Thursday, March 13, 2014

Director's Cut For January, 2014 Data -- All-Time High For Producing Wells; Oil Production Exceeds Previous Month's Production; Only One Actively Drilling Well On Federal Grasslands In North Dakota; Flaring Remains Unchanged; Tioga Gas Plant Should Come Back On Line At End Of This Month

Disclaimer: this update is always done in haste; typographical errors are likely. This is for my use only. Others should go to the source

January, 2014: 933,128 bopd (all-time high was 976,453 in 11/13) (less than 1% increase)
December, 2013: 926,687 bopd

Producing wells
January, 2014: 10,100 (new all-time high)
December, 2013:10,040

February, 2014: 180 drilling (all time high was 370 in 10/2012)
January, 2014: 253 drilling
December, 2013: 227 drilling 

Today: $84.00/bbl
February, 2014: $86.98/bbl
January, 2014: $74.20/bbl
December, 2013: $73.47/bbl

Rig count
Today: 191
February, 2014: 189
January, 2014: 188
December, 2013: 190

Drilling count was down December to January and the number of well completions dropped from 119 to 60.

Days from spud to initial production decreased 10 days to 122.  

There are over 100 wells shut in for the Tioga gas plant conversion in an attempt to minimize flaring, but the biggest production impact story continues to be the weather.

The percentage of gas flared is unchanged at 36% largely due to temporary shut-down of the Tioga gas plant on December 26th for expansion. The new plant is now planned to begin operating by the end of March. This matches the historical high of 36% in 9/2011.

The number of rigs actively drilling on federal surface in the Dakota Prairie Grasslands is down to 1.

Twenty-Three (23) New Permits -- The Williston Basin, North Dakota, USA; CLR With Permits For 21 New Wells In One Section; Petro-Hunt To Report A Nice Well In Clear Creek Friday

Active rigs:

Active Rigs190186203173104

Twenty-three (23) new permits --
  • Operators: CLR (14), Slawson (3), Hess (2), BR (2), OXY USA, Peregrine Petroleum Partners
  • Fields: Big Bend (Mountrail), Alkali Creek (Mountrail), Cherry Creek (McKenzie), Willmen (Dunn), Corral Creek (Dunn), Covered Bridge (McKenzie)
  • Comments: All fourteen (14) CLR permits will be on the same pad (or very nearly same pad) in SENE 6-153-93; these are Jersey and Jersey Federal permits that appear to replace the Linbeck permits that were canceled a few days ago; there were seven additional Jersey Federal permits at that time; 7 then + 14 now = 21 wells on that one pad (or closely neighboring pads) [Disclaimer: I did this quickly and have not had a chance to confirm this; this may be all wrong. I will check it later. If it is accurate, it makes me think that regardless of how the CLR Atlanta wells have turned out, CLR is pressing ahead with targeting all Bakken formations with multiple horizontals from one pad. These would be the first wells in this section, and perhaps the first wells in this drilling unit, depending on where the horizontals go; probably under the water.]  
  • Comments: between 1990 and 1993 (inclusive), Peregrine drilled five (5) Bakken wells, all very short horizontal wells in the far south-central/west McKenzie County (currently not much activity); the are all still active and producing, albeit very, very little; this is the company's first permit in North Dakota since 1993
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Unimportant in the light of all the CLR activity above, but for archival purposes, the following permit was canceled:
  • 26561, PNC, CLR, Linbeck 14-6H1, Alkali Creek,
About twenty (20) wells, mostly in Renville County, a couple in Bottineau County, were trasnferred from Williston Hunter to Enduro Operating; probably Spearfish wells.

Wells coming off the confidential list Friday:
  • 24054, 1,528, Petro-Hunt, Wisness 152-96-33C-28-5H, Clear Creek, t1/14; cum 18K 1/14;
  • 24975, 980, Whiting, Kummer 14-32H, Pleasant Hill, t9/13; cum 34K 1/14;
  • 24976, 1,634, Whiting, Kummer 14-32-2H, Pleasant Hill, t9/13; cum 46K 1/14;
  • 25537, drl, KOG, P Thomas 154-98-14-33-4HA, Truax, no production data,
  • 25762, 562, CLR, Sommerheilm 1-10H, Upland, producing, t12/13; cum 5K 1/14;
  • 25991, drl, XTO, Clarence Federal 34X-7D, Haystack Butte, no production data,
  • 26070, drl, BR, Big Sun 41-2MBH-ULW, Camel Butte, no production data,
  • 26131, drl, Hess, LK-A Qtr Cir-147-96-0718H-2, Big Gulch, no production data,
A yes, summer is just around the corner ---

