Saturday, January 25, 2014

CBR -- Canola By Rail

I couldn't resist. Smile.

Search the blog for "canola."
North Dakota plants 2/3rds of the nation's canola.
North Dakota company building a canola plant in Oklahoma.
Despite moisture problems, North Dakota likely to remain #1 in canola -- back in 2011.
Don sent me a link to a story on how "nanny state politics" benefits North Dakota. The Minneapolis StarTribune is reporting:
From Oregon to Oklahoma, farmers have started planting canola in earnest, rotating the yellow-flowered crop that could blossom into a replacement for artery-clogging trans fats found in myriad junk foods, such as cookies, cakes and pies.
The amount of canola being grown in the U.S. has increased dramatically in the last two decades or so, with 1.7 million acres planted in 2012. Some of it is growing in areas such as Oklahoma, which for generations has been dominated by wheat and cattle operations.
Canola seeds produce oil with less saturated fat than many cooking oils and got a boost last fall when the Food and Drug Administration announced it was changing its view on trans fats. The FDA issued a preliminary decision that trans fat, also called partially hydrogenated oils, would no longer be listed as "generally recognized as safe" and began taking comment from the food industry on a timeline for eliminating their use.
Increased use of canola has led to strong prices that can top other crops. For example, canola now brings farmers about $10 a bushel, compared to about $6 to $7 for wheat.
Statistics:
  • Oklahoma went from planting 140,000 acres in 2012 to 250,000 acres last year. 
  • Oregon climbed from 7,300 acres planted in 2012 to 13,000 in 2013.
  • In Washington, acreage during that period doubled from 15,000 to 30,000.
  • Montana the amount planted rose from 51,000 to 55,000 acres.
  • North Dakota is the top canola state, with 860,000 acres planted in 2013.
It looks like it will take quite a leap for any state to leapfrog North Dakota in canola production.

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A Note to the Granddaughters

Gravity really is a great movie. I don't watch television any more (rare exceptions: occasional NASCAR) and I rarely go to movies (I do watch a lot of DVDs - television and big screen).

But two movies that I went to this past year were exceptional. I can't say enough about Bruce Dern in Nebraska. It's in black and white and about as slow as watching grass grow, but ... but I digress ...

Gravity.  

Variety is reporting that the director of Gravity won the Directors Guild of America award this year, beating out directors of 12 Years A Slave, American Hustle, and The Wolf of Wall Street.  From the article:
Alfonso Cuaron, who spent five years developing “Gravity,” noted that photos from space show that the Earth is “absolutely beautiful” but do not depict the human experience.
“It’s a bizarre experiment of nature, that is the human experience,” he noted. “And it’s what we as directors try to sort out as filmmakers.”
Gravity, at some level, seemed to be a "sleeper" among movie-goers, the critics, and the intelligentsia this year. The cinematography was incredible, and the risk for the director was that the visual effects would overshadow the human element. I found it interesting how captivated I was by the "views" from space, but then the story-line took over, and I forgot (at times) about the views. The cinematography kept coming back, but it would be lost when the story grabbed me again.

The "thing" that made this movie work, as far as the story line goes: the hero was not a super-trained male fighter pilot-astronaut who saves the day through clever command of physics. Rather, it was psychologist-mission specialist clearly out of her element reacting instinctively to events bigger than she could ever imagine.

Sandra Bullock has always been on the cusp of becoming part of that very small circle of super-A list actresses, which can be numbered on one hand and include Judi Dench (who I seem to always enjoy) and Meryl Streep (who I occasionally enjoy watching). I don't think this movie moves her (Sandra Bullock) into that small circle. Maybe there are two circles of super-A list actresses: those who are among the gods and goddesses on Olympus, and then those who remained among the mortals. 

A Moment Of Reminiscing ... The Bryce Wells

... and maybe a little bit of bragging. Smile.

On February 18, 2010, almost four years ago, I suggested that a relatively quiet / inactive area in the Bakken might just prove to be a "sweet spot." It's a bit of fun to go back and read that note:
"... in the area where this well is located you will note that there is not much past activity there, but there are about 22 wells currently on the confidential list in this area. The oil fields involved: the Sand Creek, the Keene, and the Westberg. Bryce 31-5H was in the Westberg field."
Talk about an understatement. This area -- the Westberg -- is competing with the Banks oil field for some of the best wells outside the Sanish/Parshall. 

