Friday, February 28, 2014

How Cold Was It In The Bakken In January? -- So Cold, The Diesel Froze

Reuters is reporting:
Oil production in North Dakota's Bakken shale stayed flat in January after falling sharply the month before, according to independent data that illustrate how this winter's bitter cold put a freeze on the world's fastest-growing oil patches.
Although December's extraordinary chill gave way to relatively warmer weather last month, Bakken output hovered just below 860,000 barrels-per-day, according to calculations by LCI Energy Insight, a Texas-based energy intelligence firm.
In December, Bakken oil production fell by nearly 50,000 bpd from a record just over 910,000 bpd in November, the largest drop since state records began, according to North Dakota Industrial Commission data this month.
The LCI figures, based on historical well production data and natural gas pipeline flows in North Dakota and Montana, are the first to show the full impact of winter weather on oil output, a trend that brought new seasonal uncertainty to oil markets in recent years.
Growth in the larger Eagle Ford shale in south Texas also ground to a halt at around 1.1 million bpd, according to the LCI data, which was made available to Reuters.
Parts of North Dakota had the third coldest December on record, so frigid, according to local papers, that diesel fuel froze in truck tanks. In January, it was the wind that forestalled the drilling and hydraulic fracturing operations that are necessary to keep output growing.
"December was very cold and January was warmer but windy," said Bill Abeling, a meteorologist with the National Oceanic and Atmospheric Administration in Bismarck, North Dakota. Peak wind speeds were above 35 miles per hour for a third of the month in Williston, the heart of the oil boom, Abeling added. 
Although companies often cut back on fracking operations during the winter months due to operational issues, the impact was greater this year due to the severe conditions.
In addition, the weather in the northern Midwest state is wielding a greater influence on the oil market, forcing oil traders to adjust to a new dynamic. U.S. oil markets cannot overlook the loss of 50,000 bpd of Bakken crude just as winter heating fuel demand peaks, traders say. 
Still, it is likely to be a temporary lull in the otherwise upward trajectory of the Bakken region, whose bounty turned North Dakota into the country's No. 2 oil-producing state. Regulators expect the backlog of wells waiting on completion, numbering 635 in December, to be up and running by May.
This is the first of three pages; to see the rest, go to the linked story.

Bakken CBR Terminals Closing? Just A Rumor -- Federal Government (The Same One That Said "You Can Keep Your Physician")

Reuters at Rigzone is reporting:
Oil shipments by rail from the booming Bakken shale in North Dakota have slowed over the past two days, data showed on Friday, but a U.S. regulator knocked down rumors that some terminals have been shut down due to new rules.
Oil traders are on edge over concerns that an emergency order from the U.S. Department of Transportation this week requiring shippers to test all crude before it is carried by train could cut into deliveries of Bakken crude, as much as 800,000 barrels per day (bpd) of which is shipped by rail.
U.S. crude oil futures prices briefly spiked as much as 60 cents per barrel, or nearly 1 percent, earlier on Friday on speculation that two terminals may have been shut down for non-compliance.
The U.S. Federal Railroad Administration said talk of shutdowns was a rumor. The Pipeline and Hazardous Materials Safety Administration's inspections in North Dakota have not caused the closure of any terminals, an agency source said. Prices held onto earlier gains even after the denials.
However, data from industry intelligence group Genscape did show that loadings at a dozen major Bakken rail terminals had fallen to around 345,000 barrels per barrel on average for the past two days, down from about 550,000 bpd over the previous two weeks, an unusual but not unprecedented dip.
Genscape, which uses cameras to monitor the number of tank cars filled with crude at the terminals, provided no explanation for the dip. Analysts said the ebbing flows could also be due to other factors, including a shortage of oil tank cars and slower rail traffic due to severe winter weather.
This is the first page of a three-page article at the link. 

For Warmists Or Deniers, One Has To Admit This Has Been One Humdinger Of A Winter

Record subzero days in midwest
Historic cold shuts Michigan schools; record low temperatures set in Michigan
Worst winter in decades in Minnesota
Kansas to Massachusetts: up to a foot of snow to fall across 1,300 miles (this is going into March)
Travel agent: brutal winter is causing "a certain amount of desperation"

This is the forecast for 3:00 p.m. this Sunday -- the middle of the afternoon when it would generally be the warmest all day:

I came back to the Bakken this time for three reasons:
  • I had to thank my dad personally -- how generous he has been
  • see the changes in the area due to oil and gas
  • experience a few days of the winter I remember growing up; someday, global warming will mean the end of all this; and I am getting my wish -- it's going to be really, really cold this weekend; it is currently -14 degrees outside where I am (Williston); the overnight low will be -20.

Williston Exploration Reports Results Of A Heath Well; XTO Reports A Gusher; Oasis, MRO Each With A "High IP" Well; Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

Active Rigs19218320516996

Fifteen (15) new permits --
  • Operators: XTO (5), QEP (5), Enduro (3), Oasis (2)
  • Fields: Haystack Butte (Dunn), Newburg (Bottineau), Grail (McKenzie), Tyrone (Williams), Murphy Creek (Dunn)
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Twelve (12) producing wells completed:
  • 24146, 2,911, Oasis, Power Federal 5300 14-15B, Willow Creek, t1/14; cum --
  • 24922, 1,777, Emerald Oil, Caper 1-15-22H, Boxcar Butte, t6/13; cum 70K 12/13;
  • 25007, 929, WPX, Olson 12-1HY, Van Hook, t1/14; cum 9K 12/13;
  • 25347, 5, Williston Exploration, Rocky Ridge-Fritz 1, a Heath well; Rocky Ridge, t2/14; cum --
  • 25545, 2,482, MRO, Rudolph USA 41-15TFH, Reunion Bay, t1/14; cum --
  • 25550, 4,051, XTO, Marlene 42X-20D, Blue Buttes, t1/14; cum --
  • 25902, 109, Bakken Hunter, Ambrose, t10/13; cum 7K 12/13;
  • 25932, 277, Whiting, Sanish, t2/14; cum --
  • 26230, 348, Triangle, Dwyer 150-101-35-26-2H, Rawson, t2/14; cum --
  • 26340, 934, Whiting, Kannianen 43-31TFH, Sanish, t2/4; cum --
  • 26435, 235, KOG, Wildrose 159-98-14-12-24-14H3, t1/14; cum --
  • 26784, 1,199, Whiting, Smith 41-24H, Sanish, t2/14; cum --

Devon Energy plans to invest ~$1.1 bln in the Eagle Ford this year and will drill more than 200 wells: For its 10 months of ownership in the play this year, the company's net production is expected to average between 70,000 and 80,000 barrels of oil equivalent per day. With the majority of Devon's Eagle Ford acreage derisked, this opportunity provides low-risk, repeatable oil growth for years to come.

Chesapeake Energy confirms sale of Midstream compression assets; CHK notes minimal impact on 2014 cash flow guidance: CHK confirmed the execution of two agreements to sell midstream compression assets for total proceeds of approximately $520 million. 

The Syndicated Series I-98 Is On Hiatus

Several federal and one Illinois state agency have asked me to put the acclaimed I-98 series on hold until the investigation is complete.

For those unfamiliar with the I-98 series, here are the relevant links:
Although the series is set in the future (2040 - 2049), it is being written, and if Hollywood picks it up, filmed in the present.

The series began with two Bakken oil men traveling down I-98 near Rugby when they chanced to see a WBC&R CBR derailment. They stopped to help, and in the commotion their yellow Lamborghini was stolen.

The drones tracked the yellow Lamborghini to Minot where the two self-called Thelma and Louise women stopped for fuel. It was an electric vehicle, and charging took about an hour. The North Dakota WASP teams were called in and had the charging station surrounded.