Summer, Bond Quartet

MDU Completes Purchase Of Oil And Gas Assets In Southern Powder River Basin, Converse County, Wyoming; Most Likely A Niobrara Play

Source: MDU press release --
MDU Resources Group, Inc. (NYSE:MDU) announced today its indirect wholly owned subsidiary, Fidelity Exploration & Production Company, closed on the purchase of oil and natural gas production assets in Converse County, Wyo., in the southern Powder River Basin, with an effective date of Oct. 1, 2013.
The purchase price was approximately $183 million plus accounting and purchase price adjustments customary with acquisitions of this type and is expected to be accretive to 2014 earnings per share.
"We identified the area last year for establishment of our third oil play and our team successfully sought out acreage in this top-tier basin," said David L. Goodin, president and CEO of MDU Resources.
"The upside potential of its multiple prospective zones is appealing to us and we anticipate it will result in a long-lived production asset."
The acquisition consists primarily of non-operated undeveloped mineral leasehold positions of approximately 42,100 gross acres and 24,500 net acres. In January, the properties had existing net production of more than 1,100 barrels of oil equivalent per day, 80 percent of which is oil. Plans for 2014 include a two-rig seasonal drilling program targeting the heart of the prolific Frontier play.
About $7,500/acre -- already producing.

Converse County is east of Casper, Wyoming, just west of the South Dakota/Nebraska state line. It is about twice the size of Williams County, North Dakota.

There are four unconventional "plays" in the basin but the Niobrara is probably the most discussed at the present time. 

I track the Niobrara here

US Jobless Claims Fall To Three-Month Low (Again, For The Umpteenth Time)

How many times in the past six years have we seen that headline: US jobless claims fall to three-month low? Reuters is reporting:
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 315,000, the Labor Department said on Thursday. That was the lowest reading since late November.
Claims for the week ended March 1 were revised to show 1,000 more applications received than previously reported.
Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 330,000 in the week ended March 8.
The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 6,250 to 330,500, the lowest level since early December.
I guess happy days are here again.

Again, for newbies who may have missed it. There are only three "things" that affect American employment in 2014:
  • the economy
  • ObamaCare
  • a third item
First of all, we can dispense with ObamaCare. That is now baked into the plans of US corporations.

Second, is anyone convinced the economy has improved to the extent that it would explain the drop in first time claims? LOL.

And that brings us to the reason why unemployment will drop: Congress did not renew/extend 99+ weeks of unemployment benefits.


As long as we're talking about fictitious numbers (unemployment numbers reported by the government), we might as well link today's ObamaCare stories.  Politico is reporting that the Dems don't know if "success" of ObamaCare or "failure" of ObamaCare contributed to the Dems loss in the Florida election this past week. I don't know either, but it's a fairly safe bet ObamaCare will not be a rallying cry in the 2014 elections, much less in the 2016 election.

Posted earlier, HHS Secretary Sebelius says health insurance premiums "will likely" increase in 2015. Yup, they will.

The DailyCaller catches Mr Obama in (another) outright lie when the president says ObamaCare is as cheap as one's cellphone data plan. One can argue that point, but your cellphone data plan does not come with a $12,000 annual deductible. LOL. Or a co-pay for the first 100 minutes of voice or first 2 GB of data.


Speaking of outright lies, now we learn that Target could have stopped one of the worse security breaches ever. BloombergBusinessweek is reporting:
On Saturday, Nov. 30, the hackers had set their traps and had just one thing to do before starting the attack: plan the data’s escape route. As they uploaded exfiltration malware to move stolen credit card numbers—first to staging points spread around the U.S. to cover their tracks, then into their computers in Russia—FireEye spotted them. Bangalore got an alert and flagged the security team in Minneapolis. And then …
Nothing happened.
In testimony before Congress, Target has said that it was only after the U.S. Department of Justice notified the retailer about the breach in mid-December that company investigators went back to figure out what happened. What it hasn’t publicly revealed: Poring over computer logs, Target found FireEye’s alerts from Nov. 30 and more from Dec. 2, when hackers installed yet another version of the malware. Not only should those alarms have been impossible to miss, they went off early enough that the hackers hadn’t begun transmitting the stolen card data out of Target’s network. Had the company’s security team responded when it was supposed to, the theft that has since engulfed Target, touched as many as one in three American consumers, and led to an international manhunt for the hackers never would have happened at all.
It looks like the Target cyber-security team was taking the week off to go Christmas shopping.

I'm happy to say I haven't used a credit card in Target since the breach was announced. I've saved a lot of money. Target remains my favorite big box store but I seldom visit any more.

