Tuesday, January 28, 2014

Marathon Oil CEO To Be Keynote Speaker At Annual Williston Basin Petroleum Conference

The Bismarck Tribune is reporting:
Lee Tillman, chief executive officer of Marathon Oil Corp., will give the keynote address at the 22nd Annual Williston Basin Petroleum Conference.
Also speaking:
  • Harold Hamm of Continental Resources
  • Tommy Nusz of Oasis Petroleum
  • Jim Volker of Whiting Petroleum
The conference and expo will be held in Bismarck May 20-22. Registration opens at 9 a.m. Wednesday.

According to The Tribune: Exhibit space for the conference sold out in 17 minutes when Bismarck hosted the conference in 2012. More than 4,000 people registered, making it the largest event to be held in Bismarck-Mandan.

Prior to the conference, readers may want to review MRO's most recent presentation:
  • 370,000 net acres
  • 1,300 net wells inventory, up from 450 in 2011
  • cost target, $7 - $7.8 million
  • testing 320-acre spacing (4MB, 4TF1/1280)
  • 6 TF2 wells in forward planning
  • added a second frack spread
  • will increase rig count by 20% each in Bakken and Eagle Ford
  • Bakken: low-risk play
This may be the most interesting news (posted earlier). MRO has moved from open hole completions to 20 stages to 30 stages now. They will go back to all open hole completions and complete them to current best completion design; recompletions based on lessons learned from 9 recompletions accomplished in 2011. The recompletion results in an additional 280,000 bbls/wells; effectively "re-sets" the decline curve, not a trivial issue in the Bakken.

Perhaps other operators are recompleting their early wells, but MRO is the only operator I see talking so much about it.
Disclaimer: there might be errors in the data points from the presentation; I go through these quickly; I do not have narrative that accompanies the slides. 

To have the MRO CEO the keynote speaker is a big, big deal. Of all the operators in the Bakken, there are very few international operators; MRO is one of the few. Opportunity for CEO to compare the Bakken with rest of world.  

Earnings To Be Reported The Rest Of The Week Should Be Exciting

Link here (this is a dynamic link and the post will change over time). This pertains to the last three trading days in January, 2014.

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.

Part Of The Propane Shortage Story: Kankakee, IL

Regular readers are well aware of this story: Kinder Morgan is reversing its Cochin pipeline to carry propane from the new Kinder Morgan Cochin terminal in Kankakke County, IL, to western Canada.

From Kinder Morgan's website:
Kinder Morgan’s Cochin pipeline system consists of an approximate 1,900-mile, 12-inch diameter multi-product pipeline operating between Fort Saskatchewan, Alberta and Windsor, Ontario, including five terminals. The pipeline operates on a batched basis and has an estimated system capacity of approximately 50,000 barrels per day. It includes 31 pump stations and five U.S. propane terminals.
Underground storage is available at Fort Saskatchewan, Alberta and Windsor, Ontario through third parties. The pipeline traverses three provinces in Canada and seven states in the United States transporting light hydrocarbon liquids to the Midwestern U.S. and eastern Canadian petrochemical and fuel markets. Current operations involve the transportation of propane and an ethane/propane mix, although other products have historically been transported on the pipeline.
Kinder Morgan is currently modifying the Cochin pipeline system to move light condensate westbound from the new Kinder Morgan Cochin terminal in Kankakee County, Ill., to existing terminal facilities near Fort Saskatchewan, Alberta, Canada. Subject to the timely receipt of necessary regulatory approvals and necessary capital improvements, shipments of light condensate could begin as early as July 1, 2014. Please visit the Cochin Reversal Project web page for additional information on the project.
If you are over 50 years old and think you have heard "Kankakee" before, you have: in the song made famous by Arlo Guthrie, The City of New Orleans.

