Wednesday, May 28, 2014

A New Poll: Which Site Is President Obama Most Likely To Visit If He Visits North Dakota?

You have no idea how much I hate doing these polls; that's why some of them stay up so long. It's not just the hassle of doing the mundane work of uploading a new poll, it's the challenge of finding something to ask.

The poll that will be taken down asked how the killing of the Keystone affected you personally as a mineral rights owner or equity investor. The question: the "non-decision" regarding the Keystone XL:
  • was good for me as a mineral owner: 16%
  • was not good for me as a mineral owner: 25%
  • was good for me as an investor: 6%
  • was not good for me as an investor: 11%
  • was good for me both as a mineral owner and as an investor: 12%
  • was not good for me either as a mineral owner or as an investor: 30%
If one lumped these:
  • good overall: 34%
  • not good overall: 66%
That's interesting. I think for me, personally (I own no mineral rights, but I am an investor), I think the non-decision has been overall "good" for my portfolio. 

Now, for the new poll: There was a story in The Washington Post last week that President Obama might visit one of the Indian reservations in North Dakota. If he were to visit one of the reservations, which one is he likely to visit?
  • Lake Traverse
  • Spirit Lake
  • Standing Rock
  • Fort Berthold
  • Turtle Mountain
I purposely did not include The Links of North Dakota. Yes, I know "The Links" is not an Indian Reservation, but if you look at the actual poll, it could have been a selection.

Random Aerial Photo Of Rigs In The Bakken: The Hagen/White Wells In Banks Oil Field


May 30, 2014: a huge thank you to a "driller" for providing more information regarding this spectacular photo. It came in as a comment (see below) but for better googling/searching, I brought up here:
The small rig (I hate to use the word small but pictures don't lie) belongs to my company and you are correct we are hired to set the initial set of pipe on a well.
Since this is the portion of the well that goes through the aquifer all of the drilling must be done with fresh water and companies have found it to be both cheaper and operationally more efficient to have our rig come in and set this string of pipe than have us move off and the big rig move in and drill the remainder of the well.
With regard to capacity, the rigs are a quite a bit different. I'm using Patterson 308 for this information. The smaller rig vs the larger Patterson 308 rig:
  • hookload maximum: 250K vs 750K
  • maximum drilling depth (vertical): 6,000 feet vs 18,000 feet
  • #of loads to move: 20 vs 60 - 80
  • derrick height from ground: 60 feet vs 166 feet
  • mud pump size: 700 hp vs two 1,600 hp pumps
  • mud tank capacity: 300 bbls vs 1,050 bbls

Our rigs are built for speed, to be able to rig up and down quickly and move on to the next hole.
These big rigs are like little cities built to drill for periods of time on the same location.
For what it's worth (and I'm a drilling guy) I think that two of the things that have most helped the shale boom in America are a) pad wells; and, b) rigs that walk (or skid).
The ability to drill a well, pick up everything, and walk to another well, and be ready to drill again in a 4-6 hour period is huge.
If this were like the old days and you had to rig down, move over and rig up again, this would add 5-10 more days to every well not even including the extra costs. The difference in the ability to drill 12-18 wells per year with a rig versus 8-10 in the old days makes a tremendous difference in an Operator's ability to book reserves and get production on line.
The writer makes a very, very good point. I don't know if you all saw it, but in an earlier post this morning, I linked a Q&A with EOG who said it was more "effective" to simply drill a whole new well than re-frack an old well because drilling costs have come down so much. That's huge. When I first started blogging, I don't think many of us would have thought drilling a whole new well and doing it right would be better than trying to re-frack an existing well.  When I read (past tense) that Q&A, my first thoughts: this is a huge win-win-win-win for everyone involved: drillers, roughnecks, royalty owners, investors.

