Tuesday, April 22, 2014

The Hypocrisy In Minnesota .. But Who Cares ... North Dakota + Texas Produce More Oil Than Canada; Cold War II

Several story lines in this otherwise typical story coming out of Minnesota and being reported by The Dickinson Press:
A group of Minnesota residents drove to the state Capitol on Tuesday to deliver a petition calling for a ban on silica sand mining in southeast Minnesota, but Gov. Mark Dayton said he wouldn’t act without the Legislature.
More correctly:
A group of Minnesota residents drove to the state Capitol in their gas-guzzling SUVs to deliver a petition calling for a ban on silica sand mining in southeast Minnesota, but Gov. Mark Dayton said he wouldn’t act without the Legislature.
The hypocrisy.

For newbies, let your hearts be still. If Minnesota bans sand mining, it only affects Minnesota. There's plenty of sand in Wisconsin and elsewhere. And if Mr Obama bans sand mining across the entire US, there's plenty of ceramic proppant from Russia and China. The cost will be passed on to consumers at the pump. What is gasoline now, $3.75/gallon in the Twin Cities and rising?

Regardless of how it plays out, Mr Dayton is correct: let local communities decide. My hunch is that the majority of communities will let the sand mining continue.

What should happen is folks opposing oil drilling should be forced to ride bicycles until they come to their senses.

Texas and North Dakota Produce More Oil Than Canada

I guess this is why President Obama really isn't all that concerned about the western Canadian oil sands ( he apparently doesn't understand the difference, and the importance, of heavy vs light oil, based on his non-decisions): Texas and North Dakota are now producing more oil than Canada. That's pretty impressive. North Dakota, #2 in the US, and Texas, #1 in the US, for oil production, together produce more oil than all of Canada.

The Cold War II

I don't watch television as a rule except NASCAR, "Cosmos," and perhaps a few other occasional offerings but certainly not much, and certainly not news. Tonight my wife had the television on for some reason -- oh, that's right -- to see the story about the Supreme Court and the affirmative action case coming out of Wisconson. I happened to go in to the bedroom and saw John Kerry talking about the Cold War. I guess that's it: Cold War II has begun on/about April 22, 2014 -- President Obama and President Putin.

Interestingly, there appears to be another Cold War developing: this one between Texas and the Feds with regard to BLM land.

Nine (9) New Permits -- The Williston Basin, North Dakota, USA; A Reader Notes Probable Typo On Today's Daily Activity Report; HRC Reports Two "High-IP" Wells; CLR, KOG, Hess Each With A Nice Well

For investors only, non-energy stocks reporting tomorrow:
  • XLNX: expectations, 55 cents; actual -- 2 cent miss: Xilinx Inc, a maker of programmable chips, forecast current-quarter revenue largely below analysts' estimates, sending the company's shares down 6 percent in extended trading. This is crazy: misses by 2 cents, but reports record revenue, and still it drops 6 percent. I will recover in a.m.
    Xilinx said it expected first-quarter revenue to stay flat to rise 4 percent from the fourth quarter.
  • AAPL: expectations, $10.19; actual: blows past expectations; stock surges; announces 7-1 split;
  • Boeing: expectations, $1.56; actual, blows past expectations with $1.76; stock up 2% on a down day

Active rigs:

Active Rigs187186210175108

Nine (9) new permits --
  • Operators: Triangle (3), SM Energy (2), CLR (2), Whiting, Slawson
  • Fields: Pronghorn (McKenzie), Poe (McKenzie), Banks (McKenzie), Lonesome (McKenzie), Big Bend (Mountrail)
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Seven (7) producing wells completed:
The Daily Activity Report suggests these seven (7) permits were canceled. A reader suggests that this was a typographical error and should be producing wells completed. Based on what little I know, I think the reader is correct. I will list these as producing wells completed and see if that is corrected tomorrow. In fact, an IP is provided which confirms that these are completed producing wells. The wells in question (interestingly, these are all great wells, based on IPs):
  • 25525, 2.510, HRC, Fort Berthold 152-94-11b-14-6H, a Sanish well, Antelope, t3/14; cum -- 
  • 25524, 2,584, HRC, Fort Berthold 152-94-11B-14-5H, a Sanish well, Antelope, t3/14; cum -- 
  • 25593, 1,342, XTO, Loomer 41X-4H, Tobacco Garden, t3/13; cum -- 
  • 25827, 970, CLR, Akron 5-34H1, Banks, t3/14; cum -- 
  • 25826, 1,142, CLR, Akron 6-34H1, Banks, t3/14; cum -- 
  • 25974, 1,155, KOG, P Vance 154-97-4-17-20-13H, Truax, t3/14; cum -- 
  • 23456, 1,476, Hess, BB-Budahn-150-95-0506H-2, Blue Buttes, t3/14; cum --
Wells coming off the confidential list Wednesday:
  • 25038, drl, QEP, Lawlar 2-5-8TH, Grail, no production data,
  • 25985, drl, Hess, EN-Frandson-154-93-2116H-5, Robinson Lake, no production data,
  • 26750, drl, SM Energy, Rick 16X-12H, Siverston, no production data,

