Thursday, April 17, 2014

Third CBR Terminal Proposed For Washington State Coast

The Billings Gazette is reporting:
U.S. Development Group is seeking permits to build an oil terminal on the Washington coast that could handle about 45,000 barrels of crude oil a day.
The $80 million proposal at the Port of Grays Harbor is one of several in Washington that together would bring millions of barrels of oil by train from the Bakken region of North Dakota and Montana.
The increase in oil shipments by rail have raised concerns about public safety, the potential for oil spills and the ability of local communities to respond to accidents.
About 17 million barrels of oil were shipped across Washington state last year - mostly to refineries in Anacortes and Cherry Point near Bellingham. That number is expected to triple this year, according to U.S. Sen. Patty Murray, D-Wash., who chaired a congressional hearing Wednesday on oil shipments by train.
Anyone taking any bets? 

Feature Article On Harold Hamm -- Forbes

Link here to the article.

The article begins:
Two Scotches in, with seats on the floor of Oklahoma City’s Chesapeake Energy Arena, Harold Hamm is feeling good.
And why not? His hometown Thunder is spending the evening whupping the Philadelphia 76ers. Earlier Hamm announced big bonuses for Continental Resources employees, courtesy of record oil production.
And a judge’s ruling, revealed that morning, in Hamm’s divorce case suggested the energy tycoon would keep the Continental shares he already owned when he married soon-to-be-ex Sue Ann Hamm 26 years ago. With that chunk of stock, encompassing about $16 billion out of his $16.9 billion fortune, Hamm owns 70% of Continental.
It's been awhile since we've seen a feature on Harold Hamm. A big "thank you" to Steve for sending me the link.

CO2 Emissions In US Are Lowest In 20 Years Due to Fracking -- Slate.Com is reporting:
Weather conditions around the world this summer have provided ample fodder for the global warming debate. Droughts and heat waves are a harbinger of our future, carbon cuts are needed now more than ever, and yet meaningful policies have not been enacted.
But, beyond this well-trodden battlefield, something amazing has happened: Carbon-dioxide emissions in the United States have dropped to their lowest level in 20 years. Estimating on the basis of data from the US Energy Information Agency from the first five months of 2012, this year’s expected CO2 emissions have declined by more than 800 million tons, or 14 percent from their peak in 2007.
The cause is an unprecedented switch to natural gas, which emits 45 percent less carbon per energy unit. The U.S. used to generate about half its electricity from coal, and roughly 20 percent from gas. Over the past five years, those numbers have changed, first slowly and now dramatically: In April of this year, coal’s share in power generation plummeted to just 32 percent, on par with gas.
America’s rapid switch to natural gas is the result of three decades of technological innovation, particularly the development of hydraulic fracturing, or “fracking,” which has opened up large new resources of previously inaccessible shale gas. Despite some legitimate concerns about safety, it is hard to overstate the overwhelming benefits.
For starters, fracking has caused gas prices to drop dramatically. Adjusted for inflation, natural gas has not been this cheap for the past 35 years, with the price this year three to five times lower than it was in the mid-2000s. And, while a flagging economy may explain a small portion of the drop in U.S. carbon emissions, the EIA emphasizes that the major explanation is natural gas.
The reduction is even more impressive when one considers that 57 million additional energy consumers were added to the U.S. population over the past two decades. Indeed, U.S. carbon emissions have dropped about 20 percent per capita, and are now at their lowest level since Dwight D. Eisenhower left the White House in 1961.
 Meanwhile, the UN and President Obama want US taxpayers to do more and continue to give China and India a "free ride."

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA; Whiting Reports Several Good Wells; KOG With A High IP Well

Active rigs:

Active Rigs188185206175108

Thirteen (13) new permits --
  • Operators: Hess (6) Samson Resources (4), XTO (3)
  • Fields: South Tobacco Garden (McKenzie), Westberg (McKenzie), Antelope (McKenzie), Ambrose (Divide)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Along with all the other Samson Oil & Gas news today, it was also announced that Samson Oil & Gas canceled the following well:
  • 26919, conf, Samson Oil & Gas, Rainbow 5-20-17HBK, Rainbow, 
Six (6) producing wells completed:
  • 26029, 2,492, KOG, P Earl Rennerfeldt 154-99-1-3-10-16H, Stockyard Creek, t3/14; cum --
  • 27617, 1,466, Whiting, Leo 13-29TFH, Sanish, t4/14; cum -- 
  • 24081, 1,751, Whiting, Kaldahl 11-3H, Ray, t4/14; cum --
  • 25163, 670, Whiting, Arndt Federal 34-35H, Sanish, t4/14; cum --
  • 26195, 1,156, Whiting, Sheldon 11-6TFH, Dollar Joe, t3/14; cum --
  • 26194, 1,283, Whiting, Olson 14-31TFH, Dollar Joe, t3/14; cum -- 
The next daily activity report will be Monday, April 21, 2014. NDIC offices are closed Friday, April 18, 2014, Good Friday. 

Propane Off-Loading Facility Near Hannaford, North Dakota, For North Dakota Farmers


September 19, 2014: sounds like the new propane terminal is operational?
Original Post

Earlier I posted this story on propane shipments from North Dakota.

