Three Fund Raisers And A Wedding -- Sounds Like A Movie -- August 28, 2014

East of Williston. I don't really think this video is worth posting -- besides which, it really bounces along. But someone may be interested. This is east of Williston, about five miles east of Williston, I suppose, and one mile north of 1804. Turn the volume OFF.

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Did he really say that? We have no strategy "in" Syria. -- President Obama, press conference, August 28, 2014. Then off for three fund raisers, one wedding, and at least one round of golf, this long Labor Day weekend, according to White House spokesperson. But "no strategy in Syria"? The good news: that only supports the price of oil. WTI back of $94 today.

Also during the press conference, the President noted that his administration had been aware of ISIL, the Islamic State, for at least four years. And still "no strategy in Syria." Okay. Sort of explains the dithering on the Keystone XL. If one has four years to explore options and fail to come up with a strategy for Syria over that length of time ....

When I heard that the President had no Syrian strategy, I realized that he isn't even phoning it in any more. It's all about his fund raisers and his golf games. Wow.

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Hmmm.. speaking of "birthers" -- which we weren't .. now it turns out that the honorable senator from Louisiana may not even have a home in Louisiana, raising questions on her residency. The Washington Post is reporting:

In Washington, Sen. Mary Landrieu lives in a stately, $2.5 million brick manse she and her husband built on Capitol Hill.

Here in Louisiana, however, the Democrat does not have a home of her own. She is registered to vote at a large bungalow in New Orleans that her parents have lived in for many decades, according to a Washington Post review of Landrieu’s federal financial disclosures and local property and voting records.

That may be true, but if I had a dog in this fight, I would prefer Mary Landrieu to Al Sharpton any day, and it appears both have the same claim to residency in Louisiana. Not much. Whatever happened to Mayor Nagin? Oh, that's right.

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Oh, this is cool. I've driven through/past Three Rivers, Texas, more times than I can count -- back when we lived in San Antonio, Texas. The New York Times is reporting:

THREE RIVERS, Tex. — Whenever overseas turmoil has pushed energy prices higher in the past, John and Beth Hughes have curbed their driving by eating at home more and shopping locally. But the current crises in Ukraine and Iraq did not stop them from making the two-hour drive to San Antonio to visit the Alamo, have a chicken fried steak lunch, and buy fish for their tank before driving home to Corpus Christi.

“We were able to take a day-cation because of the lower gas prices,” said Ms. Hughes.

The reason for the improved economics of road travel can be found 10,000 feet below the ground here, where the South Texas Eagle Ford shale is providing more than a million new barrels of oil supplies to the world market every day. United States refinery production in recent weeks reached record highs and left supply depots flush, cushioning the impact of all the instability surrounding traditional global oil fields.

So oil prices — and those at the pump — are easing.With the Labor Day weekend approaching, the national average price for a gallon of regular gasoline was $3.43 on Thursday, according to the AAA motor club, nearly a dime lower than a month ago. Energy and travel analysts project the lowest gasoline prices this holiday weekend of any Labor Day since 2010, and the highest level of motor travel since 2008.

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Speaking of gasoline prices, gasoline in the heart of the Bakken, Farmers Union/Cenex, Williston, North Dakota: $4.05. Los Angeles, ARCO, $3.49. The 10% ethanol in the Farmers Union/Cenex is helping keep the price of gasoline down up here in the Bakken.

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Reuters is reporting:

U.S. coal-burning power utilities are being forced to turn to barges and more expensive trucks to move coal, desperate to shore up stockpiles left dangerously low by the widespread bottlenecks on rail networks.

The shift in how coal is being delivered to some power plants from mining regions such as Illinois Basin and comes amid persistent railroad delays that began during last year's severe North American winter.

The delays have been perpetuated also by a surge in rail deliveries of crude oil and grain, leaving power producers such as FirstEnergy Corp scrambling for transport alternatives before winter sets in, potentially adding to costs.

About 40 percent of U.S. power is generated from coal-burning plants, and 75 percent of U.S. coal relies on freight railroads to get to power plants, according to Wood Mackenzie, an energy consultancy.

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Back to that press conference: President Obama admits there's nothing he can do about Russia and the Ukraine (sanctions don't work). The president says he will visit Estonia to let that country know we stand "shoulder-to-shoulder" to this non-NATO country. He says Russia is violating Ukraine's sovereignty, but in the same breath, POTUS says he won't recognize state sovereignty when it comes to protecting Americans. Geese, gander, whatever.

