Tuesday, May 27, 2014

Tornado Hits Oil Patch In North Dakota; Near Watford City; Nine Injured; All But One Treated And Released; One Hospitalized

Several readers, in the past 24 hours, sent me links to several different sources on the tornado near Watford City yesterday evening (Monday night, Memorial Day) that injured nine at a man camp. Rigzone also reported the story:
Eight of nine people injured when a tornado struck a housing camp in western North Dakota have been treated and released from the hospital, according to news reports.
The ninth person injured in Monday's storm has been airlifted to Trinity Health Hospital in Minot, ND, ... The other eight were treated and released from McKenzie County Memorial Hospital in Watford City.
The storm, which also produced baseball-sized hail, destroyed between 12 and 15 trailers... The number of people in the camp when the tornado hit is unknown.
The tornado struck the camp Monday evening at 7:50 p.m. local time about 5 miles south of Watford City, ND. The camp is located about 30 miles southeast of Williston, ND.

Six (6) New Permits -- The Williston Basin, North Dakota, USA; KOG Reports Three "High IP" Wells

Wells coming off the confidential list Wednesday:
  • 25142, 965, Enerplus, Horned 147-93-18B-19H, Moccasin Creek, t12/13; cum 81K 3/14;
  • 26356, 389, Hunt, Bowline 1-3-10H, Boxcar Butte, t3/14; cum 6K 3/14;
  • 26790, drl, Hess, BB-Belquist-150-95-1110H-4, Blue Buttes, no production data,
  • 26927, conf, BR, Crater Lake 11-14MBH-R,
Active rigs:

Active Rigs189187214172117

Six (6) new permits --
  • Operators: Petro-Hunt (5), QEP
  • Fields: Keene (McKenzie), Eagle Nest (McKenzie)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Eleven (11) producing wells completed:
  • 18518, 2,710, KOG, Two Shields Butte 3-24-12-4H, Mandaree, t4/14; cum --  
  • 20257, 2,475, KOG, Two Shields Butte 3-24-12-3H3, Mandaree, t4/14; cum --
  • 20259, 1,579, KOG, Skunk Creek 3-24-25-14H3, Mandaree, t4/14; cum --
  • 25159, 541, CLR, Columbus Federal 2-16H, Mandaree, 4 sections, t5/14; cum --
  • 25160, 749, CLR, Columbus Federal 3-16H, Baker, 4 sections, t5/14; cum --   
  • 25875, 108, Murex, Haley Marie 1-12H, Writing Rock, t4/14; cum -- 
  • 26444, 1,703, CLR, Vachal 5-27H1, Alkali Creek, t4/14; cum --
  • 26726, 351, MRO, Edwards 44-34TFH, Killdeer, t4/14; cum --
  • 26904, 434, Whiting, Lee State 44-16-2H, Parshall, 1 section, t4/14; cum --
  • 26905, 950, Whiting, Lee State 44-16-3H, Parshall, 1 section, t4/14; cum --
  • 27122, 2,372, KOG, P Scanlan 153-98-16S-9-11-16H, Truax, t4/14; cum --
Operator tranfer: about 32 wells changed hands, from Sequel Energy, LLC, to Liberty Resources:
  • permits ranged from #13379 up to #26826; it looks like the vast majority of wells are relatively recently permitted, McKenzie, Divide, and Williams Counties 
Global Warming
The Science Is Settled
Shut Up And Color

From The Hockey Schtick: If You Can't Explain The Pause, You Can't Explain The Cause:
A new paper published in the Annals of Glaciology shows Antarctic air temperatures were warmer during the early 1800's and 1940's in comparison to the end of the 20th century. The authors find evidence of a quasi-periodic climate cycle lasting 30-50 years, with at least 5 climate shifts over the past 350 years, the last beginning during the 1970's.
According to the authors, "The correlation of the newly obtained record with the circulation indices of the Southern Hemisphere (SH) shows that the central Antarctic climate is mainly governed by the type of [natural] circulation in the Southern Hemisphere: under conditions of zonal circulation, negative anomalies of temperature and precipitation rate are observed, whereas the sign of the anomalies is positive during meridional circulation."
The paper adds to many others finding nothing unusual or unprecedented regarding the natural and cyclical changes of Antarctic climate over the past century.
Awesome: a new global warming website link for the sidebar at the right!

