Cove Point LNG Export Terminal Approved; Dominion Resources -- September 29, 2014

Comment: if one can get a LNG-export terminal approved this close to Washington, DC, on the Chesapeake Bay, it seems it would be very difficult to deny a permit elsewhere if all conditions were met. The only "new" condition I can think of is whether one of the approving agencies could question the "need" for yet another LNG-export terminal. But for me, this is the tipping point when it comes to LNG-export terminals in the US. 

Link here.

U.S. federal regulators on Monday approved construction of Dominion Resources Inc's liquefied natural gas export project in Cove Point, Maryland.

Cove Point is the fourth U.S. LNG export project to get the green light to begin construction from the Federal Energy Regulatory Commission.

It will be able to export up to 5.75 million metric tons of LNG a year when fully operational.

Dominion's facility is one of about two dozen projects that hope to ship a growing bounty of domestic natural gas to countries in Asia and Europe.

The Cove Point site, a little more than an hour's drive southeast of Washington, D.C. on Chesapeake Bay, boasts four large storage tanks and a pier built in the 1970s to import LNG from Algeria, underscoring just how much U.S. market dynamics have changed.

Construction is estimated to cost between $3.4 billion and $3.8 billion, the company said, adding that it has fully subscribed the marketed capacity of the project with 20-year service agreements that will see LNG shipped to Japan and India. 

Most interesting thing about this article? No one sent me the link; I didn't see it in any of the headlines of the "things" I routinely read; it was buried pretty deep at Rigzone. I easily could have missed it. US LNG-export licenses are becoming a "dog-bites-man" story. Interesting.

FERC has approved three other LNG export projects, all in the Gulf of Mexico: Cheniere Energy's Sabine Pass, the Freeport LNG Development project and Sempra Energy's Cameron facility. Some 14 more projects are pending with FERC with additional applications expected.

The project has been criticized by environmental groups. It lies close to hundreds of homes in the town of Lusby, a golf course and a state park, as well as the complex ecosystem of Chesapeake Bay itself, the largest estuary in the United States.

From Yahoo!In-Play, September 30, 2014: The construction of the export project, which is estimated to cost between $3.4 billion and $3.8 billion, will create thousands of skilled construction jobs, 75 permanent jobs and an additional $40 million in annual tax revenue to Calvert County. Other economic benefits included millions of dollars of new revenues for Maryland and the federal government as well as a reduction in the nation's trade deficit by billions of dollars annually.

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His "Walter Cronkite Moment"

Senior citizens will remember the evening Lyndon B. Johnson lost the American voter on his Vietnam War. The story is apocryphal but the timeline was not.

With this op-ed in The Los Angeles Times, one wonders if we aren't seeing the "Walter Cronkite moment" for Barack H. Obama and the ObamaWar.

t's funny how President Obama is always talking about "I" and "me" whenever it makes him look good, but suddenly it's "they" and "we" when mistakes are made.

For instance, for years, Obama boasted about how he ended the Iraq war and how he withdrew American troops. "You know I say what I mean and I mean what I say," he boasted on the campaign trail in 2012. "I said I'd end the war in Iraq. I ended it."

Then, over the summer, as one Iraqi city after another fell to Islamic State militants, and as critics insisted that Obama's decision to pull all of our troops out of Iraq was partly to blame, he suddenly changed his tune, mocking the critics. "What I just find interesting is the degree to which this issue keeps on coming up, as if this was my decision [to withdraw U.S. troops]."

On Sunday night, the always-congenial Steve Kroft of CBS' "60 Minutes" noted comments by James Clapper, the director of national intelligence. Clapper said, "We overestimated the ability and the will of our allies, the Iraqi army, to fight."

"That's true. That's absolutely true," Obama replied. "Jim Clapper has acknowledged that I think they underestimated what had been taking place in Syria."

Eli Lake of the Daily Beast contacted a "former senior Pentagon official who worked closely on the threat posed by Sunni jihadists in Syria and Iraq," who was, in Lake's words, "flabbergasted" by the president's remarks. "Either the president doesn't read the intelligence he's getting or he's bulls—ing," the official said.

