all other parties to the Appalachian Voices vs Gina McCarthy lawsuit was delivered to the Federal DC District Court on January 29, 2014. 
The Consent Decree states, "The EPA Administrator shall, by December 19, 2014, sign for publication in the Federal Register a notice taking final action regarding EPA's proposed revision of RCRA Subtitle D regulations pertaining to coal combustion residuals."
The proposed regulations created regulatory uncertainty that has dampened the beneficial use of coal combustion products. The District Court agreed with Headwaters and ordered EPA to propose a date by which it would finalize revised coal ash disposal rules. In the Consent Decree the parties have agreed to set the date at December 19, 2014, and also not to appeal the Court's order. This lifts the burden of regulatory uncertainty.

QEP Press Release: To Spin Off Its Midstream Business, QEP Field Services; Sell Non-Core Upstream Assets

QEP Resources provides update:
  • on strategic initiatives; 
  • authorizes $500 mln share repurchase program; 
  • initiates non-core E&P asset sales; 
  • co to implement the separation of QEP Field Services into publicly-traded co and explore alternative strategic transactions (QEP)
Co announced that, after significant review including discussions with shareholders, its Board of Directors has approved a series of strategic initiatives designed to maximize the inherent value of the co's midstream business while focusing on its core upstream business. These initiatives include:
  • increasing the upstream and midstream expertise on its Board of Directors;  
  • preparing and filing documents to facilitate the separation of the midstream business, QEP Field Services co, from QEP Resources; 
  • commencing the sale process of non-core Midcontinent upstream assets; and, 
  • authorizing the return of capital to shareholders through a $500 million share repurchase program. 
The Board of Directors has authorized management to implement the separation of QEP Field Services, including the co's interest in QEP Midstream Partners (QEPM), from QEP Resources into a standalone public co.

 As previously announced, QEP plans to sell non-core E&P assets located in the Midcontinent during the first half of 2014. The co is working with an advisor to effectuate the sale of the assets in multiple packages, the first two of which, the Granite Wash and "Cana" Woodford packages, will be marketed beginning in mid-February. The co anticipates closing the asset sales by July.

If I Get Too Many Complaints, I Will Delete This Post ...

... I have not defined "too many."

Alert: adult language at the link.

Serious readers will know where this is coming from. It results in comments that were sent in earlier today.

I did not know this.

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

After posting the above, a reader sent this to me --
Starting on page 27 of Zukerman's book The Frackers,

But George Mitchell was willing to try a relatively new drilling technique he had read about in petroleum-engineering literature that held the possibility of loosening up this compact raock and getting the gas to flow. The technique, a way of "completing" oil and gas wells, or preparing them to produce energy, was called hydraulic fracturing, or "fraccing." It entailed fracturing the rocks, or breaking them up, by pummeling them with various liquids to free up the gas trapped in those rocks.

(Years later, hydraulic fracturing became known in the popular media as "fracking" with a "k" replacing the "c." From the beginning, industry members detested the word because of its closeness to the common expletive, not to mention a similarity to "fragging," the act of attacking fellow soldiers. "Fracking" also rhymes with "hacking," yet another word with a negative connotation. Energy veterans claim that "fracking" was first used in the late 1970s in the science fiction series Battlestar Galactica as a substitute for the curse word.)

From this point Zuckerman continues with other methods of breaking up wells such as explosives, machine guns, and nuclear. 
I like the "nuclear option."

Catching Up On Mail Readers Have Sent Me; Fracking Is Good, Get Over It -- President Obama

Henry Waxman to retire from Congress

I haven't had time to look at the market yet today, but Don tells me oil is up another dollar, or thereabouts. This is the longest period of "sustained" high prices for oil. The great news: minimal volatility. The economy can manage "high-priced" oil better than volatility.

