Updates
June 30, 2014: from a reader, which adds more perspective to the original post:
A $1.5 billion plant is planned for Grand Forks as well. Not sure where they are at with their permitting or investors. I imagine with the fertile Red River Valley and all of the sugar beet producers, a plant at the north and south end would be good for the farmers.
http://www.prairiebizmag.com/event/article/id/15783/publisher_ID/46/
Original Post
A reader, overnight, sent me some thoughts regarding "The Sleeping Giant" which I've incorporated in the following note.
In this week's issue of Bloomberg Businessweek the lead story is "The $28 Trillion Writedown." For current investors in oil, gas, and coal, it's a bullish, bullish story. Embrace it.
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.
But any time 2/3rds of a commodity is removed from the market, it just makes the holder of that commodity that much better off, all things being equal. Ban all oil production in the US overnight, and tomorrow morning Saudi Arabia's worth triples, quadruples.
Right now, the tea leaves suggest natural gas is in the "sweet spot." Wind and solar are in the 1% niche. No one except the French like nuclear power these days. No one except Germany and China like coal, and that's only because of necessity. That leaves natural gas. Everyone "likes" natural gas.
Because of that, some utilities could be winners, some could be losers. Right now, I think MDU sits in a "sweet spot." Yes, it has a lot of coal, but coal is easy. What MDU has, to put it in the "sweet spot" is location, location, location, and experience in unconventional plays, something they simply stumbled into, I think.
All those meandering dots lead to another meandering dot. "The Sleeping Giant." A few people knew about the Bakken long before the boom, but no one knew how to get to it. "The Sleeping Giant" is different; everyone knows there's natural gas throughout the entire state of North Dakota. I've blogged about it before. Natural gas is found in every county in North Dakota, except ironically, Sioux County, which lies entirely within the Standing Rock Indian Reservation. Yes, that Standing Rock Indian Reservation.
The reader got me to thinking about this suggests that "The Sleeping Giant" could be a "big deal." He suggests that the Niobrara formation lies beneath 2/3rds of North Dakota, which is right below the Pierre Shale, and which surfaced south of Marmarth, North Dakota, and where Fidelity (MDU) has had natural gas wells for eighty (80) years.
In addition to the current national glut of natural gas, the other problem for natural gas operators in North Dakota has been the lack of infrastructure to gather, process, and transport that commodity. But with the Bakken, much of that infrastructure is now being built out.
Someone asked where the Rohweder natural gas would go. I noted that the Bakken is just a short hop, skip, and a jump over Mr McGregor's farm to the west, where the infrastructure is being put in on a daily basis.
But let's say that someone is thinking outside the proverbial box, or thinking outside the Bakken box. Only eighty-five (85) miles to the northeast of the Rohweder natural gas well is Jamestown, North Dakota. So what, you ask.
Spoiler alert: the proposed $2 billion fertilizer plant at Jamestown just received final regulatory approval to begin building (posted earlier). Its feedstock is natural gas. By language in the permit, they need to start building within 18 months.
Then this little pearl which I had forgotten. I had forgotten this but the reader pointed this out to me: the WBI (yes, another division of MDU) pipeline that was rerouted from Watford City, North Dakota, to Williston, to the northeast corner of North Dakota, was originally shown as going to Bismarck, then Jamestown, and then east to Fargo to hook up with regional/national grid in Minnesota.
Could the "Sleeping Giant" be another regional Marcellus/Utica in the making?
It is a hoot.
ReplyDeleteThere won't be enough production to supply the local CNG market. Yes, that market. The one they mention in their presentation.
It has worse prospects and less money than GMX had when I mentioned that GMX was not bAnkrupt yet.
They are looking for money, not gas. Money from greater fools.
Anon 1
Hope springs eternal.
DeleteThe Utica formation waited for years getting gas plants on line, before the wells didn't have to be shut in. Someone needs to spend $200 mill on a gas plant, and it will take 100's of wells before that happens. Gas wells are only profitable like the Utica when they are wet - wet gas laden with ethane, propane, butane, etc has to be there otherwise dry gas is not worth much. The gas almost certainly can't be fed directly to a pipeline without corrosion and hammering as major issues. This is a shot in the dark, but it may eventually pay off.
ReplyDeleteI really don't know. I just think it's very interesting. I don't know the history of the natural gas industry in Montana and North Dakota, but something tells me two years from now, .....
DeleteDidn't Confucius say a journey of a thousand miles begins with a single step?