Today The Dickinson Press provides the local angle for bringing propane to the North Dakota farmers: 
CHS Inc.’s new rail-fed propane terminal west of Hannaford in east-central North Dakota is coming together — an important step as the industry ramps up to fill a void left by the discontinuation of a key pipeline terminal.
CHS is one of the region’s bigger players in the propane business, delivering propane that dozens of cooperative suppliers then deliver to their retail customers.
The new facility will be the biggest propane unloading facility in North Dakota and the largest tank farm in the region. It will operate around the clock.
The propane company uses a loop track to access a new spur that can handle up to 48 cars. The new CHS terminal is operated and maintained by Central Plains Ag, itself a 50-50 partnership between CHS and West Central Ag of Ulen, Minn.The new propane facility will start functioning with three 90,000-gallon tanks — a total of 270,000 gallons initially.
Initially, the tank farm was planned for only five tanks, but in December, the plan expanded to a dozen. Phase two expansion, set for this summer, will be fully in place for fall harvest and heating in 2014.
The facility will be able to handle groups of six cars at a time, once the plant is fully operational. The terminal can load up to six trucks an hour, using two bays — theoretically more than 100 trucks per day.
The propane terminal makes the complex unique in the region.
The “loop” handles 110-car trains and was built to accommodate the Central Plains Ag Services dry fertilizer facility, on its west side. The fertilizer plant was built in 2009 at 25,000 tons and has since expanded to 40,000 tons. In 2012, Central Plains built an elevator on the east side of the circle — 1.3 million bushels in concrete storage, another 1.5-million-bushel bunker and then 1.3-million-bushel steel tanks.
Much, more more at the linked article. 

War On Coal; The Cost Of Clean Coal

From the Economist we get the cost of "clean coal" in the US:
A $5.2 billion taxpayer-supported clean-coal plant in Mississippi incorporates all the latest technology. But at $6,800 per kilowatt, it will be the costliest power plant yet built (a gas-fired power station in America costs $1,000 per kW). At those prices, coal is going to stay dirty.
For the archives.

The article does not mention the myriad problems associated with slicers and dicers or desert fryers.  

Midday Trading -- Trading At New Highs: Berkshire Hathaway, Continental Resources, And Whiting; Samson Oil & Gas Plummets

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.

Oil trades solidly above $104 near end of trading day.

Trading at new highs today: AXAS, BHI, BRK.B (wow), CLR, ECA, ERF, HAL, HP, NFX, SLB, SRE, WLL.


On the other hand, SSN falls as much as 20%:
Samson Oil & Gas announces equity placement : Co announces it has placed 65 mln ordinary shares to investors in Australia and 11,255,541 ADSs (representing 225,110,820 ordinary shares) to investors based in the United States to raise gross proceeds of A$5,802,217.
  • The placement was completed at $0.02 per ordinary share (~$0.375 per ADS), and includes options, or warrants, to purchase an additional 3 shares for each 10 shares subscribed for, at an exercise price of A$0.033 (~$0.61 per ADS). The options/warrants will expire on 30 April 2018.
I could be reading it incorrectly, but it seems the company has 127 million shares outstanding; 225 million more shares seems a fair amount of dilution.

Market cap;
  • At 127 million shares at 46 cents/share = $58 million.
  • After today's announcement, 127 million shares at 38 cents/share = $48 million.
I don't know the total assets of Samson Oil & Gas. My last data point suggests Samson Oil & Gas has about 3,000 acres in Stockyard Creek. $48 million/3,000 acres = $16,000/acre. Of course, I don't know what other assets Samson Oil & Gas might have.  

Ten Fun Fracking Facts From Motley Fool

The link is here.

Remember the Red Queen / decline debate with regard to shale? Look at fun fact #3:
It’s important to note that most of this surge in production has been driven by advances in technology like horizontal drilling and hydraulic fracturing. In a recent conference call, Pioneer Natural Resources (NYSE: PXD) Chief Executive Scott Sheffield pointed out that a single well in the Texas Permian Basin produced 140,000 barrels of oil equivalent within its first six months of operation. By comparison, a typical vertical well would take 30 to 40 years to accomplish the same feat.
For newbies: the payback for a drilled well can come in six months with a Bakken well. 

President Obama has never mentioned fun fact #4 or #5, nor has he ever visited a 14-well oil pad:
According to a report by the IHS CERA, shale drilling created 1.7 million direct and indirect jobs between 2008 and 2012. The study estimates that unconventional energy production has also boosted America’s average annual household income by $1,200.
Lower natural gas prices brought about by shale drilling has also sparked a revival in domestic manufacturing. If energy costs remain low, the Boston Consulting Group estimates that 5 million manufacturing jobs could be added by 2020.
And, of course, the activist environmentalists and warmists will never mention fun fact #10:
No doubt shale energy poses numerous risks to the environment. However, there is one problem it’s helping to solve: global warming. According to the Department of Energy, U.S. CO2 emissions per capita have fallen 15% over the past decade and are at the same level as they were in 1963. Much of this decrease can be credited to the transition to natural gas in electric power generation.
For them, the discussion is closed. All technology is bad. People working is bad. Life is bad.