For Investors Only -- Market Surges; Oil Pulls Back

Midday trading.
Oil has pulled back about 2% but the overall market surges. Trading at new 52-week highs: AXAS, BHI, HES, REX, SLB, SYRG, TRGP, UNP.

Synergy's core area of operations is the Denver-Julesburg Basin (D-J Basin), which encompasses Colorado, Wyoming, Kansas, and Nebraska. All of the company's production to date coes from wells int eh Wattenberg Field in the D-J Basin which ranks as one of the most production fields in the US. -- from Synergy's website.

The Wattenberg field is in the northeast corner of Colorado. 
Netflix rose almost 6%. 

Housing is struggling.

First Financial announces two-for-one stock split; increases quarterly dividend 7.7%: Co declared a two-for-one stock split in the form of a 100 percent stock dividend. 

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.

Nothing New Under The Sun

From Louisa Gilder's The Age of Entanglement, c. 2008, page 138:
In the little tan institute at 15 Blegdamsvej in Copenhagen, [the world's most famous physicists] have gathered in the main lecture hall in late 1932 for what George Gamow called the "customary stunt." Gamow himself is not present, since Stalin -- already "dizzy with success" while Gamow's native Ukraine is purged and starved -- refused him a passport to "fraternize with scientists of the capitalistic countries."
And so it goes.

Big Story: US Exports Refined Petroleum Products; US Exports Exceed 4 Million Bbls/Day First Time Ever In A Single Month

This is really "neat." Some time ago I started tracking the "big stories." One of the big stories I predicted would be about US exports of refined petroleum products.

Today, in The Bismarck Tribune, an update: http://www.eia.gov/todayinenergy/detail.cfm?id=15951.

The graph and the graphic are much better than the narrative:
Exports of petroleum products from the United States averaged 3.5 million barrels per day (bbl/d) in 2013, 10% more than in 2012. The increase in exports was broad-based, affecting multiple products going to multiple regions.
In December 2013, U.S. exports of petroleum products reached 4.3 million barrels per day, the first time exports exceeded 4 million barrels per day in a single month
A lot of story lines.

I track "big stories" here

Big Story: Natural Gas Storage In North America


September 9, 2014: From the DNR message board today:

I looked at an interesting report on natural gas supply/demand to 2020.
New England supply has gone from 5bcf/d in 2012 to projected 32bcf/d in 2020. Pipes don't catch up with supply until 2017.
But project 90bcf/d supply in 2020 and 5bcf/d potential shortage.
The rest of the country demand is growing 3x the supply growth in the New England.
Be sure to the NG_Fill_Rate tag at the bottom of the blog.

Original Post

From the Berry Petroleum message board:
With Canadian NG storage hovering just above 120 Bcf after consuming nearly 500 Bcf this past winter, average injection season additions will have to be at least 30% greater than last year to reach 5 year average end of injection season storage.
I don't see the Canadians exporting much NG to the USA this year . If Canadian storage doesn't fill at record pace and we have another cold winter in 2014-15 Canada would be in negative storage territory come late winter.
It is just very possible that a profound shortage of natural gas next winter in North America could be "the" big story.

I track "big stories" here.

Stacking Horizontals And Dual Laterals In The Shale Oil And Gas Industry

A reader asked about new terms being used in the shale oil and gas industry. Here's a nice graphic from a recent SandRidge presentation:

Note: the stacked lateral is different than what they are doing in North Dakota. In the Bakken, for the most part, each horizontal lateral is separately drilled from the surface; in the graphic above, note that the two horizontals are coming off the same vertical well. 