May 29, 2014: a huge thank you to a reader for "explaining" photo #11 at the link below. It came in as a comment, but comments are hard to google, so it was brought up here (it will also show up as a comment) --
The Whitten picture #11 is of the Hagen Banks location, Section 31-152-98, about 10 miles north of Watford City.
The orange rig is Patterson 308; there are 7 new Hagen wells drilling north. They are testing Middle Bakken and all three benches of the Three Forks. The blue rig is Nabors B22. After drilling a couple of the Hagen Banks wells, it was moved to the location across the road where the "spud rig" was drilling the surface holes for the White wells.
There are 7 new White wells all going south. According to the Oasis conference call, the White wells are closely spaced in the Bakken, and Three Forks 1, 2 & 3. These wells are about 4 miles southeast of Continental's 660 foot spaced Wahpeton wells. The Hagen Banks wells are a south offset to the Statoil Beaux wells which set records for high IP's in the past year. 
Also, the Whitten pictures of the Sidewinder 104 rig were taken about 4 miles to the north. This is Statoil's Maston site. It has 8 wells going north under Lake Sakakawea. This pad also has four Johnston wells to the south. These also off-set the Beaux wells.
Just across the water to the north in Williams County is the general area of Kodiak's Wood wells. 
This is what the area looks like today:

Original Post
For almost everyone, but especially for newbies to the oil patch, this might just be one of the best photos ever to highlight the difference among the various rigs being used in the Bakken.

Vern Whitten, photo #11 of 30, in the spring "batch" of photos, shows two pads, with three rigs. One rig is the smaller rig, that I assume drills to vertical depth or to below the water table. Vern's caption on the photo says this smaller rig will drill one mile deep; vertical depth is closer to two miles, so if the caption is correct (and I assume it is), this rig will drill below the water table, case the well, and then a larger rig will drill to the "kick-off" point, generally in the Lodgepole, and then push the drill bit two more miles horizontally.

I do not recall ever seeing two different size rigs of such "disparity" either in all my touring of the Bakken or in any photograph. This is really a great photo. For newbies (and really, for everyone) just look at the size of those bigger rigs. They are truly huge. I think this really helps put the Bakken into perspective and what the roughnecks are doing out there.

If any expert wants to provide more explanation/detail about the rigs, readers would really enjoy it.

I tried locating the pads on the GIS map, but there are so many possibilities that I couldn't identify it. In Banks oil field there is one location with three rigs in close proximity but not as shown in the photograph. The photograph was taken April 13, 2014, and obviously, by now, they have probably moved on.

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; Statoil With Three "High IP" Wells; Whiting, WPX Each With A Nice Well

Wells coming off confidential list Thursday:
  • 26927, drl, BR, Crater Lake 11-14MBH-R, Hawkeye, no production data,
  • 23932, 538, OXY USA, Loren Hagen 1-35-26H-141-97, St Anthony, t11/13; cum 33K 4/14;
  • 25143, 950, Enerplus, Pygmy 147-93-18B-19HTF, Moccasin Creek, t12/13; cum 68K 4/14;
  • 25674, drl, Statoil, Lucy Hanson 15-22 4H, Catwalk, no production data,
  • 26322, drl, HRC, Fort Berthold 148-95-27B-34-8H, Eagle Nest, no production data,
  • 26513, 957, WPX, Mabel Levings 14-23HA, Mandaree, t5/14; cum --
  • 26876, drl, CLR, Lawrence 9-24H, North Tioga, no production data,
Active rigs:

Active Rigs188186216172119

Fourteen (14) new permits --
  • Operators: Hess (4), Newfield (3), Triangle (2), Slawson (2), Legacy (2), OXY USA
  • Fields: Alger (Mountrail), Westberg (McKenzie), Elk (McKenzie), Big Bend (Mountrail), North Souris (Bottineau), Cabernet (Dunn)
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Seven (7) producing wells were completed:
  • 27656, 1,248, Whiting, Littlefield 11-30H, Sanish, t5/14; cum --
  • 24988, 3,306, Statoil, Domaskin 30-31 7TFH, Alger, t5/13; cum --
  • 24986, 3,087, Statoil, Domaskin 30-31 5TFH, Alger, t4/14; cum --
  • 24987, 2,912, Statoil, Domaskin 30-31 6H, Alger, t4/14; cum --
  • 27086, 1,410, Whiting, Kaldahl 41-3H, Ray, t5/14; cum --
  • 26916, 185, Samson Resources, Comet 2635-8H, Ambrose, t4/14; cum 2K 4/14;
  • 26512, 1,214, WPX, Mabel Levings 14-23HW, Mandaree, t5/14; cum -- 

