Tuesday, August 26, 2014

Coming Off The Confidential List Wednesday -- August 26, 2014

ONEOK announces completion of Garden Creek II natural gas processing facility. I track ONEOK activity here: The press release:
ONEOK Partners, L.P., today announced that its 100-million cubic feet per day (MMcf/d) natural gas processing facility in eastern McKenzie County in North Dakota – the Garden Creek II plant – is now operational. The new plant is part of the partnership's previously announced $7.0 billion to $7.5 billion capital-growth program through 2016.

Active rigs:

Active Rigs195185189200138

Wells coming off the confidential list Wednesday:
  • 24601, 131, Samson Resources, Bonneville 3625-7TFH, West Ambrose, t4/14; cum 22K 6/14;
  • 26328, drl, XTO, Boomer Federal 34X-35D, Lost Bridge, no production data,
  • 26882, drl, Abraxas, Ravin 26-35-7H, North Fork, no production data,
  • 27319, 600, Ballard Petroleum, Fines 24-19, Wildcat; t6/14; cum 3K 6/14;
  • 27593, drl, Slawson, Challenger Federal 3-29-32H, no production data,
Fifteen (15) new permits --
  • Operators: Zavanna (8), Oasis (3), MRO, CLR, Cynosure,
    Fields: Stockyard Creek (Williams), Crazy Man Creek (Williams), Baker (McKenzie), Murphy Creek (Dunn)
  • Comments: 4 of Zavanna's 8 permits are for new wells in Stockyard Creek; 4 in Crazy Man Creek; Cynosure Energy has a permit for a wildcat well in Mountrail County; this is Cynosure's first permit in North Dakota; it's too far east to get too excited; Stockyard Creek is a monster of a field; I track Stockyard Creek here;
One (1) producing well completed:
  • 25542, 1,820, Newfield, Anderson State 152-96-16-4H, Westberg, t9/13; cum 71K 6/14;
National Anthems

The national anthem for the Islamic State and Central American teen-agers:

Coming To America, Neil Diamond
My, how things have changed. Governor Jerry Brown: "You're all welcome in California." The bullet train will take them to San Francisco.

Transportation Costs For Fracking Sand From Wisconsin -- August 26, 2014

From a reliable source, data points, regarding shipping fracking sand to the midwest from Wisconsin, from one dispatcher:
  • a slow week: 60 semi-loads
  • a busy week: 120 semi-loads
  • delivery cost from mid-Wisconsin to northeast Colorado: $175/ton
  • shipping by truck because NO available trains 
The number of semi-loads is irrelevant to the degree of activity in the Bakken; the number of semi-loads is relevant because it provides a large enough denominator/data base to suggest the price of shipping is not an outlier for this dispatcher.

That is the cost to a central delivery and storage point. Additional costs will be incurred for picking up the sand at the terminal and delivering it to the drilling site.

A typical Bakken well uses 4 million lbs of sand, or 2,000 tons = $350,000 for long-haul transportation.

Companies are trying to get average cost of well down from $8 million to $7.5 million, ball-park figures; they vary dramatically, but that gives newbies an idea of cost of drilling/completing a Bakken well. The range is probably $6 million to $13 million/well. This does not include the less expensive wells near the Canadian border. I have no idea what they cost.

Disclaimer: this is all "idle chatter." I cannot vouch for accuracy but it's what I'm hearing, and what I've read. It could be wrong. In fact, some of it probably is. Mostly because folks will disagree on what a "typical" Bakken well is.

Global Warming

Coldest August night on record in Ireland.
Breaks record for the entire month of August.
A new record for the coldest August night was set on the night of 23rd/24th August for Northern Ireland.
The Met Office said temperatures plunged to a bone-chilling -1.9C (28.6F) at Katesbridge, Co Down, beating the previous record of -1.1C at Loughermore Forest in 1964.
Note: This wasn’t just the coldest in Katesbridge, it was the coldest on record across all of Northern Ireland.
At some point ... 

But back in the day, when there really was global warming, it was a hot August night.

Brother Love's Traveling Salvation Show, Neil Diamond

This was nowhere near my favorite Neil Diamond song but it connects with that concert. It was always Neil Diamond for me on the radio driving between Blacktail Dam and Williston, back in 1969.

Northeast Of Watford City -- The Bakken -- August 26, 2014

A random photograph and video of one of the sweet spots in the Bakken, northeast of Watford City.

I forget now, but I think this was on "1806" just north of ND State Highway 23.

"Hunter's Run" is just one of many subdivisions going up northeast of Watford City. It was my impression that the amount of construction / activity in Watford City was similar to what we saw in Williston about 3 - 5 years ago.