They shot us down.

Bang, Bang, Nancy Sinatra

Welders In Short Supply; Could Impact Shale Boom

On April 1, 2014, I suggested welders and electricians might be the choke point with regard to the shale boom.

Don sends me a link to Investor Village which suggests just that: the shortage of welders could imperil the shale boom.
How high is demand for welders to work in the shale boom on the U.S. Gulf Coast? So high that “you can take every citizen in the region of Lake Charles between the ages of 5 and 85 and teach them all how to weld and you’re not going to have enough welders,” said Peter Huntsman, chief executive officer of chemical maker Huntsman Corp.
So high that San Jacinto College in Pasadena, Texas, offers a four-hour welding class in the middle of the night. So high that local employers say they’re worried there won’t be adequate supply of workers of all kinds. Just for construction, Gulf Coast oil, gas and chemical companies will have to find 36,000 new qualified workers by 2016, according to Industrial Info Resources Inc. in Sugar Land, Texas.
Regional estimates call for even more new hires once those projects are built. The processing and refining industries need so many workers to build new facilities in Texas andLouisiana because of the unprecedented rise over the last three years in U.S. oil and gas production, much of it due to shale. Labor shortages, causing delays in construction, threaten to slow the boom and push back the date when the country can meet its own energy needs, estimated by BP to be in 2035.
Thank goodness we don't have all those welders working on the Keystone XL. Can you imagine the shortage that would cause? 

A Little More Background On The Three Big Wells Whiting Reported Today

See disclaimer at the bottom.

A little bit more background on the three big wells Whiting reported today. These are wells coming off the confidential list today:
  • 25789, 2,495, Whiting, Lucky Lady 44-35H, Timber Creek, t10/13; cum 44K 2/14;
  • 25790, 2,013, Whiting, Evelyn Moen 4-34H, Arnegard, t10/13; cum 43K 2/14;
  • 25791, 2,172, Whiting, Roy Moen 44-34-2H, Arnegard, t10/13; cum 50K 2/14;
Lucky Lady:
  • 26 stages; 3 million lbs proppant, 2/3rds sand; 1/3rd VersaProp; two miles down with an 8-foot target window in the lower middle Bakken, MB B and upper MB C facies; reached a total vertical depth in 10 days. Gas readings through the lateral ranged from 28 to1,779 gas units. 
Planned depths:
  • Lodgepole: 7,995
  • False Bakken: 8,756
  • Scallion: 8,760
  • Upper Bakken: 8,770
  • Middle Bakken: 8,783
  • Middle Bakken target: 8,798
Roy Moen:
  • 30 stages
  • 3 million lbs; 2/3rds sand; 1/3rd VersaProp
  • two miles down targeting the 8-foot target window, in the lower MB A, MB B and upper MB C facies. Reached total vertical depth in 26 days. The curve came in about 0' to 1' low from the prognosis and the offset Lucky Lady well.
  • The background gas throughout the entire lateral varied from 209 to 10,000 units possibly. The lateral was drilled in 15 days, with 5 bits, and 5 bottom hole assemblies. It was called 66 feet early due to dropping well bore. The final well bore is located 11.48 feet below the target window, in the middle Bakken, at 21,801' MD, and a projected TVD of 11,185.48.
Evelyn Moen:
  • 30 stages
  • 3.1 million lbs proppant; 2/3rds sand; 1/3rd VersaProp
  • Targeting the 8-foot window in the lower MB A, MB B and upper MB C facies. Reached TVD 9 days from spud. All formation tops below the Lodgepole came in approximately 1- 2 feet low from the prognosis and the offset Lucky Lady well. Gas reading through the lateral ranged from 22 - 4,470 total gas units.
Disclaimer: this is for my use only. It was done in haste. There may be typographical errors. It was taken from the Whiting files from the NDIC website. If something appears wrong, it probably is. Confirm at the source. Please enjoy reading the above at your leisure but realize it was posted by an individual who has no formal training in the oil and gas industry and understands very little of the reports from which this information is taken. 

On another note, I find it incredible, these guys drill down two miles to hit an 8-foot target, and then drill two more miles laterally.  

Nineteen (19) Inches Of Snow Overnight North Of Minneapolis; Jobless Report: First Time Claims Rise A Whole Lot Less Than Expected

Initial claims for U.S. state unemployment benefits rose less than expected in the April 12 week, increasing by 2,000 to 304,000, the Labor Department reported Thursday.

The forecast for this week's report was for a claims level of 315,000, which would have been an increase of 15,000 from the previously reported 300,000 level. Last week's figure was revised up to 302,000.

The Labor Department said there were no special factors in this week's report.

But get this:
The initial claims seasonally adjusted 4-week moving average fell 4,750 to 312,000 in the April 12 week, which is the lowest since the October 6, 2007 week when the 4-week moving average was 302,000.
A lot of folks returning to work, increasing gasoline demand.

The Senate wants to reinstate uninsured benefits for long-term unemployed. Whatever.

Global Warming Climate Change Extreme Weather Ice Age Now

AllVoices is reporting:
Minnesotans to the north and west of the Twin Cities are waking up Thursday to snowfall totals in the high double digits. The 19 inches that fell in Isanti, a small community 40 miles north of the metro, appears to be the largest. 

