The Road To New England Paved With Gold For Savvy Traders; NBC's David Gregory Fired? -- August 14, 2014

Congress is worried about "inversions." There are "worse" things out there to worry about. 

Steven sent a link to a great article on making money on the nation's fragile electricity grid. Be sure to read to the end of the story to see a "North Dakota connection." Before you get that far, ask where yourself where opportunities for profit might exist. The New York Times is reporting:

By 10 a.m. the heat was closing in on the North Shore of Long Island. But 300 miles down the seaboard, at an obscure investment company near Washington, the forecast pointed to something else: profit.

As the temperatures climbed toward the 90s here and air-conditioners turned on, the electric grid struggled to meet the demand. By midafternoon, the wholesale price of electricity had jumped nearly 550 percent.

What no one here knew that day, May 30, 2013, was that the investment company, DC Energy, was reaping rewards from the swelter. Within 48 hours the firm, based in Vienna, Va., had made more than $1.5 million by cashing in on so-called congestion contracts, complex financial instruments that gain value when the grid becomes overburdened, according to an analysis of trading data by The New York Times.

Disclaimer: this is not an investment site. So not make any investment decisions based on anything you read here or think you may have read here. 

The wholesale price of electricity surged to similar prices in New England last winter, and will probably do so again this winter.

By the way, mainstream media is reporting that President Obama will keep donations from companies who have benefited from "inversions."

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Connecting The Dots

Golfing While The World Burns ... and closer to home ...

... sort of reminds me of the riots back in the 1960's under another out-of-touch President

Remember all those stories about Homeland Security and other federal agencies stockpiling ammunition? At the time, I opined that it had to do with a concern about a break-down in border security along Mexico. It appears the Feds were aware of another tinderbox: hyper-segregation with extreme income disparity/wealth-poverty divide.  Two headlines from The Drudge Report:

• why Ferguson was ready to explode -- Time Magazine
• death stokes fire of US racial tensions-- Financial Times

The differences this time: a) the federal government knows how a small incident can turn into a big event and are better prepared; b) the population in Ferguson is not the same size as the population in the cities with the race riots in the 60's.

I don't follow the news on television, so for all I know the situation in Ferguson is now back under control and everyone is resolving to "work it out peacefully." On the other hand, if things get significantly worse, it will be interesting if the National Guard is called out [update: the Missouri governor called in the National Guard overnight, August 17 - 18, 2014].

The British tabloids seem to be covering this story much better than US mainstream media. Maybe it's not that big a deal; I really don't know.  If this continues to be a big story through the weekend, ... as SecDef Hagel said, "the world is exploding all over."

So, with that, let's see what The Wall Street Journal will be reporting tomorrow in the print media.

Oh, before we get to that. How's the war in Iraq going? French Total is pulling out some of its workers in the Kurdish oil fields. 

French oil major Total said on Thursday it had reduced its personnel working in the autonomous Kurdistan region of Iraq, although work on the two oil blocks it operates continued as scheduled.

A dramatic push by the Islamic State through northern Iraq to the border with the semi-autonomous Kurdish region alarmed Baghdad and drew the first U.S. air strikes on Iraq since the withdrawal of American troops in 2011.

The Wall Street Journal

Top story: riots in St Louis.  Police use new tactic: the highway patrol.

Iraqi's Maliki steps down.

NBC News "Meet The Press" moderator David Gregory was fired; replaced by Chuck Todd. I thought I heard that on the radio today, but thought I was mistaken. Despite dismal ratings, I thought David Gregory was bulletproof, as they say. Maybe Mr Gregory was not fired; perhaps he just wants to spend more time with his family.

How about those sanctions? The euro-zone economy stalled in the second quarter, raisign the ugly prospect (their words, not mine) that the region's recent weak economy after its long debt crisis has already lost momentum as it faces fresh headwinds from Russian and Ukraine.. How's that renewable energy working out?

Big story: Mexico will allow private companies to big on country's oil and gas reserves, eding Pemex's monopoly.

UUS retail sales at a standstill in July, suggesting that the US economy is struggling to lift off.

Ao, what are Americans buying? Cars. Americans took out new auto loans at the fastest pace in enarly eight years while new home loans tumbled to lowest level since 2000.

I don't remember the numbers that were just reported the other day, but the USPS financial losses seem to be getting significantly bigger. How are US senators reacting? Fifty senators joined forces earlier today (Thursday) to try to halt for one year a US Postal Service plan to clsoe 82 mail sorting centers, cutting 15,000 jobs and slow delivery speed for some letters. And you know? I think the senators will win this one.

The Journal reports on a nation-wide mosque-building boom. Related: even as the Muslim population in the US multiplies, the number of imams lag behind.

Hmmm .. now the US says ISIS is a new threat to the west. I thought the war on terror was pretty much over under President Obama.

Another hmmmm...Coke buys stake in Monster Beverage.

I've been following this story for quite some time for at MacRumors, but not it's being covered by The WSJ: new iPhone's sapphire screen. How much is Apple betting on this? Amost $1 billion. Sounds like a lot of cash, doesn't it? Doesn't APPL have about $40 billion in cash?

The Los Angeles Times

Lead story: Ferguson riots.

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Too Good To Last

Yesterday it was reported that the Pentagon filled weapons orders for Israel under earlier contracts / agreements. The transactions were reported to have been "out of the reach of the White House. I knew that was too good to last. It is now being reported that President Obama has blocked an Israeli missile shipment and will weigh in on future ammunition requests. I'm just a spectator; no dog in this fight. SecState John Kerry will make the decisions in the future whether to honor military-to-military agreements with Israel.