The City of New Orleans, Arlo Guthrie

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA; XTO With Eight (8) Great Wells; EOG Drilling Extended Long Laterals; KOG Reports A "High IP" Well

I remember one time being criticized (yes, I have a very thin skin) for simply re-posting the daily activity report. I "re-post" the daily activity report because if I did not, I would miss things. Today is another great example. Take a look at EOG's Hawkeye well being reported below, and then take a look at the Hawkeye wells at this post

Active rigs:

Active Rigs191190204163

Eleven (11) new permits --
  • Operators: CLR (4), MRO (3), XTO (2), Triangle (2)
  • Fields: Elm Tree (McKenzie), Elidah (McKenzie), Chimney Butte (Dunn), Lost Bridge (Dunn), Rawson (McKenzie)
  • Comments:
    Eleven (11) producing wells completed:
    • 20142, 1,353, XTO, Hovet Federal 41X-29B, Yahstack, t11/13; cum 11K 11/13;
    • 25796, 1,245, Whiting, Uran 43-17H, Sanish, t1/14; cum --
    • 24945, 1,359, XTO, Sorkness State 24X-36A, Sorkness, t11/13; cum 11K 11/13;
    • 25066, 2,356, XTO, Loomer 21X-4E, Tobacco Garden, t10/13; cum 23K 11/13;
    • 25065, 1,515, XTO, Loomer 21X-4A, Tobacco Garden, t10/13; cum 12K 11/13;
    • 25302, 2,592, XTO, Louise 31X-9D, North Tobacco Garden, t9/13; cum 65K 11/13;
    • 23693, 2,249, XTO, FBIR Huntsmedicine 24X-8E, Heart Butte, t12/13; cum --
    • 22487, 67, EOG, Hawkeye 02-2501H, Clarks Creek, t12/13; cum --
    • 20140, 1,841, XTO, Mandal Federal 31X-29C, Haystack, t10/13; cum 18K 11/13;
    • 24944, 1,595, XTO, Sorkness State 24X-36B, Sorkness, t11/13; cum 8K 11/13;
    • 24144, 1,498, Statoil, Raymond 17-20 7TFH, Ragged Butte, t12/13; cum --
    Wells coming off the confidential list Wednesday:
    • 25212, 1,712, Statoil, Alger State 16-21 5H, Alger, t11/13; cum --
    • 25288, 2,018, KOG, Charging Eagle 14-14-10-2H,  Twin Buttes, t12/13; cum --
    • 25509, drl, BR, CCU William 34-20MBH, Corral Creek, no production data,
    • 25510, drl, BR, CCU William 44-20TFH, Corral Creek, no production data,
    • 25543, 1,458, Newfield, Anderson State 152-96-3H, t9/13; cum 29K 11/13;
    • 25816, 34, Legacy, Legacy Etal Berge 5-7 2H, Spearfish, t8/13; cum 8K 11/13;

    Ah, Wouldn't You Know It, Another First For North Dakota ... Right Out Of Charles Dickens

    BetaBeat is reporting:
    Rodney Brossart, the farmer from North Dakota, was arrested after being located by Predator drone, Forbes reports. Sentenced yesterday, he is the first American to be sent to the clink thanks to drone assistance.
    In June 2011, Forbes reports, police attempted to arrest him because he wouldn’t return the three cows that had grazed onto his property. This resulted in “an armed standoff between Brossart, his three sons and a SWAT team” on his property. It ended only after the family of perps was located by a Predator drone borrowed from Customs and Border Patrol.
    I remember reading the original Forbes article when it came out. I thought I linked it at the blog, but can't find it.

    But I did find this:
    • 20151, 1,191, Slawson, Drone 1-34-27H, Saxon, Bakken, t9/11; cum 121K 11/13; 
    The Saxon oil field is at the eastern edge of the Bakken, eastern Dunn County. 

    Minnesota Censorship: First Time In Its 9-Year History That A Scheduled Film Was Censored -- Due To Psychological Nudity? Why Has The EIA Website Not Been Taken Down? The Fifth Estate

    [The back story to that drying lake in California as pictured in The Los Angeles Times. You know, I'm beginning to think the Fourth Estate is more gullible than ever. And that's probably why the Fourth Estate is dying, being replaced by the Fifth Estate. ]

    Don sent this, reported in the Fairfield Sun Times:
    The directors of FrackNation, a “pro-fracking” documentary have slammed the organizers of the Frozen River Film Festival in Minnesota after they cancelled a screening of the film following pressure from environmentalists.