Houston, We Have A Problem

I'm pretty proud of this -- memo to self: take a selfie of patting myself on the back -- I think I was the first non-industry observer who writes a blog on the Bakken to suggest that the biggest problem with flaring did not occur on private or state-controlled land, but in fact, the biggest problem with flaring in the North Dakota Bakken was on federal and BLM-controlled land, i.e., the reservation.

Today The Dickinson Press is reporting:
Sen. John Hoeven and two senators from Wyoming introduced federal legislation Wednesday that aims to reduce natural gas flaring.
The Natural Gas Gathering Enhancement Act seeks to expedite the permitting of natural gas gathering lines located on federal and Indian lands.
Hoeven, R-N.D., cited a recent report from the North Dakota Petroleum Council Flaring Task Force that said 40 percent of natural gas production is flared at oil wells on the Fort Berthold Indian Reservation, while 27 percent of natural gas production is flared at oil wells on state and private lands.
I came up with the same conclusion using minimal data. Knowing how folks like to round numbers ot make things not appear as bad as they really are, my hunch is that almost half of all natural gas production on the reservation is being flared. Almost half. Wow. Our federal government at work. Or not at work.

Here's the selfie next to a sign at the Dallas Arboretum:

Malaysian Airways Flight MH370

July 30, 2018: final report in --
Missing Malaysia Airlines flight MH370 was likely steered off course deliberately by someone and flew over the Southern Indian Ocean for over seven hours after communications were severed, according to a safety report into the disaster released Monday.
the dots connect --
March 14, 2014: it's all starting to come together. Reuters is reporting:
Analysis of the Malaysia data suggests the plane, with 239 people on board, diverted from its intended northeast route from Kuala Lumpur to Beijing and flew west instead, using airline flight corridors normally employed for routes to the Middle East and Europe, said sources familiar with investigations into the Boeing 777's disappearance.
Two sources said an unidentified aircraft that investigators believe was Flight MH370 was following a route between navigational waypoints when it was last plotted on military radar off the country's northwest coast. 
This indicates that it was either being flown by the pilots or someone with knowledge of those waypoints, the sources said.
I said from the beginning the answer lies with the pilot. 

Posted March 13, 2014, 4:25 pm central time: US officials now believe that the missing 777 airliner crashed somewhere in the Indian Ocean. To the best of my knowledge, there are only two facts with regard to Malaysian Airways Flight MH370:
  • the plane is missing
  • the transponders were turned off with no preceding "Mayday"
Sherlock Holmes says: "When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.”

It is not improbably at all. It is equidistant from point of departure in Malaysia to Beijing to safe runways from which Al-Qaeda can operate. If it was a pilot or co-pilot suicide, there would be no reason for the plane to deviate that far off course, and if the American officials are to be believed, even less reason to wait until over the Indian Ocean.

If the plane crashed into the ocean, water-activated beacons should have gone off but would not be picked up if they were "out of range."

One expert suggests this plane was not hijacked because a) radar would have picked up the hijacked plane; and, b) no terrorist group has claimed responsibility.

I don't consider the "radar would have picked up the hijacked plane" as "reasonable." As it is, hijacked or not hijacked it was not picked up by radar. If the group that wanted the plane for future use, there would be no purpose of claiming credit for a hijacking.

It will be interesting to learn WHY the US thinks the plane crashed in the Indian Ocean.

By the way, a lot of ink has been used in reporting this story for the past several days, since the plane went missing. It is interesting that one aspect of the story has received absolutely no attention. None. Zilch. Nada. Nil. And that's where the answer lies.

For Investors Only


Later, March 13, 2014, 4:10 pm: here it comes. Mr Kerry has drawn his "red line." He gives the Russians until Monday to "do something" or "someone else will do something":
There will be a response of some kind to the referendum itself,” Kerry said. “If there is no sign [from Russia] of any capacity to respond to this issue ... there will be a very serious series of steps on Monday.” Very serious, indeed, no doubt.
March 13, 2014: It appears the timing couldn't be better for oil investors. Just as the price of oil was starting to slump, The New York Times reports that Mr Putin might be moving his soldiers and airmen closer to the Ukrainian border. This will stop the slump. On the other hand, I don't think the Ukraine has anything to worry about. Ms Merkel, Mr Kerry, and Mr Obama have all told Mr Putin to back off or "bad things" could happen. Mr Obama was a signatory to the Budapest Memorandum on Security Assurances. The US, UK, and Russia signed this memorandum in 1994 pledging to support Ukraine's territorial integrity in turn for giving up its nuclear weapons. Like the "red lines" that Mr Obama has drawn, I'm sure the Budapest Memorandum is worth the paper it was written on. [By the way, speaking of Mr Kerry, where is he today?]

Original Post
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. If something appears incorrect, it probably is; check the linked source.