[That is not a typo: in much of the US, SWAT teams had been banned by Homeland Security as part of the successful gun-control initiative funded by the Cameron Diaz Stop The Madness campaign. North Dakota never saw the need for SWAT until the state annexed three eastern Montana counties. But to confuse the Feds, the state called their special weapons and tactics teams, the wide-area-special-patrol (WASP) teams. WASPs were already on the Federally-endangered-species list, and North Dakotans felt that, like the western sage grouse, WASPs were protected.]

The WASPs had the charging station and the yellow Lamborghini surrounded. Earlier in the day, the Minot hazmat folks (paid for by the Legacy Fund) had been clearing up the most recent derailment. There was still a bit of legendary highly combustible Bakken oil in the ditch near the charging station but it was considered not to be a problem.

Thelma was standing by the EV Lamborghini smoking a cigarette. Only 15 years old, she would not have been allowed to smoke "real" cigarettes and was, no doubt, smoking a Marlboro e-Cig.

"No doubt" is a phrase best not used by WASP teams responding to a potentially explosive situation. It turned out, as luck would have it, Thelma was smoking a "real" cigarette, not an electric cigarette that would have been, under similar circumstances, completely harmless.

Negotiations began. And continued. The Canadian Mounted Police were on their way. The United States Air Force was sending in their suicide-prevention team from the Grand Forks Air Force Base to negotiate -- it wasn't the best choice, but, as the lead mishap investigator said some months later, "it was close. It was all we had. What does it matter?"

In fact, that was the Fargo Informed headline some months later:
"What Does It matter?" -- Deputy Commander, ND WASP
Meanwhile, back at "the situation" as it began to be called, Louise said to Thelma, "Get in, the car is charged. And get rid of the cig. No smoking in the car."

Well, it doesn't take a rocket scientist to put two and two together. Unfortunately, the WASP commander WAS a rocket scientist. She had been laid off when the Obama administration eliminated the USAF missile program to help pay for the highly successful national health care system. Now that health care was adequately funded, it was a rousing success. But the omniscient narrator digresses.

It doesn't take a rocket scientist to put two and two together to guess what happened next.

Thelma tossed the "real" cigarette into the ditch containing the legendary highly flammable Bakken crude oil.

In the ensuing inferno, the second inferno in less than 24 hours, Thelma and Louise confounded authorities when they made a 540-degree turn and headed east. Later, when asked why they headed east, they said they knew they would have been held up in a six-hour traffic jam in Stanley (North Dakota).  WBC&R ran 90 CBR trains across I-98 daily resulting in traffic jams never imagined in 2014.

The state had planned to place an overpass over the WBC&R railroad running north/south connecting the CBR terminals north and south of the city. But at the last minute the Fargo contingent objected to Legacy Fund money being spent on highways in the Bakken when the money was needed to widen the bridges across the Red River to accommodate the Minnesotans still flowing into the state.

Louise, with "pedal to the metal" headed back towards Rugby.

Fast forward. Louise and Thelma sped through North Dakota, Minnesota, Wisconsin, and had gotten to Chicago. They refueled along the way, evading authorities.

It was in Chicago that things came to an end. Thelma and Louise were not hurt. At least they were not hurt physically.

The end was caught on video, which went viral on YouTube. And that brings us to the "here and now." Until the investigation is complete, several federal agencies and one Illinois state agency have asked that the syndicated I-98 series be put on hold. My lawyers are in contact with their lawyers.

Oh, for those interested, here is the video of Thelma and Louise in Chicago:

Lamborghini Crashes in Chicago Suburbs

On The Road To New England; We're All Screwed

Wow, talk about "themilliondollarway" being ahead of the pack, if only by a week or so.

It was just a week or so ago, I had the "aha" moment, the epiphany. I put one and one together and got two.
Obama's war on coal (1)
natural gas shortage in New England (1)
= the US is taking "the road to New England" (2)

There are two facts with regard to the folks in Boston who depend on electricity:
  • they were screwed this year
  • they will be screwed for about six more years
I think everyone is aware of the energy shortage, specifically the natural gas energy shortage, in New England this year. Among the "everyone," I assume there are a few that are aware that experts suggest it will be at least six more years before the energy issue is fixed in New England.

New England's problems began, as I understand it, when "everyone" switched over to natural gas, eliminating coal and/or heating oil as a source of energy, over the past two years. The natural gas distribution system simply could not keep up. It would have been a challenge even if it had been a normal winter, but global warming resulted in one of the snowiest, coldest winters in New England, which exacerbated the issue.

The president, I guess, naively, had hoped that wind and solar would have taken up the slack as the coal industry slowly died over the next couple of decades. Unfortunately, coal-fired power plants are closing more quickly than anticipated, and more of them are closing than anticipated (previously reported on the blog). Even after a gazillion dollars in federal and state subsidies and tax credits over the past two decades, wind and solar does not come close to closing the gap. With the loss of federal and state subsidies and tax credits, the interest in wind and solar will probably slow down.

XOM had an incredible essay several years ago (it's linked somewhere on the blog). XOM pointed out that the math simply does not work. Wind and solar cannot replace all that coal that is coming off-line. Because Big Oil cannot be trusted, and because XOM is the biggest of Big Oil, it definitely could not be trusted. So folks figured that couldn't possibly be true. Look at all the YouTube videos that show Mr Obama saying wind and solar will solve all our problems, folks said. Folks said XOM is wrong, the community organizer is right.

The "aha" moment came to me some weeks ago: the administration has put the US on the same "road to New England." The administration is moving the US toward a one-energy source for electricity (sort of like one "single-payer health care").  It's really quite interesting to watch.
  • wind and solar is dead
  • nuclear is stagnant, perhaps dying
  • hydroelectricity is stagnant
  • of course we're not going to use oil to produce electricity
  • algae really hasn't worked out all that well yet
  • and, that pretty much leaves natural gas
When I wrote that, I was a bit unsure about the hydroelectricity story. That was one little hole in the theory. My wife mentioned that when we were discussing this, while the DVD was "warming up" to play "Big Bang Theory."

I asked her where does most of our electricity come from. "Dams," she said. Or maybe she said something else. 

So, today's RBN Energy on hydroelectricity was, for lack of a better word, stunning. This was the lede, over at RBN Energy:
Natural gas-fired power generation has always played second fiddle to hydropower in the Pacific Northwest, where dams in the Columbia River Basin typically supply well over half the region’s annual power needs. Gas takes on a more significant role, however, in years like this with lower-than-normal precipitation and hydro generation. And the ongoing phase-out of coal-fired plants in the Pacific Northwest is nudging gas closer to center stage—not just in 2014 but also over the long haul. Today we start a series examining the brightening outlook for gas use in the most hydro-dominant region in the US.
Oregon and Washington State represent the heart of the Pacific Northwest, but it is not uncommon to include northern California, Idaho, and Montana in the region as well, given their location and generally similar terrain. That broader definition also takes in the geographic reach of the 31 federally owned dams in the Columbia River Basin (see Figure 1), which together can generate up to 22 gigawatt (GW)—the equivalent of 20 nuclear reactors. (California also has major hydro assets, and imports a lot of hydropower from the Columbia River Basin dams; we will look into California’s hydro/gas situation—including its historic drought—in a later episode of this series.) The Grand Coulee Dam is by far the largest power generator on the Columbia River, accounting for more than 30% of the region’s hydro capacity. Many of the region’s other large hydro dams are located along the main stem of the Columbia as well; the rest are along the Snake River and its tributaries.
One additional paragraph (you will have to go to the source to read the entire story):
The current NOAA forecast for 2014 would make this year the 16th driest in the region since JFK was elected; 2010 was only slightly drier (it was the 14thdriest iest since 1960), and in that very comparable year gas-fired units in the Pacific Northwest generated far more power than they did in 2012, which as we just noted turned out to be one of the wettest years on record.
In Oregon, hydro plants generated 30.5 million megawatt hours (MWh) in dry 2010, and gas-fired units produced 15.7 million MWh; in wet 2012, hydro output rose to 39.1 million MWh, and gas-unit output fell to 11.6 million MWh, all according to the US Energy Information Administration (EIA).
The hydro/gas dynamic was similar in Washington State. There, in dry 2010, hydro plants produced 68.3 million MWh and gas units 7.8 million MWh; in wet 2012, hydro output jumped to 89.5 million MWh and gas-unit output fell to 5.4 million MWh.
As would be expected, gas consumption by the electric power sector rose and fell with gas-unit output. In Oregon, gas consumption by the sector totaled 108.4 Bcf in dry 2010; in wet 2012 it totaled only 82.0 Bcf; in Washington State, gas consumption by the electric power sector totaled 74.5 Bcf in 2010; in 2012 it dropped to 39.2 Bcf.
Those are pretty big swings that can cause significant volatility in the natural gas market.
And so it goes.

