How Cold Was It In The Bakken In January? -- So Cold, The Diesel Froze

Reuters is reporting:

Oil production in North Dakota's Bakken shale stayed flat in January after falling sharply the month before, according to independent data that illustrate how this winter's bitter cold put a freeze on the world's fastest-growing oil patches.

Although December's extraordinary chill gave way to relatively warmer weather last month, Bakken output hovered just below 860,000 barrels-per-day, according to calculations by LCI Energy Insight, a Texas-based energy intelligence firm.

In December, Bakken oil production fell by nearly 50,000 bpd from a record just over 910,000 bpd in November, the largest drop since state records began, according to North Dakota Industrial Commission data this month.

The LCI figures, based on historical well production data and natural gas pipeline flows in North Dakota and Montana, are the first to show the full impact of winter weather on oil output, a trend that brought new seasonal uncertainty to oil markets in recent years.
Growth in the larger Eagle Ford shale in south Texas also ground to a halt at around 1.1 million bpd, according to the LCI data, which was made available to Reuters.

Parts of North Dakota had the third coldest December on record, so frigid, according to local papers, that diesel fuel froze in truck tanks. In January, it was the wind that forestalled the drilling and hydraulic fracturing operations that are necessary to keep output growing.

"December was very cold and January was warmer but windy," said Bill Abeling, a meteorologist with the National Oceanic and Atmospheric Administration in Bismarck, North Dakota. Peak wind speeds were above 35 miles per hour for a third of the month in Williston, the heart of the oil boom, Abeling added. 

Although companies often cut back on fracking operations during the winter months due to operational issues, the impact was greater this year due to the severe conditions.
In addition, the weather in the northern Midwest state is wielding a greater influence on the oil market, forcing oil traders to adjust to a new dynamic. U.S. oil markets cannot overlook the loss of 50,000 bpd of Bakken crude just as winter heating fuel demand peaks, traders say. 

Still, it is likely to be a temporary lull in the otherwise upward trajectory of the Bakken region, whose bounty turned North Dakota into the country's No. 2 oil-producing state. Regulators expect the backlog of wells waiting on completion, numbering 635 in December, to be up and running by May.

This is the first of three pages; to see the rest, go to the linked story.

Bakken CBR Terminals Closing? Just A Rumor -- Federal Government (The Same One That Said "You Can Keep Your Physician")

Reuters at Rigzone is reporting:

Oil shipments by rail from the booming Bakken shale in North Dakota have slowed over the past two days, data showed on Friday, but a U.S. regulator knocked down rumors that some terminals have been shut down due to new rules.

Oil traders are on edge over concerns that an emergency order from the U.S. Department of Transportation this week requiring shippers to test all crude before it is carried by train could cut into deliveries of Bakken crude, as much as 800,000 barrels per day (bpd) of which is shipped by rail.

U.S. crude oil futures prices briefly spiked as much as 60 cents per barrel, or nearly 1 percent, earlier on Friday on speculation that two terminals may have been shut down for non-compliance.

The U.S. Federal Railroad Administration said talk of shutdowns was a rumor. The Pipeline and Hazardous Materials Safety Administration's inspections in North Dakota have not caused the closure of any terminals, an agency source said. Prices held onto earlier gains even after the denials.

However, data from industry intelligence group Genscape did show that loadings at a dozen major Bakken rail terminals had fallen to around 345,000 barrels per barrel on average for the past two days, down from about 550,000 bpd over the previous two weeks, an unusual but not unprecedented dip.

Genscape, which uses cameras to monitor the number of tank cars filled with crude at the terminals, provided no explanation for the dip. Analysts said the ebbing flows could also be due to other factors, including a shortage of oil tank cars and slower rail traffic due to severe winter weather.

This is the first page of a three-page article at the link. 

For Warmists Or Deniers, One Has To Admit This Has Been One Humdinger Of A Winter

Record subzero days in midwest
Historic cold shuts Michigan schools; record low temperatures set in Michigan
Worst winter in decades in Minnesota
Kansas to Massachusetts: up to a foot of snow to fall across 1,300 miles (this is going into March)
Travel agent: brutal winter is causing "a certain amount of desperation"

This is the forecast for 3:00 p.m. this Sunday -- the middle of the afternoon when it would generally be the warmest all day:

 
I came back to the Bakken this time for three reasons:

• I had to thank my dad personally -- how generous he has been
• see the changes in the area due to oil and gas
• experience a few days of the winter I remember growing up; someday, global warming will mean the end of all this; and I am getting my wish -- it's going to be really, really cold this weekend; it is currently -14 degrees outside where I am (Williston); the overnight low will be -20.