Bloomberg reports:
Ford, the maker of the top-selling pickups in the U.S. for the last 37 years, said it plans to increase production by 15 percent at one of its factories building F-Series Super Duty trucks.
Ford plans to boost annual capacity by about 55,000 vehicles at its Kentucky truck plant, Joe Hinrichs, president of the Americas, said today in an interview from the factory with Bloomberg Television. The Dearborn, Michigan-based company said it expects to invest $80 million and add 350 jobs.
“The demand for our F-Series trucks continues to grow” and shows the “underlying the strength of the economy,” Hinrichs said in the interview.
*******************************

Facebook: I just looked at the market; another reason to avoid CNBC. Remember all those pundits wringing their hands over the Facebook IPO? I think the IPO was in the $20 range that day. Today, Facebook is surging, up 16%, and solidly over $60. A "stranger" at Starbucks about three weeks ago told me to keep an eye on Facebook. His reasoning: "like us on Facebook" is now ubiquitous. I see "like us on Facebook" more than I see billboards for Coca-Cola.

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.

Netflix, the next big thing: Just out of curiosity, let's see what Netflix and Starbucks are doing? Netflix, up 2% and trading at a new 52-week high. Starbucks up about a percent but $10 off its 52-week high.


NOG: NOG has 187,000 net acres, which represents an increase from previous postings. Minerals in the core Bakken went for $34,000/acre yesterday. NOG has a market cap of less than $900 million.

Under Armour: hits record as shares surge 22%.

*******************************
News From All Over

Shocker: from The Washington Post -- In his State of the Union address, President Obama heaped praise on the boom in natural-gas production across the United States. And he made a comment about fracking that triggered some grumbling from green groups. Comment: the link is to The Washington Post; I don't need to read any more. But it looks like the president is throwing the activist environmentalists under the bus.

Gas: from The New York Times -- North Dakota continues to work on plans to reduce flaring.

From under the Geico rock: Forbes is reporting -- fracking fuels an economic boom in North Dakota. Really? Posted in Forbes on January 29, 2014. This just shows me how east-coast centric Big Media is. This story is, like, three years old.

LOL: folks think Bakken oil is explosive. Now the railroads are thinking about transporting liquified natural gas. There are two words in "liquified natural gas" that should concern folks: "liquified" and "gas." The story was in Forbes. Your humor for the day.

My least favorite subject in the Bakken: The Dickinson Press is reporting on a task force for flared gas. I could care less. I couldn't care less. The only thing I like less than the flaring issue in the Bakken, are stories on "task forces."

Executive orders: it appears that President Obama does not have the corner on "executive orders." Looking forward to 2016, Governor Cuomo is starting to issue his own "executive orders." His first executive order this week: instructing his emergency response agencies to review their emergency response procedures. Exactly what the hell are these folks being paid to do in the first place. Talk about a wimp. Memo to self: consider a new blog (only to get sued for copyright infringement): "Diary of a Wimpy Governor."  Maybe to avoid copyright infringements, a better blog: the governor who would be king.  By the way, this is bad news for Donald Trump who is now rumored to be the front-runner for the GOP presidential nominee -- he can't issue "executive orders." As a CEO, he is pretty much limited to "memos."

The Bakken Shale Discussion Group

I have to chuckle. The "original" Bakken Shale Discussion Group had a rule about political comments but was unable to control such comments. The "new and improved" Bakken Shale Discussion Group has no such rules (LOL) and gets no political comments. And if it does, the comments would not be published anyway.

The Video
Pater Patriae

Let's see, what video for the day? Oh, this is perfect. In keeping with the 50th anniversary of the Beatles, "print his face on a coin and proclaim him the dictator for life." Veni, vidi, vici.

The triumvirate -- Obama, Holder, and Axelrod.

O's Cleopatra: Helle Thorning-Schmidt (google "Obama's Danish Babe"). The ultimate selfie.