Friday, February 28, 2014 -- A Lot Of Non-Bakken Stuff

Active rigs:

Active Rigs19418320516996

RBN Energy: On the road to New England.
Natural gas-fired power generation has always played second fiddle to hydropower in the Pacific Northwest, where dams in the Columbia River Basin typically supply well over half the region’s annual power needs. Gas takes on a more significant role, however, in years like this with lower-than-normal precipitation and hydro generation. And the ongoing phase-out of coal-fired plants in the Pacific Northwest is nudging gas closer to center stage—not just in 2014 but also over the long haul. Today we start a series examining the brightening outlook for gas use in the most hydro-dominant region in the US.
Oregon and Washington State represent the heart of the Pacific Northwest, but it is not uncommon to include northern California, Idaho, and Montana in the region as well, given their location and generally similar terrain. That broader definition also takes in the geographic reach of the 31 federally owned dams in the Columbia River Basin (see Figure 1), which together can generate up to 22 gigawatt (GW)—the equivalent of 20 nuclear reactors. (California also has major hydro assets, and imports a lot of hydropower from the Columbia River Basin dams; we will look into California’s hydro/gas situation—including its historic drought—in a later episode of this series.) The Grand Coulee Dam is by far the largest power generator on the Columbia River, accounting for more than 30% of the region’s hydro capacity. Many of the region’s other large hydro dams are located along the main stem of the Columbia as well; the rest are along the Snake River and its tributaries.
 I posted a stand-alone on this.

The Spin Doctor

Don't you just love this spin? Yahoo!Finance is reporting:
The U.S. government slashed its estimate for fourth-quarter economic growth on Friday in the latest sign of a loss of momentum, but some tentative signs emerged that suggested the worst of the slowdown may be over. [LOL]
Gross domestic product expanded at a 2.4 percent annual rate, the Commerce Department said, down sharply from the 3.2 percent pace it reported last month and the 4.1 percent logged in the third quarter.
The economy has faced a number of headwinds, including a 16-day shutdown of the government in October and an unusually cold winter that has weighed on activity since late December.
Growth has also been dampened by the expiration of long-term unemployment benefits, cuts to food stamps and businesses placing fewer orders with manufacturers as they work through a pile of unsold goods in their warehouses.
For Investors Only

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. 

4Q13 GDP forecast: could be significantly lower Forecast for 2.5 percent, down from 3.2 percent pace reported last month, and the 4.1 percent logged in 3Q13.

PennEnergy is reporting:
The UK oil and gas industry had a production rate that was 8 percent less last year despite investing a record-breaking 8.9 billion pounds, Reuters reported. A report by industry lobby Oil and Gas UK revealed UK taxes from fossil fuels are expected to decrease to 5 billion pounds from 6.5 billion pounds in the 2013-2014 financial year. In contrast, for every barrel of oil equivalent, oil and gas operators spent an average of 28 US dollars last year and this figure is projected to grow to more than 130 US dollars per boe in 2014.
"This relentless rise in costs is unsustainable and will result in yet more fields being shut-in and prematurely decommissioned if it is not addressed," the Oil and Gas UK report said.
To boost production, the British government announced a new industry regulator, which may punish companies that do not maximize production at oil and gas fields.
The Olympic games are over. Now the Real games begin. The Ukraine: military invasion and occupation. My hunch: leaders in the US and the EU will make some speeches.

I hope folks didn't have too much bitcoin stored at Mt Gox: once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday -- wow, that was fast -- the heist just occurred. The company says it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system. All new programs are a bit rocky at the beginning. Look at ObamaCare. But they will get this fixed, too. Perhaps call in the ObamaCare software writers to fix the faulty bitcoin system.

A Note To The Granddaughters

I don't watch television any more, except when passing through airports, or perhaps a bit of some sports event, but that's about it.  I'm staying with my dad while visiting the Bakken, and he gets about 65 cable channels. I ended up watching C-Span last night, just for some background noise -- the Senate was voting on the nomination of some deputy director of some federal agency. I think it took an hour for the voting to occur; I finally quit watching when the vote was 91 for and 0 against. It looked like the nomination would pass. I don't know what Harry Reid required for confirmation, but the crawler said 51 votes were needed.

I think I mentioned that in my original blog: televisions have replaced the conventional, classical, fireplace -- something that gives off light and a feeling of warmth. I think I had the television on last night because it was easier than starting a fire in the fireplace. And produced less carbon dioxide.

Before leaving for coffee this morning ($1.81 for coffee and a maple long john) at CashWise, I saw about five minutes of CNBC. I was thrilled to see Joe Kernen still vehemently upset about the global warming scam, speaking of which, the forecast is for overnight temperatures, without wind chill, to be about 25 degrees below zero.

For newbies, and especially the folks from Louisiana and Texas, this means that one has to "go" 32 degrees to get down to zero, and then there's another 25 degrees to go to get to 25 degrees below zero. It seems obvious but I think some folks forget that. Maybe the Canadians have it right. They start freezing at 0 degrees and then they only have to go 25 degrees to get to "25 below." Americans start freezing 32 degrees higher and they have to go about 57 degrees to get to "25 below." 

Thursday, February 27, 2014

Shell Treads Carefully While Promoting LNG-Fueled Truck Fleets

For background, see also:
The Wall Street Journal is reporting that Shell is stepping back a bit from funding LNG corridors in Canada.
Shell is tapping the brakes on plans to push natural gas as a fuel for the trucking industry.
The company confirmed it will not build a previously announced plant 20 miles west of Calgary that would turn natural gas into liquid form, known as LNG, for use in heavy duty trucks.
Shell still plans to build out a network of LNG fueling stations along a 900-mile stretch between Alberta and Canada’s Pacific Coast. But those LNG service stations, which will be operated by Pilot Flying J, will sell natural gas fuel created by a company other than Shell.
“We are definitely still interested, but it’s an emerging market so Shell has to take a balanced approach to these developments,” Shell spokeswoman Destin Singleton said.
So far Shell has not changed plans for two other LNG fuel plants – one in Geismar, LA, and one in Sarnia, Ontario, Ms. Singleton said. Once constructed, they could produce up to 250,000 tons per year of natural gas fuel for use in trucks and even ships as some tanker and ferry owners install the equipment needed to burn LNG instead of oil-based fuel.
The company has been pulling back from some North American investments as it tries to fund costly oil and gas projects around the globe, including selling off shale fields in the U.S. In December the company abandoned plans to build a multibillion-dollar plant in Louisiana that would have converted natural gas into diesel, citing skyrocketing costs.