    FrackNation had been accepted by the Frozen River Film Festival for a screening on Sunday but organizers announced at the weekend that they were canceling the screening - the first such cancellation in the festival’s nine year history.

    FrackNation Director Phelim McAleer said the cancellation was censorship and an attack on diversity.
    Apparently the organizers can't handle the truth.


    Bloomberg continues to morph into the Minneapolis Star and Tribune.

    Bloomberg reports that:
    U.S. solar companies added 20 percent more jobs in the 12 months through November, the biggest climb since an industry-funded group began its survey four years ago.
    That may be correct -- that 20 percent in the past 12 months may be some sort of record, but the article conveniently misses an opportunity to have readers compare the solar industry record with the oil and gas industry over the past five years. Compare the record of the oil and gas industry to the president's employment initiatives, as seen in the president's own graph at his link.

    The only thing that surprises me is that this website, the EIA website, has not been removed.

    Oh, by the way, it would be interesting to compare the amount of tax revenue the federal government receives annually from the oil and gas industry compared to that received from the solar industry. To see what the solar industry has contributed, click here.

    This Is Exciting: Oil Up Almost 2% Today In Early Trading

    [Reminder: update on the Tyler formation in southwest North Dakota precedes this post. For newbies, I try to post at least five new stand-alone posts every day. I often post many more, and many older posts are updated regularly. Don't forget to scroll. Archives at the sidebar on the right. If you don't see something, ask.]

    Just a data point. Doesn't mean a thing to long-term investors. February, 2016, futures, have oil selling for $80/bbl.

    But all things being equal, I prefer the price of oil moving in this direction, as opposed to some other direction.

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

    A contrarian analyst has a contrarian view of what will happen if/when the Fed tapers (actually, the Fed has already begun tapering). This contrarian analyst feels that interest rates will actually drop. More likely they will simply remain flat or very, very low.

    If accurate, it certainly makes dividend-paying utilities like CVX, COP, and XOM look nice for the long term.

    You Got To Walk That Lonesome Valley By Yourself, Pete Seeger with Arlo Guthrie on piano
    A Note to the Granddaughters

    I've been watching American Graffiti for the past few days: the movie itself, more than several times; the movie with the director commentary; the documentary making the movie.

    George Lucas, who went on to Star Wars fame, did the movie to capture what America (or at least inland California) was like before a) the British music invasion; b) the Vietnam war; and, c) free love of the 60s.

    He succeeded on all levels. I don't think he realized how great his movie was -- nor did America -- until many, many years later. 


    Knock, Knock, Knockin' on Heaven's Door, Bob Dylan and Tom Petty

    If interested, after watching the video a couple of times, go back and see if you caught the action at 1:10. Start about 1:04 so you don't miss it.  

    Update On The Tyler, Southwest North Dakota

    Read this post for background. To the best of my knowledge, there is no official information yet out on the MRO Tyler wells.

    However, still on "drl" status, but with production numbers:
    • 25347, drl, Williston Exploration, LLC, Rocky Ridge-Fritz 1, Rocky Ridge, Heath, spud 5/13; with nine days of production in November and 128 bbls of oil. 
    PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

    To the best of my knowledge, "Heath" and "Tyler" are used interchangeably, but if I am wrong, hopefully readers will correct me.

    From the well file:
    • spud date: May 18, 2013
    • cease drilling date: June 4, 2013
    • total depth: 8,280 feet
    • wellsite geologist: Heidi Smith / Neset
    • a vertical well, targeting the Tyler
    • Tyler: total vertical depth - 7,994 feet
    • Otter: total vertical depth - 8,246 feet
    • "The well is awaiting completion."
    • 80-acre spacing
    To compare this to a Bakken well, perhaps, some thoughts:
    • 31 days / 9 days  = 3.4
    • 1280 acres / 80 acres = 16
    • 128 x 3.4 x 16 = ~ 7,000 bbls/ the first month in the Bakken; not bad
    In addition the cost to drill a vertical well with no horizontal/multi-stage fracking is a whole lot less expensive than drilling/fracking the Bakken.