Julius Caear, Besame Mucho, The Beatles, The History Teachers


By the way, Latin is a "dead" language; it is only written and read. It is not spoken. No one can know how the Caesar Romans "spoke." So I truly appreciate how Amy (Burvall) pronounces "ides." She is brilliant. I wonder if she's a Harvard University grad. She teaches in Hawaii. On the big island, as they say.

Update On The New SHRT; Look At The Railcar Needs Going Forward

A huge "thank you" to the reader sending me this press release. A great link. 

The press release, January 17, 2014, announcing the new rail terminal at South Heart, a PDF:
 The story was posted earlier, back on November 28, 2013.

Read the press release carefully; it is full of incredible, staggering information:

From the press release in case the link is broken:
Watco Terminal and Port Services and Great Northern Project evelopment, L. P. announce their partnership in the development and operation of a major multi-purpose rail transload terminal and railcar maintenance shop near South Heart, North Dakota.
South Heart Rail Terminal, (SHRT), will serve the energy industry and its service providers to meet the increasing demand and development of the Bakken, Three Forks, Tyler and emerging oil and gas formations. Construction is expected to start in the first half of 2014 with operations projected to begin during the first quarter of 2015.
SHRT will be strategically located just south of Interstate 94, twelve miles west of Dickinson, ND, and will offer rail, transload, and railcar maintenance services, as well as warehousing and materials storage. The Terminal will be served with national connectivity via BNSF Railway Company and will feature two double-loop tracks and twelve manifest tracks. SHRT will accommodate multiple unit trains, manifest
business, and significant long or short term railcar storage needs.
South Heart Rail Terminal will have the capability to receive and transload dry bulk commodities such as frac sand, ceramic proppants, and cement. Tubular pipe, oil field equipment, building products and other materials will also be handled at SHRT. In addition, the Terminal will provide off-loading and storage for aggregates, asphalt, and road materials.
A full service railcar maintenance facility, operated by Watco Mechanical Services, will be located on-site to provide services to tank car owners and lessees. Based on 10 year growth projections in the crude oil sector alone, there will be a need for an additional 70,000 tank cars in the US fleet with 60% of those needed for the Bakken Shale area alone. South Heart Rail Terminal’s rail car maintenance shop will provide services to assist Customers with tank car inspections, testing, qualifications, preventive
maintenance, retrofits, paint and lining. In addition, Watco Compliance Services will provide fleet management solutions, engineering and regulatory guidance to ensure ongoing safety and mechanical integrity.

Great Plains Synfuels Plant, North Of Beulah, To Add New Product Line: Urea, For Fertilizer

Updates

August 2018: Great Plains Synfuels Plant -- pretty much "dead."
More than 300 Basin Electric Power Cooperative employees will take buyouts as the utility aims to cut costs amid a plummeting financial outlook.
Basin’s latest financial forecast predicts a decade of losses at the cooperative’s subsidiary Dakota Gasification Co., operator of the Great Plains Synfuels Plant near Beulah, said spokesman Curt Pearson. Basin CEO Paul Sukut was not available for comment.
The move to cut more costs follows several years of losses at DGC as it struggles to compete with cheap natural gas made available by hydraulic fracturing in the Bakken oil field. The plant suffered $212.4 million in net losses over the past three years — $87.2 million in 2017, $94.1 million in 2016 and $31.1 million in 2015, according to the cooperative’s annual reports. The plant also suffered $11 million in losses in 2013.

July 6, 2016: wind heavily damages this $500 million project.
 
Original Post
 
Regular readers know that I can never keep track of the various energy industries in North Dakota, who owns what, who does what, so before I post the link to the newest story regarding Synfuels, I need to look at the following sites and information:

Dakota Gasification Company website
Basin Elecric Power Cooperatiave (Basin Electric), through its for-profit subsidiary, Dakota Gasification Company (Dakota Gas), owns and operates the Great Plains Synfuels Plant (Synfuels Plant). The Synfuels Plant is the only commercial-scale coal gasification plant in the United States that manufactures natural gas. It is also the cleanest energy plant operating in the state of North Dakota, according to a comparison of emissions data available from the North Dakota Department of Health.
157-foot tower for new anhydrous ammonia facility arrives.