An Incredible Day All Around: Stock Market; Price Of Oil; Ice Age

On April 9, 2014, I posted a long note regarding the dual mandate of the Federal Reserve. It was either in that note, or a follow-up note that suggested the Fed was much more concerned about one of the mandates more than the other, but it was mostly concerned about a strong stock market. I doubt there is one Senator or congressman that checks the unemployment numbers each day, but I doubt it is a rare Senator or congressman who doesn't check the stock market at least several times a day.

Donors need to feel rich if they are going to donate to their political parties. I doubt John Kerry checks the unemployment numbers even once a week, but my hunch is that Ms Kerry checks the stock market several times throughout the day.

It was interesting to hear that in Ms Yellen's first speech she said that the Fed must continue to support the stock market.

And then the market surges 160 points.

Back on April 9, by the way, Dennis Gartman told retail investors to get out of stocks! Now! Over at Yahoo!Finance the last two days the headline has been about "the coming crash." Today, the headline: now that the rally has begun, how should you invest? Truly incredible, huh? [This was originally supposed to be posted on April 16, 2014, but I didn't get a chance to finish it; will post as is.]

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.

Ice Age? An Inconvenient Truth -- The Great Lakes Ice Cover

From IceAgeNow
“Ice cover over the Great Lakes as of April 15 is the most widespread on record for mid-April, covering over 39 percent of the Great Lakes,” says
That far exceeds previous years. In fact, only three other years came even remotely close. Even then, ice coverage reached only slightly more than half of this year’s total coverage.
I even hate to bring that up; the warmists tell us the discussion on global warming (discussion closed 2012) climate change (discussion closed 2013) extreme weather (2014) is over. 

UNP Profit Surges 14% -- One Can Only Imagine What BNSF Did In 2014

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.

The AP is reporting:
The harsh winter didn't keep Union Pacific railroad from delivering 14 percent higher quarterly profit as it hauled more agricultural, industrial and coal shipments.
The Omaha, Neb., based railroad said Thursday that it generated $1.09 billion net income, or $2.38 per share, in the first quarter.
That's up from $957 million, or $2.03 per share, a year ago. Union Pacific's revenue grew 7 percent to $5.64 billion. Analysts surveyed by FactSet expected Union Pacific to report earnings per share of $2.37 on $5.7 billion revenue.
Union Pacific appeared to handle the weather challenges better than eastern railroad CSX, which reported a 14 percent drop in quarterly profit earlier this week.

The Jobless Claims Numbers


Initial claims for U.S. state unemployment benefits rose less than expected in the April 12 week, increasing by 2,000 to 304,000, the Labor Department reported Thursday.

The forecast for this week's report was for a claims level of 315,000, which would have been an increase of 15,000 from the previously reported 300,000 level. Last week's figure was revised up to 302,000.

The Labor Department said there were no special factors in this week's report.

Original Post
MarketWatch is reporting:
The number of Americans filing for first-time unemployment benefits will likely posted a slight gain in the latest weekly data, but remain near the slowest pace in almost seven years, according to economists polled by MarketWatch.
The consensus of economists forecasts that weekly initial claims for regular state unemployment-insurance benefits will rise to 315,000 in the week that ended April 12. That tally would be just a bit above 300,000 for the prior week, which was the lowest result since May 2007, government data show.

Remember Those Reports That Libyan Oil Was Coming Back On-Line .... Never Mind....

Reuters over at Rigzone is reporting:
Libya's oil minister said on Wednesday there was no clear timetable for the resumption of steady oil output as an end to the stand-off with rebels could still falter and the 9-month port shutdown may have damaged some facilities.
A tanker started loading crude at Libya's eastern port of Hariga for the first time since July on Wednesday - the first positive signal of an end to the four-port blockade by an eastern federalist group led by Ibrahim al-Jathran.
But Tripoli still faces many hurdles to get the bulk of its oil back online. Negotiations to free the country's largest oil terminals are still on-going and a second port that was due to re-open after the agreement last week is still under Jathran's control.
Saudi Arabia will take up the slack. LOL. 

The Market In Ten Letters: I.N.C.R.E.D.I.B.L.E

Thank you Ms Yellen for keeping rates low.

Thank you Mr Obama for dithering on the Keystone XL.

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. 

Oh, ObamaCare? It's baked in, and it's going to lower expenses for Corporate America as CEOs shift their health care costs from the front office to the front line. 

What's not to like. I'm particularly impressed with BHI today. Again, this is not an investment site. I've gotten a kick out of BHI ever since they built their huge complex west of Williston, the center of the Bakken.

For the record, Yahoo!Finance headline today: why the NASDAQ could be setting up for a big decline. Two words: buying opportunity. 

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.

Water And Fracking -- North Dakota Not Even Mentioned In This Three-Page On-Line Article

From the very beginning, the MDW has said there is no shortage of water in North Dakota for fracking. The math verifies it. If I get a chance, I will post the links. Regardless, in an extensive, three-page story on fracking and water posted by Rigzone, see if North Dakota is even mentioned. Nope.

For the complete story, go to the linked article.