    Just idle chatter. 


    Random update on another "recent" Tyler well:
    • 18216, 30 (no typo), Williston Exploration, Vanvig 1, t7/12; cum 18K 11/13; 

    The Impact Of The President's Successful War On Coal

    For all those folks freezing in the midwest who support Obama's goal to kill the coal industry:
    American Electric Power (AEP) during the recent cold weather was running about 89pc of the coal generation it has scheduled to retire in 2015, leading the company today to question the reliability impacts of federal environmental rules.
    Across its system, Columbus, Ohio-based AEP has 5,573MW of coal generation due for retirement in 2015 because of the Environmental Protection Agency's mercury and air toxics standard.
    About 71% of the company's total generating capacity of 37,600MW is coal-fired or about 26,700MW. Three years ago coal formed 82% of its generation mix.
    “What it should make everyone think about is, what are we going to when that generation is not available?” AEP told Argus today. “We need to be thinking about reliability and resilience in extreme times, not just the status quo.”
    During the cold weather, disruptions in natural gas supplies led to a sharp ramp-up of coal generation in the PJM Interconnection's 13-state mid-Atlantic and northeastern territory.
    PJM confirmed that all of its coal capacity was called upon during the cold weather, which is expected to continue.
    But I'm preaching to the choir. I doubt if any folks who support Obama's goal to kill the coal industry actually read this blog. Pity. 

    A reader sent that to me. It was from ArgusMedia.

    Tuesday: Apple -- What A Great Entry Point; The Back Story To That Drying Lake In California -- Worthy Of A Mark Twain Short Story -- The Fish That Doesn't Return

    Active rigs:

    Active Rigs19019020416387

    RBN Energy: processing gulf coast condensate.
    Four midstream companies are building or planning condensate splitter capacity to process at least 400 Mb/d of Eagle Ford production by 2016.  These facilities will join BASF/Total, who have been operating a 75 Mb/d splitter at Port Arthur since 2000. Gulf Coast refiners are also increasing their capacity to process lighter crudes. These infrastructure developments are being made in response to a flood of condensate range material coming out of the Eagle Ford into Houston and Corpus Christi.  Today we detail these plans.
    The Wall Street Journal

    There will be a lot of stories about Apple today, I assume. I've read the transcript. Again, it's an incredibly financial and operations story. Apple is going to be around a long, long time. Pay attention to record sales, record profits, and record margins. 

    Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you might have read here. For the record, I have never owned AAPL shares, never have, never will.

    Yes, and here it is, the top story in "Marketplace": Apple iPhone sales, outlook come up short. I think the company learned a lot from the iPhone 5c failure. Thank goodness. "Heard on the Street" takes another look.
    Apple may have disappointed investors late Monday. But the company's quarterly results and guidance simply drove home the point that it remains dedicated to preserving the bottom line, even at the expense of sales.
    This was particularly so with the iPhone. Apple shipped 51 million of these in its first fiscal quarter ended Dec. 28. This represented a gain of only 6.7% year over year, and fell short of Wall Street's expectation of about 55 million. The miss was compounded by the fact it came in a period that saw the launch of two new models and the inclusion of two carriers in China in that launch.
    However, Apple is holding the line on pricing: the average selling price on the iPhone rose by more than 10% from the previous quarter. That is a much bigger jump than what has been seen in the comparable periods during the last two fiscal years. Apple's guidance also indicates that it will keep to this path, with the company predicting relatively flat revenue and a gross margin for the current quarter of 37% to 38%, in line with Wall Street's forecast.
    This is a strange bit of trivia: ethanol exporters look for a port.
    U.S. ethanol makers are banking on export markets as they grapple with Obama administration plans to cut U.S. consumption requirements, but the industry is hampered by a distribution structure built almost exclusively around the domestic market.
    Archer Daniels Midland Co., Green Plains Renewable Energy Inc., and other ethanol producers are trying to boost sales to Brazil, Mexico, Asia and the Middle East, in part by cutting costs to make the corn-based biofuel more price-competitive overseas.
    Exports could reach one billion gallons this year, increasing their share of U.S. output to 7% from 5%, as lower corn prices help producers sell ethanol more cheaply to foreign buyers, according to the Renewable Fuels Association, a trade group.
    But the $44 billion industry's efforts to expand could be limited, analysts say, because the bulk of U.S. ethanol plants are located in the Midwest to be close to the corn supply rather than near shipping ports. That is driving up costs to transport the fuel.
    US Honda hits milestone: more Hondas were manufactured in the US than imported from Japan. Honda actually exported 108,000 vehicles FROM the US.