Burlington Resources' Bryce wells are going to be very, very interesting. [Note: the American Eagle Bryce wells are located nowhere near the BR Bryce wells.]

To date, the BR Bryce wells:
  • 23739, 2,895, BR, Bryce 34-8TFH, t11/13; cum 402K 12/18;
  • 23738, 2,899, BR, Bryce 24-8MBH, t11/13; cum 325K 12/18;
  • 23737, 2,712, BR, Bryce 24-8TFH, t12/13; cum 264K 12/18;
  • 23736, 1,643, BR, Bryce 41-5TFH, t10/14; cum 164K 12/18;
  • 23735, 2,974, BR, Bryce 11-5MBH, t11/13; cum 315K 10/18; off line most  11/18 - 12/18;
  • 23734, 2,485, BR, Bryce 11-5TFH, t11/13; cum 278K 12/18;
  • 18177, AB-->A/1,844, BR, Bryce 31-5H, t10/09; cum 255K 12/18; minimal production since 9/13; very minor amounts as recently as 3/14; sundry form received October 17, 2016: stuck coil tubing; commodity prices too low to justify fishing; will TA this well until commodity prices justify fishing; interesting, interesting -- back on "A" status of 10/18 with one bbl of oil "run" in 10/18;
Note that four of the six Bryce wells target the Three Forks.

Random Look At Three Recent Whiting Wells In Westberg Oil Field, Bakken, North Dakota; Competing With Banks Oil Field For Record IPs

I track the Westberg oil field here.

While updating it tonight, I was reminded of three recent Whiting wells. The IPs for these three wells were reported back in July, 2013. Tonight we follow up with their production for the first six months:
  • 22388, 4,956, Whiting, Skaar Federal 41-3-3H, 30 states; 3 million pounds; t6/13; cum 185K 11/13;
  • 22387, 4,460, Whiting, Skaar Federal 41-3-2H, 30 stages; 3 million pounds; t6/13; cum 148K 11/13;
  • 22386, 4,456, Whiting, Skaar Federal 41-3-1H, t6/13; cum 156K 11/13
For newbies, the shorthand says that the first well above produced 185,000 bbls of oil through the end of November, 2013; the second well, produced almost 150,000 bbls of oil in the first six months; and the third well produced just a bit over 150,000 bbls in the first six months. Quite incredible to say the least. 

As high as these IPs, they are not records. One can see the record IPs at the FAQs page. Interestingly enough, the Westberg has had record IPs, but is competing with the Banks oil field for that honor.

The total production of these wells compare nicely with recently completed EOG wells. Whiting is using a new completion technique. These wells were only 30 stages with 3 million pounds of proppant (mostly sand, some ceramic) compared with 50+ stages and 10 million pounds of sand for the comparable EOG wells over in the Parshall oil field.

Coldest Month In A Century

Mail OnLine is reporting:
America is set for the coldest month of the century as weather forecasters predict yet another freezing blast of Arctic air - putting Super Bowl Sunday in jeopardy.
Teams have been warned to stay on high alert for changes to the scheduling of the first Super Bowl to be played in an open-air stadium.
Temperatures have already hit record lows, at times making parts of the U.S. colder than the North Pole, and are expected to plunge in the coming days.
Why did "they" ever even consider playing the Super Bowl in New Jersey in January/February? The "best and the brightest" never fail to amaze me. They must have been taken in by all this "global warming" talk. The decision was announced February 4, 2013.

It will be interesting to see:
  • when the game is actually played; and,
  • how many actually show up
According to the linked article, The game could be moved to the preceding Friday or Saturday or the following Monday if authorities decide the weather will constitute a danger to public health.

If earlier, this means folks will have to fly in, drive in, or ski in as early as Thursday and that will be the end of the pre-Super Bowl events. The pre-Super Bowl events are the money-makers; ten minutes after the end of the game, folks are trying to get out of Dodge as quickly as possible. I suppose clever entrepreneurs could market pre-Super Bowl events as post-Super Bowl events, but human nature .... not likely.