Incredible Vern Whitten Photography: See If You Can Guess The Location Of The Pad In His First Photo -- May 28, 2014

I always enjoy Vern Whitten photography but this batch of pictures might just be one of the best --- or maybe I was just excited to see recent photographs of the oil patch. Regardless, they are really, really good.

The link to the main site:

At that point, one has several options. I went directly to the 30 photographs of the oil patch. The first one is really cool. Vern notes in the photo: 9 pumpers and 1 frac. In fact, I bet this is the Riersgard pad. There are very few places in which one will find six pumpers next to three pumpers while a frack spread is on-site.

Look at this post:

I think the first Vern Whitten photograph is of the 12-well Alger oil field pad west of Ross. If you look at the photograph closely, it appears that three wells are also drilled (no pumpers) and they are the ones the frack teams are involved with. If you look at the GIS map (the link above), you will see that three wells are on DRL status and three well sites are only permitted.

Others can play along, and tell me if they think I'm wrong.

Folks who grew up in western North Dakota but who haven't been back in a long time will really enjoy Vern's photographs of the changes, including the bypass that is being built around Watford City, and the new Menard's west of Dickinson.

Another favorite of mine is slide #30, a photo Vern and labeled "David and Goliaths." It's another incredible photo.

I always appreciate Mr Whitten's photography. He is very, very generous to share it with me to share with others. When I post his photos, the posts become the most-visited on my blog. I'm sure he would enjoy hearing from you:

Vern Whitten Photography
1518 7th Street South
Fargo, ND 58103            

Calgary Conference: Canadian Completions Optimization, June 24 - 25, 2014

Link here.

Canada's First Congress Designed To Maximize Well Economics By Correlating Completions Variables To Reservoir Characteristics To Production Performance

Optimizing frack modeling, fluid and system selection for carbonate, shale, waterflooded, and layered plays.

June 24 - 25, 2014, Calgary, Alberta, Canada.

Experts on the agenda from ConocoPhillips, Murphy Oil, Lightstream Resources, TAQA North, and many more. 

For Investors Only -- May 28, 2014; Bloomberg Suggests A Shakeout Among Shale Operators

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.

Trading at new 52-week highs: AAPL (again), COP (again), DAVE, WIN. On another note, ERF is near its 52-week high and up over 2%.

For The Archives: A Shakeout In The Oil Patch

BloombergBusinessweek is reporting:
The U.S. shale patch is facing a shakeout as drillers struggle to keep pace with the relentless spending needed to get oil and gas out of the ground.
Shale debt has almost doubled over the last four years while revenue has gained just 5.6 percent, according to a Bloomberg News analysis of 61 shale drillers. A dozen of those wildcatters are spending at least 10 percent of their sales on interest compared with Exxon Mobil Corp.’s 0.1 percent.
“The list of companies that are financially stressed is considerable,” said Benjamin Dell, managing partner of Kimmeridge Energy, a New York-based alternative asset manager focused on energy. “Not everyone is going to survive. We’ve seen it before.”
Some investors are already bailing out. On May 23, Loews Corp., the holding company run by New York’s Tisch family, said it is weighing the sale of HighMount Exploration & Production LLC, its oil and natural gas subsidiary, at a loss.
HighMount lost $20 million in the first three months of the year, after being unprofitable in 2013 and 2012, Loews said it its financial reports. As with much of the industry, HighMount has shifted its focus to oil after natural gas prices plunged and has struggled to find sites worth developing, company records show
The article lists a number of companies but none were associated with the Bakken, except Hess and EOG which are not considered at risk. [Big thank you to a reader who sent me this story.]