It Just Became A Bit Clearer Why Dow Chemical Was So Quick To Condemn Natural Gas Exports

Do you remember those stories reporting that Dow Chemical was strongly against natural gas exports?

This story shines some light on the issue. Deep in the article being reported by Houston Business Journal:
In Houston, many companies, such as The Dow Chemical Co., have publicly expressed their concerns about whether the price of natural gas, a raw material used to produce chemicals, will go up. If a significant price increase happens, Michigan-based Dow said that its massive, $4 billion Gulf Coast expansion will be in jeopardy.
I had no idea. 

Bakken Oil Rolling Through Fracking-Averse New York State -- Such Sweet Irony


March 2, 2014: it looks like four little counties in fly-over country have become a regular feature in The New York Times. Steven sent a follow-on to the article below. It is very interesting and very, very helpful. I envision a TSA-like CBR inspection team, and perhaps even a whole new division of Homeland Security: Bakken Security Agency, BSA. The New York Times is reporting:
New York State regulators conducted a series of inspections over the last week at the Port of Albany and on rail tracks in Albany and Buffalo to increase the safety of the surging oil-by-rail business, according to a statement by Gov. Andrew M. Cuomo.
Albany has emerged in the last two years as a key hub for shipping oil from North Dakota to refineries along the East Coast. And the rise in production from the Bakken shale region has prompted concerns about the hazards of moving potentially explosive oil by rail.
Federal and state officials have been under pressure to beef up their oversight of the industry and tighten regulations. The issue is particularly sensitive in Albany, where millions of gallons of oil arrive each day aboard two oil trains and are then transferred onto barges and tankers heading down the Hudson River.
Several facilities were inspected over the last week. At the Kenwood Rail Yard in Albany, inspectors examined 120 crude oil tank cars and found three defective wheels and three defective brake shoes. They also examined two miles of track and 31 switches and found 36 defects including loose rail joints and fasteners. Those were repaired immediately. Similar inspections took place at the Frontier Rail Yard in Buffalo and along four miles of track there. 
Let's see, 120 crude oil tank cars times 8 wheels = 960 wheels. 3 / 960 = 0.3%. But all it takes is one, I guess.  I suppose the definition of "defective" needs to be taken into account and how likely a defect would cause a derailment.

Original Post

Steve sent this most interesting article, filled with irony. The New York Times is reporting:
On a clear December morning two years ago, a 600-foot oceangoing oil tanker called the Stena Primorsk left the Port of Albany on its maiden voyage down the Hudson River laden with 279,000 barrels of crude oil. It quickly ran aground on a sandbar.
The incident attracted little attention at the time. The ship’s outer hull was breached, but a second hull prevented a spill. Still, the interrupted voyage just 12 miles south of the port signaled a remarkable turnaround for the state’s capital.
With little fanfare, this sleepy port has been quietly transformed into a major hub for oil shipments by trains from North Dakota and a key supplier to refiners on the East Coast.
Hidden in plain sight, Albany’s oil boom has taken local officials and residents by surprise. Many became aware of the dangers of oil trains after a recent series of derailments and explosions, including one that killed 47 people in Quebec last July, which have generated concerns about growing rail traffic into the city. Trains rumble through the heart of Albany every day and often idle along the busy Interstate 787 highway while waiting to get into the port’s rail yards.
“This has caught everyone off guard,” said Roger Downs, a conservation director at the Sierra Club in Albany.
About 75 percent of Bakken oil production travels by rail and as much as 400,000 barrels a day heads to the East Coast, said Trisha Curtis, an analyst at the Energy Policy Research Foundation. Albany gets 20 to 25 percent of the Bakken’s rail exports, according to various analyst estimates.
This is really a "fun"story to read; there are simply so many story lines.What caught my attention was the operator: Global Partners. Do a search on the blog to get background to this company. This is one post. I find it simply amazing how far -- literally and figuratively -- the Bakken has come in such little time.

Note this in the article:
Trains now come into Albany on average twice a day after completing a four-day journey from North Dakota, either through the Canadian Pacific network, via Montreal, or on the CSX rail lines that pass through Buffalo and Syracuse. These mile-long trains, each up to 120 tank cars long, can carry roughly 85,000 barrels of oil.
CBR trains now come into Albany on average twice a day according to the story. Let's put that into perspective: I understand that as many as thirty BNSF CBR trains roll through Minot daily. I can't link a source for that but that's what I've been told. I could be way wrong.

XOM, XTO, And Idle Chatter

Don sent me a most interesting article with several story lines. Bloomberg is reporting
Exxon finished 2013 with proved reserves equivalent to 25.2 billion barrels of oil, 47 percent of which were comprised of gas, according to today’s statement. The company discovered and acquired enough new crude and gas to replace 103 percent of what it pumped last year.
The company cited the Upper Zakum oilfield in Abu Dhabi as a major source of new liquid reserves, as well as North American shale formations such as the Permian and Bakken. Exxon has been deploying XTO’s fracturing experts to shale fields to speed the development of resources.
The story looks familiar and though it has the February 27, 2014, date, it seems I've seen the same story elsewhere a few days (or weeks) ago.  I wrote the following to Don, unedited:
You know, this is a huge story. I first heard "rumors" about this story some weeks ago -- let's see the date on this article -- Feb 27, so this is the first time I've seen this in print, but I heard someone talking about this/or read about this. I don't know who picked up on this a couple of weeks ago, but I certainly caught it -- my ears perk up when I hear XTO or some other Bakken operator mentioned on the radio.

They say XOM /CEO is brilliant -- the previous one and now this one -- whoever he is -- I've forgotten -- but they say XOM is brilliant and they don't make mistakes. They were too heavy into natural gas and analysts thought XOM had made a mistake. Maybe they did, but they turned on a dime when they bought XTO and the rest is history.

XOM could have bought other Bakken "experts" but maybe XOM liked XTO's ticker symbol. Smile.
If XOM is citing the Bakken, that, for me, is a huge story. Especially when the Bakken is mentioned in the same paragraph as Abu Dhabi.

Eighteen (18) New Permits -- The Williston Basin, North Dakota, USA; EOG Reports Another Huge Wayzetta Well (118,000 In Less Than Four Months); Hess With A Nice Well

Active rigs:

Active Rigs19418120516996

Eighteen (18) new permits --
  • Operators: Hess (7), Oasis (5), SM Energy (3), EOG (2), QEP
  • Fields: Siverston (McKenzie), Parshall (Mountrail), Grail (McKenzie), Camp (McKenzie), Beaver Lodge (Williams), Cottonwood (Mountrail)
  • Comments:
The one well coming off the confidential list today was posted earlier; see sidebar at the right.

Finally, it's official: Four "Oil For America" wells were designated "DRY." Chesapeake's Olson well was also DRY; and Ballantyne's Diepolder well was DRY.

Help requested: over at The Bakken Discussion Group, an individual is asking -- Would anybody be able to tell me if $27,300 per acre bonus and 22% royalty for 160 acres in northeast McKenzie county on the reservation would be fair?