Moving it to Saturday, maybe, and moving it to Monday, maybe, but still incredibly challenging.

Think of security. New York police are now going to have to move security forward three or four days and extend plans for an additional day following Sunday just on a "what-if."

I always tell my granddaughters if you don't understand something, a) Google it, or, b) follow the money. In this case, googling does not provide an answer.

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In other global warming news, the Midwest is experiencing the snowiest month on record. None other than USA Today is reporting:
Hey Midwesterners: If you think it's been a snowy winter, you're right: Because of the ongoing parade of winter storms, several cities, including Chicago, Detroit, Indianapolis and Cincinnati, have seen more snow than they typically get for the entire season.
Indianapolis, which has had almost 2 feet of snow this month, may see its single snowiest month in the city's history, where records go back to just after the Civil War.
(The snowiest month on record was January 1978, when 30.6 inches fell.)
If USA Today continues to report news like this, the editors could be subpoenaed, could find themselves indicted by some attorney general.   

Disclaimer: some of my comments are hyperbole, meant for entertainment, and, if the NSA is listening, and even if they aren't, some of my comments are not to be taken literally.

And then this: the ice jam along Pittsburgh's three rivers is the worst in decades...as least according to Drudge who links CBSPittsburgh. The ice is bad enough for shippers right now, but the real risk is the flooding. Of course, when that happens, it will be blamed on global warming, because it is "warming" that melts ice. I can't make this stuff up. 

Don't Cry For Me, Argentina

Wow, I'm in a great mood. I'm caught up on the blog. I've paged through the current issue of BloombergBusinessweek which is actually quite good this week. The one article on global warming was unnecessary but I'm starting to see a shift in my attitude and the attitude of other sane folks regarding global warming.

I have twenty minutes before the public library opens; I hope to finish the new biography of Mary Shelley this morning.

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.

I normally do not write about the stock market in general, but I'm in a good mood, and as noted, I have twenty minutes to spare.

I'm not sure what all the hand-wringing was about yesterday, regarding the sell-off in the stock market.

"Everyone" has been anticipating a ten percent correction.

Let's see: the market returned about 35% last year, 50% over two years, and so there's a sell-off of 3% this week, and there is hysteria on Wall Street. Look at all the commissions: the brokers are paid regardless, sales or purchases.

No one, as far as I can tell, has even addressed the most fundamental observation: once the market sell-off began, and once the market was down 125 points or so, the machines took over.

Earning reports had nothing to do with this. Overall, earnings looked pretty good, and certainly no worse/no better than most quarters over the past several years, from a general, non-scientific, recollection.

No blue chip company imploded (should "blue chip" be capitalized?)(some of these examples were added after the original post to continue illustrating the point)
  • Apple beat analysts' expectations but guided lower
  • DuPont, the nation's biggest chemical maker by far, will buy back $5 billion of its shares after posting fourth-quarter earnings that exceeded analysts' expectations. 
  • IBM's fourth-quarter net income grew 6 percent, surpassing Wall Street's expectations even though revenue declined 
  • Microsoft, the software giant posted surprisingly strong sales of its Xbox videogame consoles and Surface tablet computers, helping drive quarterly revenue and earnings that topped Wall Street expectations. In response, Microsoft's shares rose about 4% in after-hours trading Thursday.
  • oil holds at $96, the longest sustained period of "high" oil prices ... ever.
  • natural gas more than doubles, solidly over $5/mmBTUs
  • Starbucks, McDonald's, and Union Pacific all beat analysts' expectations
  • Verizon had a blow-out quarter
  • Baker Hughes, Schlumberger both beat expectations
And earnings season is just beginning. The pundits telling us that earnings created the sell-off are blowing smoke. 

China? One manufacturing index suggested a slowdown in China. I've talked about this at length; not gonna last unless the Chinese want to see mass civil disobedience by out-of-work young men.

The Argentina peso? Several readers sent me links to stories on the peso. Don was the first. If any one thing led to the sell-off, it was probably that -- what is now happening in Argentina. LOL. So everyone sold their shares in American companies because of fear of another crisis somewhere. GDP by country? Argentina ranks 26th between Belgium and Austria. Belgium? Give me a break. Among the states in the US, Argentina would rank about 9th, somewhere between Ohio and New Jersey, I suppose.