From The Archives: It's Who You Know, Not What You Know

Remember this story? A lack of transmission lines thrwared T. Boone Pickens' ambitions for a huge wind farm in Texas. To guys like Algore it only made sense. unfortunately Pickens' apparently did not have friends in high enough places to get it done:
Texas is in the midst of a wind-power boom, and at the heart of it lies a conundrum: While plenty of ranchers are eager to host wind turbines, few want the unsightly high-voltage transmission lines needed to carry the power to distant cities running through their property. 
The lack of transmission lines — and the relatively low price of natural gas — has thwarted the ambitions of wind-power advocates to expand the use of this alternative energy source in Texas. The oilman T. Boone Pickens, for example, bet heavily on wind a couple of years ago, ordering hundreds of turbines and announcing plans to build the world’s largest wind farm in the Panhandle at a cost of up to $12 billion. He later scaled back, canceling some of the turbine orders, giving up his land lease and saying he was looking elsewhere to build. 
Now, fast forward, last week. Friends in high places approved a transmission line in Texas for a proposed wind farm. FuelFix is reporting:
A California-based energy company announced Thursday that it has federal approval to build a transmission line connecting Texas to the power grid in southeastern states.
The project has the potential to expand the Texas’s wind energy industry by giving it access to another market, according to Pattern Energy Group LP, the company behind the planned Southern Cross transmission line.
Pattern Energy said it received approval from the Federal Energy Regulatory Commission last week to move forward with the line, which is expected to be complete by 2019. The line, which would stretch about 400 miles, would extend from near Dallas into northern Louisiana and then into northern Mississippi.
It begs questions for which I have no answer, but it is interesting it is a California-based company, a state well known with high rollers who fund liberal causes and political races.  I guess Texas ranchers now like the unsightly high-voltage transmission lines needed to carry the power to distant cities running through their property. LOL.

Back To Minimum Wage Debate: All That Noise To Drown Out The 800-Pound Gorilla Story

The other day I mentioned I would get back to these two stories if I remembered/had the time. I'm caught up for the moment, so back to the story on minimum wage. This is what I wrote a couple of days ago:
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.]
The Connecticut story is important. It has all the usual arguments, pro and con, but there was a section of the story that caught my interest. See if you see what I saw:
Employment growth in Connecticut has lagged behind the nation since December, data show. Nationally, employment grew 0.62% from December through April, while employment in Connecticut fell 0.19% over the same time period.
Much of that drop-off was related to the elimination of 10,900 jobs in January, the month employers had to start paying 45 cents more. In the previous three years, Connecticut had added an average of 4,000 jobs over the same time period.
More job cuts wouldn't surprise economists. If companies have to pay more for labor, they'll try to save somewhere else, said Keith Hall, a research fellow at the Mercatus Center at George Mason University.
Did you see it? Do you really think that employers eliminated 10,900 jobs in January because of a "proposed" wage increase, that was incredibly low to begin with? You have to be kidding.  Okay, here's another hint:
When Segui began working at Dunkin' Donuts, she was scheduled for 35 hours a week. A few months ago, she and other workers starting getting fewer hours. She now works from 20 to 27 hours a week.
Employers say they're worried that minimum-wage hikes will inflate their whole pay scale; they fear they'll have to raise all wages so that skilled workers proportionally get more than unskilled workers.
Whether you schedule someone to work 35 hours or 27 hours ,you still need all the hours covered.

Regular readers know the 35-hour vs 27-hour 800-pound gorilla in the room. I have to go back and see if the story mentions that 800-pound gorilla.