By the way, ice coverage on Lake Superior is the greatest ice cover of that lake since satellite records began.
As of today, 27 May 2014, Lake Superior ice cover stands at 4.3% – the greatest level of ice seen on this date, not only on Lake Superior, but on all of the Great Lakes since modern satellite records in 1980-81.

LA Confidential, Theme, Angelo Badalamenti

The Tale Of Two States

The Fairfield SunTimes has an interesting "story":
During the recent energy conference when MDU Chief Executive Officer, David Goodin, was asked why they located the first refinery to be built in the US since 1976 near Dickinson, his gracious response was to say that they were “pleased” with the prompt regulatory process of North Dakota. The project was launched and it is expected to be completed within a two-year span.
There was plenty of mumbled audience comment which indicated that most of the people in the room understood why the question was asked, and they understood what wasn’t said. Application for permitting in Montana wouldn’t even begin to be processed within a two-year span. The company or any company could very well be still waiting for permitting, ten years from now, having spent millions on legal expenses.
A similar response emerged when one speaker reported the annual rate at which Germany is expected to build coal-fired generating plants, over the next 30 years. “We couldn’t even get one permitted in thirty years,” said one conference attendee. Whether true or not, such isn’t outside the realm of possibility in Montana, and just that fact alone is enough to dissuade most investors from even testing the waters.
This speaks volumes about the "sense of urgency" in some states, in some agencies. It would be interesting to hear a bit more on the permit process in Montana (corrected from original post when I accidentally wrote "Minnesota").

The President's Chickens In The War On Coal Have Come Home To Roost: Consumers Will Pay Producers $120/MW (2017 - 2018) Vs $60/MW (2016 - 2017); Unintended Consequences To Follow

At the sidebar at the right, I have a link: "Big Stories."

At "Big Stories," I have a page on the North American Energy Revolution.

The war on coal and the shale revolution are cornerstones of the North American energy revolution.


The president's chickens in the war on coal are coming home to roost -- mixing metaphors, I guess. Look at the prices consumers are going to pay for the president's war on coal. From investors.com:
On Friday, PJM Interconnection — a regional transmission organization that operates the electric power grid in the 13 states and D.C. — completed an auction to procure supplies for 2017-18.
According to news reports, payments to electricity producers will rise to $120 per megawatt per day from $59.37 in the previous 12-month period.
PJM said the auction continued a trend toward more gas-fired generation and more diversity of resources. Environmental regulations designed to limit emissions from coal and other plants also contributed to the higher costs.
For investors in utilities, their investments have just become more valuable (disclaimer: this is nto an investment site. Do not make any investment decisions based on what you read here or what you think you may have here.):
The news is considered a big positive for power companies in the region because it increases their revenue potential, analysts say.
The auction, in a separate story, by the way, "cratered" the financial outlook for two Exelon nuclear reactors in Illinois:
Exelon Corp.'s financial woes at its nuclear plants in Illinois just got worse—more than $180 million worse. 
For the first time in the 12 years since the Chicago-based nuclear giant's Illinois plants became part of the PJM Interconnection regional power grid dominated by Mid-Atlantic states, two of its Illinois nukes were shut out of the PJM-run annual auction that determines the cost to ratepayers of furnishing power during the highest-demand times of the year. 
The Byron plant, near Rockford, and the Quad Cities plant didn't clear at the $120-per-megawatt-day price that other facilities will earn from June 1, 2017, until May 31, 2018 (see next story below this one). 
The PJM auctions, the most recent of which took place May 23, are held three years in advance. 
That will cost the two plants, which Exelon already has identified as financially troubled, a combined $182 million in revenue based on their production last year. Company executives led by CEO Chris Crane have said they won't hesitate to close the plants if they can't see a way for them to become economic. Exelon declined to comment on how much revenue its plants would lose due to the most recent PJM auction. 
Also on the chopping block is Exelon's Clinton nuclear plant in downstate Illinois. That facility isn't located within the PJM grid, though, so it has never received payments from PJM. Its network, the Midwest Independent System Operator, doesn't use an auction method to set a price for reserving power during future peak periods, and such revenues are much lower than they are in PJM.
The unintended consequences?
At the same time, Mr. Crane has said closing any of Exelon's nukes — by far the largest carbon-free generators in the state — will make it extremely difficult for Illinois to comply with new federal greenhouse-gas rules, which the U.S. Environmental Protection Agency will propose next week. Those rules will put the onus on states to reduce their carbon emissions.
The article said:
“We have an excess of capacity in the region,” said David Kolata, executive director of the Citizens Utility Board, which represents ratepayers. “That is objectively true right now.”
It will be up to state lawmakers, and whoever emerges as governor next year, to decide whether ratepayers should pay more on top of the $120 per megawatt-day to keep the plants open despite the fact that they're apparently not needed.
Exelon's Mr. Crane has maintained that he's not seeking a "bailout"  he's from the state, and that the company is seeking "market-based" solutions to its nuclear woes.
Excess energy capacity? Square that with the links below.