The plant: The Synfuels Plant supplies carbon dioxide to the world’s largest carbon capture and storage project in the world in Saskatchewan, Canada. Dakota Gas currently captures between 2.5 and 3 million metric tons of carbon dioxide per year.

Now the story today: PrairieBusiness is reporting that the plant will add a new product line - urea.
A synthetic natural gas producer plans to produce urea at its facility.
Dakota Gasification Co. approved the $402 million project at Great Plains Synfuels Plant north of Beulah on Monday, according to a news release.
Urea, which is a granular fertilizer used in agricultural applications, is the 10th product the facility will produce.

Jobs Report: First Time Jobless Claims Surge; Labor Market Is Healing -- Reuters

Jobless claims rise more than expected. [Later, after finishing the article -- wow, that's an understatement.]

The jobs story was buried. The story is becoming so common, so repetitive, it is no longer news.

Let's see how bad it is this week and how Reuters, Bloomberg, others spin it.

WOW, LOL, the same opening statement I've seen for the past four years: despite the bad news,
the underlying trend suggested the labor market continued to heal."
LOL. Seriously.

That's as far as I got. What are then numbers?

HOLY MACKERAL. I thought maybe 2,000, or 3,000 or 5,000, but am I reading this correctly? 19,000. Not only that, but the numbers for the previous week were revised upward another 3,000.

This is a BAD, BAD, BAD report.

This is where I track weekly reports. See how many weekly reports report a number as high as 19,000. 

Analysts had expected the number to rise to 330,000. In fact, it rose to 348,000.

Oh, here it is, the spin. Reuters is using a new adverb: ironed-out, as in, "the four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, edged up 750 to 333,000." LOL.

The revised numbers, which will come out next week, will, of course, be worse.
A Labor Department analyst said claims for Louisiana were estimated because of inclement weather, adding there were no special factors affecting the state level data.
Now more spin:
Last week's claims data include the Martin Luther King Jr Day and filings tend to be volatile around federal holidays.
Hmmmm.... there's a federal holiday almost every month. Is this new, Martin Luther King Jr Day?
Job growth slowed sharply in December, but economists shrugged off the surprise meager increase in payrolls, pointing to freezing temperatures that hit sectors such as construction and transportation.
Federal Reserve officials also appeared to dismiss the slowdown in payrolls, saying at the end of a two-day policy meeting on Wednesday that the labor market on balance showed further improvement.
The decision by Congress to not extend unemployment benefits out to fifteen years or more is starting to show up in the data:
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell 16,000 to 2.99 million in the week ended January 18.
The Sunday comics are being replaced by the weekly jobs reports coming out of the Obama administration.

Amtrak Stays On Schedule Despite Surge In Crude Oil Shipments

Yahoo!News is reporting that Amtrak continues to arrive "on time," generally within 24 hours of the scheduled arrival time. I don't think the article actually gives any specific data, it's mostly hearsay and rumor and conjecture, but reading between the lines, it seems everything about Amtrak is about as I remember it.

Well before CBR, a) Amtrak was "always late" according to those who did not understand Amtrak; and, b) farmers always said there were not enough grain cars during harvest season. Fortunately, Amtrak has been able to keep on schedule (as defined by arriving at destinations within 24 hours of scheduled arrivals) due to the administration's success in holding back the economy. Amtrak would have significant problems if the economy were (was?) surging.

I love riding Amtrak, but haven't had the opportunity since 2011. Amtrak has always had delays; I have blogged in the past that if Amtrak arrives within 24 hours of its scheduled arrival, it has arrived on time.

In the winter, it is the weather that "delays" Amtrak.

In the summer, it is the flooding around Minot and Devils Lake that "delays" Amtrak.

In fact, if Amtrak is moving, it is delayed. 

