Friday, July 25, 2014

Week 30: July 20, 2014 -- July 26, 2014

North Dakota expects "big surge" in production this summer
Random update on an incredible Halcon well in McGregory Buttes
At 197, active rigs in North Dakota nears 200
Newfield reports a gusher
A big day for some nice wells (XTO, Oasis reporting)
MDU sells 4,363 mineral acres in Mountrail County; about $46,000/acre

A "minor" Bakken crude oil train derailment in Seattle

Shale revolution changing cities across America 
Delta Airlines signs for five more years of Bakken crude oil
Stabilizers: the next big story in the Bakken

Big fire in Williston; Red River Supply

Ten (10) New Permits On A Very Slow Friday -- July 25, 2014; NDIC Not Reporting Historical Rig Counts Consistently; The Big Story -- Why Is North Korea So Quiet?

NOTE: The NDIC is intermittently not including various years (most notably 2013 and 2009) when reporting the number of active rigs. I had not noticed that, but scrolling through the active rigs data, this started happening over the past week or so. Note, for example, today: 2013 and 2009 data is not included. An alert reader caught this. I don't know the reason.

Active rigs:

Active Rigs19320817913876

Ten (10) new permits --
  • Operators: Oasis (4), Petro-Hunt (2), Statoil, Whiting, Crescent Point, Samson Resources
  • Fields: Foothills (Burke), Baker (McKenzie), North Tioga (Burke), Stony Creek (Williams) Sanish (mountrail), Ellisville (Williams), Blooming Prairie (Divide)
  • Comments:
Wells coming off the confidential list today were posted earlier today; see sidebar at the right.

New North Dakota Refinery Almost Complete

BillingsGazett is reporting:
Construction of an oil refinery near Dickinson is about three-fourths complete, and most of the jobs that will be created there have already been filled.
Bismarck-based MDU Resources Group Inc. and Indianapolis-based Calumet Specialty Products Partners are building the $350 million Dakota Prairie Refinery. Construction started in March 2013. The facility is slated to be operating late this year.

The refinery will employ about 90 workers. About 70 of the positions already have been filled by people with a lot of experience in the industry, according to MDU.
ONEOK To Invest $450 Million In SCOOP

TulsaWorld is reporting:
ONEOK Partners LP announced Thursday that it plans to invest between $365 million to $470 million on natural gas projects in the emerging South Central Oklahoma Oil Province (SCOOP) over the next two years.
The Tulsa-based energy infrastructure firm will build a new natural gas processing plant in Grady and Stephens counties. The planned Knox plant will eventually process up to 200 million cubic feet in natural gas per day, according to the ONEOK release.

The "average" ONEOK natural gas processing plant in the North Dakota Bakken is rated at 100 million cubic feet of natural gas per day.

When Is A Cease-Fire Not A Cease-Fire? When Israel Is Involved

Israel and Hamas announced a 12-hour humanitarian cease-fire in Gaza for Saturday, only hours after Israel's security cabinet unanimously rejected U.S. Secretary of State John Kerry's proposal for a temporary cease-fire to allow indirect talks.

In announcing late Friday that it would observe the "humanitarian window" from 8 a.m. to 8 p.m. Saturday, Israel said that during that time "we'll continue to locate and neutralize terror tunnels."
It also warned the military "shall respond if terrorists choose to exploit" the lull to attack Israeli troops "or fire at Israeli civilians."
A Hamas spokesman, Sami Abu Zuhri, said earlier Friday that the group had agreed to a 12-hour lull, starting at 8 a.m.
Any bets how long this 12-hour cease fire between modern-day Hatfields and McCoys will last? I give it six hours. [Apparently the cease fire did not last an hour: "Israeli-Hamas forces continue to fight despite cease fire."]

The Obama Legacy: Household Net Worth Plummets

The New York Times is reporting:
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially. 
No, the entire "loss" did not happen under the Obama administration, but the expectations that his administration would turn "this" around.

The Obama Legacy: No More Oil From Libya

Fox News is reporting:
The United States shut down its embassy in Libya Saturday and evacuated its diplomats to neighboring Tunisia under U.S. military escort amid a significant deterioration in security in Tripoli as fighting intensified between rival militias, the State Department said. 
"Due to the ongoing violence resulting from clashes between Libyan militias in the immediate vicinity of the U.S. Embassy in Tripoli, we have temporarily relocated all of our personnel out of Libya," spokeswoman Marie Harf said.
The withdrawal underscored the Obama administration's concern about the heightened risk to American diplomats abroad, particularly in Libya where memories of the deadly 2012 attack on the U.S. mission in the eastern city of Benghazi are still vivid and the political uproar over it remain fresh ahead of a new congressional investigation into the incident. A senior military official told Fox News the Pentagon has been advising the State Department leave the post for weeks. 
Wow, talk about dithering. Never learns. It will be interesting to see the new definition of "temporarily."