PJM: The Grid This Past Winter

PJM warns: if it's a cold winter, there could be some "blackouts." -- August 25, 2014. PJM is starting to sound like "pajamas."
The switch from coal to natural gas for electricity generation could harm power reliability in Ohio and surrounding states, according to the group that manages the transmission grid for the 13-state region.
PJM Interconnection said in a new white paper that the “rapid transition” as more utilities retire coal plants and turn to domestic shale gas causes concern about the reliability of the region’s generation fleet. That’s especially worrisome during bitterly cold weather such as that experienced by Ohio and other states during the polar vortex this year. Up to 22 percent of capacity in the PJM region was unavailable during the polar vortex because of weather-related problems, and the outages are a “potentially significant reliability issue,” PJM said.
PJM home page on the web.

PJM: the president's war on coal is moving us toward an electrical grid failure -- April 25, 2014

PJM: experienced a new all-time peak winter load of almost 142 MW; the grid almost went down-- April 23, 2014

PJM: grid required 100% of its coal availability. -- January 28, 2014

PJM: "take it easy" on the grid; unable to ramp up. -- January 27, 2014

PJM: power grids have seen significant spikes in wholesale market prices, brought on by huge increases in underlying natural gas spot market prices -- January 24, 2014

PJM: the New England energy debacle -- January 10, 2014

PJM: "maximum emergency generation alert"; the grid may not hold. -- January 6, 2014

PJM: coal will be replaced by natural gas with/without wind -- July 17, 2013

PJM: $136/MW (non-coal) vs $16/MW (coal); Obama's war on coal. -- May 22, 2012


A huge thank you to a reader who keeps me abreast of what's going on in PJM's world, a microcosm of the east coast, the south, the mid-continent, and the midwest, but perhaps not comparable to a) the land of fruits and nuts; and, b) the Pacific Northwest.

Ideology Over Jobs

Bloomberg is reporting:
The nation’s biggest business lobby says President Barack Obama’s plan to tackle climate change could cost the U.S. economy $50 billion a year. Supporters predict it will create jobs and lower power bills.
The U.S. Chamber of Commerce and Natural Resources Defense Council are both releasing economic impact studies this week, signaling that the political battle over the president’s plan will be fought over dollars and cents. For Obama, the risk is the plan gets labeled a job-killer just as campaigns heat up for an election that could determine control of the U.S. Senate.
In an analysis released today -- days before the Environmental Protection Agency unveils a proposal to cut carbon dioxide emissions from power plants -- the Chamber said that an ambitious pollution-control effort could force more than a third of the coal-fired power capacity to close by 2030, resulting in economic losses of $50 billion a year and the elimination of 224,000 jobs. 
Twenty years from now we're going to be wondering how "we" let this happen.  

500% Increase In Number Of Pick-Up Trucks Being Shipped To Fargo, ND; St Paul, MN; By BNSF -- 240 Pick-Ups Rolling Into MN/ND Each Day

All due to the Bakken, no doubt ... The Bismarck Tribune is reporting:
BNSF Executive Chairman Matt Rose joked that pickup truck hauling by rail appears to be "the next great line of business" for the railroad.
Rose says BNSF is hauling 240 pickups daily by rail to Fargo, ND, and St. Paul, Minnesota. He says that's a 543 percent increase since 2011.
15 pick-ups daily in 2011: 100% increase would have been 30?
Another 100% increase would have been 60.
Another 100% increase would have been 120.
Another 100% increase would have been 240.