KOG With Huge Skunk Creek Well; QEP With Four (4) "High-IP" Wells; Petro-Hunt To Report A Huge Bakken Well -- August 14, 2014; US LNG Export Process -- Picking Winners And Losers

Wells coming off the confidential list Friday:

• 24832, 1,243, Petro-Hunt, Kostelnak 145-97-29B-32-1H, Little Knife, t6/14; cum 22K 6/14;
• 26395, drl, CLR, Limousin 5-3H, Sanish, no production data,
• 26673, 344, OXY USA, Steffan 2-29-28H-143-97, Willmen, t2/14; cum 20K 6/14;
• 27327, 2,357, KOG, Skunk Creek 4-8-17-14H3, South Fork, t7/14; cum --

Reminder: I track all OXY Bakken/North Dakota wells -- click here.

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24832, see above, Petro-Hunt, Kostelnak 145-97-29B-32-1H, Little Knife, a huge well,

Date	Oil Runs	MCF Sold
6-2014	21074	18444

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Twelve (12) new permits --

• Operators: Triangle (4), XTO (3), Slawson (2), Whiting (2), CLR,
• Fields: Pronghorn (McKenzie), Murphy Creek (Dunn), Big Bend (Mountrail), Bell (Stark), Garylord (Stark), Temple (Williams
• Comments:

Wells coming off the confidential list were posted earlier; see sidebar at the right.

Permits renewed:

The White Butte Oil Operations renewed permits for three Panzer wells in Antelope oil field, McKenzie county. I don't recall posting this company before. These are the only three permits this company has in North Dakota at this time; perhaps they picked up these permits from someone else? Yes, here they are: the permits were originally issued in 2011 to Slawson; here were two of them:

• 21385, conf, Slawson, Panzer 1-20H, Antelope,
• 21387, conf, Slawson, Panzer 4-20TFH, Antelope,

Eleven (11) producing wells completed:

• 24846, 2,013, QEP, MHA 1-06-07H-147-92, Heart Butte, t6/14; cum 29K 6/14;
• 24848, 2,187, QEP, MHA 5-06-07H-147-92, Heart Butte, t6/14; cum 24K 6/14;
• 24847, 2,238, QEP, MHA 7-06-07H-147-92, Heart Butte, t6/14; cum 34K 6/14;
• 24845, 2,736, QEP, MHA 3-06-07H-147-92, Heart Butte, t5/14; cum 43K 6/14;
• 26688, 623, CLR, Schroeder 2-34H, Stoneview, t6/14; cum 6K 6/14;
• 27077, 1,342, MRO, Vollmer 24-24TFH, Chimney Butte, t7/14; cum --
• 24918, 279, Slawson, Hunter 7-8-17TFH, Big Bend, t6/14; cum 7K 6/14;
• 24921, 188, Slawson, Jeriyote 6-5-32TFH, Big Bend, t6/14; cum 6K 6/14;
• 26822, 607, XTO, Boe State 31X-16H, Beaver Lodge, t7/14; cum --
• 26821, 1,298, XTO, Boe State 31X-16D, Beaver Lodge, t7/14; cum --
• 26823, 753, XTO, Boe State 31X-16C, Beaver Lodge, t7/14; cum --

Active rigs:

	8/14/2014	08/14/2013	08/14/2012	08/14/2011	08/14/2010
Active Rigs	194	184	201	191	142

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The road to New England: as Don noted, movers and shakers are moving stranded Marcellus and Utica natural gas to states that want it. Apparently, at least according to this article, Massachusetts and New Hampshire are not interested, FuelFix is reporting:

A Houston company is planning to spend $1.75 billion on two new pipelines to carry Northeastern U.S. shale gas to nearby states and to systems that go to Gulf Coast and Midwestern markets.

Columbia Pipeline Group, the Houston-based infrastructure arm of Indiana gas distributor NiSource, said it wants to move stranded gas from the Marcellus and Utica shale plays to eager markets in Pennsylvania, West Virginia and Ohio, as well as to its pipelines that transport gas across the country.

By the way, just for the record, US Senator from Massachusetts, the Native American Elizabeth Warren opposes a new natural gas pipeline to Massachusetts.That's fine; I'm just a spectator; no dog in this fight.

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Europe at a tipping point is a subject I track here. This is another article, sent by Don, that supports the argument. The UPI is reporting:

Natural gas production from members of the European Union is expected to decline by more than 40 percent in the coming years, Russian analysis Wednesday finds.

A report Wednesday from Russia's National Energy Security Fund finds gas production from EU member states declines 43 percent over the next 12 years when compared with 2013 levels.

The research note finds the reduction in gas production is equivalent to the total annual consumption rate of Italy. It says the EU currently is able to meet only 35 percent of its domestic demand for gas and has few export partners outside Russia.

The report suggests that in the EU, the percent of energy production:

• renewable and coal: 40%
• natural gas: 17%
• crude oil: "the rest"

My thoughts:

This report, coming from Russia (which has its own agenda) makes one circumspect, but based on what I've read I have to agree. Europe won't frack, and had the US not cracked the code on fracking, the US would be in deep, deep trouble. I believe that almost all our oil, and much of our natural gas, is now coming from fracked fields.

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For Investors Only 

LNG Export Process -- Update

• The U.S. Energy Department has finalized its plan to revamp the process for approving liquefied natural gas exports, largely codifying a process first proposed in May.
• Beginning immediately, the DoE will only issue final rulings on whether exports are in the public interest after the FERC has completed an environmental review of the project.
• The benefits of the change extend unevenly to the dozens of companies now vying to export U.S. natural gas, and some in the industry say the new process will exacerbate permitting delays for most companies.
• The biggest winner under the new approach is Cheniere Energy, which already had gained FERC approval but faced a nearly two-year wait for the required Energy Department review of its proposed Sabine Pass expansion; it now moves to the front of the line to get a permit from the DoE.
• Another winner is Exxon's Golden Pass project in southeast Texas, which also was far down the Energy Department’s list, even though it was well into the FERC review.
• The new policy will not affect companies that already have received conditional approvals, such as Dominion's Cove Point project, Sempra's Cameron LNG project and Leucadia National's Oregon LNG project.