He also says the will sign a politically-binding global warming treaty which everyone else agrees is clearly illegal. This is getting quite fun to watch. We may be watching, in prime time, a president becoming unglued. He certainly is becoming annoying. And I think if one appreciates that he has become simply that (annoying), it will be easier to ignore him. Was his hair a bit disheveled at the press conference?

Annoying is one step below "irrelevant" when it comes to politics. I think the mainstream media, for example, considered John McCain (when he was running for president), irrelevant, and Sarah Palin (before, during, and after her VP run), annoying.

This Is Getting Very, Very Interesting Very, Very Quickly -- August 28, 2014

For background to this story, see an earlier post. Today, The Bismarck Tribune is reporting:

In what would be major economic and energy development for the central region, Basin Electric Power Cooperative says it is scouting for land in Emmons County to locate a mega-scale power plant fueled by natural gas.

The cooperative will meet with the Emmons County Commission in Linton Tuesday to talk about its plans, though spokesman Curt Pearson emphasized the project is still in its infancy and no firm decisions had yet been made.

On the other hand and as a sign of its interest in going forward, the company is looking for land deals in Emmons County. The site will require about 100 acres of land that would be taken on option and then purchased if the plant goes forward.

“This is at the earliest stage, but since we have people out there talking to landowners, it is time to talk to the (Emmons) county commission,” Pearson said.

The co-op has confined its land search to Emmons County, but Morton County also has potential, Pearson said.

The Missouri River and the Northern Border Natural Gas Pipeline go through both Emmons and Morton counties and each has transmission lines to take the 600 megawatt power load.

Filloon On Diamondback; In The Bakken -- August 28, 2014

It's been a long time since we've heard from Mr Filloon. Over at SeekingAlpha, enjoy; the summary:

FANG still has significant downspacing to perform with 11 possible intervals to target horizontally. 

Production is growing fast, bolstered by acquisitions and improved well design. 

Its acreage is well-suited to pad production, as this area could have some of the tightest spacing in the country. 

The recent pullback in realized oil prices could be an issue, as expectations are for an inventory build at Cushing.

 The lede:

FANG continues to be a top operator in the Midland Basin with very good production rates.  The Permian operators have been very successful in 2013 and 2014. Midland has outperformed other US plays and the west Permian players. There has been a recent pullback affecting the Permian, Bakken, Eagle Ford, etc. We believe this has provided an opportunity, especially in the Midland Basin. We continue to like the northern Midland Basin players including Diamondback, Athlon, RSP Permian, and Parsley. 

These names have outperformed the southern operators like Approach and Laredo. Well results in the northern part of the basin have been significantly better, and the reason these names have seen a much higher stock appreciation. We continue to believe that operators in stacked plays will outperform in 2015. 

These provide an interesting situation for investors, as current intervals are downspaced, while others are tested. There could be significant upside, as acreage values will head higher as locations are added per section. Of these plays, the Permian looks to have the most upside. Not only are there several intervals to prove, but there is significant downspacing in current intervals, like the Wolfcamp.

Pad development continues to be the focus of US operators. We are seeing this in all over the country, including North Dakota, as the middle Bakken has seen the majority of traffic.

The Three Forks has emerged, and although the middle Bakken has produced better, the Three Forks has three benches to target. In mid- and western-McKenzie County, we have seen the lower Bakken silt emerge, but not by drilling the interval. Operators are fraccing into this zone, which has improved recoveries for companies like Triangle  and Whiting. Continental has been the Bakken leader with respect to pad development.

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.

Halcon With Two "High-IP" Wells; KOG With Another Great Irgens Well; 28 August 2014

Active rigs:

	8/28/2014	08/28/2013	08/28/2012	08/28/2011	08/28/2010
Active Rigs	195	181	191	199	140

Wells coming off the confidential list today:

• 26183, 649, Oasis, Mallard 5692 21-20 4T, Alger, t6/14; cum 2K 7/14;
• 26264, 627, Oasis, Lydia 5601 43-24T, Tyrone, t2/14; cum 11K 7/14;
• 26427, drl, Oasis, Osage 569 43-24T, Alger,
• 26586, 664, CLR, Honolulu 2-22H2, Indian Hill, t7/14; cum 5K 7/14;
• 26587, 207, Oasis, Delia 5992 14-30 2T, Cottonwood, t4/14; cum 8K 7/14;
• 26813, drl, EN-Hermanson-LE-155-93-3501H-3, Robinson Lake,
• 26832, 1,418, Oasis, Lefty 5200 14-30 4T2, Camp, t4/14; cum 7K 7/14;
• 27051, 259, Corinthian, Corinthian Backman 12-35 1H, North Souris, a Spearfish well, t5/14; cum 11K 7/14;
• 27369, 362, American Eagle, Murielle 16-1E-163-102, Colgan, t7/14; cum 12K 7/14;