Or 540% of "what" = 240
About 45 pickups.

So, I guess somewhere between 10 and 45 pickups were being delivered on a daily basis by BNSF three years ago, and now they are up to 240 pickups daily. 

It would have been interesting to get the number being delivered to Minot, and even more interesting to get the breakdown by brand.

Cash Wise Grocery Opens New Store In Tioga; Open 24-Hours; Employs 100 People

From The Williston Wire:
A new 24-hour Cash Wise recently opened in Tioga creating more than 100 new jobs.  "It's absolutely a game changer.  Between the jobs, the convenience, the availability and they're open 24 hours. They're employing so many people locally.  Not only do I have three family members who are working there, but I have two tenants that are working there. It's getting better all the time," says Shannon Arthur of Tioga.
The original story was aired by KUMV-TV

American Soldiers To Stay In Afghanistan -- AP
The current CIA station chief? Probably not.

The AP is reporting the president's endless (and forgotten) war.  
President Barack Obama will seek to keep 9,800 U.S. troops in Afghanistan after the war formally ends later this year and then will withdraw most of those forces by 2016, senior administration officials said Tuesday.

The Bakken Shale Formation Is Part Of An Exclusive Club Among Global Oil Fields

I know I posted some time ago that North Dakota oil production most likely went over the one-million-bopd milestone back in April but we won't know until the Director's Cut is released in June, 2014.

I can't remember if I posted this note from The Bistmarck Tribune, published May 21, 2014, but I don't think so. The "exclusivity" feature would have caught my eye:
North Dakota's top energy industry regulator says he expects April's oil production figures to be over 1 million barrels daily. 
He says he expects oil production to increase from 977,000 barrels daily in March.
Helms says the Bakken shale formation in North Dakota and Montana is "an exclusive club." He says that out of the 65,000 oil fields worldwide, only 150 including the Bakken have exceeded 1 billion barrels of oil. North Dakota has generated more than 850 million barrels of Bakken crude, and Montana has produced more than 150 million barrels through the first quarter of this year.

Bakken Conference, Denver, CO: Advance Registration By June 6, 2014; Bakken Pump Optimization

Link here for the July 16 - 17, 2014, conference to be held in Denver, CO.

Bakken Artificial Life and Production Optimization

Examining technical solutions for reducing failure rates, maximizing productivity, and improving run times by optimizing artificial lift design and chemical treatments for Bakken wells, and overcoming challenges related to sand control, gas interference, and wellbore deviation.

Bakken production speakers on the agenda include experts from Triangle Petroleum, Liberty Resources, Halcon Resources, Hess, SM Energy, Whiting and others.

Minnesota Oil Boom Has Begun

A huge "thank you" to the reader who sent me this -- taken from an undisclosed location in northern Minnesota:
  • 1, 3, Koch Brothers, Dayton #1, t3/14; cum 2 bbls 4/14; TD = 6 feet; vertical, not fracked, rumors are it tapped into an Enbridge crude oil pipeline, 
The "IP" was based on a 5-minute flow rate which turned out to be somewhat exaggerated. Perhaps to encourage investor interest.

Note the trailer in background which will move the (unseen) rig to the next location, rumored to be four feet to the left.

My hunch is that none of this is true. Regardless, a huge "thanks" to the reader for sending it my way.

For Investors Only: Record Number Of Companies Trading At New Highs .... Probably Not, But It's A Lot; Market Closed At A New High

AAPL is up almost 2% -- up another $10.

You don't see this often. Last Friday, just before the long weekend, I posted a link to Dennis Gartman's prediction that "we" were headed for a major market correction.  Today, on CNBC, he says he was "abundantly wrong" with regard to that prediction. Had he not come out and done that, he would have lost a lot of credibility. I still don't care for him a whole lot, but I was impressed he would publicly comment on his earlier prediction:
"Having called for a correction, I have been abundantly wrong," Gartman said. A correction is typically defined as a market downturn of 10 percent or more. "I am probably going to be wrong continuing to expect one. It's best to err on the side of remaining quietly bullish," he said.
Market hits new highs. WTI oil fluctuating around the $104 ceiling.