Rigzone is reporting:
One of the criticisms levied against hydraulic fracturing, particularly during recent periods of drought, is the amount of water used in the process.
However, energy companies are seeking to reduce water use during hydraulic fracturing, even as research shows more water is used in other activities. The numbers put things into perspective. The amount of water used to frack a well varies, but most reporting entities put the figure in a range of about 3 to 6 million gallons of water.
In Pennsylvania, the average amount of water per well is about 4.4 million gallons, according to State Impact Pennsylvania, a reporting project of National Public Radio (NPR). Using a range of 3-5 million gallons of water per well in the Marcellus Shale, the State College Borough Water Authority calculated that about 12-20 million gallons of water were used in the formation each day.
In Texas, the estimated average is similar; about 4.5 million gallons of water is used to fracture a well in the Eagle Ford Shale formation, according to the San Antonio Express News. Over an 18-month period, 19.2 billion gallons of water were used in the Eagle Ford formation, according to Ceres, a non-profit organization advocating sustainability. All that comes out to between 70 billion and 140 billion gallons of water that are used to frack 35,000 wells a year, according to a 2011 report by the Environmental Protection Agency (EPA).
While that is not an insignificant amount of water, it is actually quite modest when compared with other common uses of water. Far more water is used for municipalities, manufacturing and agriculture, according to FracFocus. The total estimated water consumption for all shale wells completed in 2011 was .3 percent of total U.S. freshwater consumption, according to Jesse Jenkins, a Massachusetts Institute of Technology researcher for The Energy Collective, in a report. That was well under the water usage at golf courses, which accounts for .5 percent of all the freshwater consumption in the country, according to the Professional Golf Association. In Texas, where fracking has been the most prevalent, the amount of water used by the oil and gas industry is still less than 1 percent of the state’s overall water use, according to the Texas State Water Board.
Another way for Texas homeowners to look at the water issue is to consider that in a given year, watering Texas lawns uses 18 times the amount of water that was used in fracking in the state in 2011, Rusty Todd, University of Texas professor, told the Wall Street Journal. And watering golf courses and lawns uses far less water than agriculture, which uses 243 times more water than fracking does, Jenkins noted.
To see the full story, go to the linked article.

Fracking Sand Spurs Grain-Like Silos For Rail Transport; What A Great Time To Be A Recent Harvard MBA Graduate; Big Story On Emerge, Based In Southlake, Texas

Bloomberg is reporting (go to the link to see entire article; only parts of it are seen below):
The U.S. shale oil boom is putting millions of tons of sand onto North American railroads, enabling carriers to pack trains full instead of hauling just a handful of cars at a time.
With help from Union Pacific Corp. (UNP) and Warren Buffett’s BNSF Railway Co., the sleepy silica sand industry that once mostly supplied glassmakers now ships more than 20 million tons of the material a year. Buyers including Halliburton Co. and Schlumberger Ltd. use the sand in hydraulic fracturing at oil fields in Texas and North Dakota.
Miners such as Emerge Energy Services LP, U.S. Silica Holdings Inc. and Hi-Crush Partners LP are taking a page from the grain industry’s playbook to deliver sand faster and cheaper. They’re building facilities at their mines to load unit trains, which move just one type of cargo, and near oil fields to empty them.
“The customers more and more are saying ‘We don’t want the headache of logistics. That’s on you,’” Rick Shearer, chief executive officer of Southlake, Texas-based Emerge, said in an April 14 phone interview. “We’ve scrambled to put in a network of storage and trans-load sites all over North America.”
100 cars:
For decades, sand-mining companies catered mostly to glassmakers that sent a few rail cars, said Shearer, whose company was created in 2012 by combining Superior Silica Sands with two energy-service firms.
Now, with fracking helping drive oil output, Emerge fills trains pulling 100 cars on newly laid track from shiny metal silos.
Unit trains will move about 25 percent of sand sent to oil and gas users this year, a fivefold surge from 2013, and the share could rise to 50 percent in the future, according to U.S. Silica. Union Pacific and BNSF, the two major carriers in the western U.S., are poised to benefit from shale-oil production in the region and sand mines in Wisconsin, Illinois and Minnesota.