Williston Exploration Reports Results Of A Heath Well; XTO Reports A Gusher; Oasis, MRO Each With A "High IP" Well; Fifteen (15) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

	2/28/2014	02/28/2013	02/28/2012	02/28/2011	02/28/2010
Active Rigs	192	183	205	169	96

Fifteen (15) new permits --

• Operators: XTO (5), QEP (5), Enduro (3), Oasis (2)
• Fields: Haystack Butte (Dunn), Newburg (Bottineau), Grail (McKenzie), Tyrone (Williams), Murphy Creek (Dunn)
• Comments:

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Twelve (12) producing wells completed:

• 24146, 2,911, Oasis, Power Federal 5300 14-15B, Willow Creek, t1/14; cum --
• 24922, 1,777, Emerald Oil, Caper 1-15-22H, Boxcar Butte, t6/13; cum 70K 12/13;
• 25007, 929, WPX, Olson 12-1HY, Van Hook, t1/14; cum 9K 12/13;
• 25347, 5, Williston Exploration, Rocky Ridge-Fritz 1, a Heath well; Rocky Ridge, t2/14; cum --
• 25545, 2,482, MRO, Rudolph USA 41-15TFH, Reunion Bay, t1/14; cum --
• 25550, 4,051, XTO, Marlene 42X-20D, Blue Buttes, t1/14; cum --
• 25902, 109, Bakken Hunter, Ambrose, t10/13; cum 7K 12/13;
• 25932, 277, Whiting, Sanish, t2/14; cum --
• 26230, 348, Triangle, Dwyer 150-101-35-26-2H, Rawson, t2/14; cum --
• 26340, 934, Whiting, Kannianen 43-31TFH, Sanish, t2/4; cum --
• 26435, 235, KOG, Wildrose 159-98-14-12-24-14H3, t1/14; cum --
• 26784, 1,199, Whiting, Smith 41-24H, Sanish, t2/14; cum --

Devon Energy plans to invest ~$1.1 bln in the Eagle Ford this year and will drill more than 200 wells: For its 10 months of ownership in the play this year, the company's net production is expected to average between 70,000 and 80,000 barrels of oil equivalent per day. With the majority of Devon's Eagle Ford acreage derisked, this opportunity provides low-risk, repeatable oil growth for years to come.

Chesapeake Energy confirms sale of Midstream compression assets; CHK notes minimal impact on 2014 cash flow guidance: CHK confirmed the execution of two agreements to sell midstream compression assets for total proceeds of approximately $520 million. 

The Syndicated Series I-98 Is On Hiatus

Several federal and one Illinois state agency have asked me to put the acclaimed I-98 series on hold until the investigation is complete.

For those unfamiliar with the I-98 series, here are the relevant links:

• the background
• the pilot, opening episode
• the inferno, the second episode
• the chase, the third episode

Although the series is set in the future (2040 - 2049), it is being written, and if Hollywood picks it up, filmed in the present.

The series began with two Bakken oil men traveling down I-98 near Rugby when they chanced to see a WBC&R CBR derailment. They stopped to help, and in the commotion their yellow Lamborghini was stolen.

The drones tracked the yellow Lamborghini to Minot where the two self-called Thelma and Louise women stopped for fuel. It was an electric vehicle, and charging took about an hour. The North Dakota WASP teams were called in and had the charging station surrounded.

[That is not a typo: in much of the US, SWAT teams had been banned by Homeland Security as part of the successful gun-control initiative funded by the Cameron Diaz Stop The Madness campaign. North Dakota never saw the need for SWAT until the state annexed three eastern Montana counties. But to confuse the Feds, the state called their special weapons and tactics teams, the wide-area-special-patrol (WASP) teams. WASPs were already on the Federally-endangered-species list, and North Dakotans felt that, like the western sage grouse, WASPs were protected.]

The WASPs had the charging station and the yellow Lamborghini surrounded. Earlier in the day, the Minot hazmat folks (paid for by the Legacy Fund) had been clearing up the most recent derailment. There was still a bit of legendary highly combustible Bakken oil in the ditch near the charging station but it was considered not to be a problem.

Thelma was standing by the EV Lamborghini smoking a cigarette. Only 15 years old, she would not have been allowed to smoke "real" cigarettes and was, no doubt, smoking a Marlboro e-Cig.