ObamaCare is already baked into the American economy. Jobless rates are falling across the nation, Bloomberg tells us. Unemployment is down to 6% or something like that, Reuters tells us. 

This 3 percent sell-off certainly reeks of manipulation (even factoring in the fact that the machines took over after the initial 1 percent drop). None of the movers and shakers saw this coming. Warren Buffett had just committed to buying a unit of PSX. Mr Icahn just bought more Apple. Netflix had just surged $50 in one day. Jamie Dimon was just given a huge raise. Companies are raising their dividends.

So, let's hope for that 10 percent correction. "Everyone" has been talking about it for so long, we might as well get it over with. And provide the little folks with some great entry points.

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. The only reason I posted this was so I could post this video: 

Don't Cry For Me, Argentina, Madonna

Memo To Heidi: Talk To BLM

Ms Heitkamp was out in the oil fields the other day, mesmerized by the flaring it appears. She needs to talk to the BLM: their managed land has the worst record on flaring in the Bakken, and no natural gas gathering and processing plant on the reservation.

Regular readers are aware of three facts in the Bakken regarding flaring, that, to the best of my knowledge (and I could be wrong here):
  • the greatest amount of flaring, at least in terms of percent, takes place on the BLM-managed reservation (based on my interpretation of public documents; and again, I could be wrong)
  • there are no natural gas gathering and processing plants on the reservation
  • ONEOK -- the most visible / active company building natural gas processing plants in North Dakota are building them on private land, not on the reservation
Can you imagine how long it would take to get a federal permit for a natural gas processing plant on an extraordinary site?

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A Note to the Granddaughters

I have a couple of days off; my daughter has the weekend free and gets to enjoy her wonderful daughters.

Wow, we had a great day yesterday. Because there was no swimming, we had several hours free, from 3:00 p.m. to 8:00 p.m. I told the granddaughters they had to pick three from the following list, no more, no less:
  • a tasty snack at TCBY (yogurt/ice cream)
  • a stop at the grocery story to pick up broccoli for dinner
  • a short visit to an art museum (10 minutes)
  • a visit to the crafts story (Hobby Lobby/Michael's) and $20 each to spend
  • clean up their bedroom
I will let the reader guess which three they chose. LOL.

While driving, we continued our discussion on sapphires and rubies, and then had a dialogue on what happens when oxygen combines with various metals.
  • when oxygen combines with aluminum (Al2O3) one gets very, very hard gemstones (rubies, sapphires); rubies are associated with ruby-red shoes in Wizard of Oz
  • when oxygen combines with silicon, one gets sand (and really hot sand --> green glass)
  • when oxygen combines with iron, rust
  • when oxygen combines with copper, it turns green (maybe moisture also involved)
  • we talked about the different forms of carbon (C) -- diamonds and coal, and what happens when oxygen and carbon come together
That in bold was what she volunteered as we drove along. I was very, very impressed that she knew all about rust.

I asked her what color "copper" was. She thought I was nuts. The color of "copper" is, well, copper, like a copper penny.

So, when you combine oxygen with aluminum you get the second hardest, most colorful, gemstone (sapphire, second to diamonds), and when you combine oxygen and carbon, you get a colorless gas.

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The younger granddaughter is always the luckiest. She routinely beats either of us (me or her older sister) at any new game we play, including Texas Hold 'Em (poke) or chess (when I help her). She always gets away with smallest portion of broccoli at dinner.

Yesterday, while walking from Barnes and Noble, she was lucky again. It was starting to get dark; she and I were walking side by side. The older granddaughter was walking a bit behind us. I am sure that the younger granddaughter and I spied the paper first, though she says she was first. If so, it was by a nano-second. Regardless, because her hands are closer to the ground than mine are, she got to the paper first: three $5 bills and five $1 bills. Yes, she found $20 in cash.

We said we would divide it among the three of us. She said she would divide it in two. I said "which two." For her and her sister. The older granddaughter -- always the kindest, said she would divide her half with me. The younger granddaughter's response:
"Arianna, you can divide your money with whoever (sic) you want, but I'm keeping my half." 
LOL. She will be a good liberal when she grows up.