Idle Chatter On Pace Of Drilling In The Bakken -- August 14, 2014

Over at the discussion board, a writer asks:

I have been keeping an eye on Whiting's presentations for awhile. Whiting shows the potential for six more middle Bakken wells along with a couple of "new objective wells" (per drilling spacing unit, see page 9 of most recent presentation).

Is this just to keep investors happy or will they actually start drilling some of these so called high density infill wells? After much activity early on, by comparison, there seems to be very little activity in the Sanish field these days. 

This is somewhat of a rhetorical question and regular readers understand the issue and have their own opinions.

However, for newbies, the writer's question raises a number of issues and begs for some kind of response.

Whiting is an E&P company: exploration and production. If Whiting was simply a "production" company (for example, a MLP perhaps) then, yes, it should be maximizing drilling and production. However, they are also an exploration company. As a company, they have a strategic plan and finite resources (money, people, rigs, sand --- for example). The valuation of an E&P company is based on reserves in the ground as well as production. If Whiting announced they would drill their entire inventory this year, and by the end of 2015, they would have no more oil in the ground, their shares would plummet; and they would be out of business in a very short time. Managing their resources is as important as daily production; in fact, from my perspective, managing their resources is more important than daily production.

There are two very interesting "things" happening in the Bakken right now. First, the data now shows that larger amounts of proppant correlate with much better wells. EOG has demonstrated this over the past year -- it's been quite striking. For newbies, in the old days, fracking a well with less than one million pounds of proppant (sand, ceramic, or both) was the norm. Then BEXP (now Statoil) went to 4 million pounds (not many have followed) and then EOG blew open the door (pun intended) by using upwards of 10 million, 12 million, and 14 million pounds of sand. No one has followed EOG's example yet (if others have, I have not yet seen it).

The second "thing": the chokepoint in the Bakken is fracking sand. Almost no one knows this and, to the best of my knowledge, no one is reporting it in such blunt language (Mike Filloon comes closest). But this is a fact: there is a severe shortage of fracking sand in the Bakken. Operators are completing wells with less proppant than they wish because they cannot get enough.

Part of managing its resources includes managing sand allotment when completing Bakken wells. Operators are working furiously to come up with better completion techniques; the Bakken wells have improved immensely since 2000 (Montana) and 2007 (North Dakota) and are going to get better if optimal completion techniques are prescribed. But, right now, sand is the chokepoint.

With regard to Whiting and the Bakken, Whiting is now in a manufacturing phase. Early on, they drilled fast and furious to save leases; to gain experience; to get the cash flow necessary to moving forward. That was the boom. If one defines a boom as continued growth despite severe shortages of resources, the Bakken is still "enjoying" a boom, but in some fields, the Sanish for one, the operators have moved into a manufacturing phase.

It's interesting to look at the number of wells on the confidential list by operator:

• CLR: 306
• Hess: 250
• Statoil: 106
• Oasis: 92
• EOG: 29
• Whiting: 66

EOG has a fair amount of acreage in the Bakken, comparable to the others in that short list. EOG also has some of the most prolific wells in the Bakken. They are also blowing the doors off the formations with 10, 12, 14 million pounds of sand. But look at that: where CLR has more than 300 wells on the confidential list, EOG has a paltry 29. For me that speaks volumes.

Oh, one last thought. When I first started the blog, I was looking at the Bakken from the viewpoint of someone who had no mineral rights. Over time, I realized what I was missing. Everyone following the Bakken follows it for different reasons: surface owners see it one way; mineral owners see it another way; operators see it differently; investors in equities see the Bakken in a different light. Even among mineral owners, there is a difference of opinion how fast the Bakken should be developed. Some mineral owners tell me they wish "their well" had been drilled a couple years later when the technology was better -- compare some of those early short lateral wells with minimal fracking to the long lateral wells they are now completing with "heavy" fracking and slickwater.

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Anyone not connecting these dots, is not paying attention:

• President Obama is on track to have more golfing rounds than Tiger Woods. 

• President Obama's SecDef: the world is exploding everywhere. 

• President Obama says "nyet" to Mr Maliki for urgent request to save his country.

• Mayhem in St Louis. 

• "The boy should be in school." SecState on photograph of 7-y/o holding up severed head.

• Phoning it in. 

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A Note for the Granddaugters

Among several books I read during the past month in southern California (or at least parts of books) included a couple of biographies on Mary Colter; a biography on Fred Harvey (more on him later); and a most interesting book on the Celts: The Discovery of Middle Earth: Mapping the Last World of the Celts, Graham Robb, c. 2013.

I also added two new bird sightings to my "bird journal," such as it is: the juniper titmouse (Grand Canyon) and a small bluish bird, possibly a blue grosbeak, but not sure, since it was the first time I had seen this particular bird. We saw it in the marshes along the creek in the Red Rock State Park, south of Sedona, Arizona. That state park's visitor center had a special exhibit on the riparian biome. The first time I ever heard of the riparian biome was when reading about the Bakken (one such link here). It was a new biome for both our older granddaughter and me. Fascinating.

For Newbies: Random Look At Hess In The Bakken -- August 14, 2014

For newbies, this may be interesting.

Look at the number and the percent of new permits going to Hess the week of August 11 - 15, 2014. 

