Active Rigs In North Dakota -- 198 -- September 9, 2014; How The Bakken Impacts US Supply Chains; The Bakken Experiment Saved The US Rust Belt

Rigs

The race is on!

Today: 198 active rigs in North Dakota. On this date, it was all the way back to 2011 where we had more active rigs -- 199. Add the two Oasis rigs in Montana and "we" are up to 200 active rigs "almost" in North Dakota. I assume Slawson and CLR also have some Montana rigs, but the "official" race is "active rigs in North Dakota as reported by the NDIC."

Active rigs:

	9/9/2014	09/09/2013	09/09/2012	09/09/2011	09/09/2010
Active Rigs	198	185	191	199	143

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The Retail Boom Begins

From KXNews:

"We have an almost unimaginable opportunity right here. I would challenge you to find any community in the continental united states of 35,000 people which is two hours away, not in traffic but at highway speed to the nearest significant retail development."

Actually, the catchment area far exceeds 35,000 people, and the driving time, door-to-door certainly exceeds two hours.

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Natural Gas and the Road To New England

From the DNR message board today:

I looked at an interesting report on natural gas supply/demand to 2020.

New England supply has gone from 5bcf/d in 2012 to projected 32bcf/d in 2020. Pipes don't catch up with supply until 2017.

But project 90bcf/d supply in 2020 and 5bcf/d potential shortage.

The rest of the country demand is growing 3x the supply growth in the New England.

LNG, exports to Mexico and Canada, power generation: $100 billion of export, chemical projects on the Gulf Coast to 2020, 85k jobs building the facilities.

The natural gas infrastructure companies should do well for a few more years. And the oil infrastructure companies as well.

The US gas discount to global prices is 1/3 of the trade deficit.

I still think this revolution is as big as the social media, Apple/smart phone phenom and maybe longer-lasting. I still think Williams might be one of the easiest bets on this growth, and it yields around 4% now. EPD, KMI, ETE will be continue to be winners as well.

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The Eagle Ford / Eaglebine

RBN Energy: new takeaway capacity heralds production growth south of San Antonio.

Located just east of the prolific Eagle Ford shale, production from the Eaglebine play has yet to take off. In good part that is because takeaway capacity is currently limited to trucks. All that is about to change with the new 60 Mb/d Sunoco Logistics Eaglebine Express pipeline due online by the end of 2014. And last month two midstream companies announced competing pipeline projects that would add as much as another 400 Mb/d of takeaway capacity in 2016. Today we review recent developments in the Eaglebine basin.

The Eagle Ford, a rectangular box running southwest to northeast, right through, on the south side of Bexar County. The Eaglebine continues, as another rectangular box, to the northeast of Eagle Ford.A And then the Woodbine sand play takes a 90-degree turn, a rectangular box running northwest to southeast, it's southern quarter underlying the northern quarter of the Eaglebine. 

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How The Bakken Boom Impacts US Supply Chains

This is an incredible essay written by Jason Craig over at the C. H. Robinson blog sent to me by a reader. Thank you. It begins:

For those of you on the coasts (all three of them—East, West, and Gulf) you may be vaguely aware of the Bakken oil boom in North Dakota.

For those of us in neighboring states, North Dakota is the source of a clichéd “giant sucking sound,” the likes of which this generation has never experienced. And it has all happened incredibly quickly.

The Ninth District Federal Reserve Bank (FRB) has been diligently monitoring and quantifying this boom. They recently calculated that North Dakota just topped an average output of 1 million barrels of oil per day. Typically, you can get 19 gallons of gasoline out of a barrel of oil. Therefore if that oil was turned into gas, North Dakota alone would produce 19 million gallons of gas per day!

The astonishing part of this situation is how quickly it came about. The Bakken oil boom is a little more than four years old. Check out the amazing chart [at the linked article] from the FRB that measures the daily output of oil over the last ten years.

But it's not just the US supply chains, but how the entire "Bakken experiment" led the American energy revolution. It didn't just happen. 

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The Bakken Spurs Development In The Rust Belt

I've talked about this before, how the Bakken has far-reaching effects on the rest of the US. Nice to see this being reported in The New York Times. President Obama is becoming more vocal about the role he played in the US energy revolution [I think someone said he wrote a paper on the feasibility of combining horizontal drilling with fracturing while he was attending Harvard.]  My hunch is that the stories in The New York Times don't appear by coincidence or randomly. President Obama will still give his "global warming" speeches but such speeches no longer matter. That train left the station a long time ago, some time last autumn (2013). The New York Times is reporting:

YOUNGSTOWN, Ohio — Waist-high weeds and a crumbling old Chevy mark the entrance to a rust-colored factory complex on the edge of town here, seemingly another monument to the passing of the golden age of American industry.

But deep inside the 14-acre site, the thwack-thwack-thwack sound of metal on metal tells a different story.