Union Pacific, the largest publicly traded U.S. railroad, and U.S. Silica together are constructing a $12 million storage facility for the sand in Odessa, Texas, that will handle two unit trains at a time.
BNSF built an off-loading operation near San Antonio with U.S. Silica that reached capacity of 15,000 tons sooner than expected and will be expanded, U.S. Silica CEO Bryan Shinn said in an April 11 phone interview.
Unit trains help railroads because the cargo is hauled quicker and doesn’t have to be switched at crowded yards. 
Trains loaded only with sand can reach their destination and return in four days instead of two or three weeks. The cost savings is as much as 20 percent, Emerge’s Shearer said.
The payoff for the mining companies is a higher price, Shinn said. A ton of sand that sells for $50 at the mine gate can fetch $130 near the drilling area, he said. The sand moves in covered hoppers also used for cement. They’re shorter than grain cars because the product is heavier, Shinn said.
The Sand
Drillers covet the hard, round sand grains that are produced in the U.S. Midwest. The sand comes in several varieties and sizes depending on the shale fractures’ width, making the shipping logistics even more complicated than grain.
Unlike crude-by-rail shipments that face pipeline competition, frac sand is railroads’ domain. The amount hauled is growing faster than drilling activity as oil producers find they can improve yields by packing in more sand per well.
The railroads
BNSF’s shipments of sand, with the large majority of it for fracking, rose 15 percent to 140,000 carloads, said Mike Trevino, a spokesman for the Fort Worth, Texas-based railroad.
Shale-related freight is helping pump up results at both carriers. Union Pacific’s 2013 net income rose 11 percent to $4.39 billion on a 5 percent gain in revenue to $21.96 billion. BNSF’s net income climbed 12 percent to $3.79 billion on a 5.7 percent gain in revenue to $22 billion.
The railroads will also benefit from having a few large mining companies that ship most of the sand. The drive toward unit trains and the investment it requires puts smaller miners at a disadvantage ...
Emerge is building toward 20 unit trains of sand a month from none two years ago, Shearer said. The company is adding two new mines that together will have annual capacity of 5 million tons and give it access to Canadian National Railway Co. (CNR) and Canadian Pacific Railway Ltd.  
 The company’s existing mines are served by Union Pacific and BNSF, he said.
“We will be on four Class I railroads when we finish these plants,” Shearer said. “That was a key focus for us to add this logistics flexibility.”
U.S. Silica is now selling 70 percent of frac sand from its storage facilities near drilling areas, up from 5 percent two years earlier, U.S. Silica’s Shinn said.

For Investors Only; BHI Surging Pre-Market

BHI surging pre-market. Earnings rise 23%. Beats by 6 cents.

WSJ report.


TPLM Yearly Earnings, Operational Update -- 2014

Snapshot of Bakken operators here.  

I track TPLM here

For newbies: this is an incredible press release -- whether you are an investor, a mineral rights owner, or simply interested in the Bakken, this press release has a lot of information that is pertinent to the entire Bakken and all operators. 

Highly recommended reading. Note this just as one example from the press release:
  • Successful downspacing efforts continue with multiple DSUs containing middle Bakken wells spaced approximately 600' apart, further supporting future development of core acreage using up to eight middle Bakken wells per DSU; initial well results from currently producing infill wells indicate an approximate 15% increase in production
Triangle Petroleum misses by $0.02, reports revs in-line : Reports Q4 (Jan) earnings of $0.11 per share, $0.02 worse than the Capital IQ Consensus Estimate of $0.13; revenues rose 257.7% year/year to $85.5 mln vs the $85.64 mln consensus.
  • Increased volumes in fiscal year 2014 to 1,929 Mboe (+295% y/y, 5,286 Boepd) as compared to 488 Mboe (1,334 Boepd) in fiscal year 2013 
  • Increased total estimated net proved reserves to 40,314 Mboe at fiscal year-end 2014, a 175% increase over fiscal year-end 2013 total estimated net proved reserves, with an associated increase in SEC PV-10 to ~$678 million (+201% y/y)
Press release: 4Q14 and full year financial results and operational update.

For Investors Only; Earnings Wrap-Up: Baxter, BHI, SLB, UNP; KSU; Others

On tap today:
  • Baxter, forecast, $1.09; before market opens. Actual: "Baxter reports strong first quarter financial results exceeding expectations and confirms 2014 full-year guidance."
  • BHI, forecast, 78 cents; before market opens. Actual: beats; surges;
  • GE, forecast, 32 cents; before market opens. Actual: net falls, but industrial profits rise. Stock up.
  • Schlumberger, forecast, $1.20; before market opens. Actual: beats by 1 cent; profit from continuing ops jumps 33 percent; profit jumps on Middle East, Asia growth;
  • Union Pacific, forecast, $2.37, before market opens. Actual: beats by 1 cent; profit surges 14%.
From yesterday:
GOOG: after market close; expectations, $6.39; actual: misses by 15 cents; drops almost 3%

Kansas City Southern: after market close; expectations, 99 cents; beats by 6 cents; nice response

Kinder Morgan (KMI): after market close; expectations, 33 cents; profit falls 1.7%; records double-digit sales growth; up about 1.25%; raises quarterly dividend 11%

Yahoo!Financial shows TPLM reporting today:
Triangle Petroleum misses by $0.02, reports revs in-line (TPLM) : Reports Q4 (Jan) earnings of $0.11 per share, $0.02 worse than the Capital IQ Consensus Estimate of $0.13; revenues rose 257.7% year/year to $85.5 mln vs the $85.64 mln consensus.
  • Increased volumes in fiscal year 2014 to 1,929 Mboe (+295% y/y, 5,286 Boepd) as compared to 488 Mboe (1,334 Boepd) in fiscal year 2013 
  • Increased total estimated net proved reserves to 40,314 Mboe at fiscal year-end 2014, a 175% increase over fiscal year-end 2013 total estimated net proved reserves, with an associated increase in SEC PV-10 to ~$678 million (+201% y/y)
Noble Corp beats by $0.28, beats on revs (NE) 30.37 -0.43 : Reports Q1 (Mar) earnings of $0.99 per share, $0.28 better than the Capital IQ Consensus Estimate of $0.71; revenues rose 24.2% year/year to $1.21 bln vs the $1.19 bln consensus. 
Morgan Stanley reported a 55 percent jump in first-quarter earnings as higher revenue from the bank's institutional securities business augmented another strong quarter from wealth management.
Tomorrow: nothing of interest.