Ten (10) producing wells completed:

• 26334, 460, Hess, GN-Frantzick-158-97-1003H-1, New Home, t7/14; cum --
• 26600, 1,764, BR, Sequoia 24-9TFH, Hawkeye, t8/14; cum --
• 26709, 1,072, Hess, BW-Arnegard State-151-100-3625H-5, Sandrocks, t8/14; cum --
• 26797, 2,236, HRC, Fort Berthold 152-94-24D-13-6H, Antelope, t8/14; cum --
• 26798, 2,295, HRC, Fort Berthold 152-94-24D-13-5H, Antelope, t7/14; cum --
• 26857, 1,059, Hess, EN-State D-154-93-2625H-7, Robinson Lake, t8/14; cum --
• 26986,  910, Hess, EN-Dobrovolny-155-93-2128H-6, Alger, t8/14; cum --
• 27313, 781, Hess, EN-Eva-156-94-1621H-1, Manitou, t7/14; cum --
• 27490, 1,905, KOG, P Irgens 155-99-3-4-9-13H, Epping, t7/14; cum --

Wells coming off confidential list Friday: none? Wells come off the confidential list at the 6-month mark. Six months ago, there was no February 29, 30, or 31. So, no wells coming off the confidential list August 29, 30, or 31, it appears. The March first wells come off the confidential list September first. Maybe. Don't quote me on this.

Thirteen (13) permits --

• Operators: Hess (5), Oasis (4), Enduro (2) MBI (2)
  Fields: Alger (Mountrail), Missouri Ridge (Williams), Beaver Lodge (Williams), Rocky Ridge (Slope), Newburg (Bottineau)
• Comments: see comment below -- the MBI permits are for wells that will test the Tyler but not be producers.

A Note To The Granddaughters

The sound of energy-independent America -- turn the volume up:

Flaring in The Bakken

It's a melancholy evening.

It's my last evening in the Bakken (this trip), and one could not ask for a nicer evening, weather-wise. It's clear, big-sky country; it's currently 87 degrees, having hit a high of 90 degrees earlier today.

Dad wanted to go to the restaurant "on the hill" tonight. He couldn't remember the name (of the restaurant). I had no idea what he was talking about; there are no "hills" in Williston. He said he would give me directions once we started driving. And here we are, well, actually, here I am: at Fuddruckers, at "the top of the hill," overlooking Williston. It's an incredible view; I'm actually eye-level higher than the water tower on the Williston State College campus way off in the distance; one would not see if one did not know where to look. And just beyond that is the wide Missouri, just a few miles downstream from the confluence (where the Yellowstone empties into the Missouri). I can see the bluffs across the Missouri, the bluffs that mark the northern rim of McKenzie County.

It's funny how things work out. Fuddruckers was not the first "new" restaurant to come in during the Bakken boom but it was one of the first. How it happened to pick the site at "the top of the hill," no one will ever know, but it was a stroke of luck or serendipity. This is where the steak house for Bakken millionaires should be located. Far off to the east is the Little Muddy River.

I took Dad out to dinner to this restaurant "on the top of the hill." After dinner, we drove out to the recreation area just above the Little Muddy Bridge/Highway 1804 east of Williston. The boat landing was filled with pick-ups and boat trailers. It appears the boats were down on the Missouri River. At this point, the Little Muddy is very, very wide -- it's about as high as I've ever seen it. Lots of water this year.

Troop 368 is out here in several canoes; they must be earning their canoeing merit badge. There is one swimmer -- and now a "mom" with a stopwatch is coming out to greet him; he must have been looking to earn a swimming merit badge or looking to set some kind of personal swimming record.

I told Dad I was going to the Lewis & Clark Bridge, asking him if he wanted to go. He declined, saying he gets restless and would like to head home; he retires fairly early these days. I dropped him off, took a short drive, and then back up to Fuddruckers. I told the hostess I was only there to have a beverage and use their wi-fi. So here I am.