"No doubt" is a phrase best not used by WASP teams responding to a potentially explosive situation. It turned out, as luck would have it, Thelma was smoking a "real" cigarette, not an electric cigarette that would have been, under similar circumstances, completely harmless.

Negotiations began. And continued. The Canadian Mounted Police were on their way. The United States Air Force was sending in their suicide-prevention team from the Grand Forks Air Force Base to negotiate -- it wasn't the best choice, but, as the lead mishap investigator said some months later, "it was close. It was all we had. What does it matter?"

In fact, that was the Fargo Informed headline some months later:

"What Does It matter?" -- Deputy Commander, ND WASP

Meanwhile, back at "the situation" as it began to be called, Louise said to Thelma, "Get in, the car is charged. And get rid of the cig. No smoking in the car."

Well, it doesn't take a rocket scientist to put two and two together. Unfortunately, the WASP commander WAS a rocket scientist. She had been laid off when the Obama administration eliminated the USAF missile program to help pay for the highly successful national health care system. Now that health care was adequately funded, it was a rousing success. But the omniscient narrator digresses.

It doesn't take a rocket scientist to put two and two together to guess what happened next.

Thelma tossed the "real" cigarette into the ditch containing the legendary highly flammable Bakken crude oil.

In the ensuing inferno, the second inferno in less than 24 hours, Thelma and Louise confounded authorities when they made a 540-degree turn and headed east. Later, when asked why they headed east, they said they knew they would have been held up in a six-hour traffic jam in Stanley (North Dakota).  WBC&R ran 90 CBR trains across I-98 daily resulting in traffic jams never imagined in 2014.

The state had planned to place an overpass over the WBC&R railroad running north/south connecting the CBR terminals north and south of the city. But at the last minute the Fargo contingent objected to Legacy Fund money being spent on highways in the Bakken when the money was needed to widen the bridges across the Red River to accommodate the Minnesotans still flowing into the state.

Louise, with "pedal to the metal" headed back towards Rugby.

Fast forward. Louise and Thelma sped through North Dakota, Minnesota, Wisconsin, and had gotten to Chicago. They refueled along the way, evading authorities.

It was in Chicago that things came to an end. Thelma and Louise were not hurt. At least they were not hurt physically.

The end was caught on video, which went viral on YouTube. And that brings us to the "here and now." Until the investigation is complete, several federal agencies and one Illinois state agency have asked that the syndicated I-98 series be put on hold. My lawyers are in contact with their lawyers.

Oh, for those interested, here is the video of Thelma and Louise in Chicago:

Lamborghini Crashes in Chicago Suburbs

On The Road To New England; We're All Screwed

Wow, talk about "themilliondollarway" being ahead of the pack, if only by a week or so.

It was just a week or so ago, I had the "aha" moment, the epiphany. I put one and one together and got two.

Obama's war on coal (1)
natural gas shortage in New England (1)
______________________________
= the US is taking "the road to New England" (2)

There are two facts with regard to the folks in Boston who depend on electricity:

• they were screwed this year
• they will be screwed for about six more years

I think everyone is aware of the energy shortage, specifically the natural gas energy shortage, in New England this year. Among the "everyone," I assume there are a few that are aware that experts suggest it will be at least six more years before the energy issue is fixed in New England.

New England's problems began, as I understand it, when "everyone" switched over to natural gas, eliminating coal and/or heating oil as a source of energy, over the past two years. The natural gas distribution system simply could not keep up. It would have been a challenge even if it had been a normal winter, but global warming resulted in one of the snowiest, coldest winters in New England, which exacerbated the issue.

The president, I guess, naively, had hoped that wind and solar would have taken up the slack as the coal industry slowly died over the next couple of decades. Unfortunately, coal-fired power plants are closing more quickly than anticipated, and more of them are closing than anticipated (previously reported on the blog). Even after a gazillion dollars in federal and state subsidies and tax credits over the past two decades, wind and solar does not come close to closing the gap. With the loss of federal and state subsidies and tax credits, the interest in wind and solar will probably slow down.

XOM had an incredible essay several years ago (it's linked somewhere on the blog). XOM pointed out that the math simply does not work. Wind and solar cannot replace all that coal that is coming off-line. Because Big Oil cannot be trusted, and because XOM is the biggest of Big Oil, it definitely could not be trusted. So folks figured that couldn't possibly be true. Look at all the YouTube videos that show Mr Obama saying wind and solar will solve all our problems, folks said. Folks said XOM is wrong, the community organizer is right.