From the August, 2014, NDIC docket agenda:

• 22795, Hess, Antelope-Sanish, establish two 1280-acre units; 12 wells one of the units, and 10 wells on the other unit; establish an overlapping 2560-acre unit, 3 wells; McKenzie
• 22800, Hess, Blue Buttes-Bakken, 11 wells on a 1280-acre unit; 12 wells on another 1280-acre unit; establish an overlapping 2560-acre unit, 1 well, McKenzie
• 22820, Hess, Robinson Lake-Bakken, 11 wells on an overlapping 2560-acre unit; 13 wells on each of two overlapping 1280-acre units; Mountrail

From the June, 2014, NDIC docket agenda:

• 22490, Hess, Alger-Bakken, 11 wells on a 1280-acre unit; Mountrail
• 22491, Hess, Robinson Lake-Bakken, 11 wells on a 1280-acre unit, Mountrail
• 22492, Hess, Truax-Bakken, 10 wells on each of two 1280-acre units; 11 wells on one
• 1280-acre unit; 2 wells on each of two overlapping 2560-acre unit; Williams
• 22493, Hess, Glass Bluff-Bakken, 6 wells on each of three 1280-acre units, McKenzie
• 22494, Hess, Sandrocks-Bakken, 10 wells on a 1280-acre unit, McKenzie
• 22495, Hess, Juniper-Bakken, 6 wells on a 1280-acre unit, McKenzie
• 22496, Hess, Big Gulch-Bakken, 12 wells on each of two 1280-acre units; Dunn 
• 22406, Hess, Big Gulch-Bakken, 12 wells on each of two 1280-acre units; Dunn

Then, the recent list of wells on the confidential list by operator:

• CLR: 306
• Hess: 250
• Statoil: 106
• Oasis: 92
• EOG: 29

Then, look at all the producing wells that were announced yesterday (Wednesday, August 13, 2014) as being completed. Not only is this one of the longer lists (longest list?) I've seen in quite some time, look at all the Hess wells:

• 25493, 1,310, QEP, Johnson 4-9-3-10LL, Grail, t6/14; cum 8K 6/14;
• 25491, 1,615, QEP, Johnson 2-4-9BH, Grail, t6/14; cum 11K 6/14;
• 25490, 2,262, QEP, Johnson 2-4-9TH, Grail, t6/14; cum 12K 6/14;
• 25492, 1,106, QEP, Johnson 1-4-9BH, Grail, t6/14; cum 8K 6/14;
• 23862, 2,633, Statoil, Hovde 33-4 3H, Sandrocks, t7/14; cum --
• 23861, 3,340, Statoil, Hovde 33-4 4H, Sandrocks, t7/14; cum --
• 25776, 3,043, Statoil, Bugs 27-22 7H, Poe, t7/14; cum --
• 26985, 1.019, Hess, EN-Dobrovolny-155-93-2128H-5, Alger, t7/14; cum --
• 27099, 680, Hess, EN-Johnson-155-94-2017H-4, Manitou, t7/14; cum --
• 26711, 1,085, Hess, BW-Arnegard State-151-100-3625H-3, Sandrocks, t7/14; cum --
• 26856, 701, Hess, EN-State D-154-93-2635H-6, Robinson Lake, t7/14; cum --
• 26984, 700, Hess, EN-Dobrovolny-155-93-2128H-4, Alger, t7/14; cum --
• 26712, 756, Hess, BW-Arnegard State-151-100-3625H-2, Sandrocks, t7/14; cum --
• 26846, 753, Hess, EN-Weyrauch-154-93-1918H-9, Robinson Lake, t7/14; cum --
• 25691, 955, Hess, BW-Johnson-155-94-2017H-6, Cherry Creek, t7/14; cum --
• 27097, 558, Hess, EN-Johnson-155-94-2017H-6, Manitou, t7/14; cum --
• 26599, 2,565, BR, Sequoia 14-9MBH, Hawkeye, t8/14; cum --
• 26664, 1,186, Hess, HA-Link-152-95-3526H-5, Hawkeye, t6/14; cum 29K 6/14;
• 25295, 729, Hess, EN-Weyrauch 154-93-1918H-7, Robinson Lake, t6/14; cum 16K 6/14;
• 25694, 838, Hess, BW-Erler 149-99-1522H-2, Cherry Creek, t6/14; cum 23K 6/14;
• 24515, 1,317, Hess, LK-Summerfield-147-96-15H-2, Bear Creek, t6/14; cum 35K 6/14;
• 24517, 922, Hess, LK-Summerfield-147-96-15H-4, Bear Creek, t7/14; cum 13K 6/14;
• 25693, 913, Hess, BW-Johnson 149-99-1003H-2, Cherry Creek, t6/14; cum 13K 6/14;
• 25294, 953, Hess, EN-Weyrauch 154-93-1918H-8, Robinson Lake, t7/14; cum 14K 6/14;
• 27098, 953, Hess, EN-Johnson-155-94-2017H-5, Manitou, t6/14; cum 18K 6/14;
• 25692, 726, Hess, BW-Erler 149-99-1522H-3, Cherry Creek, t6/14; cum 16K 6/14;
• 24516, 881, Hess, LK-Summerfield-147-96-15H-3, Bear Creek, t6/14; cum 19K 6/14; 

I track the Weyrauch wells here.

Reminder: the Tioga natural gas and processing plant, owned and operated by Hess, and recently expanded, came back on line earlier this summer.  Compare: click here for the list of ONEOK natural gas processing plants in North Dakota.

Among the information considered in granting permits, the NDIC looks at the "likelihood" that the operator will have the resources to drill those wells in a reasonable period of time.

Going Through Stories I Missed -- August 14, 2014; The Key Word: Relatively

Best interactive video of the week? Don sent me this: the climb to the top of Mt Everest. I have severe acrophobia and the initial two-thirds of the video did not particularly catch my attention, but I have to admit, I was feeling "uncomfortable" watching the last one-third of the video, when the ascent starts up the last rock to the Hillary notch, and then, of course, the summit. This is really quite incredible.