In the North Dakota Bakken we are not seeing much (any?) of either. In Montana, Oasis (or was it Slawson?) has drilled dual laterals, and CLR has recently drilled a well with six laterals.

Paradigm Shift: Big Oil + Big Coal = Big Energy = Big Rail

From Crosscut.com/Seattle, an article with an activist environmentalism slant perhaps, but a good article none-the-less to help folks stay aware of energy issues facing coal in Montana/Wyoming and oil in the Bakken.

My takeaway: the activist environmentalists are struggling to come to terms with the tsunami of American fossil fuel -- coal and oil. Killing the Keystone aggravated the entire rail system in the United States. Talk about unintended consequences.

Crude oil derailments. I was correct. The mainstream media cannot come up with any deaths caused by crude oil derailments in the United States, and the only one in North America was due to an engineer failing to set the brakes once the train had completed its "trip" for the day. Rational folks have trouble instituting even more stringent rules when that's all they have:
Oil trains scare people who live anywhere near the tracks. The most recent crash — in North Dakota — brought flames and smoke, but no injuries. A July explosion in Lac-Magentic, Quebec, killed 47 people. Other crashes have led to evacuations, but not hospitalizations. The problem, oil executives say, is a lack of pipelines to ship crude. TransCanada, which would build the Keystone pipeline, said this month that it will look to rail instead.
The other takeaway: money will win out.

The last takeaway: presidents come and go, but energy needs will continue, and probably increase.

North Dakota Farmers Love Fracking; No Shortage Of Water In North Dakota For Fracking; Largest Shale Oil Field In The US? The Permian; Why Windmill / Solar Energy Is Not Stored In Batteries

Wow, this is an incredible story. Farmers love fracking! The Bismarck Tribune is reporting
Curt Trulson’s got a good deal going with the oil company putting in 12 wells behind his farm headquarters just east of Ross.
They’ll pump water out of his slough to hydraulic fracture the wells and maybe he’ll get some of his farmland back.
It’s wet up there in Mountrail County and the amount of farmland being swallowed by sloughs and potholes has quadrupled in recent years. Trulson will have to leave half the slough water for wildlife by State Water Commission rules, but that still leaves plenty for the oil industry. And maybe some of the 350 acres of farmland that’s now under water will dry out.
Oasis Petroleum needs in the range of 33 million gallons of water to frack 11 more wells on the two-section spacing unit north of Trulson’s farm headquarters. One lease-holder well was completed a few years ago and now the company is in-filling with two, six-well pads on either end of the unit.
Fracking, an injection process that has a huge appetite for water, will start in June and Trulson’s brimming slough lies conveniently in the middle of it all.
Water is a 6 billion-gallon annual business in the oil patch, and these localized arrangements compete with established water depots and to an extent, with the state-subsidized Western Area Water Supply regional pipeline system.
So many story lines. I've been reporting "forever" that if you have one well, you will have a dozen before it's over. 


Nice article sent in by Steve. The New York Times is reporting:
Energy storage is crucial to transforming the electric grid into a clean, sustainable, low-emissions system, the experts say. And it’s happening already, just not the way most consumers would expect.
The simplest idea for storage — charging up batteries at night when there is a lot of wind energy and not much demand for it, or at midday when the sun is bright — is years from being feasible, according to the experts.
The reason? It costs hundreds of dollars to store a kilowatt-hour of energy in a battery, while nationally the average retail price of a kilowatt-hour is about 11 cents. On the wholesale market, even buying low at off-peak periods and selling high could earn a battery owner perhaps 25 or 30 cents for each $400 or so invested. For that kind of transaction, “storage is not profitable,” said Jay Apt, executive director of the Carnegie Mellon Electricity Industry Center.
There's a lot more to the story, but that's all I need to know.