One of the "sweetest" spots in the Bakken, northeast of Watford City. Turn the volume OFF:

Northeast of Watford City

A reader was nice enough to take the time to explain exactly where this sweet spot is; see first comment:
The area showing in this video is the very deepest part of the Bakken play. The
top of the Bakken is 9000 feet plus below sea level about 5 miles northeast of Watford.
The formations slope upward and outward in all directions from this area.
The Bakken temperature is 300 degrees (F) and pressures are extremely high.
About 10 seconds into the video you are pointing directly at the "center of the Bakken."

The Continental Wahpeton and Oasis Hagen-White multizone/ increased density wells are in the area where you completed your "pan" to the right about 3/4th the way thru the video.
The temperature is important to note. Can you imagine the quality of the steel needed to managed sub-zero temperatures ( - 40 degrees F) at the surface in February, and then maintain integrity two miles below the surface at 300 degrees F?

Video And Graphic Of New Underpass Under The "Original" Williston Bypass -- August 26, 2014

[See first comment. I accidentally deleted it when trying to post it; I was able to "save" it but had to post under/over my name.]

Turn the volume OFF.

Bypass underpass, west side of Williston
This is really quite impressive, how fast this is moving. The entry to the underpass, from the east ("old Williston)" is just to the north (or the right) of the Williston High School track and football field (the field is geographically separated from the high school), a continuation of 18th Street, a major thoroughfare for that part of town. According to the map below, it looks like it will connect with Bison Drive, one of the "new" parts of Williston.

Tuesday, August 26, 2014 -- New CBR Terminal Proposed -- Miscellaneous -- For Investors Only

I track CBR terminals here

A reader sent me this link, proposing a new CBR terminal:
PLAZA, N.D.-- Dakota Gold Transfer - Plaza, LLC (“Dakota Gold”) announced today that the company plans to develop a crude oil transload facility in Mountrail County, North Dakota. Strategically located on a 350-acre site in the eastern section of the prolific Bakken and Three Forks shale oil producing areas, the Plaza Terminal will provide refiners, marketers and producers with new options for reaching multiple markets across the United States and Canada via rail and pipeline. 
Located on a private rail spur controlled by Dakota Gold under a long-term lease, the state-of-the-art terminal will be served by the Canadian Pacific Railway.
The Plaza Terminal will aggregate crude oil produced in Mountrail and neighboring counties, utilizing gathering pipelines and trucks. The terminal will also provide crude oil storage services through on-site tankage.
The rail facility will have a throughput capacity of 70,000 barrels per day (bpd) and storage capacity of more than 300,000 barrels, with expansion to 600,000 barrels during a planned second phase. The terminal’s design includes two loop tracks with storage for one to two additional trains on the private rail spur, a covered loading barn, a 14-arm system capable of loading a unit train in approximately 14 hours, 15 truck unloading bays and three 103,000-barrel storage tanks.
The Plaza site is large enough to allow for substantial expansions of storage and transload capacity as customer demand increases.
Much more at the link.

When I was out northeast of Watford City over the weekend, I did not realize how close I was to this area. I may have to go back, drive a bit farther east, take a look.

Plaza, ND is about 10 miles east of Parshall, ND -- one of the centers of the activity right now; it's just outside the reservation.  It may be one of the farthest east terminals, and yet it's right at one of the busiest locations. 

Obama Legacy

The headline: Housing market stuck in downward spiral: Shari Olefson. His words, not mine. The "problem" is that all those illegal children coming across the border are not buying new OR existing homes. If we can change that dynamic somehow, that would help. Perhaps the government could buy homes for Guatemala children between the ages of 10 and 16. Government housing for this relatively small, new group of immigrants couldn't possibly cost more than the government healthcare web site. Okay, bad example.

Back to the linked article:
New homes sales fell by 2.4% from June to July, yet July’s new homes sales were up 12.3% from the previous year.
“New construction appears to be up significantly from last year but when you dig beneath the surface what’s up are multifamily homes,” says Olefson. “Single family homes are up by just 1% which defies logic because we’ve had over 3 million single family units that have been converted to residential rentals.”
Some believe that these numbers mean that housing is approaching normal levels, but Olefson disagrees. She sees more potential buyers turning into renters and believes there’s a lack of suitable housing and loan products for what people can afford now.
Part of the problem is that young couples can't find/won't buy "starter" homes.


Burger King to leave the US, over taxes. Warren Buffett, one of the president's BFF's, will finance the merger with the Canadian donut company. It looks like BRK-B may trade at new highs today; if not, awful close.

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 highs today: ARII, CP, EEQ, EPD, OKE, PBR, PSX, QEP, RAIL, WLL, WPX.

Did He Really Say This?