Back to the canoes and Troop 368. A couple of years ago, Kathy told me that anyone who says they are "bored," should be slapped. I don't think she meant that literally; she seems to be a pretty gentle woman, a quilter. But I know exactly what she means, and on a night like tonight in the Bakken, if anyone says they are bored, they need to get out. I assume many, many roughnecks are not bored, but exhausted tonight. They are putting in some very, very long days with this incredibly good weather and long hours of daylight.

By the way, I will be seeing Kathy tomorrow, on my way back to Texas. 

Before I forget: again, truck drivers are not paid enough. Maybe they are well paid in the Bakken; I don't know, but whatever the average pay for long-haul truck drivers, it's not enough.

One piece of advice for drivers in North Dakota: DRIVE FRIENDLY.

If you are like me, and simply a tourist, exploring the Bakken, drive carefully and drive friendly. If on the back roads, even if have the right-of-way at a intersection with stop signs for cross traffic, and you see a truck coming, slow down, and let the truck go through the intersection. If you stop far enough back, they will know what you are doing and will appreciate the gesture. It's called "driving friendly." But it's also called "Defensive Driving." Some of the truck drivers are new to the area, and do not know which roads are through-ways and which have stop signs at the intersections. Some will simply not have time to stop; they will do what they can, but I would rather have a trucker coast through an intersection while I watch him/her through my windshield, rather than seeing his Peterbuilt hood ornament up close and personal coming through my passenger side window.

So, tomorrow, I head back to Texas. I will stop along the way before I leave North Dakota, but it's going to be a tough day for me, emotionally, to be leaving.

He Rode All the Way to Texas, Dolly Parton, Trio II

Before I leave,  a big "thank you" to Steve for meeting with me at "The Daily Addiction" on Wednesday and Thursday mornings, 7:00 a.m. to 10:00 a.m. He comes up from Texas two or three weeks each month to help folks with their financial planning. It's a long, long story. He's a native of eastern Montana but currently works for an "investment" company, living in Plano, Texas. We both find great joy in sharing stories about the Bakken. He flies into Minot, and then rents whatever SUV they give him. Today, the SUV he had looked like it was about the size of of a Bakken water-hauling truck. A good truck for the Bakken, a Toyota Sequoia. I wouldn't know; when he mentioned Sequoia, I did not even know the manufacturer. I honestly thought it was made by the company with the ignition switch problems. LOL.

A big thanks, also, to Michael, who gave me a great Knife River baseball cap. I will get a photograph of me wearing the cap sometime and post it. It was strictly a social visit, but I learned a lot about road construction in the Bakken.

I spent limited time at "Books on Broadway." I was just way too busy this trip, and my time was really, really limited. However, in a later posting, I will recommend a book that Chuck is featuring; I can't do it tonight because I've sent a letter to the individual who sent me the book, and I want to make sure he gets my "thank you" letter before I talk about it on the blog. It's another long story.

Perhaps more later, but now, back to the business of the Bakken.

$5 Gasoline -- Here We Go Again -- August 28, 2014

Screen shot:

Gasoline prices in Los Angeles in past 24 hours.

The "funny thing" about this: one needs to understand the "geography" of Los Angeles. Yes, one can find "less expensive" gasoline, but folks in Santa Monica are not going to drive to Norwalk to buy less expensive gasoline. The $4.99 price one sees above is what folks are paying for gasoline in Santa Monica. Sure, there will be some competition and some less expensive locations, but these locations (Olympic and Fairfax; Pico and 20th; Wilshire and 26th) are high volume locations.

The ARCO stations offering a lower price are outliers in the sense that they only take cash and the ARCO card (as far as I know; I only know what my wife tells me). My wife only goes to ARCO when she is out in California and only pays cash. ARCO is big in California but by no means the "norm." So, to some extent, one can ignore the $3.99 ARCO prices. I doubt very many folks in California are paying $3.99. The Shell prices are closer to reality.

So, $5 gasoline.

On January 1, 2015, Californians will "absorb" another price increase in gasoline. 

Californians already pay the nation's second highest gas tax at 68 cents a gallon -- and now it will go up again in January to pay for a first-in-the-nation climate change law.

It's an indirect tax at the pump so no one knows how much it will actually affect the price at the pump. Perhaps it won't affect the price at the pump at all. Perhaps ARCO and Shell will "eat" the cost because they "like" their customers. Perhaps a good old-fashioned "price war" will break out in California dropping gasoline to 35 cents/gallon. Maybe Costco and grocery stores through loyalty programs will knock off $2.00/gallon.