As usual, the comments at the story are the most interesting part.

The tracks are owned by the railroad companies. Amtrak does not own the tracks. In North Dakota,  most tracks are owned by Warren Buffett and BNSF. Amtrak rents the opportunity to use BNSF tracks and, yes, freight trains have priority. These freight trains carry a lot more than just crude oil: including agricultural and industrial products. And the much-talked about, seldom seen hobo.

At one time a great capitalist nation would have solved this problem. There was the potential of shovel-ready jobs many years ago to build more railroad sidings, but the president had no interest in such shovel-ready jobs. Had the railroad companies started work on these railroad sidings, efforts would have been stopped by activist environmentalists, anyway; it would have taken five years just to get the environmental impact statements completed. Crude-by-rail surged after the president killed the Keystone XL pipeline program.

If Congress kills CBR, the oil will be trucked.

But the writer of the Amtrak story misses the most important point: no one rides Amtrak to make time or to arrive on schedule, at least not across the northern tier. If folks need to be somewhere on time, they take the airlines. Amtrak is no longer competitive on price vs airlines.

Amtrak appears to be reaching most of its destinations within 24 hours of scheduled arrivals. Amtrak is so consistently "late" by other people's definitions I've never understood why Amtrak doesn't simply change its schedules to reflect reality. 

Thursday

Wells coming off the confidential list have been posted. KOG has another "high IP" well.

Active rigs: another day in which the number of active rigs in North Dakota exceeds the number of one year ago.


1/30/201401/30/201301/30/201201/30/201101/30/2010
Active Rigs18918620416390

RBN Energy: a continuation of their series on royalties. Anyone with Bakken royalties should be following this series.
 
The Wall Street Journal

I guess this is why the market is surging: GDP surges 3.2%. Despite all the headwinds. It doesn't take a rocket scientist to figure out where the growth came from. Facebook mobile ads. LOL.


Senator Reid delivers a body blow to President Obama. And they call the Republican Party divided. LOL.

Facebook shares soar to record high.

Global warming gridlocks Atlanta.

Exxon profit falls on lower production.

Shell suspends US Arctic project. Shell said it would suspend drilling in the US Arctic, as it reported a 71% decline in 4Q13 profit larely because of rising costs and lower oil and gas volumes. This certainly puts the Bakken in perspective.

Wow, that was fast: President Obama signs order for retirement accounts.

But, minimum wage is stalled -- and the President's party controls the Senate which can't seem to get its act together on this issue. And they call the Republican Party divided. LOL. This is a no-brainer for the President's party.

Egypt continues with its hard-line policies, charging Al Jazeera journalists.

Germany's perfect storm: now the German pension plan eyes a rise in taxes. Merkel's planned improvements to pensions in Germany will cost $80 billion until 2020 and lead to an increase in payroll taxes from 2019.

And again, in case you missed it the first time, Facebook's profit surges on mobile-ad growth.

Target: hackers used vendor credentials. The Target hackers appear to have breached the discounter's systems by using credentials stolen from a vendor. Maybe not so much hacking as just plain theft. I no longer have a dog in this fight. My Target account is canceled.

American Energy Partners buys Utica shale gas from Hess.

A doubling of revenues in three years is the real reason Amazon receives the benefit of the doubt from so many investors. I pretty much by all non-grocery products through Amazon. The book reseller program allows me to buy remaindered books (in perfect condition) for as little as 1 cent and $3.99 shipping charges. Not much tax on a one-cent item. The two books I bought this week have 2013 copyright dates and sell at B&N for $30 each.

The Los Angeles Times

For a newspaper that writes mostly about sports and entertainment, the newspaper found room on its front page to post the story that Exxon's profits dipped 16% to $8.35 billion. But I cannot find the OXY earnings in which the company beat forecasts by 4 cents.  

Lots Of News Today -- It Will Take Awhile To Catch Up

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 lot of companies of interest are reporting earnings today. All of them, except one, beat forecasts. In addition to earnings, dividends are being increased. This is an incredibly day of reports.