President Obama will leave office with the world significantly worse off than the found it when he assumed the presidency.  

The big story: why is North Korea so quiet?

The Road To New England Takes A Detour Through Colorado -- July 25, 2014

This is from The Washington Post -- yes, the liberal media newspaper -- not from Fox News. As you read the story, remember that the US has the least expensive energy in the world, and is currently experiencing a glut of natural gas -- so much natural gas that a lot of folks want to export it.

It turns out that Germany is not the only place where electricity is considered a "residential luxury." A big "thanks" to Steven for sending the link. The Washington Post is reporting (at the link, scroll down):
Colorado is way ahead of the rest of the country on moving towards cleaner energy. But if that's not managed carefully, energy bills can skyrocket
That's the headline. Actually, the headline seems to be very, very off the mark. Energy bills in Colorado have already skyrocketed, at least for some.
It’s not just the light switches, though. Ever since her power was shut off in 2010, Garcia has adopted a Depression-era obsessiveness: She doesn’t use the oven in the summer, because it heats up the house, and uses only one small air conditioner.
Oh, and forget about machine-washed dishes; Garcia does them by hand (the battle is evident in the pile at the sink). The toaster and microwave bear sticky notes ordering the user to unplug them afterward, lest they continue drawing energy from the sockets. “You think turning it off is enough, and it’s not,” she admonishes.
And yet, no matter how much she rations and cuts, Garcia cannot keep ahead of the fast rise in rates. She runs a daycare out of her home, so her monthly bill of about $200 is already higher than average in Pueblo, where the residential rate per kilowatt hour has risen 26 percent since 2010 — and on a per-household basis, is now among the highest in the state (which seems odd, consider her rent for the house is only $850).
So what's the story?
Garcia’s extreme frugality is, indirectly, the result of coal plants shutting down as Colorado transitions to renewable energy. But in Pueblo, it happened in a way that has left poor consumers gasping for relief.
To a wealthy community, skyrocketing electricity rates might not have much of an impact: When you have a decent-paying job, what’s a few more dollars a month on your utility bill?
Pueblo is not that kind of place. With a poverty rate of 18.1 percent, incomes far below the state average and a third of the population on some sort of public assistance, those few dollars can make a big difference here.
So why have rates jumped so much, so fast? The local utility would point to environmental regulations and the sudden disappearance of supply from its competitor. Local officials and environmentalists would cite the utility’s business strategy.
The customers were caught in the middle.
Soon after buying the local utility, Black Hills Energy opted to replace nearly all its cheap coal capacity with natural gas essentially overnight — which means ratepayers are footing some big infrastructure bills all at once.
This is why today's RNB Energy post is so relevant.

It looks like the road to New England took a detour through Colorado.

[Later: when I wrote the above, I was going to add a note that this whole story sounds a bit bogus -- I find it incredible that someone as frugal as Ms Garcia could be paying as much as $200/month and, at that, she is paying more than other residents.

A close reading of the story provides the explanation, perhaps, something the Washington Post writer conveniently attempted to gloss over: Ms Garcia is running a business from her home. Of course, her electric bill would be higher if she is running a business from her home. It would be interesting to know the square footage of her business, and exactly what is meant by "a small air conditioner." Small, compared to what? It would be interesting to know what the utility costs directly associated with her business are.

Don sent me the Black Hills Power utility rates for Colorado and the rates are among the least expensive in the nation:
  • 8 cents/kWh for the first 1,000 kWh
  • and as little as 6.6 cents/kWh for any usage above 1,000 kWh during nine months of the year (October through May)
This whole story sounds a bit bogus. I agree that switching from coal (really, really cheap) to natural gas (really cheap) all at once, and adding in mandated wind and solar (really, really expensive) is the "road to New England."]

Don, with a fairly typical midwestern home says he will use about 550 kWh in the month of June. Figuring backwards, Ms Garcia, at $200/month utility bill, was using, in comparison, about 2,215 kWh of electricity. Something fishy is going on. We don't know the whole story.

Don reminded me that 24/7 lights to grow marijuana is extremely energy intensive; Colorado allows personal marijuana production, I believe, but don't take my word for it. I don't follow the Colorado marijuana laws all that closely.