Trading at new 52-week highs include: AAPL, BRK-B, COP, DAVE, DIS, NGLS, NRG, TRGP, TRN, UNP, WFC, WMB.

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. I post companies that interest me. I personally invest in very few of the companies that I list, but they help me keep the Bakken in perspective. In the list above I think I invest in two of the companies listed. 

OGE Energy: US Supreme Court declines to hear OG&E's Regional Haze case : The U.S. Supreme Court today denied a petition filed by Oklahoma Gas and Electric and Oklahoma Attorney General Scott Pruitt asking the nation's highest court to review a 10th Circuit Court of Appeals decision on Regional Haze. The question that the Supreme Court declined to review is whether the Environmental Protection Agency acted appropriately in rejecting Oklahoma's plan to address visibility at national parks and wildlife areas.

  • Last July, a split, three-member panel of the 10th Circuit ruled that the EPA lawfully exercised its authority to reject Oklahoma's state plan and instead impose a federally mandated plan on Oklahoma. OG&E and the Attorney General filed a joint appeal to the U.S. Supreme Court in January. 
  • "We are disappointed on behalf of our customers," said OG&E spokesman Paul Renfrow. "We still believe that the Oklahoma State Implementation Plan would have enabled us to meet the Regional Haze requirements at a much lower cost. However, we accept the Court's ruling and now turn our attention to meeting the 55-month compliance deadline."
Dividend stocks have been attracting investors for several years because of low yields on fixed-income instruments. Now their appeal is broadening as investors assume defensive postures, accelerating dividend-paying vehicles into outperformance.

Global Fracking Patents Hit Record Last Year

Huge "thank you"to a reader.

I've often talked about the Bakken as being a laboratory. A reader sends me this link lending support to that argument. The Economic Times is reporting that global fracking patents hit a record last year (2013):
The number of patents filed for new shale extraction technology reached a record high last year as oil and gas companies battled for control of intellectual property in the growing industry, research by Thomson Reuters showed on Tuesday.

In 2013, 706 patent applications were filed worldwide for so-called fracking technology, up 28 percent from the previous year, according to a report published by Thomson Reuters' legal business.

Fracking is the process of drilling and pumping chemicals, sand and water into rocks at high pressure to extract oil and gas.

Many of the patent applications were for systems to provide power to isolated fracking projects and for technology to heat water needed in the fracking process without electricity.

RBN Has A Nice Graphic Compairing Amount Of Condensates Produced Across US Shale

The market takes off today. Why? The LA Times says it is because orders for durable goods rise; durable goods orders unexpectedly up in April. 

Active rigs:

Active Rigs191187214172117

RBN Energy: Musings on lifting the condensate export ban. It is amazing to see the proportion of US shale condensate produced by the Bakken, compared to Eagle Ford, D-J, Powder River, Permian, and everything else, including the Utica.

The Wall Street Journal

EPA set to unveil climate proposal that gives states flexibility in what measures to take to meet aggressive emissions-cutting goals.

Health-law costs snarl union contract talks. Comes immediately after NY Times story yesterday about new IRS rules and ObamaCare. I've got the post written but put it in draft form to post later, afer the Bakken stories are out for the day.

The Tea Party may be receding elsewhere, but definitely not in Texas.

TrainWreck in the US, but "earthquake" in France: a wave of national soul-searching washed over France as the country's leadership sorted through the political wreckage of the far-right National Front's victory in European Parliament elections.

The Los Angeles Times

I will get back to these two stories later if I remember / have the time: In Connecticut, some minimum-wage workers say raise hasn't helped much. Actually, it's much worse than that.  The second story, it appears, has already been removed. It was about support for minimum wage in California. I guess the Times editor thought the story should be pulled for some reason. I will watch for it. [Update: I can't find that second story but now the LA Times has an op-ed suggesting that the liberal newspaper is changing its stance on the minimum wage -- perhaps after reading the Connecticut experience.]

LA Times trying to guns rights the issue regarding the Isla Vista/UCSB rampage, forgetting that half the deaths were due to stabbings, and the strongest gun laws would not prevented the rampage.