COP beats by 8 cents.

OXY beats by 4 cents.

Enterprise Products beats by 4 cents.

Helmerich & Payne beats by 13 cents.

Carbo Ceramics beats by 9 cents.

Noble Corp increases quarterly dividend by 50%.

Royal Dutch Shell declares an interim dividend of 47 cents, an increase of 4.4% over last year.

The one miss: XOM misses by a penny.

TECO Energy beats by a penny.

Kelly Services beats by 10 pennies.

Facebook is making new highs in pre-market trading.

Weatherford warns, sees 4Q13 well below consensus.

Raytheon beats by 23 cents. Not trivial.

Northrop Grumman beats by 18 cents. Not trivial.

Cardinal Health beats by 6 cents.

Time Warner Cable beats by 8 cents.

Wednesday, January 29, 2014

NOG Operational Update

Northern Oil & Gas announces 4Q2013 production is expected to average ~ 13,900 barrels of oil equivalent (Boe) per day, up 28% y/y: Co is providing a production and operations update for the quarter ended December 31, 2013.

Production and operations update
Northern's Q4 2013 production is expected to average ~13,900 barrels of oil equivalent (Boe) per day. This represents an increase of 28% compared to Q4 of 2012, and a sequential increase of 6.5% compared to the third quarter of 2013. Total production for 2013 was ~4.47 million barrels of oil equivalent, an increase of ~ 19% compared to 2012.

During Q4 of 2013, Northern added 173 gross (12.6 net) wells to production, with an additional 245 gross (15.2 net) wells that were drilling or awaiting completion as of Dec 31, 2013. During 2013, Northern added 531 gross (40.0 net) wells to production. As of Dec 31, 2013, Northern's total producing well count was 1,758 gross (146.2 net) wells.

Northern expects its Q4 2013 realized price per barrel of oil equivalent, including the effect of settled derivatives (hedges), to be in a range of $74.50 - $75.00. The expected realized price per Boe reflects an approximate crude oil differential to WTI of $15.00 per barrel and an ~$3.00 per barrel loss on settled crude oil derivatives during the quarter.

Northern expects its fourth quarter 2013 lease operating expense (LOE) per barrel of oil equivalent to be in a range of $8.75 - $9.00, a reduction of ~7% compared to Q3 of 2013.

This Story Came Out Before The News That Someone Paid $34,000/Acre In The Bakken

A contributor over at SeekingAlpha looks at Surge Energy, KOG, and Halcon.

Disclaimer: This is not an investment site, but some days I wish it were. Having said that, do not make any investment decisions based on what you read here or what you think you may have read here.

For those who come here for investment advice, President Obama is hoping to initiate the plan that President Bush II proposed but instead of common stock, President Obama will ensure the full faith and credit of his administration, guaranteeing a fair return, let's say 2% on one's money. The Fed's inflation target is 2% so this will work out just about right. Again, this is not an investment site, and I do not know the particulars of the president's plan which he has cleverly called "myRA." 

It's better than nothing (some say). I did not say that. This is not an investment site. By the way, the maximum balance of $15,000 looks ridiculously small, but it appears once one gets to $15,000, it is expected that one would roll that over into a private sector IRA. This sounds like President Bush II's plan -- done a bit differently, but essentially the same idea.

Halcon presentations can be found here. A big thank you to a reader. 

$34,000 / Acre In The Bakken; January's BLM Minerals Lease Sale -- January 29, 2014

KXNET is reporting:
The Bureau of Land Management says its most recent sale of oil and gas leases in North Dakota totaled more than $17.5 million.
BLM says 40 federal leases were sold Wednesday.
The agency says Williston-based Diamond Resources Co. submitted a record high bid of $34,000 for each acre in a 53-acre parcel in Mountrail County.
Diamond Resources also purchased the highest single-parcel bid at more than $5 million for a 152-acre parcel in Mountrail County.
Let's do the math: $5,000,000 / 152 acres = $32,895/acre (rounded). 