“We’re holding our own,” said Greg Hess, who is looking to hire draftsmen and machine operators at the company he runs, Youngstown Bending and Rolling. “I feel good that we saved this place from the wrecking ball.”

The turnaround is part of a transformation spreading across the heartland of the nation, driven by a surge in domestic oil and gas production that is changing the economic calculus for old industries and downtrodden cities alike.

Here in Ohio, in an arc stretching south from Youngstown past Canton and into the rural parts of the state where much of the natural gas is being drawn from shale deep underground, entire sectors like manufacturing, hotels, real estate and even law are being reshaped. A series of recent economic indicators, including factory hiring, shows momentum building nationally in the manufacturing sector.

And no earthquakes in Ohio reported this past week.

The usual bone for the environmentalists:

The environmental consequences of the American energy boom and the unconventional drilling techniques that have made it possible are being fiercely debated nationwide. New York officials have imposed a moratorium on hydraulic fracturing, or fracking, because of concerns that the fluids injected into the shale to free oil and natural gas deposits might contaminate the local drinking water.

Although that danger worries environmentalists here as well, there has been much less opposition because residents are so desperate for the kind of economic growth that fracking can bring, whatever the risks.

Vallourec, a French industrial giant, recently completed a million-square-foot plant in Youngstown to make steel pipes for the energy industry, the first mill of its kind to open here in 50 years. The facility, which cost $1.1 billion to build, will be joined next year by a smaller $80 million Vallourec plant making pipe connectors.

But politically, even Mr Obama can read these tea leaves:

Ohio’s unemployment rate in July was 5.7 percent, well below the national average of 6.1 percent. That’s a sharp reversal of the situation four years ago, when unemployment in Ohio hit 10.6 percent, significantly above the country’s overall jobless rate at the time, as manufacturers here and elsewhere hemorrhaged jobs. In the Youngstown area, the jobless rate in July was 6.7 percent, compared with 13.3 percent in early 2010.

Ban fracking at your own political risk. 

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The Obama Presidency: Fail

I have posted this a number of times. Unless something incredibly unforeseen happens in the next 18 months, President Obama will go down as a footnote in American history fifty years from now. I think he will get favorable press for the next ten years, but historians writing about the American presidency twenty years from now will have little to say about President Obama. I think he realizes that, and that explains all the golfing. It will be a toss-up between President Obama and President Carter among the least distinguished modern presidents. Obama will get the nod for the impact he had on race relations.

It's one thing for me to say that, and it's one thing for Fox News to say that, but when the AP is reporting it, it speaks volumes. The AP, yes, the AP, is reporting:

President Barack Obama's legacy isn't looking so hot — at least according to what respondents told a Washington Post-ABC News poll released Tuesday morning.

The poll found a 52% majority of Americans believe Obama's presidency is, on a balance, a "failure," compared to 42% who believe it to be a success. Those on the "failure" side were far more likely to have said they "strongly" held that belief.

A full 56% said they disapproved of the way he has been handling international affairs, while 54% disapprove of his handling of the economy. Overall, 65% said the country is on the "wrong track."

That's really all you have to read of that news article. There's something much, much better to read. Whatever you think about the president, especially if you are among his cult followers, I challenge you to read an op-ed in today's Wall Street Journal on Alexander the Great, 2014: 

What does Vladimir Putin want? Not money, power, territory, or revenge. The Russian strongman is after bigger game. 

Bret Stephens has it exactly right. If you disagree, then you are back to money, power, territory, or revenge.

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God Has A Sense Of Humor
400 PPM

It's not even October yet. Bloomberg is reporting:

Cold is about to sweep into the northern U.S. Plains from Canada and drop temperatures to winter-like levels.

Readings in Calgary were forecast to drop to 27 Fahrenheit (minus 3 Celsius) later this week and snow was flying there yesterday, according to Environment Canada.

That will be a welcome change for energy traders after a mild summer, although it’s just a glimpse of what may come.

While the temperatures will drop, they won’t be falling too far where it counts.

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For Investors Only

Trading at new highs today: EEP, EPD, EW, GPRO, MSFT, NFLX, PAA, RAIL, TRP, UAL, YHOO.

Regular readers know my love for McDonald's when traveling because of their free wi-fi. But they have their challenges. Bloomberg is reporting: the world’s largest restaurant chain posted the worst same-store sales decline in more than a decade, hurt by sluggish demand in the U.S. and a health scare involving a Chinese supplier. I can't talk to the the health scare involving a Chinese supplier, but with regard to US store sales, McDonald's seems to be a lot like Obama: taking its base for granted, and throwing everybody under the bus. Cleanliness? Pretty bad across the country. Friendliness of the staff? Really quite good in fly-over country but in the busy metropolitan areas they might be friendly but English is the not the first language of the front-line employees. I can (grudgingly) put with that, but the fact that McDonald's, in general, does everything possible to discourage the use of electric outlets, pretty much really, really turns me off. If their wi-fi wasn't so dependable, I would go elsewhere. I don't think McDonald's gets it.