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Bakken production numbers posted for past several days. When I get caught up I will point out a story regarding these numbers that might interest newbies. We know the overall production numbers for latest reporting period (May, 2014) but we are waiting for the Director's Cut which will be out today or tomorrow.

Unemployment numbers posted; things are not improving in the job market, five years into the "recovery," no matter what the spin. Even The Los Angeles Times is surprised, their headline: jobless claims take surprising jump to 6-week high. (That headline was on the front page of the day's news summary; the headline at the story: "Jobless Claims Rise to 6-Week High, But Remain Relatively Low." I can't make this stuff up. Relatively? UC Irvine? Really?

Sent to me by readers while I was out-of-touch (literally and figuratively).

Bullet Train To Nowhere. California unable to get the land needed for 29-mile opening section in Fresno, California. Fresno? Really?

The state has yet to start full-blown, sustained construction of permanent structures — including bridges, tracks and train stations — at least partly because it lacks most of the Central Valley land needed for an initial 29-mile segment that will pass through Fresno. The state has acquired 71 of 526 parcels needed for the segment, about 13% of the total, according to figures provided by the California High-Speed Rail Authority.

The start of heavy construction is not only symbolically important but could help weaken political and legal opposition to the project. However, slow progress could threaten the state's ability to meet funding deadlines.

RBN Energy: Canadian efforts to export LNG slip-sliding away.

RBN Energy: part 3 of the Enbridge story. Must-read; must-save.

Enbridge own and operate the longest liquids pipeline system in North America extending from Fort McMurray in Alberta to Montreal in Eastern Canada and south through the US Midwest to Freeport on the Texas Gulf Coast. Although the major purpose of the pipeline is to deliver heavy western Canadian crude, it also carries light crude to eastern Canada and the US Midwest. Projects underway that are expected to be completed at the end of 2014 will expand flows of light crude to the east by 400 Mb/d. Today we continue our series reviewing the Enbridge initiatives with the Light Oil Market Access (LOMA) projects.

In Episode One of this series, we reviewed the 9 refineries in eastern Canada with combined capacity of 1.3 MMb/d. These refineries mostly process light crude that until recently has come from offshore Atlantic seaboard production and imports, but they are processing growing volumes of US shale oil today. Extensive upgrades, reversals and expansions to the Enbridge network have begun to change the dynamics of crude supply to these refineries. In Episode Two we began with an overview of the Enbridge system and the two huge expansion projects underway to increase eastbound flows. Then we described the Eastern Access project to rebuild and expand Line 6B by the end of 2014. In this episode we cover the second major Eastern Access initiative - the reversal and expansion of Line 9 and start our description of the light oil market access (LOMA) initiative with the Sandpiper project.

RBN Energy: dead-cat bounce? Is Gulf of Mexico gas production set to rebound?

Natural gas production in the Gulf of Mexico (GOM) has been falling for 15 years, hurt first by hurricane-related rig damage, then more recently by the side effects of the BP/Macondo disaster, the on-shore sale boom, and the resulting sag in gas prices.

But GOM gas production is about to uptick, due largely to two big, long-planned oil and gas projects finally coming online. Is the upcoming increase in gas production in the Gulf the first sign of resurgence, or is it the energy-sector equivalent of a “dead cat bounce.”

In this blog, we consider what is ahead for gas production in the GOM.

The few of us old enough to remember the Houston Astros winning more than 100 games in a season (it has only happened once, in 1998, and as of late July is mathematically impossible in 2014) also can recall a time when wells in the GOM produced a significant portion of US natural gas needs. In 1998, total GOM gas production marketed averaged more than 14 Bcf/d, according to the US Energy Information Administration (EIA), providing 23% of the 61 Bcf/d the US consumed that year. 

Fast-forward to 2013. US gas consumption was up 17%, to 71 Bcf/d, but GOM gas production was way down—off 71% to 3.6 Bcf/d. Two events tell much of the tale. 

First, in the summer and fall of 2005, two major hurricanes—Katrina and Rita—wreaked havoc on gas (and oil) infrastructure in the Gulf; then, three years later, hurricanes Gustav and Ike did serious damage of their own. 

Yet another big hit to GOM gas production came in the aftermath of the BP/Macondo blowout in April 2010, which brought well permitting to a halt and slowed exploration activity. But perhaps the biggest hit of all came from the boom in the production of onshore shale gas, which rose from 5.5 Bcf/d in 2007 to 28 Bcf/d in 2012. In July 2014, the Marcellus region alone produced 15 Bcf/d, several times the Gulf’s total production. 

The shale boom resulted not only in ample gas supply and lower, more stable gas prices, but also in gas production nearer to consumption population centers. The model of piping GOM, Louisiana and Texas gas to the Northeast, for example, is now a thing of the past. 

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The Bakken

EOG: best developer in the Eagle Ford just keeps getting better -- over at SeekingAlpha; writer should have added "best developer in the Bakken, also

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Global Warming

The warmists predicted this: more snow. CTVNews is reporting:

It may be the middle of summer, but in Winnipeg, a little shred of winter just won't go away.

A filthy, muddy, massive snow pile has defied the seasons and survived the summer heat at the Kenaston snow dump site on the edge of the city. The 18-metre snow pile is the largest of a handful of snow piles still lingering at Winnipeg's four snow-dumping sites, where the city stores the snow it collects in the winter.

Jim Berezowsky, Winnipeg's manager of streets maintenance, says it's not unusual for snow at the dump sites to survive into August. But this year, he's seeing more snow than usual.

"It is significantly higher than in years past," Berezowsky told CTV's Canada AM on Friday. "We didn't receive the extreme heat that we usually do."

So, should this be tagged global warming for 2013-2014, or 2014-2015. Okay, both.