Yup, here it is:
Shanece Coleman, 25, began working at Burger King in Hartford a year and a half ago. At first, she worked 40 hours a week, and it was still difficult to pay her rent of $625 and provide for her 8-year-old son.
Then Burger King reduced her hours to 28 hours a week because, she was told, the company didn't want to have to provide her with healthcare under the Affordable Care Act.
And so it goes. The minimum wage story: it's all noise to drown out the bigger issue that will affect jobs: ObamaCare.

Also note: the companies are reducing hours/week well below the 30-hour threshold so there's a bit of slack in case someone actually clocks in a bit early or clocks in a bit late. The stories above show 20 - 27 weeks, and 28 hours, well below the 30-hour threshold.

Housing (Non) Recovery

By the way, this leads me to the next story: Fed Chairman's problem with housing.

Background: it really, really helped me to have read Grand Pursuit by Sylvia Nasar to help me understand macro-economics, and help me understand why we are not seeing a housing recovery. The two main reasons we are not seeing a housing recovery despite record low mortgage rates: a) lowest labor force participation rate in quite some time; and, b) lack of capital due to Dodd-Frank, SEC, government rules on banking. The second reason (lack of capital) is mentioned in the linked article; labor force participation rate is not mentioned.

The other reason, of course, is the effect ObamaCare is having on the economy in general. If folks required a second income to afford a home, getting one's hours cut from 40 hours to 20 hours because of ObamaCare will probably nix the deal on buying a home.

Another reason was mentioned in the article: a dearth of starter homes. 

But any article on the economy that fails to take into consideration ObamaCare is missing a huge story line. ObamaCare is "US Health" and health represents 1/6th of the US economy.

I Am Not Weak

The DailyMail is reporting:
–  'I believe in American exceptionalism with every fiber of my being,' the president insisted, yet he used the words 'partner' and 'partnership' 16 times in his speech at West Point, outlining a contradictory foreign policy 
– Obama replaced the phrase 'collective action' in his prepared remarks – with the words 'multilateral action' several times 
– working through NATO and the UN will dominate American foreign policy, Obama said: 'This is American leadership, American strength' 
"I am not weak." At least that's better than "I am not a crook." I guess.

Actually, again, one must parse the words. "I am not weak," suggesting he IS (Captain) America. If so, "I am not weak" suggests America is not weak. I agree: America is NOT weak. But America is a whole lot less strong than when Obama came into office. I've run out of fingers and toes to keep track of the lines the President has drawn in the sand (and the Black Sea).

Update On Electric Vehicles; GM's 2-Year Supply Of Cadillac ELR; GM Selling Less Volts Than Last Year; Tesla Debt -- Junk Bond Status

I track electric vehicles at this post.

Three items to be added today.

First: GM with a 2-year supply of the new Cadillac ELR. The graphic at the site is quite incredible. And worrisome, I suppose for GM.

Second: Tesla's debt is now junk-bond status.

Third, the Chevy Volt story: Chevy Volt sales fall to 2-year low earlier this year.
Yet GM sold only 918 Volts, the car’s worst monthly showing since January of 2012 when 603 were sold (and also the last time less than 4 digits were moved).
Those 918 sales represent 19.5% decrease compared 2013 when 1,140 left dealer lots.
And while we thought that new production may kick into high gear at GM’s Hamtramck facility, that really didn’t happen as national inventories continued to hover near 12 month lows – which means besting February 2013′s surprising 1,626 sales level might also be more than a little tricky.
Again on the technical ‘plus side,’ GM also had some difficulties managing Volt inventory in early 2013; meaning Spring is the company’s best opportunity to put once again put some distance between 2014 and 2013 results.
Despite being the best selling plug-in vehicle in the United States last year, inventory issues late in 2013 meant that Chevrolet actually sold less Volts that in 2013 than the year prior (23,094 vs 23,461) … a result we are sure General Motors does not want to repeat.
In April, 2014: Nissan Leaf widens lead over Chevy Volt.
The Nissan Leaf battery-electric hatchback continued its stronger sales trend from March: 2,088 Leafs found new owners, lower than the March number of 2,507 (its second-best month ever, after December last year).
That figure, however, brings the total number of Leafs delivered in 2014 to 7,272, fully one-third higher than the same four-month period last year.
And it widens the Leaf's lead over the Chevy Volt range-extended electric car, which logged 1,548 deliveries, bringing its total for the first four months of 2014 to 5,154. That's less than last year's 5,550 during the same period.