Wells coming off the confidential list Friday:
  • 22203, drl, CLR, Cuskelly 2-7H, Rattlesnake Point, no production data,
  • 25343, 730, EOG, Wayzetta 154-0605H,  Parshall, t9/13; cum 119K 12/13;
  • 25497, 233, Baytex, Haugenoe 21-16-162-99H 1PB, Ambrose, t9/13; cum 20K 12/13;
  • 25825, 1,751, Newfield, Holm 150-98-17-20-3H, Siverson, t1/14; cum --
  • 25948, 2,088, Petrogulf, Sanstrom 151-94-1H, Antelope, a Sanish well,  t12/13; cum 21K 12/13;
  • 26114, drl, Hess, EN-Chamley 156-93-0508H-4, Baskin,
  • 26123, conf, CLR, Morgan 1-29H1, Corinth, t11/13; cum 26K 12/13;


25343, see above, EOG, Wayzetta 154-0605H,  Parshall:

DateOil RunsMCF Sold

A Note To The Granddaughters

I noted that it got up to 22 degrees the other day here in Williston, the heart of the Bakken, North Dakota. This morning when I drove to Cashwise for coffee, it was eleven degrees below zero; it is currently quite warm, 13 degrees (above zero, but still almost 20 degrees below freezing). To no one in particular in the Books on Broadway coffee shop this afternoon, I noted that it was warmer earlier in the week, but today was cooler. One of the long-term Willistonites who was there having coffee checked his iPhone and noted that it would be -21 overnight Friday; -22 overnight Saturday; -15 overnight Monday with snow.

He noted that we had our "spring" for the year.

NOG: 4Q13 And Full Year 2013 Earnings

Press release here.

Full year:
  • annual production increased 19% to 12,261 average boe per day
  • fourth quarter production increased 28% year-over-year to 13,946 average boe per day
  • proved reserves increased 25% to 84.2 million boe, a reserve replacement ratio of 370%
  • added 531 gross (40.0 net) wells to production; total producing wells to 1,758 gross (146.2 net)
  • currently participating in an additional 252 gross (18.8 net) wells drilling or awaiting completion as of January 31, 2014
  • income per common share was $0.85 in 2013, compared to $1.15 in 2012
Net income was $17.4 million in the fourth quarter of 2013, compared to $19.6 million in the fourth quarter of 2012.  Diluted net income per common share decreased to $0.28 in the fourth quarter of 2013, compared to $0.31 in the fourth quarter of 2012. 

What 99% Of Readers Were Waiting For: KOG Operational / Earnings 4Q13 And Full Year; 2013 .... For The Other 1%, SandRidge Also Releases Results

Press release here for KOG.
For the fourth quarter ended December 31, 2013, the company reported oil and gas sales of $266.5 million, as compared to $130.8 million during the same period in 2012, an increase of 104%.
Kodiak reported an overall 98% increase in quarter-over-quarter equivalent sales volumes with an average of 36,100 boepd during the fourth quarter 2013, as compared to 18,200 boepd in the same period in 2012.
Kodiak reported net cash provided by operating activities during the fourth quarter 2013 of $168.1 million, as compared to $69.4 million during the same period in 2012
Kodiak reported net cash provided by operating activities during 2013 of $553.6 million, as compared to $272.7 million in 2012.
For the fourth quarter 2013, the company reported net income  $0.17 per diluted share, compared to a net gain of $0.12 per diluted share, for the same period in 2012.
Kodiak reported record net income for the full year 2013 of $141.4 million, or $0.53 per diluted share, compared to net income of $131.6 million, or $0.49 per diluted share, for 2012.
Press release for SandRidge (SD):
  • 4Q13 -- 3 cents vs 6 cents 4Q12
  • Full year, 2013 -- 18 cents vs 23 cents for the full year 2012

Request For Assistance; Why Would A Well Have Such A Sporadic Production History

A reader asked me a couple questions regarding a well that piqued my curiosity also.

First, the easy question. In the well file, the most recent "Transportation and Purchase" form includes "PU" after the well name [Hanson 33-28H (PU)]. We did not know what "PU" stands for? Does anyone know? A google search suggested "producing unit" but that doesn't seem to help or make sense.

Now, the more difficult question. Look at the production history for this well. It has never produced for a full 30-day or 31-day month. Most recently it was down to 5 days:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This is a very good well, having produced 43,000 bbls in less than a year despite a very sporadic production record.

My hunch is that trucks are having difficulty (or the company is having trouble getting trucks) getting to the site to empty the tanks on the pad.

So now that I have embarrassed myself with my hunch, I will be curious what the experts suggest. Smile. Thank you in advance for any help.

A Nice Human Interest Story / Update On The Tuscaloosa Marine Shale

I did not post this story earlier today. I felt it did not add anything that regular readers did not already know. The comparison between the Bakken (2,500 wells/year to maintain 1 million bopd production) and Saudi (60 wells/year to maintain) is apples and oranges. I also think the statement that operators will be spending $1.50 this year for every dollar they get back is way too simplistic. I doubt Harold Hamm is where he is today by spending $1.50 for every dollar he gets back.

But a couple of folks sent in the link, so I thought it better to post it than keep getting the link sent to me.

However, on the other hand, this is a much better and a much more meaningful story for me; it was linked at DrudgeReport: shale brings high hopes in Mississippi, Louisiana. The AP is reporting:
Residents living above an oil-rich shale formation that stretches across southwest Mississippi and Louisiana have been waiting on a boom for years. A steady trickle of drilling is already boosting the rural region's economy, and spending by two oil companies could make 2014 the year that many other locals finally cash in on the oil far beneath their feet.
Already, Max Lawson has spent hours watching the round-the-clock work of shoving pipe into the ground in his back pasture. The process began two years ago when Encana Corp. built a big gravel pad, but didn't take off until late last year when a convoy of 200 trucks carted in a drilling rig and other equipment to bore into the earth looking for oil.
"They call it the Gillsburg Christmas tree," he said while standing near the brightly lit rig. "It looks like a little city over here at night."
Gillsburg and surrounding Amite County lie above a prime section of the Tuscaloosa Marine Shale, a geologic formation that stretches in boomerang shape across Louisiana's midsection and into southern Mississippi. Drillers have known about the formation north of the Gulf of Mexico for years, but affordable technology to remove the oil from the shale's tight pores was slow to develop.
Thanks partly to advances in hydraulic fracturing techniques, Encana Corp. and Goodrich Petroleum plan to spend hundreds of millions of dollars in the area in 2014. So far, Goodrich and others have drilled more than 30 wells across the region, trying to find the right methods.
I first posted about the Tuscaloosa Marine Shale almost a year ago, May 10, 2013.

For Investors Only -- Whiting Has Stellar Report, Many New Records

I have to apologize to some of the readers, I suppose. I know most folks are interested in the Bakken and not investing in the stock market per se. When I first starting blogging about the Bakken, I had no intention of talking about investing, but I quickly learned that one can't really follow or understand the Bakken without following their earnings, and the economy in general.

Today, it's pretty exciting. The S&P might actually set a new all-time closing record. So, we'll see.

Nine (9) companies are reporting increased dividends or distributions.

Crude oil is pretty much flat, slightly negative, but the spread between WTI and Brent continues to narrow.

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

Whiting -- 4Q13 and Full Year Earnings

Data points:
  • record production of 94,090 BOE/d in 2013; up 14%
  • over 30.21 82,540 BOE/d in 2012 year-over-year production
  • proved reserves increase 16% to a record 
  • proved reserves up 31% 
  • company achieves 402% reserve replacement 4Q13 
  • adjusted net income of $0.88 per diluted share 4Q13 
  • discretionary cash flow totals a record $457.6 million 
  • 2014 capital budget of $2.7 billion
  • year-over-year production growth guidance of +17% to +19% 
Sempra Energy beats by $0.15, misses on revs; reaffirms FY14 EPS guidance : Reports Q4 (Dec) earnings of $1.13 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus Estimate of $0.98; revenues rose 1.4% year/year to $2.71 bln vs the $2.74 bln consensus. 

