Flaring In The Bakken: I Knew It Would Be Challenging But Not This Challenging

KOG cut its FY 2014 production guidance to 39K-42K boeday.  Z-Man remains bullish on KOG despite miss. At SeekingAlpha. After pull-back last night in market after closing, the opening this morning for KOG is hardly a whimper -- down about 3% which is nothing in this market, and nothing for KOG, particularly after it says it is reducing its production guidance.

Berkshire Hathaway buying AltaLink for about $3 billion. AltaLink is a Canadian power transmission provider. Berkshire Hathaway Energy is new name for Berkshire Hathaway Mid America Energy.

North Dakota ObamaCare Enrollees: The Bismarck Tribune is reporting:

• 16,627 eligible; 11,974 eligible for financial assistance; 10,597 enrolled
• North Dakota had a good showing from young people who signed up for insurance, with 19 percent of the enrollees under the age of 18. Only Arizona, with 21 percent, had a higher figure.
• The rest of the age breakdown in North Dakota is 8 percent between ages 18-25, 18 percent between 26-34, 14 percent between 35-44, 16 percent between 45-54, and 25 percent between 55-64.

Reporting today:

• CVX: $2.51, before market opens; actual -- $2.36; profit drops 27% y/y; huge miss
• SRE: 95 cents; actual, beats by 9 cents, $1.03
• TransCanada (TRP.TO): 59 cents, before market open; actual -- 60 cents -- great report.

Active rigs:

	5/2/2014	05/02/2013	05/02/2012	05/02/2011	05/02/2010
Active Rigs	187	190	209	174	113

RBN Energy: Flaring in the Bakken

From space the light thrown off by Bakken gas flaring makes sparsely populated western North Dakota look like Minneapolis-St. Paul. But the gathering pipelines, the processing plants and the interstate pipelines needed to transport Bakken gas to market are finally being built, and within a few years the glow of gas flaring in the region is expected to dim.

What all this means is that, while there appears to be sufficient takeaway capacity in place to handle the existing 800 MMcf/d of Bakken gas making its way to market, more pipeline capacity out of the region will be needed as production rises to 1.6 Bcf/d (from the current 1.1 Bcf/d) in late 2015 and as producers make progress in their efforts to reduce how much gas is flared.

With Western Canadian gas still using up big shares of the capacity on both the Northern Border and Alliance pipelines, WBI Energy (a subsidiary of MDU Resources) is seeking to fill that perceived pipeline-capacity gap by planning the 375-mile Dakota Pipeline, which would run from the heart of the Bakken in western North Dakota to northwestern Minnesota and initially have the capacity to move 400 Mcf/d. An open season on the $650 million project is under way. If all goes well, construction could begin in 2016 and the Dakota Pipeline could start moving gas the following year. Whether additional pipeline capacity beyond that will be needed is an open question. 

Having sufficient interstate pipeline capacity in place to handle rising gas production from the Bakken is another key element in the plan to reduce flaring in the region—just as important an element as gas gathering pipelines and processing capacity. Those three elements appear to be falling into place, particularly if the NDIC continues tightening its flaring-related rules and WBI Energy proceeds with its Dakota Pipeline plan.

But even the most optimistic goal of reducing Bakken flaring to 5% of production by 2020 would leave the region burning off 10 times the 0.5% share of Texas gas production that is flared. Further reductions in Bakken flaring beyond 5 or 10% will take more aggressive moves, most of them involving the capture and innovative use of gas near where it is produced. Next time we will explore what that might involve.

 East of Williston, April 30, 2014, A KOG well

The Wall Street Journal

Only one in four of ObamaCare enrollees are young (18 - 34) and healthy.

Germany tells Obama: no more sanctions on Russia. My hunch: the US fascination with the Ukraine simply fades from the front page. Meanwhile, XOM is pushing ahead with its plans to drill in Russia's Arctic even though deteriorating relations between Moscow and Washington have increased the risks. XOM: presidents coma and go.

Retirement investors flock back to stocks.

Lynchburg, VA, CBR derailment: train travleing at sppeds well below regulatory requirements.

US factory / manufacturing activity accelerated in April for the 3rd straight month.

Labor shortage besets home builders. What's wrong with that story.

Pfizer-AstraZenaca stalled. The British company wants much more.

DirecTV shows a need for AT&T.

 Canadian Pacific projects growth from CBR: sees revenue double to 10% of the rail's overall total in the next two or three years.

the administration can't blame the weather: jobs-related data is seasonally adjusted. But already, I see there is talk that the formula used for seasonal adjustments is incorrect. Here we go again: massaging the data to get a better number.

Wheat prices are up 15% this year; concern over drought in Kansas.

The Los Angeles Times

Here it comes: apologists for ... 

Toyota's plan to close its Torrance headquarters and ship 3,000 jobs to a Dallas suburb has triggered a new round of hand-wringing among those who see business-friendly Texas gaining at the expense of regulation-choked California.

In Austin, Texas Gov. Rick Perry took a victory lap, crediting his state's low taxes and hands-off policies. Lawmakers and business lobbyists from Torrance to Sacramento said the Golden State must unravel red tape and increase incentives if it hopes to compete for jobs. They ridiculed Gov. Jerry Brown for not even knowing about Toyota's plans to abandon his state.

The trouble is that taxes, regulations and business climate appear to have had nothing to do with Toyota's move. It came down to a simple matter of geography and a plan for corporate consolidation, Toyota's North American chief told The Times. And in the big picture, California's and Texas' economies are growing at a similar pace, with corporate relocations — in either direction — representing only a tiny slice of job growth in both states.

For companies that do move, corporate strategy often plays a bigger role than a state's tax or regulatory climate.

When Northrop Grumman moved its headquarters and 300 jobs to Virginia from Century City three years ago, the company aimed to get closer to Pentagon power brokers who decided on big contracts for the company, the company's chief executive, Wesley B. Bush, said at the time.

Los Angeles-based Occidental Petroleum, which announced earlier this year that it would move its headquarter to Houston, wants to be closer to the profitable Texas oil patch.

So, Toyota, Northrop Grumman, Occidental all leave California in the past few years, and the reporter seems unconcerned. Okay. I would refer the reporter to the Carpe Diem article linked earlier. Not a pretty picture. For California.

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This is irony: the owner of the Clippers still has his team. The head of the LA NAACP quits because of his ties to Donald Sterling.

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Rigzone

North Sea drilling slowing:

Drilling and deal activity on the UK Continental Shelf (UKCS) will remain at a "steady low" for at least the next year, according to a new report from business consultancy Deloitte.

Deloitte said that poor weather and high costs already had an impact on the amount of exploration and appraisal work conducted by operators in the region during the first quarter.

Are you kidding? 

Work crews for BP Plc were clearing contaminated snow on Thursday on Alaska's North Slope after a Prudhoe Bay well line ruptured, spraying a 34-acre area with crude oil and natural gas.