The Deccan Chronicle is reporting:
White House spokesman Josh Earnest, on Monday, said that Obama has demonstrated his willingness to order military action when necessary to protect American citizens.
"That is true without regard to international boundaries," he said. The White House would not comment on Obama's decision to authorize surveillance flights over Syria.
Oh, well. 

Ever Since Benghazi And The Bergdahl Swap ....

... it seems US intelligence is struggling. It seems to have started with Benghazi, and now news sources are saying US intelligence agencies have very little "intel" on the Islamic State. It's agreed US intel was either unaware of the Islamic State's preparation for "shock and awe" or no one was listening.

But as Hillary says, "What does it matter?"

Tuesday, August 26, 2014; Statoil Cutting Back; Congresswoman Calling For Boycotting Burger King

Statoil cutting back. Reuters via Rigzone is reporting:
Norwegian energy firm Statoil will only slightly raise its U.S. shale oil and gas output in the near term due to spending curbs, well below a potential for a 50 percent surge, the firm said on Monday.
Statoil, which produces around a tenth of its oil and gas from its U.S. shale operations in the Bakken, Eagle Ford and Marcellus formations, has even cut back investments in the area, as shale projects are competing for capital within the company, said Torstein Hole, Statoil's chief for U.S. onshore activities.
Statoil abandoned its 2020 production target earlier this year and cut its capital spending budget, arguing that it needs to save cash and return more to shareholders after a decade of ramping up spending.
The firm increased shale production to around 210,000 barrels of oil equivalent per day by the middle of 2014 from close to nothing in 2010, but output levelled off in the second quarter.
This continues the story line I introduced a few days ago after arriving in the Bakken.

Active rigs:

Active Rigs195185189200138

RBN Energy: more problems for Bakken producers -- simply not enough storage capacity for the tsunami of oil reaching the coasts.
Looking out over the next year and a half to 2016, Houston crude storage capacity looks to be lower than necessary to meet operational needs. With continuing increases in pipeline crude streams headed into the area in the next six months, we could see supply disruptions with consequences for price volatility. Probable victims of these disruptions would be producers looking to find a home at Houston refineries for their production. The solution is to build more storage but the market is not yet sending alarm signals to that effect.  Today we conclude our series on Houston storage capacity.
Saudi Aramco will invest $40 billion annually for the next decade. Reuters via Rigzone is reporting:
Saudi Aramco, the world's biggest oil producer, plans to invest $40 billion a year over the next decade to keep oil production capacity steady and double gas production.
State-owned Aramco sees more capital going into offshore projects and expects rising costs across the oil sector to underpin oil prices.
Oil prices fell to a 14-month low of $101.07 last week as global demand growth weakens, even as production ramp ups in several places create a glut of oil.
"To meet forecast demand growth and offset (global output)decline, our industry will need to add close to 40 million barrels per day of new capacity in the next two decades."
Boycott Burger King

I heard on the news this morning, driving into downtown Williston, that a Congresswoman was calling for a boycott of Burger King.

By the way, the drive into downtown Williston was uneventful. At 7:00 a.m. there was no traffic on this side of town, the east site, the University side. At the first stop sign/intersection, I was the only vehicle. At the first (and only) traffic light intersection that I had to cross, again, no other vehicles. The sun is shining, no rain, but very, very cool. There was some talk in the coffee shop of an "early winter." Well, the words "early winter" were not used; rather, it was more like "winter is already here." They must be new to Williston. This, too, will pass, and the autumn will be absolutely gorgeous and then "Indian summer" is generally incredible. Is "Indian summer" an "okay" phrase?

I also heard part of eulogy for Michael Brown who was said to have been doing the Lord's work when he died. I also read that the White House sent more mourners to Brown's funeral than it sent to Thatcher's funeral. But that's very, very misleading and very, very unfair. It's not the numbers that count but the value of each piece -- think chess -- six pawns vs one knight, and two bishops.

The Wall Street Journal
News and Comment; Mostly Comment; Not Fair; Not Balanced

Earlier the administration was going to arm the rebels in Syria; now they are laying the groundworkr for airstrikes on the same rebels. Was Putin correct?

The Islamic State is going to seriously alter the demographics and once-mixed communities by dividing territory along ethnic and religious lines. Ferguson?

Buyers not clamoring for new homes

14-year Army veteran commits suicide on militarized Army base in Virginia yesterday.

Oh, this is good. While the Obama administration looks to de-militarize police forces around the country, "more Texas schools allow armed employees." Somehow visions of kitchen workers pakcing heat is not comforting. Brings more meaning to "eat your vegetables, or make my day."

Libya is back in the news.

IEA: Europe needs Russian natural gas. Okay. I thought we already knew that.