Linn Energy reports Q4 results, misses on revs: Reports Q4 (Dec) loss of $3.15 per share, may not compare to the Capital IQ Consensus Estimate of $0.29; oil, natural gas, and NGL revenues rose 26.9% year/year to $585 mln vs the $654.69 mln consensus.

Wendy's beats by $0.01, reports revs in-line; reaffirms FY14 EPS guidance; reaffirms long term guidance: Reports Q4 (Dec) earnings of $0.11 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.10; revenues fell 6.0% year/year to $592.4 mln vs the $592.4 mln consensus; co preannounced on Jan 13. [Years ago, Wendy's was one of the first companies in which I invested. I sold it a long time ago and will unlikely ever get back in. But it's interesting to follow once in awhile.]

Windstream reports EPS in-line, revs in-line; guides FY14 revs in-line: Reports Q4 (Dec) earnings of $0.09 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.09; revenues fell 2.8% year/year to $1.49 bln vs the $1.5 bln consensus. Co issues in-line guidance for FY14, sees FY14 revs -2.5% to +1.0%, or roughly 5.84-6.05 bln vs. $5.94 bln Capital IQ Consensus Estimate.  

Laredo Petroleum beats by $0.04, beats on revs: Reports Q4 (Dec) earnings of $0.13 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.09; revenues rose 1.4% year/year to $153.4 mln vs the $151.27 mln consensus. Reports Adjusted EBITDA of $111.4 million.

Random Update On The Parshall


March 30, 2014: eight wells in the Parshall today; three inside the reservation; two on the reservation line at the north (a cluster of five wells). 
Original Post

A reader noted that there are now nine (9) rigs in the Parshall. This is an increase from the five or six rigs I've been noticing, and the reader has been noticing. It appears seven rigs are north (outside) of the reservation) and two are inside the reservation, but at the far north end of the reservation. Eight are EOG wells; one is a Whiting well.

The four inside the reservation:
  • 27117, just outside of the reservation, on the north, EOG, Parshall 53-1014H,
  • 27291, inside the reservation, at the north, EOG, Parshall 61-15H,
  • 27159, inside the reservation, at the north, EOG, Parshall 49-2226H,
  • 27205, just outside of the reservation, on the north, EOG, Parshall 52-1114H,

The Pyramid -- Northwest Williston

For more on the Pyramid pad, click here.

The Pyramid Pad, Northwest Williston, North Dakota, Statoil, The Bakken

This is a lousy video, I apologize. If I get a chance, I will go out and re-shoot (although a re-shoot is not in the budget).  It was very windy, and a tad cool, when I was filming.

Four pumpers on this pad. Northwest Williston. 36 tanks on the pad. Beautifully landscaped.

The Pyramid Pad, Northwest Williston, North Dakota, Statoil, The Bakken

Volatlity Of Bakken Crude Oil

The Dickinson Press is reporting:
A study of a fresh sample of crude oil from the Bakken shale in North Dakota published this week showed sharply lower levels of volatile vapors compared to previous tests, potentially raising new questions about the danger of shipping it by rail.
The latest data from Marathon Petroleum’s Capline Pipeline unit, which publishes so-called “assays” on the quality of over 100 types of crude on its website, showed a sharp fall in the oil’s vapor pressure, a common measure of a fuel’s ability to evaporate and give off combustible gases.
While the data offers only a single snapshot of the properties for a batch of so-called “North Dakota Sweet,” a term for Bakken crude, it may raise more questions about the combustibility of the oil, which has been cited in several fiery derailments in recent months.
Well, that makes me feel better. 

Wow, This Is Not Good -- The INTERESTING Road Between Watford City And Williston Will Not Be A Divided Four-Lane Highway

I am trying to get caught up with all the e-mail after several days on the road and away from the blog and the computer much of that time.

I have to correct an error in my notes, and it's a big one. A big "thank you" to the reader who sent me the correction.

That four-lane highway between Watford City and Williston will NOT be a divided four-lane highway, but an undivided four-lane highway. That is incredible. Incredible as absolutely the wrong thing to do. See my first impressions of this stretch of road. An undivided highway is absolutely irresponsible. I think one could argue that a four-lane undivided highway might be more dangerous than leaving things the way they are. A four-lane highway will encourage faster speeds; the current two-lane with some widening, some three-lane stretches, some turning lanes creates a chokepoint simply because so much of it is two-lane, but it has the natural effect to slow down traffic at least to some extent.

The plans for the US Highway 85 project in western North Dakota can be found here. I'm not sure if the 20' median is the entire length of the highway, but if it is "highway asphalt" that makes up the median, I would assume it becomes, for all "practical" reasons, a dangerous, optional, illegal passing zone. Disclaimer: I have not reviewed the details; I don't know for sure what the completed highway will look like. I may be wrong; I may be misunderstanding the reader or the official plans, but if this is not a conventional "divided" highway, this is not good news.

By the way, while driving that stretch of road the other day, there was already a lot of construction of the four-lane highway, and it appeared that it was not going to be divided, but I thought I was just missing something. Apparently not. Barriers down the center of the road will be needed -- they do this all over the south and the east where there is high traffic, high speed, and an undivided four-lane highway. The barriers, beside protecting against head-on crashes, have a tendency to slow traffic down just because there is a "perception" the road is narrower than it might really be, AND drivers know they have no "escape route" to the left when driving in the passing lane.

$16 Million Downtown Williston Project Given Go-Ahead

I understand the city of Williston has approved a developer's proposal to proceed with a $16-million, game-changing project in downtown Williston. Apparently everyone was prepared for an exciting give-and-take discussion on whether the developer had adequately met parking concerns. And apparently, the opposition forces did not appear to state their case. The original story is reported here.

Bakken Trip #3
Third Report
I grew up in Williston. After graduating from high school, I left and "never really returned." I was overseas much of my adult life and it was difficult to get back to Williston. The Bakken boom can be said to have begun in 2000 in Montana, and 2007 in North Dakota. I knew very little about the oil and gas industry, but there was something about the news reports coming out in those early years about the Bakken that got me excited. I had missed the earlier oil booms in North Dakota and in 2007 I decided I wanted to follow the industry in my hometown. I started blogging in 2007, but it was too eclectic -- literature, music, oil -- and it wasn't working. In a fit of temporary insanity, I deleted two years of blogging and started over. I had posted some good stories between 2007 and 2009 but they were all lost.
The current blog dates back to 2009 / 2010 or thereabouts. 

I have great difficulty understanding how the community is changing, and even more difficulty articulating what I am seeing. When I return to the Bakken, the first thing I do is ask long-term residents how they see things developing. I don't talk to very many folks, mostly just a few friends and acquaintances from the old days. 

I don't remember if I still have the post that talked about the Bakken at the beginning: it was my feeling that "old Williston" and long term residents were inside the eye of the hurricane. There was a huge energy revolution occurring just outside the town, but most folks seemed to be completely unaware. They were in the eye of the hurricane.

It is now 2014, and clearly Williston has experienced boomtown challenges for five, six, or seven years.

After five, six, or seven years, "old Williston" has hardly changed. Main Street seems no different than what I remember while cruising in my 1947 Willys jeep in 1969. The east side of Williston has some new buildings and some new residential areas but superficially it really doesn't seem that much different. Yes, I know the huge recreation center on the east side is due to open next month, March. 

Even the west side of "old Williston" out to the bypass has not changed much. 