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We had not planned to stop at Barnes and Noble, but the older granddaughter wanted to visit. I said only 20 minutes. Two hours later I was still asking if they were ready to leave. Nope. The younger one was finishing another Diary of a Wimpy Kid. She has four at home; I think the series is up to nine. Arianna was reading a couple of books that best fit "dystopian literature." She called it by another genre name, but I forget what she called it, not science fiction. Like Hunger Games, three volumes which she has read three times. She has read volumes 1 and 3 of the Divergent series by Veronica Roth, and already knows that the movie will be out later this year. I was not even aware of the book, much less the movie.

That was our afternoon. No dinner. A yogurt snack at TCBY and hot chocolate/pastry snack at Barnes and Noble/Starbucks. Oh, one interesting observation. They both now have whipped cream with their hot chocolate. That was not true last year. Somewhere I missed that transition. They still do not serve broccoli at Barnes and Noble/Starbucks.

Wyoming Wind Update: Wyoming Wind Farms To Save Average California $2.50 Annually In Utility Bills

Updates

Later, January 25, 2014: see first comment below --
Let me backstop your (accurate) calculations:
  • $750M savings / 38M people = $19.73/year
  • $600M / 38M = $15.79
  • $100M / 38M = $2.63
More story lines:
The outfit delivering the highest estimate is a federally funded research group whose goal is to push solar and wind. They were hired by the state agency wanting to sell the electricity. Imagine the reaction if a research company exclusively funded by Mobil and BP published a report claimed this wind project would increase electricity rates instead of reducing them.
Also, that non-existent, not-even-permitted transmission line will cost a mere $3 billion. Payback term in years to recover the cost of the line would be either 4, 5, or 30 years, depending on which study is accurate.

From the comments:
“It never ceases to amaze me that folks who become hysterical at the thought of an oil or gas drilling rig being visible for a few months are thrilled with the idea of miles of those huge windmills standing there forever.”
Incredible, isn't it?

If the Casper Star and Tribune wants to maintain any semblance of integrity in reporting, it may want to follow up with "the rest of the story." I am quite disappointed, to say the least, the CST would print this story without critical analysis. The Casper Star and Tribune risks morphing into the Minneapolis Star Tribune.
Original Post

I love these stories. So many story lines. The Casper Star and Tribune is reporting that Wyoming wind could save $750 million annually for California ratepayers.

One story line: the math.
Let's quickly do the math, with round numbers:
  • California population: 40 million
  • 750/40 = $20/year
  • Let's assume there are four persons/household = savings of $80/year.
So, Wyoming gets to put all those unsightly windmills in their state all to save a single Californian $20/year, about the price of a pack of cigarettes (? -- see comments), or a day of parking at LAX; or a meal for two at Applebee's, or a few hours of daycare.
Second story line: the understatement.
"We’re a little delayed from what we originally set out; however, we are within the market time frame for California.”
The project was first proposed in 2005 and bought by Anschutz in 2008.
Third story line: those little needling inconvenient truths.
The would-be wind companies face two hurdles in sending their electricity to California and its 38 million people. The first challenge is one of transmitting the electricity.
Currently, no transmission lines exist between Wyoming and California. The second is convincing California policymakers to choose Wyoming renewables over similar projects in the Golden State. 
The fourth story line: the internal inconsistencies in the story, or as Don points out -- progressive (modern) math.
Opening line of the article: A preliminary report suggests Wyoming wind power could save California ratepayers $750 million annually.
The last paragraph of the article: The preliminary conclusions of the report, which will be finalized and officially published in February, are in line with previous studies finding that Wyoming wind is a cost-effective means of providing renewable energy, said Greg Brinkman, an energy analysis engineer at the laboratory. A University of Wyoming study found wind projects in the state would save Golden State ratepayers $100 million annually. A 2011 Western Electricity Coordinating Council found such projects would save California customers $600 million annually. 
In line with previous studies? $750 million in this study vs $100 million in an earlier study? At least the $600 million is a bit closer to $750 million but it certainly reeks of creative bookkeeping, more smoke and mirrors.