The "aha" moment came to me some weeks ago: the administration has put the US on the same "road to New England." The administration is moving the US toward a one-energy source for electricity (sort of like one "single-payer health care").  It's really quite interesting to watch.

• wind and solar is dead
• nuclear is stagnant, perhaps dying
• hydroelectricity is stagnant
• of course we're not going to use oil to produce electricity
• algae really hasn't worked out all that well yet
• and, that pretty much leaves natural gas

When I wrote that, I was a bit unsure about the hydroelectricity story. That was one little hole in the theory. My wife mentioned that when we were discussing this, while the DVD was "warming up" to play "Big Bang Theory."

I asked her where does most of our electricity come from. "Dams," she said. Or maybe she said something else. 

So, today's RBN Energy on hydroelectricity was, for lack of a better word, stunning. This was the lede, over at RBN Energy:

Natural gas-fired power generation has always played second fiddle to hydropower in the Pacific Northwest, where dams in the Columbia River Basin typically supply well over half the region’s annual power needs. Gas takes on a more significant role, however, in years like this with lower-than-normal precipitation and hydro generation. And the ongoing phase-out of coal-fired plants in the Pacific Northwest is nudging gas closer to center stage—not just in 2014 but also over the long haul. Today we start a series examining the brightening outlook for gas use in the most hydro-dominant region in the US.

Oregon and Washington State represent the heart of the Pacific Northwest, but it is not uncommon to include northern California, Idaho, and Montana in the region as well, given their location and generally similar terrain. That broader definition also takes in the geographic reach of the 31 federally owned dams in the Columbia River Basin (see Figure 1), which together can generate up to 22 gigawatt (GW)—the equivalent of 20 nuclear reactors. (California also has major hydro assets, and imports a lot of hydropower from the Columbia River Basin dams; we will look into California’s hydro/gas situation—including its historic drought—in a later episode of this series.) The Grand Coulee Dam is by far the largest power generator on the Columbia River, accounting for more than 30% of the region’s hydro capacity. Many of the region’s other large hydro dams are located along the main stem of the Columbia as well; the rest are along the Snake River and its tributaries.

One additional paragraph (you will have to go to the source to read the entire story):

The current NOAA forecast for 2014 would make this year the 16th driest in the region since JFK was elected; 2010 was only slightly drier (it was the 14thdriest iest since 1960), and in that very comparable year gas-fired units in the Pacific Northwest generated far more power than they did in 2012, which as we just noted turned out to be one of the wettest years on record.

In Oregon, hydro plants generated 30.5 million megawatt hours (MWh) in dry 2010, and gas-fired units produced 15.7 million MWh; in wet 2012, hydro output rose to 39.1 million MWh, and gas-unit output fell to 11.6 million MWh, all according to the US Energy Information Administration (EIA).

The hydro/gas dynamic was similar in Washington State. There, in dry 2010, hydro plants produced 68.3 million MWh and gas units 7.8 million MWh; in wet 2012, hydro output jumped to 89.5 million MWh and gas-unit output fell to 5.4 million MWh.

As would be expected, gas consumption by the electric power sector rose and fell with gas-unit output. In Oregon, gas consumption by the sector totaled 108.4 Bcf in dry 2010; in wet 2012 it totaled only 82.0 Bcf; in Washington State, gas consumption by the electric power sector totaled 74.5 Bcf in 2010; in 2012 it dropped to 39.2 Bcf.

Those are pretty big swings that can cause significant volatility in the natural gas market.

And so it goes.

Friday, February 28, 2014 -- A Lot Of Non-Bakken Stuff

Active rigs:

	2/28/2014	02/28/2013	02/28/2012	02/28/2011	02/28/2010
Active Rigs	194	183	205	169	96

RBN Energy: On the road to New England.

Natural gas-fired power generation has always played second fiddle to hydropower in the Pacific Northwest, where dams in the Columbia River Basin typically supply well over half the region’s annual power needs. Gas takes on a more significant role, however, in years like this with lower-than-normal precipitation and hydro generation. And the ongoing phase-out of coal-fired plants in the Pacific Northwest is nudging gas closer to center stage—not just in 2014 but also over the long haul. Today we start a series examining the brightening outlook for gas use in the most hydro-dominant region in the US.