And Some Folks Thought The Permian Was Dead After Fifty Years Of Pumping Oil

The San Antonio Express-News is reporting:
Shale fields across the U.S. continue to push out greater amounts of oil, according to a new government report.
The U.S. Energy Information Administration estimates that domestic shale-oil production will increase to about 4.3 million barrels daily in May, up 71,000 barrels daily over this month.
It estimates the Eagle Ford will produce about 1.38 million barrels daily in May, up from April’s level of 1.35 million barrels per day.
That’s an increase of about 38 percent from May 2013. Eagle Ford wells are also likely getting better — the EIA estimates that new wells make 463 daily barrels in April but will make 470 daily barrels in May.
The Railroad Commission said the Permian Basin produced 968,696 daily barrels of crude oil in January.
The EIA data show the Permian as the biggest shale-oil field in the U.S., making an estimated 1.44 million barrels daily this month. The EIA projects Permian Basin production will rise to 1.45 million barrels daily in May.
The state data are based on what has been reported by operators and generally get revised upward over time. (For the Permian Basin, state data also includes only Texas production. The field extends into eastern New Mexico).

The New York Times also has a long meandering article on the state of energy in North America, from the western Canadian sands to Mexico. I kept looking for a theme, or something new; maybe others will see things I did not. This jumped out at me, though I was aware of it, had just forgotten about it:
In September, Royal Dutch Shell announced its intention to sell 100,000 acres it had leased in the Eagle Ford shale field of South Texas because of out-of-control costs. An analyst at the Oxford Institute for Energy Studies has estimated asset write-downs approaching $35 billion in recent years among 15 of the main operators in the shale gas and oil fields, a tiny percentage of the total investment but a sign that shale field development is sensitive to market shifts and drilling disappointments.
EOG says their wells pay for themselves in six months in the Eagle Ford.

For Investors Only

Thirteen (13) companies announced increased distributions or dividends including Oneok (OKE) with a huge increase from 40 cents to 56 cents.

Arch Coal misses by 16 cents, a loss of 60 cents/share.

Harley-Davidson beats by 13 cents.

Comcast beats by 4 cents.

BNY Mellon beats by 4 cents.

McDonald's misses by 3 cents -- $1.21/share; shares initially down slightly, then up slightly

ATT (T): barely beat by a penny; first quarter net income dipped 1.2 % to $3.65 billion as expenses rose but robust demand for its more expensive wireless data plans drove quarterly revenue higher. Revenue totaled $32.5 billion for the three-months period ending March 31, up 3.6% from a year ago. Earnings per diluted share of 70 cents beat analysts' estimate by a penny.

Nabors Industries (NBR): 16 cents; barely beats, by 1 cent. 

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.

Another Inconvenient Truth -- Hurricane Weather Has Not Been That Extreme

WeatherBELL.com is reporting:
What is different is that the ECMWF model has a forecast for higher than average activity near the East Coast of the U.S. [for 2014].!
We have been in awe at the lack of activity near the East Coast over the last 20 years, given the similar cycle to the 1950s. While Irene and Sandy have drawn significant attention, they were nothing compared to the meteorological mayhem of the 1950s or the intensity of 1938 and 1944. There is nothing to prohibit another Sandy-type hit from the southeast or three storms up the East Coast in one year despite a relatively low number of named storms in a season.
The benchmark year on the eastern seaboard, 1954, had well below normal tropical activity in the deep tropics, with only Hazel being a strong storm south of 20°N, so there is strong historical support for the ECMWF's idea.

Drivers Facing Rising Gasoline Prices As American Refiners Export More Gasoline To Other Countries

Active rigs:

Active Rigs185186210175108

RBN Energy: part 2 of a series on exporting LNG from the East Coast.

The Wall Street Journal

The momentum to forgive student debt surges; just a matter of time.

Iraq oil output exceeds Hussein era.

UAW drops appeal on Volkswagen vote.

Drivers in the US are facing rising gasoline prices ahead of summer-vacation season, just as refiners here are shipping more gasoline to other countries. 
Drivers in the U.S. are facing rising gasoline prices ahead of summer-vacation season, just as refiners here are shipping more gas to other countries.
A new pipeline, built to release a glut of crude oil that was stuck in the middle of the country, is now feeding oil to refineries on the Gulf Coast that churn out gasoline and diesel. While these fuels still make their way to the Southeast and the East Coast, growing amounts are being sold to Mexico, the Netherlands, Brazil and other countries.
The Los Angeles Times

Finally, the right question is being asked: how did a 15-year-old stowaway on a plane to Hawaii?