There now seems to be three communities: 1) the long-term residents who live in "old Williston"; 2) the new residents who will become long term and who will become the "new Williston" living in new developments, most of whom are on the west side, outside the "old bypass"; and, 3) the those who, to quote a song, have not made up their minds. I suppose the first group numbers 10,000; the second group numbers 10,000; and the third group numbers 30,000.
The long-term residents seem not to have changed much. Many of them seem completely unaware of what is going on outside city limits. Many have not even driven by new retail stores popping up on the edge of "old Williston." For folks unfamiliar with Williston, we're talking about a destination that would be less than 1.5 miles away. I think the city of Williston would fit inside the Dallas-Fort Worth Airport footprint. It is not unusual for me to tell someone about a new building or a new business that I saw on my way into town, and that someone is completely unaware that there was anything new out there. We're talking about something less than two miles away; something one would see if one simply made a wrong turn on the way home. 
When I ask folks how Williston has changed, or what they are seeing, this is about all I hear: "Yeah, it's busy." LOL. "Yeah, it's busy." Well, helloo. I think the oil and gas industry is pumping about $2 billion/month into the economy just drilling new wells. A town that might have had a population of 10,000 a few years ago, before the boom, might now have a population of 50,000. "Yeah, it's busy."
Weather was always the major topic of conversation; now the top three topics of conversation are: 1) traffic; 2) traffic; and, 3) traffic, and pretty much in that order. I honestly think the old-timers have no desire to drive outside of "old Williston." There is a fear of driving on the state or county highways. 
Finally, yesterday, I ran into someone who was able to articulate it perfectly. In the Bakken, when one drives unto a state highway, particularly US Highway 85, one is "swept into the flow." One becomes part of a herd, or a flock, or a school. It is not like the interstates in California where there are entry and exit ramps, where one signals and makes lane changes, or exits the interstate. Once you are on US Highway 85 in the heart of the Bakken, you become part of the herd, the flock, or the school. You maintain the same speed as everyone else. You turn right, left, or stay true, with the flow. You are no longer in control. You don't have your own direction; you don't have your own destination. Your direction and your destination is that of "the flow." You don't exit the highway; you don't change lanes; you don't signal. You just flow. At 70 miles per hour with a really huge semi-truck behind you. 
This would be the perfect location for Toyota to test their new driver-less cars. 

It's not white-knuckle driving. It's just "pure concentration." There is no opportunity to watch the beautiful scenery go by. I think if a UFO landed in the farm field off to the right, no one would notice. One is devoting 100% of one's attention to the flow. 

"John, did you see the UFO outside Williston last night." "No, I was in the flow."

Needless to say, roadside advertising is useless. In fact, on perhaps the busiest stretch of road in the US (measured in axle tonnage per linear foot of white interrupted striping), there is not one billboard sign. Not one. No one would even see it.
Coming into Williston the other night, I was coming down Indian Hill, on the long straight-away, heading toward THE choke point, the two-lane bridge over the Missouri River, and there was a pick-up truck on the shoulder. The rest of us were in "the flow." The driver had stopped to watch a moose; it was the first time I had ever seen a moose along the river, though they were well-known to be there, and I wanted desperately to stop and watch. But I couldn't get out of the flow. The stream was moving way too fast.
My hunch is that the pick-up truck was never on the highway in the first place. He had probably come off a farm road and had given up trying to get into the traffic stream, and spent the next hour watching the moose.

Thursday -- February 27, 2014; First Time Unemployment Claims Surge

Holy mackerel! How the mainstream media spins the jobless report: the report simply said it was a one-month high. I was surprised how high it jumped in one week, up 14,000, to 348,000. Due to the weather, my hunch the revised report will be even worse as late reports flow in. And then the boiler-plate spin:
We still have a fairly constructive view on the labor market,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, whose claims forecast of 345,000 matched the highest estimate in a Bloomberg survey.
“There have been some weather-related setbacks in hiring [global warming?], but as it warms up, you’re going to see much better performance in labor market activity.”
The median forecast of 53 economists surveyed by Bloomberg projected 335,000. Estimates ranged from 325,000 to 345,000. The prior week’s claims were revised down to 334,000 from an initial reading of 336,000.
Active rigs in North Dakota:

Active Rigs19318120516996

RBN Energy: the propane shortage of 2014 -- the rest of the story.
The recent propane shortage is being called a “crisis” and for good reason. But like so many “crises” there is more to the story than is generally known and in this case it’s worth a careful examination of the events involved.  Clearly it was a perfect storm in the balance of supply and demand, resulting in huge price spikes.  And the consequences included panic, headline news, government intervention and of course, lots of finger pointing.  Today we look at how the market responded and why the propane industry will once again be stronger for it.
The “winter season” for propane officially ends March 31. That’s still a few weeks away so much can still happen.  But whatever challenges remain ahead of the propane industry this winter, we are confident that the community will continue pulling together and as a whole will be stronger in the future for having gone through this winter “crisis.”
Big thanks to some of those veteran propane experts who helped with this blog, like Harold Poland, Poland and Associates, LLC, who we like to refer to as the “Godfather of Propane.” Its folks like Harold who shaped the foundation of this great industry and we toast Harold and all of the others that have contributed to building the propane industry we have today!
 The Wall Street Journal

In a largely gridlocked Washington, spending on highways and other transportation infrastructure is emerging as a potential point of agreement. Plans to improve roads, bridges and tunnels received a boost from several quarters on Wednesday, as President Barack Obama laid out a proposal for infrastructure upgrades, paid for by unspecified changes to the tax code.

Tesla plans $5 billion battery factory: looking at sites in Arizona, Nevada, New Mexico, and Texas.

Target's profit fell 46% as the retailer took a hit from its holiday data breach and mounting losses from its push into Canada.

barnes & Noble swings to profit on cost-cutting.

Chesapeake energy swings to loss.
Excluding asset-sale write-downs and other items, adjusted fourth-quarter earnings rose to 27 cents a share from 26 cents a share. Analysts polled by Thomson Reuters were expecting Chesapeake to report a per-share profit of 41 cents excluding items. Revenue increased 28% to $4.54 billion. The company has struggled to reduce its spending while boosting oil and natural-gas production. Chesapeake said its average daily output rose 2% during the fourth quarter over a year earlier, but the prices the company were paid for its oil, gas and other liquids were lower than analysts were expecting. Chesapeake's average natural-gas price in the quarter was just $1.90 per thousand cubic feet, down 8% from a year earlier and 27% less than analysts were expecting.
Investors getting back into solar. Solar stocks are not for the faint of heart. Price swings in the sector are often dizzying.

The Los Angeles Times

Congress is considering renaming a Yosemite peak for Jessie Benton Fremont, wife of John C. Fremont and once "the most famous woman in Los Angeles." But the National Park Service is opposed.
The measure, a tribute to Jessie Benton Fremont's efforts to preserve the land that would become the park, comes on this year's 150th anniversary of President Lincoln signing the bill granting Yosemite Valley and the Mariposa Grove, a stand of some of the world's largest trees, to the state of California as a public trust. Yosemite became a national park in 1890.
Mammoth Peak, not to be confused with the popular ski attraction Mammoth Mountain, would be renamed under the legislation.

Musings On Future Of Fossil Fuel

Rigzone has an "op-ed" on the future of fossil fuel. I didn't find anything of particular interest; it seemed fairly "common sense." Comments regarding renewable energy were in line with my thoughts:
Natural gas consumption will grow to a level greater than oil and coal put together. Renewables also are forecast to grow significantly, primarily due to government policies. However, renewables will shrink without government subsidies to promote their use.
When I see that statement, "natural gas consumption will grow to a level greater than oil and coal put together" I think of "the road to New England."