At least three story lines come from this:
a) now we know why holding leases by production is so important;
b) if the acreage is worth this much, the Bakken operators are going to show some spectacular profits down the road -- no one paid this much for so little
c) this helps investors understand the value of the shares they hold in Bakken operators
Diamond Resources is probably buying the minerals for CLR.

According to my FAQ page, question 11:
The late summer QEP/Helis deal may have priced "core" Bakken at $30,000/acre (or more). -- August 29, 2012.
I know two people who, when they read this, will be sneezing coffee out their respective nostrils.

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

The worst case scenario for the sweet spots in the Bakken:
  • 8 wells on 1280-acre spacing (four middle Bakken wells, four Three Forks wells)
  • EURs of 300,000
  • $50/bbl oil 
  • The arithmetic:
  • 8 wells x 300,000 bbls (EURs) = 2,400,000 bbls
  • 2,400,000 x $50/bbl= $120,000,000
  • $120,000,000 / 1280 acres = $93,750 / acre
  • Even with each of the 8 wells costing $10 million, one still comes out to $31,250/acre
However, a couple things to consider:
  • in the best Bakken, EOG, CLR, and KOG are planning on many more than 8 wells/1280-acre unit (see pilot density projects)
  • no one thinks 300,000 bbls for average EURs is even close; across the Bakken, the average is closer to 600,000 (according to CLR) and Mike Filloon says that in the best Bakken, expect to see EURs of 1 million bbls
  • I doubt anyone thinks oil will average $50/bbl over the next 30 years
  • wells are coming down in cost, from $10 million to $8 million
See what $/acre one gets with the following assumptions?
  • 12 wells (still way below the current anticipated well density)
  • EURs of 450K (still way below the average of 600K)
  • $75/bbl (perhaps reasonable)
  • same cost per well

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; KOG Will Report A Nice Well Thursday

Active rigs:


1/29/201401/29/201301/29/201201/29/201101/29/2010
Active Rigs19018720416390

Fourteen (14) new permits --
  • Operators: Hess (4), Statoil (3), BR (3), Fidelity (2), MRO (2)
  • Fields: Alkali Creek (Mountrail), Alger (Mountrail), Hawkeye (McKenzie), Green River (Stark), Chimney Butte (Dunn)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Triangle USA Petroleum renewed eight (8) permits, six Larsen wells and two Kittleson wells.

One producing well was completed:
  • 23278, 2,143, QEP, Paul 1-26/35H, Grail, t1/13; cum --
Wells coming off confidential list Thursday:
  • 23019, 754, CLR, Sacrament 3-10H, Brooklyn, no production data,
  • 24160, 863, Whiting, Pronghorn Federal 34-10PH, Park, Three Forks, 21,478 feet; t7/13; cum 23K 11/13;
  • 24161, 716, Whiting, Pronghorn Federal 41-15PH, Park, Three Forks, 21,030 feet; t8/13; 24K 11/13;
  • 24162, 1,327, Whiting, Pronghorn Federal 44-10PH, Park, Three Forks, 21,811 feet; t7/13; cum 30K 11/13;
  • 24848, drl, QEP, MHA 5-06-07H-147-92, Heart Butte, no production data,
  • 25009, 1,614, WPX, Olson 12-1HX, Van Hook, t12/13; cum 3K 11/13;
  • 25033, 507, Hess, LK-Thomas-145-97-3625H-4, Little Knife, no production data,
  • 25213, 1,415, Statoil, Alger State 16-21 6TFH, Alger, no production data, 
  • 25287, 2,109, KOG, Charging Eagle 1-14-11-2H, Twin Buttes, t12/13; cum 20K 12/13;
  • 25760, 1,757, MRO, Williams Kukla 24-34H, Murphy Creek, no production data;