But this is what the analysts say:

Estimates of the cost of the tax vary. The California Air Resources Board, the Golden State's premier anti-pollution agency, predicts the new tax will raise gasoline prices from 20 cents to $1.30 per gallon. A prominent state senator who helped author the bill estimated the cost at 40 cents a gallon. Environmental activists downplay the cost, but hail the impact.

First of all, we all know, gasoline is not going to jump $1.30/gallon on January 1, 2015, in California.

And another 20 cents/gallon -- won't even be noticeable. Even 40 cents/gallon represents only a ten percent increase (based on $4.00 gasoline); I think the US Postal Service has been raising first class postage at a rate exceeding 10 percent. And life goes on.

Whatever.

On another note, the price per gallon is irrelevant. The cost of gasoline as part of a family's entire budget is the issue. If the teen-ager is no longer allowed to use the family car, the family's gasoline expense can be cut dramatically. If the family's wager-earner takes the bus to work, the gasoline expense can be cut dramatically. Farmers/processors/restaurants will simply pass on any increased cost of diesel on to the customer buying avocados at the grocery store/restaurant. Guacamole dip is not the end-all be-all.

Thursday -- August 28, 2014; President To Meet With National Security Council In The Situation Room

News report: vacation over; President Obama will meet with National Security Council in the Situation Room this afternoon. My hunch: a) President Obama thinks they're talking about the Situation Room Wolf Blitzer anchors over at CNN; and/or, b) the President will need help finding the Situation Room. In the big scheme of things, I find it amusing that this is news/headline: that the president is meeting in the "Situation Room." Isn't this sort of standard practice for most presidents to meet in the Situation Room at least once or twice during a four-year term? Is this something so new for this president that it makes headline news? Maybe.

Hey, I gotta go. I will be off the net for several hours. Good luck to all. It's been fun.

Jobs report: 298,000, a decrease of 1,000. The four-week average at 299,750. Nice graph at the linked article.

I track the "big stories" here. Today, Europe at a tipping point. A top story over at Rigzone today -- Germany's energy transition dream at risk of becoming a nightmare.

Wintershall's head of exploration and production warned Thursday that Germany's 'Energiewende' (or Energy Transition) dream of pursuing an economy powered by the wind and the sun is in danger of turning into a nightmare.

Speaking to energy journalists at the ONS exhibition in Stavanger, Norway, Wintershall Executive Director Martin Bachmann said he was concerned about figures recently published by Statistics Norway that showed overall investment in Norway's petroleum sector will drop by EUR 6 billion ($7.9 billion) next year.

"That is actually bad news for Europe's security of supply and I think Germany – as the biggest market in Europe – has played a large part in creating this uncertainty," Bachmann said.

RBN Energy: continuation of the series on Enbridge.

Enbridge is investing close to $9 billion between 2013 and 2016 in its Eastern and Light Oil Market Access initiatives. A major goal is to improve access for Enbridge shippers – particularly shippers of light shale crude from North Dakota, to refineries in the Midwest and eastern Canada. And by the end of 2014 refineries in Illinois, Michigan and Ohio as well as in Ontario will have better access to Enbridge crude. But even when the reversal of Line 9 in Ontario is completed and Enbridge crude can flow as far as Montreal, only about 300 Mb/d will be available for Quebec refineries to process. Today we continue our review of Enbridge eastern expansion plans.

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 these refineries to increase supplies from western Canada and the Bakken.

In Episode Two we began a description of Enbridge expansion plans with the Eastern Access project.

In Episode Three we finished up the Eastern Access project and started on Enbridge’s Light Oil Markets Access  (LOMA) initiatives with the Sandpiper project that will deliver increased supplies of light crude from North Dakota.

In Episode Four we covered the expansion of the Southern Access line to deliver Sandpiper crude to Flanagan and its extension to Patoka that provides a path to Marathon’s Midwest refineries. We also covered the Line 78 project that will increase capacity northeast from Flanagan to Griffith allowing more light crude to flow to Eastern Canada on Line 6B. In this episode we cover planned expansions to Line 6B and how new flows on Line 9 will feed refineries in Ontario as well as Warren, PA.

Active rigs:

	8/28/2014	08/28/2013	08/28/2012	08/28/2011	08/28/2010
Active Rigs	194	181	191	199	140

The Wall Street Journal

Declining attendance by students at college football games.

CBO: federal budget deficit to be smaller than predicted over next decade; revised GDP estimated downward for 2014.

The Los Angeles Times

Top story: experts see long, tough battle to contain Islamic state.  

Slow news day.