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File Under: You Have Got To Be Kidding

From fantasy land as reported by Reuters:

EU regulators have begun legal proceedings against 24 member states, including Germany, for failing to enforce a law on energy efficiency, the European Commission said on Wednesday.

Energy saving has risen up the list of EU priorities since the conflict with the European Union's biggest oil and gas supplier Russia over its actions in Ukraine increased concerns about energy security.

Commission spokeswoman Marlene Holzner told reporters proceedings began automatically against Germany because it had not enforced EU legislation on saving energy. She only named Germany, but the Commission said that in total, 24 of the bloc's 28 member states missed a June 5 deadline for fully transposing the European Union's Energy Efficiency Directive into their national laws.

The directive was agreed by member states in 2012 to enforce an existing target to cut energy use by 20 percent by 2020 compared with projected use. The Commission now says the bloc is broadly on track to meet that target through measures such as building insulation.

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On The Road To New England

Hey, Maybe Fossil Fuel Isn't So Bad, After All

Better than freezing:

PORTLAND, Maine — Wyman Station, the state’s largest power plant, is no longer on the market as its owners saw increasing profits from the oil-fired power plant in the first quarter of 2014, when winter constraints on natural gas supply for electric generation resulted in greater demand for power from the oil-fired generator.

After logging a loss from its Maine fossil fuel assets in 2013, Florida-based owner NextEra Energy — which owns Wyman Station — revealed in an earnings statement that it would keep the 796-megawatt portfolio of oil-fired generation resources in Maine.

“During the first quarter of 2014, based on a reassessment of valuation in light of new market information, the company reversed its earlier decision to sell its 796-megawatt merchant fossil portfolio in Maine,” the company said in its first-quarter earnings statement.

It looks like the environmental nuts got their wish: stop the transmission lines from the hydroelectric power from Canada and stop the NG pipelines, and continues burning oil for electricity.

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Renewable Energy

Plenty of corn for ethanol: this year's corn production should exceed government forecasts.

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Secular Stagflation

Cheap Money

Real cheap money: GE borrows $1.2 billion for ten years for 4.25%

New theory concerning the Fed: secular stagflation:

Recent comments by the vice chairman of the Federal Reserve, Stanley Fischer, indicate questions within the central bank about whether the slow growth that has followed the recent recession could reflect, or at least could potentially morph into, longer-term issues within the economy. And while Fischer avoided the phrase "secular stagnation" in his Monday speech, Minneapolis Fed President Narayana Kocherlakota is planning to host a November symposium that directly addresses the issue of secular stagnation by name, CNBC has learned.

The theory of secular stagnation was first developed by Alvin Hansen, who wondered in the midst of the Great Depression whether diminishing investment opportunities in a maturing economy would stunt economic growth and permanently prevent full employment—at least in the absence of robust government intervention, which soon came in the form of the second world war.

These theories have found a new life in the aftermath of the so-called Great Recession, as the U.S. is experiencing (albeit to a much less dramatic degree) slow growth over a relatively long time period.

In November 2013, noted economist Larry Summers (who was considered, alongside current Chair Janet Yellen, a leading candidate to head the Fed) began to invoke the same phrase in arguing that the interest rate that the economy requires has fallen below zero.
he problem is that it is very difficult for nominal interest rates to fall below zero due to a constraint known as the zero lower bound. The upshot? Even with the Fed keeping short-term rates just above zero, market interest rates cannot possibly create adequate demand for loans, and thus the economy stagnates.

Without embracing the secular stagnation thesis, in Sweden on Monday, second highest-ranking Fed official Fischer gestured toward those concerns.

Noting slow growth in "labor supply, capital investment and productivity," Fischer warned that "This may well reflect factors related to or predating the recession that are also holding down growth" and noted: "How much of this weakness on the supply side will turn out to be structural—perhaps contributing to a secular slowdown—and how much is temporary but longer than usual lasting remains a crucial and open question."

*****************************

From The Land of Fruits and Nuts and Peaches

And so it goes:

A group of California farm workers for the nation's largest peach operation voted on whether to kick out or accept representation by the United Farm Workers. That was last November.

They still don't know the results of the vote. 

Why?

The state's Agriculture Labor Relations Board (ALRB) won't reveal the vote pending the outcome of an investigation into the voting. The investigation has been going on for months, and no one knows when it will be completed. 

In the meantime, the ALRB appointed a mediator who wrote up a three-year contract that, under California law, can unilaterally be imposed on the farmer, Dan Gerawan. He's gone to court to stop that.

*********************************

And That's The Way It Is

With regard to global warming, shut up and color: the debate is over. We're all doomed.

With regard to the president's Syrian policy: any criticism of that policy is "horseshit." The president's words, not mine.

The funny thing is this: I was unaware that President had a Syrian policy. Hillary said the same thing: the emperor has no clothes. I never understood that idiom until this president came along.

**************************

Broken Promises

"As president, I won't take any vacations."

Initial Production Numbers Coming Out Of The Bakken Continue To Impress -- August 14, 2014

Thursday, August 14, 2014

• 24001, drl, Statoil, Syverson1-12 3TFH, Stony Creek, no production data,
• 26450, 1,470, Newfield, Hovland 150-99-26-35-4H, South Tobacco Garden, t5/14; cum 22K 6/14;
• 27082, 2,371, Whiting, Johnson 34-8-2H, Pleasant Hill, t2/14; cum 60K 6/14;
• 27338, drl, CLR, Vachal 8-27H, Alkali Creek, no production data,
• 27356, drl, XTO, Franchuk 24X-19A, Murphy Creek, no production data,
• 27453, drl, CLR, Hartman 5-28H3, Chimney Butte, no production data,

Wednesday, August 13, 2014

• 26102,  1,476, Petro-Hunt, Syverson 156-99-30B-31-6H, East Fork, t6/14; cm 19K 6/14;
• 26151, 1,146, WPX, Alfred Old Dao 30-31 HZ, Reunion Bay, t6/14; cum 5K 6/14;
• 27293, drl, Hess, EN-Ortloff-156-94-2635H-8, Big Butte, no production data,

