Friday, March 14, 2014

Six (6) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

Active Rigs190187203174104

Six (6) new permits --
  • Operators: XTO (3), Emerald Oil (2), American Eagle
  • Fields: Bear Den (McKenzie), Heart River (Stark), Colgan (Divide)
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

One (1) producing well was completed:
  • 25811, 928, Slawson, Jugard (Federal) 2-26-35H, Big Bend, t1/14; cum 17K 1/14;

From The Williston Wire -- Ferry 'Cross The Missouri?

For those of us who remember going out to Spring Lake Park and going to the drive-in movies north of Williston, here's a bit of news that will change the landscape out there:
As soon as weather permits construction will get underway on a new mixed use subdivision in north Williston. The Spring Lake Village subdivision is located three blocks north of Walmart on the east side of US Highways 2 and 85. The development is approximately 85 acres in size and will provide a variety of commercial and residential services. Williston resident Ronica Branson-Harger is the Project Manager for the Spring Lake Village.
The new rec center on the east side of town, near the college, is going to be a game-changer.

Apartments are on a vertical trend. There are nearly 3,000 apartment units in Williston.  Half of those were added last year in the 45 new apartment buildings built in 2013.  "Before the boom hit, the last apartment building was built in 1983. So from 1983-2007 we did not have any new apartment buildings,"  said Kelly Aberle, Williston Building Department.

The Federal Highway Administration (FHWA) has issued a Finding of No Significant Impact regarding the construction of a four-lane limited-access highway west and north of the City of Williston. The FHWA has determined that the preferred alternative will have no significant impact on the environment. The preferred alternative route has been identified as the Hybrid Route (formerly known as the Green Route).The preferred alternative would begin at the west junction of US Highway 2 and US Highway 85 (Four-Mile Corner) and generally head north and east to connect with US Highway 2 at its junction with Williams County Highway (CH) 6. The total project length would be approximately 13.0 miles. [Comment: I wonder if anyone did a corresponding study to suggest the environmental impact if the bypass was not completed.]

Cool: A ferry to float vehicles across Lake Sakakawea could relieve traffic on overburdened Oil Patch highways, says a group working to plan western North Dakota's future. [Comment: during the winter, some truckers simply drive across the lake.]

Note: links are not provided. It is easy to subscribe to The Williston Wire.

The most interesting story line with regard to the ferry across the lake: folks aren't thinking of these ideas if they thought the boom was nearing its end. Think of the truck traffic that will be needed to service 24-well pads.


Ferry 'cross the Missouri?

Ferry Cross the Mersey, Gerry & the Pacemakers

For Investors Only: A Cold Winter, A Cold War; A Cold Reality

Some common sense in California: power companies are allowed to purchase natural-gas electricity to replace nuclear-produced electricity. Bloomberg is reporting:
Edison International and Sempra Energy utilities in Southern California were cleared to buy as much as 1,500 megawatts of electricity to replace the power lost when the San Onofre nuclear plant shut in 2012.
Sempra’s San Diego Gas & Electric Co. was authorized by the California Public Utilities Commission today to secure 500 to 800 megawatts, with at least 175 coming from “preferred resources” such as solar, wind and energy-efficient sources and 25 from energy storage. [175/800 = 22%; and that's about the state mandate.]
Edison’s Southern California Edison in Rosemead was approved for 500 to 700 megawatts, with at least 400 from preferred sources. Environmental groups including the Natural Resources Defense Council and Sierra Club had argued that all additional power should come from renewables and other clean sources, saying the alternative would lead to more emissions-intensive power such as that produced by natural gas-fired plants.
“I wish we could do 100 percent preferred resources,” Michael Peevey, president of the commission, said at the panel’s meeting in San Francisco today. “We just don’t have it in the timeframe necessary to ensure economic well-being, prosperity and keeping the lights on in Southern California.”
The market is flat, slightly negative, and yet a fair number of energy-related stocks, especially utilities are doing very, very well. Nothing like a cold winter, a cold war, and cold reality to help the utilities:
  • cold winter: global warming
  • cold war: Ukraine
  • cold reality: California buying natural-gas produced electricity; renewable energy math doesn't add up 
I finally broke down and added another utility to my portfolio. If Warren Buffett buys the company, I will post the story.