The futures market is up about 20 points. I can only assume the market sees value in a "Candy Crush" game whose maker prices itself for an $8 billion IPO payout. I assume the company has about 35 employees, including the teen-ager who writes the software for the wildly popular game.

Oil futures are actually up a bit.


Yes, as I posted a few minutes ago, the markets were caught by surprise with the Obama decision to release oil from the Strategic Petroleum Reserve. Reuters is reporting:
In the first sale from the reserve since 1990 that is specifically designed as a test, the department will offer sour crude from its West Hackberry and Big Hill sites on the U.S. Gulf coast, with bids due March 14.
Surging U.S. shale oil production has changed the logistics of U.S. crude markets. Instead of moving oil from the Gulf up to the center of the country, as was traditionally the case, major pipelines have reversed course to move a glut of shale oil from places like North Dakota to points south.
How does one spell "market manipulation?" And the government sees speculators behind every oil rig? LOL.


Over at SeekingAlpha, EquityFlux recommends Noble Energy The analysts begin their conclusion with:
Chevron, Exxon Mobil, ConocoPhillips, Noble, Devon and Cimarex are all involved in oil and gas exploration and production in different regions of the world. 
Hopefully, that brings folks up to speed. These analysts may qualify for the "group" Geico Rock Award.

Closer And Closer To Energy Independence -- Rigzone

Active rigs:

Active Rigs193186203173104

RBN Energy: waterborne LPGs.
US waterborne exports of propane, normal butane and isobutane - known collectively as liquefied petroleum gases or LPGs - are growing rapidly - up from 148 Mb/d in 2011 to 331 Mb/d in 2013. RBN expect these volumes to continue growing from 466 Mb/d this year to 825 Mb/d in 2018 as LPG production from gas plant processing increases more rapidly than domestic demand. The two largest export terminals operated by Enterprise and Targa will add 400 Mb/d of capacity between 2013 and 2018 and as many as 8 more terminals could be built.
Rigzone is reporting:
Production from the Eagle Ford unconventional oil play in South Texas is expected to keep growing through 2014 and to break the 1.5 million barrel per day (bpd) mark in 2015, an analyst told attendees at the Platts’ North America Crude Conference in Houston Feb. 27-28.
Between now and the end of 2018, 4.4 million barrels of crude are expected to be produced in North America, said Suzanne Minter, manager of crude and natural gas analysis with Bentek Energy. In 2013, 1.2 million barrels per day (bpd) of crude production was grown; crude production this year will exceed that number, Minter noted.
While infrastructure projects will bring this crude production to market, little has been done to grow incremental demand in the North America Lower 48 market, Minter noted. For this reason, the light crude market should be pretty aggressive and competitive in the near-term; by year end, Bentek believes that North America crude production will have pushed out all light sweet waterborne imports, Minter said.
Last year was phenomenal in terms of oil production. In 2012, North America crude production grew 10 percent year over year; in 2013, it grew 17 percent year over year to 1.4 million bpd. This growth comes on the heels of decades of consistent but gradual decline, Minter said. North America crude production has experienced a “strong, quick” reversal to the steady, gradual decline previously seen in oil production.
The Wall Street Journal

It looks like the hijackers flew the plane for about four hours after they turned off the transponders.

The US launched a last ditch effort to avert a diplomatic circus with Moscow vis a vis the Crimean.

 Florida GOP win highlights ObamaCare.

Wow, wow, wow. Haven't I been saying this all along: HHS Secretary Sebelius says health insurance premiums for 2015 are "likely to go up." Not enough folks signed up; the wrong folks signed up; majority of enrollees won't pay premiums through end of this year; no caps on medical expenses; children up to 26 years of age kept on family policies.

Business groups "size up" Obama's overtime plan: to pay overtime for folks working longer than the "official US work week" which used to be 40 hours; with ObamaCare it is 30 hours. 

Israel may strip orthodox Jews of their military exemption. Say what?

EU decides it can do without more Russian gas; it puts the brakes on Russia natural gas pipelines. Yeah, that was easy.

Government Motor says ignition problem that resulted in the deaths of at least 13 people dates back to 2001. Sounds like the blame belongs to George Bush.

Oil futures fall as supplies continue to climb. President Obama silently made decision to release oil from the Strategic Petroleum Reserve.

 The Los Angeles Times

Yes! Phil Jackson heads back to New York City (where he belongs!). Phil Jackson, Williston native, will be head of operations for the Knicks.

Dumbing-down of the SAT presents colleges with tough question. Students no longer need to show an ability to write; simply an ability to take selfies and text.

Kobe Bryant out for the rest of the year for the Lakers. End of career. Will Tiger and Kobe both call it quits the same year?