Butane Exports Triple Year-Over-Year; "Church Reports Couple Kissing In Car" -- A Top Story In The Dickinson Press

Making money on Yellen's remarks: yesterday it was reported that the Fed chairman will keep rates low. Denbury is making money on that. If I understand the press release correctly, Denbury has about $1 billion in notes (loans) that it pays 8.25% to those who hold them. Denbury plans to offer new notes at 5.5% which will pa off the higher-interest notes. It looks like investor interest was so high, Denbury had to increase the size of the offering. on $1 billion, the company would save $27.5 million/year. To put $30 million in perspective, the company has less than $15 million in cash on hand (Yahoo!Finance).

Active rigs:

Active Rigs184185206175108

RBN Energy: normal butane exports have tripled, year-over-year. See also the post from yesterday.
Propane has received a lot of airtime in recent months given the Polar Vortex and heavy crop drying demand anomalies coinciding with growing propane export volumes.  Now it’s time to show normal butane a little love as normal butane exports almost tripled from this time last year.  In January 2013, 22 Mb/d of butane was exported; that number was 63 Mb/d in January 2014, as reported by the EIA.  All indications are that butane export volumes will be experiencing an astronomical growth rate over the next five years, reaching 300 Mb/d by 2019.  What are the factors driving this rate of growth, and what are the implications for refiners and petrochemical companies?  In today’s blog, we assess the rapid growth in normal butane exports.
For more on the propane demand anomalies that occurred over the past six months see A Perfect Storm – Polar Vortex Turns Propane and other NGL Markets Upside Down.  We also covered more detail on growing propane exports in Sail Away – Propane Exports Exceed 400 Mb/d for the First Time. Growing volumes of NGLs, as a result of the shale gas revolution is also not a new story, and it’s one we have covered in-depth.   Most recently we talked about overall production trends resulting from the Shale Revolution in The Future’s So Bright I’ve Gotta Wear Shades – Crude, NGLs and Natural Gas Outlook. Normal butane is riding that wave of increasing production along with the other NGLs.
Most normal butane is used in the blending of motor gasoline.  As a gasoline blendstock, butane has a high octane number (91), which is good, but it also has a high Reid vapor pressure (RVP) level, which is not so good, especially in the summer.  During the winter, refiners blend greater amounts of butane into gasoline because it is cheap, has high octane, and because government Clean Air regulations permit the sale of gasoline with a higher RVP.   But in the summer, those same regulations specify lower RVP maximums in gasoline, which dramatically reduces how much butane can be blended in.  When that happens, many refiners produce more butane than they can use.  Thus butane inventories tend to swing widely from the winter season (low inventories) to the summer season (high inventories). All things being equal, butane prices work in the inverse – higher in the winter and lower in the summer.   We discussed butane blending in gasoline in Wasted Away in Butane Blendingville  and Regulatory Gas Pressure Party.   Smaller volumes of normal butane are also used in the petrochemical industry as an olefin unit feedstock and as a feed for butamer (isomerization) units to produce volumes of its sister NGL product, isobutane (see You Can Just Iso my Butane).  
The Wall Street Journal

Top story: Syrian-scenario begins to play out in the Ukraine. Initial Ukraine thrust begins with a sputter. Ends with a sputter?

For the Nobel-winning president, a stand-off with Moscow, and yet another war.


Top investing story yesterday: Yellen's speech. More on that later. 
In particular, Ms. Yellen said she was more worried about inflation getting too low than too high. The Fed is "well aware" that inflation could shoot above its 2% goal, she said. "At present, I rate the chances of this happening as significantly below the chances of inflation persisting below 2%." In answer to a question posed after her speech, she added the Fed's focus should be on lifting inflation to the 2% goal, not holding it down. The setting provided the Fed chief's first opportunity in her new role to field questions in public from economists, instead of reporters or lawmakers as she had done in prior months. Ms. Yellen canceled an appearance before the group last October as the White House weighed nominating her for the job. Stocks rose in the hour before her luncheon address and were little changed in its aftermath, with the Dow Jones Industrial Average ending the day up 1% at 16424.85. Yields on 10-year Treasury notes ticked up slightly, to 2.637%. 

Economy improving: The economy strengthened across a broad swath of the country in recent weeks, further evidence of the recovery springing back to life after a winter lull. Retailers reported better traffic coinciding with improved weather, manufacturers saw fewer disruptions and banks found stronger demand for business loans, according to the Federal Reserve's survey of regional economic conditions released Wednesday. Comment: I commented on this some days ago. The tea leaves were right.

Unions want federal funds to bolster Detroit pensions. Union leaders want federal money originally slated for struggling Michigan homeowners to help plug a pension hole in Detroit as officials work to resolve the nation's largest municipal bankruptcy. They will get it; it's an election year.

That GM ignition switch that killed at least 13 people? It turns out test drives for GM recognized the problem as far back as 2006.