A Familiar Story

Statoil beats 2Q14 earnings estimates but misses on revenues. Reports earning 63 cents vs consensus of 58 cents.

Quiet, Quiet Friday -- July 25, 2014

Common Core Mathematics

Number of significant shooting wars (Ukraine, Israel-Gaza, Iraq): 3
Number of political fundraisers in past two days: 2
Number of speeches on US economy: 1
Number of speeches on worldwide atrocities: 0

Approval rating: 39% (compare at wiki) (source)

President's "approval average" is now lower than that of President George W. Bush and lower than that of Richard M. Nixon.


Global Warming! Everyone's Blaming The Weather

Don spotted this. Cliffs Natural Resources Inc. reported second-quarter 2014 net loss of $2 million, or a penny per share compared with a net income of $133 million or 82 cents per share in the year-ago quarter, hurt by a double-digit decline in sales. The loss was narrower than the Zacks consensus estimate of a loss of 8 cents per share. Cliffs is blaming part of the loss on the weather (reminder -- this was springtime, not winter):
Iron ore pellet sales volume was 4.3 million tons in the second quarter, compared with 5.7 million tons in the year-ago quarter. The decline was due to reduced vessel shipment availability due to the freeze on the Great Lakes [no doubt due to global warming -- LOL] resulting in a delayed start of the 2014 shipping season, as well as lower export and other spot sales.
Back in April, this story over at nwittimes:
The winter from hell has caused the shutdown of blast furnaces that normally burn around the clock at U.S. Steel Gary Works.
U.S. Steel has temporarily idled its blast furnaces and steelmaker operations at the massive steel mill, the largest in the nation, because ice on the Great Lakes has choked off access to vital raw materials. Gary Works, which stretches along seven miles of Lake Michigan's south shoreline, gets iron ore — an essential ingredient in steelmaking — from lake freighters that have not been able to navigate treacherous conditions that include 40-inch-thick shelf ice and stacks of ice chunks that reach as high as 14 feet tall.
Great Lakes ice cover had hit the highest point in 35 years this winter and is currently at 65.7 percent. Most problematically, Lake Superior is more than 80 percent frozen, which is preventing ships from hauling ore from Minnesota's Iron Range to Northwest Indiana steel mills.
A big "thank you" to "anon 1" for providing the link.

Active rigs in North Dakota:

Active Rigs19220817913876

RBN Energy: update on power plants switching from coal to natural gas.
Natural gas prices for the nearby CME NYMEX futures contract at the Henry Hub in Louisiana have fallen by 38 percent from their high in February of $6.149/MMBtu to yesterday’s close at $3.847/MMBtu (July 24, 2014). Over the same period the price of CME NYMEX Appalachian coal has stayed virtually flat at $60/ton. So far falling gas prices have not increased power burn – the consumption of natural gas by power generators switching from coal. But natural gas prices in the Marcellus at Dominion South Point have fallen by nearly 60 percent since February to $2.46/MMBtu making natural gas a cheaper fuel than coal for power burn in that region. Today we discuss prospects for coal to gas switching this summer.
The Wall Street Journal

US says Russia firing into Ukraine And the point would be? The US "feels" a lot like a paper tiger; a lot like Germany, Britian ... mostly talk these days. Not a criticism, just an observation. There's really nothing the US can do militarily -- send troops into the Ukraine? Into the Gaza Strip? Back into Iraq? Hardly. Although the Obama administration is quietly sending more "advisers" back into Iraq.

The question for the day: the market is down a bit today -- what is more concerning: Amazon reporting a loss everyone knew was coming (but coming in worse than expected) or the bad numbers regarding new home sales.

This is interesting. Insurers are trying to reverse a long slide in sales of life insurance to the middle class, but it's proving a tough sell.

This is even more interesting. For folks who thought those radioactive "socks" in the Bakken were a problem this should get their attention: garbage heating up underground at a St Louis landfill is said to be heading toward a section of the site where thousands of tons of radioactive waste from the US nuclear weapons program is buried. Sort of like the North Dakota burning coal seams.

Obama urges action on "inversions." The good news for investors: it's all talk.

Well, isn't this surprising? "Shrapnel damage found on Malaysian Airlines flight 17 aircraft" suggesting that the plane was shot down. Really?

What happened to ethanol? US corn farmers face a cash crunch. Tumbling corn prices are sowing fears that many US farmers will suffer their first losses in years and the agricultural economy could face its first sustained slump in a decade. ObamaNomics?


"He had delusions of adequacy." - notable quotes; Walter Kerr.

Penthouse Living, San Pedro, CA
As "they" say in Monopoly: "just visiting"