Saturday, July 19, 2014

Week 29: July 13, 2014 -- July 19, 2014

Top story of the month
Whiting to acquire KOG for $3.8 billion; no cash premium; all stock deal
More on the Whiting-KOG deal

Top story of the week
North Dakota sets new production record; second consecutive month greater than 1 million bopd
Director's Cut for May, 2014 data

The boom is here to stay -- at least through 2100; five generations of roughnecks
Bakken recoverable oil: 100 billion bbls places it at double Spraberry/Wolfcamp (Permian)
KOG reports several nice Koala wells
BR with another gusher in Corral Creek
Lease sales in Towner County
Bloomberg impressed with North Dakota production in May
Whiting reports high background gas at the Mork Farms Wells in Pleasant Hill oil field
A new field in the Bakken? The Aquarium (Newfield)
ONEOK to build 7th natural gas gathering and processing plant in Williston Basin

New CBR rules will stifle Bakken production

Bakken economy
Taxable sales and purchases: Williston still leads -- by a huge margin
First time ever: oil beats King Ag in North Dakota
Legacy Fund to receive largest infusion to date 
The male migration: comparing the Bakken boom with other booms
Update on Williston Crossing
Menards, Home Depot in Williston, an update
The Williston Wire: Tom Rolfstad retires; Home Depot to open in Williston
Taxable sales and purchases across the state; Williston still leads by a large margin
North Dakota: one of eight states not at risk for major earthquake (despite all that fracking)
The Permian: huge; new lease on life due to "Bakken" technology
Global investment in "green" energy fell a whopping 12% in 2013 as incentives blew away
EU at risk of losing 30 million jobs to US shale revolution

Personnel Costs, Railroads; Texas To Get Bragging Rights To Having First Existing Coal-Fired Power Plant Retrofitted To Capture Carbon (CO2)-- July, 2014

On July 17, 2014, I mentioned in passing the personnel costs associated with engineers/railroads. Today The Dickinson Press is reporting:
BNSF Railway has struck a tentative agreement with a union that would allow one-person train crews on certain routes if a monitoring system is in use.
The proposed agreement, which is at odds with the national union’s staunch support of two-person crews, also conflicts with a possible federal rule that would require two crew members aboard trains.
According to BNSF, the tentative agreement allowing a one-person crew would not apply to large trains carrying hazardous cargo, including crude oil and ethanol.
“BNSF has special handling procedures and operating rules for hazardous materials including loaded crude unit trains, which, among other things, require two people in the locomotive,” BNSF spokeswoman Amy McBeth said Friday. “That would not change under the agreement.”
The railroad’s agreement with the Transportation Division of the Sheet Metal, Air, Rail, and Transportation Union, SMART, would apply to about 60 percent of BNSF’s system.
Anyone wanna bet this will happen? For the record, I'm not taking bets.

Texas: First Existing Coal-Fired Power Plant To Be Retrofitted 
With Coal Gas Capture Technology

Data points:
Where to get the CO2?
  • coal-powered W. A. Parish power plant eighty (80) miles away generates C02
  • retrofit the power plant to capture the CO2 and move it to West Ranch oil field by pipeline
  • joint venture: NRG Energy (Texas utility) and JX Nippon Oil and Gas (Japanese)
  • to be completed in 2016
Why is this news?  The project marks the first time an existing coal-fired power plant is being refitted with coal gas capture technology.

Velocity of Money 
Government's Obfuscation With Gasoline Consumption Data

Some months ago I posted a number of observations while reading Sylvia Nasar's book on economics: Grand Pursuit. All things being equal, it is not the amount of money the government prints, but it is the velocity of money moving through the economy that correlates best to inflation. I was reminded of that again by the excellent "guest post" over at ZeroHedge: US gasoline consumption plummets nearly 75%. It's an article worth bookmarking and reading when one has time.

No New "Red Lines"After Malaysian Airlines "Tragedy"
When "last chance" means "extend the deadline"

It was noted on Los Angeles radio yesterday that the president did not set any new "red lines" following the shoot-down of the Malaysian airliner. However, earlier in the week, this Reuters headline: Iran warned of "last chance" in talks after deadline missed.

So, what does "last chance" mean?  Extend the deadline:
The countries agreed to extend the high-stakes negotiations by four months.
I can't make this stuff up. No longer any more "red lines"; rather, "one last chance."

WTI May Invert; Short-Term Angst For Investors -- WSJ

Active rigs:

Active Rigs19520718213442

The Wall Street Journal

US blames attack on Malaysia Airlines on Russian-aided separatists in the Ukraine. Disaster clouds Putin's strategy for Ukraine.

Gaza bombarded by air, land, and sea.

Detroit's water cutoffs spark protests. Courts will get involved. Free water for all.

President Obama schedules top-level meeting on immigrant children, set for next Friday. Then golf.

 British Open: McIlroy extends lead; Tiger and Phil not on leaderboard but "they are all that seems to mater."

Heard on the street:
Front-month Brent crude-oil futures raced up to almost $116 a barrel in mid-June amid renewed violence in Iraq, but are now back below $108. That would upset many an oil investor.
But there is more trouble ahead—literally.
Just as the yield curve plots interest rates for bonds at different maturities, the forward curve prices oil for delivery in the months and years ahead, based on the level at which futures are changing hands. When near-dated prices are higher than those further out, the curve slopes downward, implying that supply is tight. When near-dated prices are lower and the curve slopes upward, it suggests the oil market is looser. Brent's recent slide hasn't merely brought down the headline price, it has flipped the curve.
A month ago, the spot price was about $1.60 a barrel higher than oil for delivery three months out, so the curve sloped downward. Today, the three month level is 75 cents above the spot price.
It will get worse before it gets better.

The Los Angeles Times

The President calls downing the Malaysian airliner an "outrage."