Tuesday, August 12, 2014

• 19818, 2,051, KOG, Skunk Creek 4-8-17-14H, South Fork, t7/14; cum --
• 25769, 2,382, Oasis, Vaughn Becky 5501 11-1B, Cow Creek, t7/14; cum -- 
• 26184, 1,341, Oasis, Mallart 5692 21-20-3B, Alger, t6/14; cum 5K 6/14;
• 26185, 1,127, Oasis, Mallard 5692 21-20 2T, Alger, t6/14; cum 2K 6/14;
• 27339, drl, CLR, Vachal 7-27H,  Alkali Creek, no production data,
• 27347, 1,827, MRO, Marshall 34-10H, Chimney Butte, t6/14; cum 7K 6/14;

Monday, August 11, 2014

• 21374, drl, Statoil, Barstad 23-14 4TFH, Alger, no production data,
• 26149, 990, WPX, Alfred Old Dog 30-31HC,  Reunion Bay, t7/14; cum 4K 6/14;
• 26396, drl, CLR, Limousin 6-3H2, Sanish, no production data,
• 26449, 1,318, Newfield, Hovland 150-99-26-35-3H, South Tobacco Garden, t5/14; cum 22K 6/14;
• 26575, 2,152, MRO, Cheetah USA 14-16TFH, Four Bears, t4/14; cum 46K 6/14;
• 27133, drl, Hess, SC-Tom-2560-153-98-1514-2223H-1, Truax, no production data,
• 27153, 2,404, BR, Arches 34-35MBH, Keene,Three Forks, t7/14; cum --
• 27454, drl, CLR, Hartman 6-28H2, Chimney Butte, no production data,

Sunday, August 10, 2014

• 26148, 556, WPX, Alfred Old Dog 30-31HY, Reunion Bay, t6/14; cum 4K 6/14;
• 27270, 812, WPX, Glenn Fox 13-24HA, Van Hook, t6/14; cum 10K 6/14;
• 27294, drl, Hess, EN-Ortloff-156-94-2635H-7, Big Butte, no production data,
• 27556, 3,511, XTO, Kaye Federal 43X-4B, Lost Bridge, t7/14; cum --

Saturday, August 9, 2014

• 26095, 106, American Eagle, La Plata State 2-16-163-101, Colgan, t6/14; cum 2K 6/14;
• 26448, drl, Newfield, Hovland 150-99-26-35-2H, South Tobacco Garden, producing, albeit not much, 
• 26605, 1,244, Newfield, Hoffmann 149-98-11-2-2H, Pembroke, t5/14; cum 21K 6/14;
• 27154, 1,603, BR, Arches 34-35TFH, Keene, Three Forks, t7/14; cum --
• 27210, 89, Legacy, Legacy Et Al Berge 16-36 2H, North Souris, a Spearfish well, t3/14; cum 7K 6/14;
• 27340, drl, CLR, Vachal 6-27H1, Alkali Creek, no production data,
• 27455, drl, CLR, Hartman 7-28H3, Chimney Butte, no production data, 

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Producing Wells Completed

Wednesday, August 13, 2014

• 25493, 1,310, QEP, Johnson 4-9-3-10LL, Grail, t6/14; cum 8K 6/14;
• 25491, 1,615, QEP, Johnson 2-4-9BH, Grail, t6/14; cum 11K 6/14;
• 25490, 2,262, QEP, Johnson 2-4-9TH, Grail, t6/14; cum 12K 6/14;
• 25492, 1,106, QEP, Johnson 1-4-9BH, Grail, t6/14; cum 8K 6/14;
• 23862, 2,633, Statoil, Hovde 33-4 3H, Sandrocks, t7/14; cum --
• 23861, 3,340, Statoil, HOvde 33-4 4H, Sandrocks, t7/14; cum --
• 25776, 3,043, Statoil, Bugs 27-22 7H, Poe, t7/14; cum --
• 26985, 1.019, Hess, EN-Dobrovolny-155-93-2128H-5, Alger, t7/14; cum --
• 27099, 680, Hess, EN-Johnson-155-94-2017H-4, Manitou, t7/14; cum --
• 26711, 1,085, Hess, BW-Arnegard State-151-100-3625H-3, Sandrocks, t7/14; cum --
• 26856, 701, Hess, EN-State D-154-93-2635H-6, Robinson Lake, t7/14; cum --
• 26984, 700, Hess, EN-Dobrovolny-155-93-2128H-4, Alger, t7/14; cum --
• 26712, 756, Hess, BW-Arnegard State-151-100-3625H-2, Sandrocks, t7/14; cum --
• 26846, 753, Hess, EN-Weyrauch-154-93-1918H-9, Robinson Lake, t7/14; cum --
• 25691, 955, Hess, BW-Johnson-155-94-2017H-6, Cherry Creek, t7/14; cum --
• 27097, 558, Hess, EN-Johnson-155-94-2017H-6, Manitou, t7/14; cum --
• 26599, 2,565, BR, Sequoia 14-9MBH, Hawkeye, t8/14; cum --
• 26664, 1,186, Hess, HA-Link-152-95-3526H-5, Hawkeye, t6/14; cum 29K 6/14;
• 25295, 729, Hess, EN-Weyrauch 154-93-1918H-7, Robinson Lake, t6/14; cum 16K 6/14;
• 25694, 838, Hess, BW-Erler 149-99-1522H-2, Cherry Creek, t6/14; cum 23K 6/14;
• 24515, 1,317, Hess, LK-Summerfield-147-96-15H-2, Bear Creek, t6/14; cum 35K 6/14;
• 24517, 922, Hess, LK-Summerfield-147-96-15H-4, Bear Creek, t7/14; cum 13K 6/14;
• 25693, 913, Hess, BW-Johnson 149-99-1003H-2, Cherry Creek, t6/14; cum 13K 6/14;
• 25294, 953, Hess, EN-Weyrauch 154-93-1918H-8, Robinson Lake, t7/14; cum 14K 6/14;
• 27098, 953, Hess, EN-Johnson-155-94-2017H-5, Manitou, t6/14; cum 18K 6/14;
• 25692, 726, Hess, BW-Erler 149-99-1522H-3,  Cherry Creek, t6/14; cum 16K 6/14;
• 24516, 881, Hess, LK-Summerfield-147-96-15H-3, Bear Creek, t6/14; cum 19K 6/14;