But can you imagine? If this saves California rate payers $100 million annually, we're talking a whopping $2.50 will be saved by each Californian each year. I can't make this stuff up, unless my arithmetic is wrong, which is very well may be. Readers will correct me. Please.

Some Random Links From A Reader

From The New York Times (the writer seems surprised): US oil production continues to exceed forecasts.
Oil production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated this week.
“We keep raising our forecasts, and we keep underestimating production,” said Lejla Alic, a Paris-based analyst with the agency.
The increase left United States production at 7.5 million barrels a day, with both November and December production estimated to have been over eight million barrels a day.
American consumption of oil also rose last year, by 390,000 barrels a day, or 2.1 percent, to 18.9 million barrels a day. The agency increased its estimate of American oil use in the final quarter of the year, although it lowered its estimate of the increase in some other countries, including China. Over all, world consumption rose 1.4 percent, making 2013 the first year since 1999 that the use of oil in the United States rose more rapidly than in the rest of the world.
Remember: some of these European analysts thought the Bakken had shut down because of a bit of cold weather. LOL. 

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A feel-good story for activist environmentalists, but like all fads, it will die on the vine also. The New England energy debacle and the shortage of propane in the Midwest will bring a few folks to their senses, as they say. (In case the link is broken, it's a story about how the Keystone XL protest changes environmental scene in the US.)

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BP is still trying to move beyond the Gulf spill. The Gulf spill reminded me of one thing: the oil companies have deep, deep pockets.

Bull Butte -- Random Observation From A Reader

This came in as a comment from a reader:
In late November, 2013, Oasis received six (6) new permits for wells in Bull Butte field: three (3) with the Ross name and three (3) with the Emerald name.  I don't have the info here with me but a couple of them will target the Three Forks.  
I got a call from ____  ____ the other day, farms to the south, that they had delivered the surface pipe for the wells so they can drill the first 2,000 feet before the big rig comes in to do the main drilling.

That will make a total of 8 on those two spacing units at 156-103-10 and 15 which seems to be quite unusual for our area. The landscape is sure changing out there.
For newbies, here's where I track Bull Butte. I haven't updated it in quite awhile; may be time to do that.  I have fond memories of Bull Butte for a variety of reasons.

Saturday Morning

The talk among investors will be about the market sell-off yesterday. If the spirit moves me, I may comment on it later.

The Wall Street Journal

And that is indeed the headline story: US markets tumble as fear spreads

Propane scarce as cold spell lifts demand, prices.

Supplies of natural gas tighten; now over $5/mmBTUs. Spin the wind turbines.

Well-deserved. Dimon gets raise after rough year.

Wal-Mart to lay off 2,300 Sam's Club employees; reducing middle managers.

Happy Birthday! Apple Macintosh turns 30. Most of my adult life.

Apple pushes deeper into mobile payments.

The Los Angeles Times

Wow, the 9/11 memorial in NYC has a $24 admission fee. Death spiral guaranteed. People have moved on. 

Most of the front page of the on-line edition: sports, murders, Hollywood. Pretty lame.

Week 4: January 19, 2014 -- January 25, 2014

Top story of the week
EOG reports single well with 225,000 bbls in less than five months

Operations
Hess to ramp up in the Bakken
Nineteen producing wells completed; example of pad drilling
Ten "high IP" wells reported on one day
List of extraordinary sites where drilling may not be allowed in the Bakken
Which Bakken wells will hit the one-million-mark first; a look at the EOG wells

Pipeline
Koch suspends plans for Bakken-to-Illinois 250,000 bopd pipeline
2013: the year of CBR; 2014: pipeline resurgent 

CBR
CBR unlikely to slow down
Savage expands operations at its Bakken terminal

Refinery
MDU-Calument refinery near Dickinson nearing completion

Bakken 101
How geology affects production across the Bakken

Coal
Random update on coal industry in North Dakota

Economy
Jimmy John's coming to the Bakken
North Dakota population keeps growing
First major residential development east of Williston approved
Menards Mega Store in Dickinson to open; new railroad terminal near Beach proposed

National energy
Propane shortage in midwest; natural gas shortage in New England
Natural gas prices soar in New England
TransCanada's Keystone XL 2.0 South starts flowing

International
Statoil to abandon Greenland