Oregon and Washington State represent the heart of the Pacific Northwest, but it is not uncommon to include northern California, Idaho, and Montana in the region as well, given their location and generally similar terrain. That broader definition also takes in the geographic reach of the 31 federally owned dams in the Columbia River Basin (see Figure 1), which together can generate up to 22 gigawatt (GW)—the equivalent of 20 nuclear reactors. (California also has major hydro assets, and imports a lot of hydropower from the Columbia River Basin dams; we will look into California’s hydro/gas situation—including its historic drought—in a later episode of this series.) The Grand Coulee Dam is by far the largest power generator on the Columbia River, accounting for more than 30% of the region’s hydro capacity. Many of the region’s other large hydro dams are located along the main stem of the Columbia as well; the rest are along the Snake River and its tributaries.

 I posted a stand-alone on this.

*********************************

The Spin Doctor

Don't you just love this spin? Yahoo!Finance is reporting:

The U.S. government slashed its estimate for fourth-quarter economic growth on Friday in the latest sign of a loss of momentum, but some tentative signs emerged that suggested the worst of the slowdown may be over. [LOL]

Gross domestic product expanded at a 2.4 percent annual rate, the Commerce Department said, down sharply from the 3.2 percent pace it reported last month and the 4.1 percent logged in the third quarter.

The economy has faced a number of headwinds, including a 16-day shutdown of the government in October and an unusually cold winter that has weighed on activity since late December.

Growth has also been dampened by the expiration of long-term unemployment benefits, cuts to food stamps and businesses placing fewer orders with manufacturers as they work through a pile of unsold goods in their warehouses.

*********************************

For Investors Only

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. 

4Q13 GDP forecast: could be significantly lower.  Forecast for 2.5 percent, down from 3.2 percent pace reported last month, and the 4.1 percent logged in 3Q13.

PennEnergy is reporting:

The UK oil and gas industry had a production rate that was 8 percent less last year despite investing a record-breaking 8.9 billion pounds, Reuters reported. A report by industry lobby Oil and Gas UK revealed UK taxes from fossil fuels are expected to decrease to 5 billion pounds from 6.5 billion pounds in the 2013-2014 financial year. In contrast, for every barrel of oil equivalent, oil and gas operators spent an average of 28 US dollars last year and this figure is projected to grow to more than 130 US dollars per boe in 2014.

"This relentless rise in costs is unsustainable and will result in yet more fields being shut-in and prematurely decommissioned if it is not addressed," the Oil and Gas UK report said.

To boost production, the British government announced a new industry regulator, which may punish companies that do not maximize production at oil and gas fields.

The Olympic games are over. Now the Real games begin. The Ukraine: military invasion and occupation. My hunch: leaders in the US and the EU will make some speeches.

I hope folks didn't have too much bitcoin stored at Mt Gox: once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday -- wow, that was fast -- the heist just occurred. The company says it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system. All new programs are a bit rocky at the beginning. Look at ObamaCare. But they will get this fixed, too. Perhaps call in the ObamaCare software writers to fix the faulty bitcoin system.

**********************************

A Note To The Granddaughters

I don't watch television any more, except when passing through airports, or perhaps a bit of some sports event, but that's about it.  I'm staying with my dad while visiting the Bakken, and he gets about 65 cable channels. I ended up watching C-Span last night, just for some background noise -- the Senate was voting on the nomination of some deputy director of some federal agency. I think it took an hour for the voting to occur; I finally quit watching when the vote was 91 for and 0 against. It looked like the nomination would pass. I don't know what Harry Reid required for confirmation, but the crawler said 51 votes were needed.

I think I mentioned that in my original blog: televisions have replaced the conventional, classical, fireplace -- something that gives off light and a feeling of warmth. I think I had the television on last night because it was easier than starting a fire in the fireplace. And produced less carbon dioxide.

Before leaving for coffee this morning ($1.81 for coffee and a maple long john) at CashWise, I saw about five minutes of CNBC. I was thrilled to see Joe Kernen still vehemently upset about the global warming scam, speaking of which, the forecast is for overnight temperatures, without wind chill, to be about 25 degrees below zero.

For newbies, and especially the folks from Louisiana and Texas, this means that one has to "go" 32 degrees to get down to zero, and then there's another 25 degrees to go to get to 25 degrees below zero. It seems obvious but I think some folks forget that. Maybe the Canadians have it right. They start freezing at 0 degrees and then they only have to go 25 degrees to get to "25 below." Americans start freezing 32 degrees higher and they have to go about 57 degrees to get to "25 below."