Tuesday, August 12, 2014

• 19818, 2,051, KOG, Skunk Creek 4-8-17-14H, South Fork, t7/14; cum -- 
• 24837, 652, CLR, Wahpeton 2-16H2, Banks, t6/14; cum 9K 6/14;
• 24840, 382, CLR, Wahpeton 4-16H1, Banks, t6/14; cum 2K 6/14;
• 24843, 1,050, CLR, Wahpeton 6-16H, Banks, t6/14; cum 17K 6/14;
• 24920, 530, Slawson, Hunter 6-8-17TFH, Big Bend, t6/14; cum 13K 6/14;
• 26411, 1,586, Whiting, Ness 21-3TFH, Sanish, t7/14; cum --
• 26412, 2,091, Whiting, Hansen 21-3H, Sanish, t7/14; cum --
• 26598, 1,923, BR, Sequoia 14-9TFH, Hawkey, t8/14; cum --
• 26890, 3,415, Oasis, Brier 5200-44-22 3B, Camp, t7/14; cum --
• 27337, 205, Slawson, Hunter 8-8-17TF2H, Big Band, t6/14; cum 11K 6/14;

Monday, August 11, 2014

• 27632, 514, OXY USA, Cabernet, Kary 3-24-13H-144-97, Cabernet,
• 27633, 519, OXY USA, Cabernet, Kary 4-24-13H-144-97, Cabernet, t6/14; cum 4K 6/14;

***************************************

New Permits 

Monday, August 11, 2014 (10 new permits)

• Operators: Hess (6), EOG (3), Ballantyne,
• Fields: Robinson Lake (Mountrail), Kanu (bottineau), Parshall (Mountrail)
• Comments:

Tuesday, August 12, 2014 (13 new permits)

• Operators: XTO (5), CLR (4), Newfield (3), Cornerstone
• Fields: McGregor (Williams), Dimmick Lake (McKenzie), Sand Creek (McKenzie), Flaxton (Burke)
• Comments:

Wednesday, August 13, 2014 (18 new permits)

• Operators: Hess (10), HRC (4), EOG (2), Enduro, Murex
• Fields: Parshall (Mountrail), Cherry Creek (McKenzie), McGregory Buttes (Dunn), Newburg (Bottineau), Ellsworth (McKenzie), Daneville (Divide)
• Comments:

Getting Back Into The Swing Of Things -- August 14, 2014

Some data points before I get back into the swing of things:

• first time unemployment claims surge
• President Obama on track to have more golf outings than Tiger
• "the world is exploding all over the place" -- SecDef Hagel
• plans to "cut" the military appear to be on track
• "boots on ground" back in Iraq -- Special Forces and US Marines on the mountain
• price of WTI down but holding its own
• Saudi to flood the market with oil?
• Italy back in recession
• early reports that Germany may swing into recession with -0.2% growth; how are those sanctions working out?
• huge IPs being reported in the Bakken

*****************************************

Unemployment Claims

• last week's 289,000 revised upward to 290,00
• consensus for this week: 289,000
• actual: surged to 311,000
• mainstream media analysis: everything on track; economy rose; jobless claims continue to close to pre-recession levels;
• four-week average, a less volatile measure, only jumped 2,000, to 295,750
• and Mr Obama is still on vacation

Even The Los Angeles Times is surprised, their headline: jobless claims take surprising jump to 6-week high. (That headline was on the front page of the day's news summary; the headline at the story: "Jobless Claims Rise to 6-Week High, But Remain Relatively Low." I can't make this stuff up. Relatively? UC Irvine? Really?

Cisco will cut 6,000 jobs (8% of workforce).

*****************************************

Global Economy

first of all, sanctions never work

Italy is in recession

Germany at risk of pulling all of Europe back into recession -- Business Insider

Germany close to recession as ECB admits recovery is weak -- The (London) Telegraph

*****************************************

Read My Lips

Four score and seven years ago ... : Abraham Lincoln

No new taxes: George Bush I

Brownie, you're doing a heckuva job: George Bush II

I will not send combat troops back into Iraq; that chapter is over: Baraq

*****************************************

Old Code-Words

Special Forces, US Marines: military advisers

*****************************************

Old Code-Words

Small regional wars where US military advisers are sent: "projects" -- Baraq Obama as quoted by NBC News.

Back in Air War College, I was introduced to "small regional conflicts (SRC)" and "military operations other than war (MOOTW)" but never "projects."

*****************************************

US Golfers Ranking: Update

Tiger Woods drops out of top 5

President Baraq O'Bama moves into top 20  

Op-ed in The Washington Times

*****************************************

Baraq O'Bama To Interrupt Martha Vineyard Vacation

There are reports that President O'Bama will return to Wasshington, DC, this weeken. No one knows why. It doesn't take a rocket scientist to figure this out: Bill Clinton knows. From a very, very unreliable source. Don't quote me on this.

*****************************************

And Through All of This, For Some, There's A Kind of A Hush All Over the World 

There's A Kind of Hush, Herman's Hermits