Regarding Brazil and the North American shale revolution:
IEA believes that Brazil’s deepwater oil production will rise significantly, although not as high as official estimates, to 4 MMbopd. The South American country will become a major exporter of oil, eventually joining the ranks of the top six oil producers in the world, said Birol. He considers Brazil a success story not only for raising its oil production growth, but reducing its domestic oil consumption by utilizing hydropower and other renewables.
However, $60 billion a year investment is needed for Brazil to realize its production potential, and attracting this investment may be difficult because of local content and other requirements. These requirements may put tension on the supply chain and delay some projects, Birol noted.
Significant investment will be needed not only in Brazil, but worldwide to ensure the oil needed to meet future demand will be available. Birol estimates that $15.1 trillion in investment is needed over the next 20 years for upstream oil and gas, with 30 percent or $4 trillion of that investment needed in North America to ensure that the U.S. shale revolution continues.

Wednesday, February 26, 2014

Poll: Another Look At President Obama's Recent Statement On The Keystone XL

I'm not going to look for the links now because I am traveling and have a poor/unreliable wi-fi connection, but I think folks are aware that when asked at the recent governors' meeting when he would make a decision on the Keystone XL, President Obama suggested he would be making the decision in "a couple of months." There is no recorded soundbite of that exchange (or if there is, I have not heard it) but one of the governors said President Obama said just that.

I personally think, if he said it, it was a just a one-liner thrown out as a hypothetical and means absolutely nothing.

So, now that I have biased the poll, here we go:

With regard to President Obama's alleged statement on making a decision on the Keystone XL ...
  • ... he was accurately quoted but his statement was a complete lie
  • .... he was accurately quoted but his statement was a bit of tongue-in-cheek, hyperbole, but not an outright lie
  • ... truthful, and he will approve the permit by July 4, 2014
  • ... truthful, and he will deny the permit by July 4, 2014
  • ... the statement was never made. The governor is lying, misspoke, or was misquoted.

Natural Gas Prices In Chicago -- Sticker Shock: The Road To New England

Chicago Business is reporting:
Heating bills in Chicago are going way up, both next month and also next year if Peoples Gas has its way.
The Chicago natural gas utility announced today that its charge for the gas commodity in March is soaring 79 percent to 93 cents per therm from 52 cents in February. The steep increase is a result of the extreme cold weather that has boosted the near-term cost of natural gas and the price to transport the fuel, the company said.
At the same time, Peoples filed with state regulators for a delivery rate hike that would take effect in the middle of next winter. That $129 million increase, if the Illinois Commerce Commission granted it in full, would bring the average Chicago household's monthly gas bill to nearly $100.

Increasing Bakken Crude Oil Reaching California

Despite all the talk about problems with CBR, rail and crude oil continues to roll.

Bloomberg is reporting:
California, the third-biggest refining state in the U.S., is about to see a flood of oil by rail from places such as Canada and North Dakota as suppliers seek to tap a market isolated from the rest of the country.
The Western U.S. may bring 500,000 barrels of light oil by rail a day in 2015 as the region’s refiners seek to replace shrinking output in California and Alaska and more costly foreign imports, Mark Smith, Tesoro Corp.’s vice president of development, supply and logistics, said at a conference yesterday in Glendale, California. California refineries can run 1.63 million barrels a day, the most in the U.S. after Texas and Louisiana, government data show.
The region has become one of the most depending in the nation on foreign oil as the West lacks pipeline access to crude from shale supplies in the middle of the country. Companies from Alon USA Energy Inc. to Valero Energy Corp. are looking to tap the market with projects that would bring more crude into the West by rail.
“The West Coast is one of the last frontiers where foreign imports really have a stronghold, and there’s not a lot of alternatives,” Smith said yesterday at the Crude By Rail 2014 conference organized by Houston-based American Business Conferences. “Obviously there is a huge opportunity here” for oil shipped by rail. 
It costs $9 a barrel to send North Dakota’s Bakken crude to Washington and $4 to $5 more to carry it by ship from there to California, according to Valero, the world’s largest independent refiner. Tesoro said the cost of delivering a barrel by rail from the Bakken to California would range from $9 to $10.50.
Royal Dutch Shell Plc posted a price of $88.33 a barrel yesterday for Bakken crude in North Dakota. Alaska North Slope oil typically used in West Coast refineries cost $109.70 at 12:05 p.m. New York time today, according to data compiled by Bloomberg.
California may get more than one-quarter of its crude from Canada and U.S. states other than Alaska should six proposed rail-offloading projects win approval, state Energy Commission data show. Companies including Valero, Phillips 66 and Plains All American Pipeline LP support the projects.
A huge "thank you" to a reader for sending this story. While I am traveling, I will be posting less.  Sorry. 

CLR Reports 4Q13 And Full-Year 2013 Earnings

Link here.
Continental Resources, Inc. today announced fourth quarter and full-year 2013 operating and financial results. Net income for the quarter ended December 31, 2013 was $132.8 million , or $0.72 per diluted share, compared with net income of $220.5 million , or $1.19 per diluted share, for the fourth quarter of 2012. Excluding items typically excluded from published analyst estimates, adjusted net income for the fourth quarter of 2013 was $228.1 million , or $1.23 per diluted share, a 19% increase over adjusted net income of $191.8 million , or $1.04 per diluted share, for the fourth quarter of 2012.
Net income for full-year 2013 was $764.2 million , or $4.13 per diluted share, compared with net income of $739.4 million , or $4.07 per diluted share, for full-year 2012. Excluding items typically excluded from published analyst estimates, adjusted net income for full-year 2013 was $986.1 million, or $5.33 per diluted share, a 61% increase over adjusted net income of $611.9 million, or $3.36 per diluted share, for full-year 2012.
EBITDAX for the fourth quarter of 2013 was $712 million , a 20% increase over EBITDAX of $595 million for the fourth quarter of 2012. Full-year 2013 EBITDAX was a record $2.84 billion, a 45% increase over EBITDAX of $1.96 billion for full-year 2012.
I like the report; Wall Street did not.

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

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

Active Rigs19318320416996

Eleven (11) new permits --
  • Operators: EOG (8), BR (2), Petro-Hunt
  • Fields: Parshall (Mountrail), Corral Creek (Dunn), Stockyard Creek (Williams)
  • Comments: EOG permits -- one 3-well pad; one 5-well pad; it never ceases to amaze me all the permits and all the different operators in Stockyard Creek
Wells coming off the confidential list were posted earlier; see sidebar at the right.

One producing well completed:
  • 25951, 2,688, BR, Capitol 44-7MBH, Westberg, t12/13; cum 14K 12/13;
Only one well coming off the confidential list tomorrow:
  • 25594, drl, XTO, Loomer 41X-4C, Tobacco Garden,

Bakken Trip #3
Second Report

I guess it's cold out there. But the weather report seems worse than it feels, if that makes sense. I was surprised to see how "warm" it was today, up to 22 degrees. This is not to "take away" from what the men and women in the field are experiencing, especially the folks on the rigs, but for most of us in-town folks, it was an incredibly nice day. No wind makes a big difference. It is interesting how "relative" things are. Coming from one degree earlier to 22 degrees during the day, that 22 degrees felt good.

I spent the day checking on wells in the Stockyard Creek area; I hope to post some photos later. Nothing out of the ordinary. Most "enjoyable" was seeing the Statoil Pyramid pad northwest of Williston; it's quite a pad. Surrounded by green mesh link fence, and that surrounded by young "evergreen" trees that will someday completely hide the pad. When I get a good wi-fi connection, I will post video, photos. If one stays in downtown Williston, or on the east side of Williston, one would hardly know there's a huge oil and gas industry enveloping the area.