    Wow, this is surprising. A UNANIMOUS Supreme Court ruled that employers are not required to pay workers for the time it takes to put on safety gear. Why do I find myself supporting the employees on this one? There must be more to the story.

    The Los Angeles Times

    A fascinating story on the plague. Yes, that plague. It turns out that the Justinian plague was of different genetic stock than the others.
    After dispatching so many souls in eight-to-12-year cycles with such efficiency, what became of that novel strain? For now, the authors can only conjecture that either human populations evolved to become less susceptible to its deadly ways or that climatic changes taking place at the time created a less hospitable environment for the Justinian Plague pathogen.
    Evidence for the latter possibility includes the fact that all three plagues -- the Justinian Plague, the Black Plague and the plague that surged in the late 1800s and early 1900s -- followed periods of exceptional rainfall and ended periods of climatic stability.
    Now, isn't that more interesting than last year's presidential state of the union address?


    Great photo of Cachuma Lake in central California drying up. Think fracking, water.

    Later, after posting the photo of Lake Cachuma, a reader sent me the following e-mail:
    This lake is in my backyard as I am only 15 miles from it in the Santa Ynez Valley.
    It is true the lake is running very low, but the writer missed the why of the story ... and here is the why:
    When the dam was built back in the 40's-50's (I haven't googled it but it's about that old) the farmers downstream in Lompoc some 30 miles away wanted to be sure that after the dam was built they would still get the same amount of water that flowed to them every year (every rainy year that is) that would be lost once the dam was built.
    So for the past year, the dam at Cachuma Lake has been steadily releasing water in an amount that allows the water to make it all the way downstream to Lompoc.
    There is a second side story about another more controversial required mandatory release of water that is really amazing - they must release water so that the endangered steelhead trout can make it upstream, even though a) these trout are on the endangered list with controversy as they may not be the same species; b) these fish haven't been seen in the river since the dam was built due to changing the natural pattern of the seasonal river, but even then there is only old fish stories of their historical presence; and, c) the dam actually blocks their path to the areas that they would be going to even if they tried to navigate the long river run.
    It's an interesting story if you want to google it and see all of the theories on these fish. Nevertheless, the dam must release water not only for the farmers but also for the fish that never come.
    Reminds me of the smelt in the Sacramento Delta and the trade off that humans endure to save every species and protect them from having to adapt to a changing environment (aka we are changing it - but that is what top predators have always done so are we not actually changing the process by trying to remain unchanged?)
    By the way, the purpose of linking the photograph in the first place was to suggest to readers that with photographs like that, OXY and CVX are going to have a devil of a time fracking (with water) in the state of California.

    The Boston Globe

    This is nice: an employer has ordered that his back office increase the pay for his employees. The is the CEO's first experience in business. Learning on the job. 

    I love this cold weather. It's 22 degrees in the Fort Worth, TX, suburbs. The women are all wearing very stylish winter clothes coming into Starbucks. Very stylish. Long, warm dresses; knee-high boots. Nice. The men: not much change. Some in their hunting parkas.