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.

Statoil Reports A Dry Well In The North Sea

Rigzone is reporting:
The Norwegian Petroleum Directorate reported Monday that Statoil has drilled a dry well north of the Fram field in the North Sea. The NPD said that Statoil is in the process of concluding the drilling of the wildcat well (35/11-16S). The well was drilled approximately 3.5 miles north of the Fram field in the northern North Sea, and around 80 miles northwest of Bergen.
It was drilled from production license 248C with the exploration target situated in license 090B. Its objective was to prove petroleum in Upper Jurassic reservoir rocks.
I doubt these wells are inexpensive.

Flood Affects Wells In The Bakken

Flooding affects wells at the confluence of the Missouri River and the Yellowstone.
The Department of Mineral Resources Oil and Gas Division began advising operators on Monday to shut down wells that at risk and move equipment and chemical containers in anticipation of possible flooding.
About 50 wells are in the area that’s being monitored, said spokeswoman Alison Ritter. Twenty-two wells cannot be accessed by road due to water on the roads, and seven wells have water on the well site, Ritter said.
Pretty standard.

North Dakota Oil Production Report "Somewhat Disappointing" -- NDIC/Director

Link here.

That was the politically correct thing to say, but I find it remarkable that oil production increased despite all the headwinds. One has to remember that, according to The Atlantic Monthly, the Bakken boom is over.

Day in, day out, the folks continue to drill at 175 sites (or thereabouts) every day. More and more pipeline is laid. Lessons are learned every day. Time from spud to initial sales continues to decrease. Flaring on non-federal / non-BLM land is only 20 percent. And the weather just keeps getting better. Load restrictions will present a few problems but operators are getting better and better each year preparing for this.

I thought the report was pretty good. But then I'm an inveterate optimist.

I see that Great Lakes Airlines will discontinue operations at Dickinson later this month, further confirming The Atlantic Monthly assertion that the boom is over. The airline will also discontinue operations at Williston this month. In the same story: the board, in a unanimous vote, moved to increase [airport manager] Remynse’s 2014 salary about 25 percent to $69,500 annually. Still

Senator Hoeven will travel to the Ukraine. The purpose of the trip was not mentioned. Senator McCain will lead the delegation.

A Note to the Granddaughters

On another note, I made the second of three payments on the new bicycle I have on layaway. I will make the last payment next month. I am excited to add my first disc-brake bicycle to my "collection." This will be my first KHS bike.

The weather is now perfect for biking in northern Texas.

I don't have the book with me today at Starbucks, but I've started reading Crazy Horse. I picked the book up at Chuck Wilder's Books on Broadway store in Williston a couple of weeks ago. I knew it would be good, but until I started reading it, I had no idea how good it was going to be. It's incredible. When I get back home and can quote from the book, if I remember, I will provide a bit of background to the author and the background to the book.

My first thought after reading a few pages: Chuck Wilder really knows his books. There must be thousands of books that he must choose from each year and to keep coming up with these great books must be no small feat.

I'm also reading Sylvia Nasar's Grand Pursuit: The Story of Economic Genius. Something tells me reviewers will pan this book as being too superficial, but for the beginner who wants to learn about the "science" of economics, this looks like a very, very good place to start. The book begins with Marx and Engels. It's hard to believe that a loser like Marx made such a huge impact. It is obvious that folks mis-read what he wrote.