RadioShack is mired in negotiations with is lenders over plans to close up to 1,100 stores, complicating the struggling consumer electronics retailer's turnaround.

Sonic will add 1,000 restaurants over the next ten years.

The Los Angeles Times

After posting The Wall Street Journal, going through the LA Times day-after-day is a real disappointment.

The Dickinson Press

I cannot make this up: headline story "Church reports couple kissing in car." C'mon. I expect better than this, even in The Dickinson Press.
Hillside Baptist Church reported a Honda Civic at approximately 6:45 p.m. that was parked at its facility, claiming a male and female were kissing in the car, Oestreich said.
Police officers responded to the incident but were unable to locate the vehicle or couple, he added.
I confess. My wife and I were stopping through Dickinson on our way to Rugby. 

Huge Oil Supply Increase -- WSJ -- Highest In 13 Years; Gasoline Stocks Fell Far Less Than Expected

In addition to the "new" story below, be sure to read an early posting on same subject about a week ago.

From The Wall Street Journal:
A bulge in U.S. oil stockpiles last week pushed the amount of crude in storage closer to record levels, but prices were held in check amid worry that the crisis in Ukraine could crimp Russian exports. 
Oil inventories in the U.S. are approaching an all-time high amid a multiyear surge in production, as new technologies have enabled drillers to access crude trapped in shale-oil fields.
Gasoline stockpiles fell less than expected last week, down 200,000 barrels to 210.3 million barrels, the EIA said in its weekly report. Analysts surveyed by The Wall Street Journal had forecast a 1.4 million-barrel drop. On Wednesday, government data showed the biggest one-week increase in U.S. oil stockpiles in 13 years.
Crude-oil stockpiles rose by 10 million barrels last week to 394.1 million barrels, the U.S. Energy Information Administration said. That's 3.4 million barrels below the peak reached in May 2013.
Oil prices, which had been at a six-week high, eased on the news but the market remained alert to escalating tensions in Ukraine.
Light, sweet crude for May delivery settled up a penny at $103.76 a barrel on the New York Mercantile Exchange, after trading as high as $104.99 a barrel. Brent crude on ICE Futures Europe rose 24 cents, or 0.2%, to $109.60 a barrel, a six-week high.
Stockpiles are growing in part because some refineries, which turn crude into gasoline and other products, were shut down for seasonal maintenance. In addition, much of the oil that the U.S. produces is of a different quality than many refineries prefer to process.
Much of the new U.S. oil supply has been stuck in a storage hub in Oklahoma until recently, when a new pipeline to refineries on the Gulf Coast opened. As the oil flows from Cushing, OK, where the Nymex contract is priced, tepid demand for the crude is coming into focus.
Supplies in Cushing fell to the lowest level since 2009 last week, the EIA said, while storage levels in the Gulf Coast hit an all-time high on data going back to 1990.
Think about these data points:
  • oil inventories are approaching an all-time high
  • price of oil at high end of historical range; longest period of high-price oil
  • gasoline production is barely keeping up with demand
  • gasoline prices are at high end of historical range; over $4.50/gallon in California
  • minimal global tensions that could disrupt flow of oil
  • gridlock in Washington; lame-duck president with history of dithering
  • Yellen reassures investors she is going to prop up the stock market
  • Venezuela is about to implode
  • Brazil is a bust (with regard to offshore oil)
  • Kashagan is a bust
  • railroad resurgence in the United States
  • Germany turning away from renewable energy
The tea leaves are swirling.

Question: do "we" have the wrong kind of oil, or do "we" have the wrong kind of refinery? By the way, had the Keystone been approved, "we" would have the right kind of refinery.

Home Depot Joins The Shale Rush -- WSJ

Huge story in The WSJ today: Home Depot joins the shale rush. The only store that Home Depot opened last fiscal year was in .... drum roll.... North Dakota.
When most retailers look for places to open new stores, they take into account economic indicators like job growth and new home building.
Now, some retailers are considering another data point: drilling permits.
Home Depot Inc. has all but given up on opening new stores in the U.S., but the home-improvement retailer made an exception in January to open a store in an area it said it couldn't pass up: Minot, N.D., in the heart of the American shale oil and gas boom.
"If you had said to me seven years ago, you'll be opening a store in Minot, North Dakota, I would have asked, Why?" Chief Executive Frank Blake said in an interview.
"One of the great stories of the U.S. is the shale oil development, and it's happening in areas where we don't have a lot of stores now."
The 100,000 square-foot store is more than a four-hour drive from Home Depot's nearest location and is the only U.S. store Home Depot opened in the fiscal year ended Feb. 2.
Home Depot is among a number of retailers including Wal-Mart Stores Inc. and GameStop Corp.  targeting oil and gas towns in North Dakota, Texas and Louisiana, in an otherwise dour environment for retail real estate. The rise in online shopping and decline in foot traffic has led a number of retailers to scale back store construction and the size of the stores they do build.
Back in 2007, I sent a letter to Menards in Minnesota and spoke with one of their vice presidents about the opportunity in Williston. I was pretty much blown off. I believe Menards is building in Williston but the store is not yet completed.

A lot of story lines in that article. Enjoy.