Is The LA Times Shifting Stance On Minimum Wage?

Active rigs:

Active Rigs190186216172119

RBN Energy: more on pipelines from the Marcellus/Utica to the southeast.

The Wall Street Journal

Insurers push to rein in spending on cancer care.

Cost to rein in Detroit blight will cost almost $1 billion.

Military spending buoys durable orders.

Some Democrats have begun to take a more assertive stance on ObamaCare, highlighting the most popular benefits of the law and attacking Republicans for trying to repeal them.

SecDef orders review of military health care: he has ordered a sweeping revew of the miltary healht-care system to determine if it is hobbled by any of the problems recently exposed in the medical services provided to the nation's veterans.

Supreme Court rules against George W. Bush protestorers.

GM-defect death tally likely to rise.

Power-price rise energizes utility shares: this was posted yesterday from a different source. A huge "thank you" to Steve for alerting me to the article. This is a big one -- it should be a WSJ front page story. 

S&P 500 closes at record; gold extends losses to 15-week low.

The Los Angeles Times

Obama delays deportation review to give immigration bill a chance.

Study: diet soda drinkers lost more weight than water drinkers.

Michelle decries plan to lower school lunch nutrition standards.

Tectonic shift? LA Times shifting stance on minimum wage after the Connecticut experience?
ashington politicos want to know which way popular winds are blowing so they can set their sails accordingly. Rarely, though, are they as explicit as President Obama in citing public opinion as a justification for policy. When pressed to defend his call for a $10.10 minimum wage, Obama routinely points to the November 2013 Gallup poll wherein 76% of respondents said they favored a higher minimum wage. A higher minimum wage is "what America wants," asserts the president.
There are evident problems with poll-driven policy development. To begin with, pandering to polls isn't real leadership; poll-driven decisions are instead the epitome of "leading from behind." Further, poll responses vary significantly over time and circumstances. Five years ago, 58% of Americans opposed gay marriage (as did, coincidentally, Obama). Today, 59% approve of same-sex marriage (USA Today/Gallup, 2014).

In assessing those losses, several facts are relevant. First, nearly everyone starts out in a minimum wage job. Second, few people stay at minimum-wage jobs very long; they move up the wage scale quickly with experience and employer references. Third, a majority of both teen and adult minimum-wage workers live in households with other, higher-wage workers. Single moms who hold minimum-wage jobs (the favorite focus of the popular media) stay neither single moms nor at minimum wage jobs very long.
All of this means that an effective wage hike will delay labor-market entry for teens, immigrants and other low-skilled workers who need access to that first step on America's mobility ladder. So, there is a downside to minimum-wage hikes.

Are We Underestimating North America's Fracking Boom? -- WSJ

Front page story of section 2 -- all about Sasol in Louisiana.

This is a huge story. Don first introduced me to Sasol, maybe two or three years ago, and periodically it shows up on my radar again. From the WSJ:
It's the tale of a company called Sasol,  the former South African state oil company, which is embarking on what could be the single-largest foreign investment project in U.S. history.
Sasol is building a 3,034-acre energy complex near a bayou in Lake Charles, LA. Tapping into cheap, fracked natural gas as well as the pipeline and shipping infrastructure along the Gulf Coast, Sasol plans to spend as much as $21 billion there.
It is expensive, elaborate and dirty work. Sasol plans to reduce, or "crack," the gas into ethylene, a raw chemical used in plastics, paints and food packaging. It also plans to convert the gas into high-quality diesel and other fuels, using a process once advanced by Nazi scientists to power Panzer tanks. The state of Louisiana is even kicking in $2 billion of incentives to make it happen.