I completed The Origin of Tepees: The Evolution of Ideas (and Ourselves), by Jonnie Hughes. It's a nice travelogue, from Minneapolis, to Mandan, to the Canadian Rocky Mountains. It can probably be read on one long international flight. If one wants a 30-second soundbite on the "origin" and "migration" of the Plains Indians from 1600 to 1800, I would be hard-pressed to recommend a better source. Humorously, our younger granddaughter is working on a tepee for her hedgehogs; my wife used chopsticks to build a prototype and actually asked our granddaughter if the wanted a three-pole tepee or a four-pole tepee, the thread that actually holds The Origin of Tepees together. Until I read this book, neither my wife nor I were even aware that there was a difference, and one evolved from the other.

For Investors Only

Vail Resorts doubles dividend. Global warming must be helping the ski resorts.

Magnum Hunter provides operational update on its Marcellus and Utica Shale Plays; over the next 30 days, co anticipates production flowing to sales from 8 gross (7 net) wells in the Marcellus and Utica Shale Plays via its majority owned Eureka Hunter Pipeline System: Co announced certain updates on its drilling and completion activities in the Marcellus and Utica Shale Plays. [The fracking/earthquake link in Ohio is a concern.]

Disclaimer: this is not an investment site. Do no make any investment decisions based on anything you read here or think you may have read here. announces plans to open a nearly 1 million-square-foot fulfillment center in Kent, Wash: This will be the company's fourth fulfillment center in the state. Amazon's other Washington fulfillment centers are located in Sumner and Bellevue, and a DuPont site is near completion. 

Kinder Morgan Partners: Kinder Morgan reconfirms its 2014 financial dividend and distribution guidance
for Kinder Morgan (KMI), Kinder Morgan Energy Partners, Kinder Morgan Management (KMR) and El Paso Pipeline Partners ( EPB); KMP expects to generate distributable cash flow per unit nicely in excess of its budget targets.

I Guess This Is Why He Is "The Former" -- He Disagreed With The President

Rigzone is reporting:
President Barack Obama's former national security adviser says he should approve the Keystone XL oil pipeline as a matter of national security.
Retired Gen. James Jones tells the Senate Foreign Relations that approving the pipeline would send a message to Russian President Vladimir Putin and other "international bullies" that they cannot use energy security as a weapon. Jones says rejection of the Canada-to-Texas pipeline would "make Mr. Putin's day and strengthen his hand."
The Senate panel is holding its first hearing on the pipeline five years after it was proposed as Democrats wrestle with its impact on the outcome of next fall's election.
Rich Democratic donors are funding candidates who oppose the project while the party's continued control of the Senate may hinge on re-electing the pipeline's biggest supporters.
It will have zero impact on the election. This is all about keeping people's minds off ObamaCare. 

Lengthy Update On Natural Gas Flaring In North Dakota -- Rigzone

A long article in Rigzone today on natural gas flaring in North Dakota. I skimmed it; doesn't seem to have anything new for regular readers of the blog. Let me know if the article mentions that the "real" problem is all the flaring on federal / BLM-managed land. The state is actually doing quite well.


Ah, for the simple days ... when the only thing I had to worry about was my Vietnam draft lottery number that I would receive in 1969. From 1968:

A World Of Our Own, The Seekers

Sort of puts flaring into perspective.

Random Update On Magnum Hunter's Focus On Shale Oil -- For Investors Only

PennEnergy has a great update on Magnum Hunter:
MHR’s 2013 annual results boasted a doubling in market cap since June. This leap followed a difficult period that began for many US shale-focused companies in the middle of 2012, where MHR’s share price fell from US$6.41 to US$4.18 in 3 months and moved further towards $3.50 until June 2013. 
The MHR shareholders will be hoping this rise in market cap is sustainable, unlike a similar rise between Q3 2011 and Q1 2012 that eventually led to a fall. Whilst the share price continued to trend downwards in this year between June 2012 and June 2013, the company’s daily production actually went in the opposite direction, proving that a rise in production in isolation is not necessarily a good thing for an oil and gas company shareholder.