Congo reports first Ebola cases since 2008. I remember when such news caused alarm in the US. Not so much these days.

This makes no sense: slow going for natural-gas powered trucks. Amid the strongest market for commercial trucks in eight years (yes, thank you, Mr Bakken), US sales of natural-gas powered haulers are just inching ahead, slowed by premium prices, limited infrastructure, and more efficient diesels.

Court overturns Hawaii ban on GMO crops.

This will show them who's the boss: federal investigators expel both UPS company reps and pilot-union reps from a UPS cargo plane investigation.

Not getting any better for Statoil: sanctions on Russia will slow down approvals for some of Statoil's Rosneft joint ventures.

Fairchild cutting 15% of the workforce.

S&P closes at another record; futures are up again today. Shorts are getting crushed. Weren't there some stories recently on Soros betting big on a 10%, or even a 20%, pullback. May yet happen, but not this week.

Apple iPhone might save Best Buy.

 The Los Angeles Times

Headline story:  LAUSD suspends iPad program after bidding is called into question. Actually the whole idea of iPads in LA schools was crazy.

Liberian doctor who got experimental drug dies of Ebola.

Emmys 2014: "Breaking Bad," "Modern Family" dominate. "Fargo" got more than one Emmy, I believe. The most "worthy' segment, as it always is, year in, year out: "In Memoriam."
The 2014 Emmys honored the late Robin Williams Monday night, Aug. 25, with a touching tribute at the end of the in memoriam segment of the broadcast. Billy Crystal, Williams' longtime friend, spoke about the late actor. "The brilliance was astounding," Crystal said of Williams, who he performed with numerous times.
Al Sharpton's Networks On The Ropes

The Wrap is reporting:
An individual with knowledge of the network's plans tell TheWrap a large portion are expected at the two cable channels
Some 550 buyouts are to be offered at Time Warner's Turner network this week, including a large number of those at CNN and HLN, which will lead to layoffs if they are not taken voluntarily, according to an individual with knowledge of the network's plans.
The buyouts will come across the Turner division, with a couple of hundred expected at CNN and HLN, the individual said.
One of the comments to this story, that I posted last night, posting again:
Here’s the problem with MSNBC and CNN: predictability. You already know what they’re going to say on any issue. So why watch?
I once knew a piano player in a fancy restaurant I used to go to who could play only one song really well: Moon River. You’d get it fast and slow and reggae and cha-cha and gospel and jazz and blues, but it was still Moon-effing-River. Now if you liked Moon River, you were golden. If you didn’t, go some place else. That’s MSNBC – a “one-note Johnny.”
On the other hand, Fox is unpredictable. Of course they might have a conservative slant, but they bring in far more libs to speak their piece than MSNBC does conservatives. And I like Megyn Kelly a lot. The woman has a mouth on her. You never know what she’ll say next. Ailes allows her to go off-script. You never see that at MSNBC or CNN. Stick to the copy!

New York Times Fails To Mention The 800-Pound Gorilla -- August 26, 2014

This story was on the local news last night, here in the Bakken, and now a reader sends me a link to the same story in The New York Times. It's a terrible, terrible story about all that North Dakota grain that is going to be dumped and lost because there is not enough rail to move the grain; too much oil has to be moved.

This is a great example of where the federal government and private enterprise could have worked together to prevent this problem in the first place. Remember: there are two ways to move oil economically out of the Bakken: pipeline and rail. Even now, the folks in Minnesota are creating all kinds of obstacles for Enbridge to get on with additional pipeline capacity.

Locally, I read stories of farmers tired of more and more pipeline being laid, and oil companies wanting to lay yet more pipeline.

But go to the linked story at The New York Times. Do a search for "800-pound gorilla." It's not there.

The story's lede:
FARGO, N.D. — The furious pace of energy exploration in North Dakota is creating a crisis for farmers whose grain shipments have been held up by a vast new movement of oil by rail, leading to millions of dollars in agricultural losses and slower production for breakfast cereal giants like General Mills.
The backlog is only going to get worse, farmers said, as they prepared this week for what is expected to be a record crop of wheat and soybeans.
“If we can’t get this stuff out soon, a lot of it is simply going to go on the ground and rot,” said Bill Hejl, who grows soybeans, wheat and sugar beets in the town of Casselton, about 20 miles west of here.
Although the energy boom in North Dakota has led to a 2.8 percent unemployment rate, the lowest in the nation, the downside has been harder times for farmers who have long been mainstays of the state’s economy. Agriculture was North Dakota’s No. 1 industry for decades, representing a quarter of its economic base, but recent statistics show that oil and gas have become the biggest contributors to the state’s gross domestic product.