The rise in share price and market cap in 2013 came after a big sale in the Eagle Ford shale in Texas; MHR sold its holdings in Gonzalo and Lavaca counties for $401 million in April to Penn Virginia (NYSE:PVA). MHR completed its exit from the play in early 2014 with the $24 million sale of its remaining Eagle Ford acreage to New Standard Energy (ASX:NSE). This was in some ways a surprising move as the Eagle Ford has been the most active shale play in terms of companies acquiring new or bolstering existing acreage positions over the last few years; MHR is almost unique (especially for a company of its size) in actually leaving the play to focus its efforts elsewhere, but the rise in share price is proof that the market welcomed the move.

The exit from the Eagle Ford, around $100 million of other sales in the year and further planned non-core divestitures of over $400 million have allowed Magnum Hunter to focus its investment plans on its core plays, the Bakken in North Dakota and the Marcellus and Utica plays in the Appalachian basin.
Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read at this site, or think you may have possibly read at this site.

Loopholes Big Enough To Drive Trucks Through

When I first learned that the US banned oil exports, I noted that the loopholes were big enough to drive trucks through.

PennEnergy is reporting:
BP as agreed to take 80 percent capacity of a new $360 million mini-refinery in Houston that will refine just enough crude oil to avoid the restrictions that are placed on exporting crude oil out of the U.S.
This is happening as pressure mounts from the oil industry on President Barack Obama to end the ban on exports, which is now 41 years old. [Won't happen in this administration; and won't happen in my investing lifetime.]
There has lately been a large influx of crude oil due to new technologies and refineries are finding themselves with a surplus that the U.S. market is not absorbing. Many have begun transforming the product into other things that can be exported, such as propane gas.
"It's a relatively inexpensive way around the export prohibition," said Judith Dwarkin, chief energy economist for ITG Investment Research Inc. "You can lightly ruffle the hydrocarbons and they are considered processed and then they aren't subject to the ban."
According to Bloomberg, the shale-oil boom in the U.S. is raising production of crude oil to levels that haven't been seen since 26 years ago. U.S. imports have been cut, affecting prices in the Middle East market.

On The Keystone, The US Dithers; Meanwhile, South Korea Will Spend Almost $2 Billion To Build World's Fourth Largest Oil Hub

PennEnergy is reporting:
South Korea plans to construct the world's fourth largest oil hub as it aims to become a major oil trading post with a total capacity of 56.6 million barrels, South Korea's largest news outlet Yonhap News Agency reported. South Korea began expanding its number of oil storage facilities by opening a location in Yeosu in 2013 with the capacity to hold up to 8.2 million barrels of oil. 
Hmmmm....with all the stories on wind and solar one would have thought South Korea would be moving toward renewables by now.

Friday, March 14, 2014

Question of the day: why is there a switch to turn off transponders in commercial aircraft? I update thoughts on the Malaysia airline story at this bottom of this post. [Later: a reader wrote to answer that "rhetorical" question -- why is there a switch to turn off transponders in commercial aircraft? The writer's answer: "As a private pilot, I can answer your rhetorical question about why there is a switch on transponders. Occasionally they fail; and when they do, they can send confusing information to controllers. In my modest 1500 hours flying time, I have been requested to turn off my transponder twice."]

Active rigs:

Active Rigs190187203174104

RBN Energy: drought boosting gas power burn in California? Natural gas accounts for 71% of California's summer electricity demand; hydro, 15%. Wind? Solar? 2.3 and 1.9% after decades of pouring money into the sectors.
Despite some recent rain and snow, California continues to experience a historic drought that will further reduce the state’s hydroelectric output and again increase demand for natural gas for power generation. But the drought is only part of the story. California needs to replace the megawatts once provided by the now-shuttered San Onofre nuclear station, and specifically needs flexible gas-fired capacity to back up the intermittent production from the state’s new solar facilities and wind farms. The resulting gas shortages have led to generators being exposed to massive swings in gas prices this winter and facing higher prices this summer. Today we examine the growing connection between gas use and rain, snow, sun and wind in the Golden State.
Hydropower is big on the West Coast. In Part 1 of our series, Who Stopped the Rain?, we saw how natural gas plays second fiddle to hydro in the Pacific Northwest, especially in Oregon and Washington State, where a series of federally owned dams along the Columbia and Snake rivers generate more than half of the states’ annual electricity needs. That episode also discussed how, in relatively dry years the use of gas-fired power plants increases to fill the gap left by water-starved hydro plants.  In Part 2, we looked at other forces driving increased gas use in the Pacific Northwest, including the development of new gas-fired power plants to replace coal units being taken offline and to keep pace with load growth. We also explored the new pipeline infrastructure being developed to move more gas from western Canada and the US Rockies to the increasingly gas-dependent region. Now we take a look at California.
Meantime, Southern California’s gas-delivery infrastructure has been showing signs of strain this winter. Due to unusually cold weather (cold for Los Angeles, that is) and resulting shortfalls in gas supplies in early December, SoCalGas twice asked its customers to reduce their gas use. And on February 6, the California Independent System Operator (CAISO), which oversees the state’s electric grid, issued a rare, statewide “Flex Alert”—this time urging electricity conservation due to “a shortage of natural gas triggered by extreme cold weather in much of the United States and Canada.” CAISO said the shortage was “impacting fuel supplies to southern California power plants and reducing electricity generation” in the gas-dependent region. According to reports filed by generators with the FERC in early March requesting waivers to recover their costs (see FERC Docket ER14-1428), California generators have been exposed to massive swings in gas prices and to the need to procure gas on short notice, without any assurance that they will be paid by CAISO for their actual costs of production.
These shortages of gas for power generation in the winter months when California demand is normally lower do not portend well for the coming summer season. With the drought reducing hydro output and demand for gas up to help fill the SONGS gap California gas supplies are expected to remain tight. Forward prices for the summer strip (average of April through October) at Pacific Gas & Electric City Gates have traded at more than $0.50 /MMBtu above the CME NYMEX Henry Hub, LA benchmark this month (March), double the basis seen a year ago in 2013.
In sum, the interplay between hydro and gas in California is a long-running phenomenon that is becoming more complex due to the continuing drought, the new gas-fired generation that has been coming online, and gas’s increasing role as a “balancer” to offset the variable output of solar and wind projects. Add to that the need to beef up some elements of southern California’s gas pipeline infrastructure and the sheer size of California’s gas market and you get a situation worth following. We’ll do that as those pipeline plans unfold.
The Wall Street Journal

Radar suggests plane's change in direction was "deliberate."

Obama's support for Ukraine: military rations, only. No guns, no ammunition. Oh, yes, he will tell John Kerry to bore the Russians to tears with more speeches. Putin is not concerned about economic sanctions.

So, in North Dakota, ThinkProgress is concerned about rogue radioactive waste contractors, but the facts are the federal government has been much more slow to respond to much bigger problems.

Retail sales rebound after tough winter caused by global warming.

It looks like the Obama administration will once again extend deadline for ObamaCare. My hunch is that "open season" in health care insurance will soon end. People will not wait until they have a medical condition before they sign up.

Target, the retail store, was warned about the breach before data was stolen; failed to act. Target is still my favorite big box store, but I haven't used a credit card in the store since the breach, and I seldom visit any more. I've saved a lot of money. [Yahoo!Finance reminds us how incredibly badly the retail giant reacted to the warning, and how incredibly badly it "took care of its loyal customers."]

VW's bid to grow in US is hurt by UAW fight in Tennessee. It appears the union has not given up. the union wants the vote thrown out by the NLRB. Meanwhile, Porsche's 2013 profit nearly matched VW's. What recession? The gap between the haves and the have-nots continues to widen.

GE to offer credit card.

The Los Angeles Times

At leas the LA Times is willing to print the headline: experts lean toward foul play in the missing Malaysian airplane.

Thank goodness! Kerry and Russians launch new talks on Ukraine.

Duke porn star. Interesting story. I agree with Camille Paglia on this one.