It's almost surely the latter.

Now it's "we" and "they" where it used to be "I." Or "Michelle and I." 

By the way, there was a great question on NRP today when discussing the ObamaWar: "Exactly who are we bombing in Syria?" Great question.

Time For A Good Sweating In The Oil Market -- Reuters -- Rigzone

Link here:

U.S. demand for petroleum products has experienced an unprecedented and broad-based decline over the last eight years as soaring oil prices have forced consumers to become more efficient and seek cheaper alternatives.

Consumption of oil-based products has fallen in every major category - from gasoline, diesel and jet kerosene to heating oil, fuel oil, petrochemical feedstock, petroleum coke and asphalt, according to the U.S. Energy Information Administration.

In every case, consumption has fallen in absolute terms and the decline is even steeper compared with the growth in population and the size of the economy since 2005. The extent of demand destruction varies from a relatively small reduction in motor gasoline and diesel to steep falls in the use of heavy fuel oil, petroleum coke, asphalt and oil-based products as feedstock for making petrochemicals.

The final two paragraphs:

In the next couple of years, there will be plenty more headlines about cancelled projects and producers struggling to break even, as well as signs of recovering consumption. For oil bulls, that is reason to hope prices will soon recover. But it is more useful to see it as a necessary adjustment and reaction after several years of exceptionally high prices.

Only lower prices can slow the shale juggernaut and high-cost offshore exploration while slowing consumption losses in the advanced economies and encouraging faster demand growth in emerging markets.

Unmentioned in the article are the high CAPEX wind, solar, renewable energy projects. But back to fossil fuel: I think "demand destruction" is huge. It will be interesting to see the changes in the US if oil drops "permanently" to $80/bbl or less. I'm thinking Dwight Eisenhower and the nifty fifties.

Why Peak Oil Predictions Haven't Come True -- The WSJ -- September 29, 2014

Today's WSJ has a special section on energy.

The front page, full-page article: why peak-oil predictions haven't come true:

To the peak-oil adherents, this is just a respite, and decline is inevitable. But a growing tide of oil-industry experts argue that peak oil looks at the situation in the wrong way. The real constraints we face are technological and economic, they say. We're limited not by the amount of oil in the ground, but by how inventive we are about reaching new sources of fuel and how much we're willing to pay to get at it.

"Technology moves so quickly today that any looming resource constraint will be nothing more than a blip," says petroleum economist Phil Verleger. "We adjust."

And then Mason shows up again (and some people say he's a "smart" peaker:

If M. King Hubbert were alive today—he died in 1989—would he admit defeat?

Probably not, says Mason Inman, who has written a biography of Mr. Hubbert that will be released next year. He argues that the recent shale boom is just a temporary respite in a long march downward. U.S. oil production could be about to hit a second peak, and then return to its terminal decline.

The production boom "makes things better for a while, but it doesn't change the long-term picture," Mr. Inman says.

If Mr. Hubbert were around, he might be dumbstruck by what he sees, Mr. Inman says. Mr. Hubbert, he says, advocated turning to solar power and energy efficiency to break the dependency on oil.

As for the power of innovation to reach new oil reserves, Mr. Hubbert believed that technology would help extend the limits of oil production, but thought its impact was exaggerated, Mr. Inman says. He felt people would invoke technology as a kind of panacea—which it isn't.

There will eventually be diminishing returns, Mr. Inman says, since oil is a finite resource, even though we don't really know its limits. "He would probably say, 'You guys are crazy to be drilling this so fast and using it up and pretending it's a solution,' " says Mr. Inman.

And Mason still doesn't have his own wiki page. 

Reason #3450 why I love to blog: one week ago I did not know who Mason Inman was; now I do, and my life is much richer. Not.

A Pimple At Risk Of Being Popped -- September 29, 2014

I track pipelines of interest here; one of the first I tracked was Enbridge #9 (#9A). I suppose I first blogged about Enbridge #9A two years ago. RBN Energy has talked about it at least once.

This is a story about the crude oil pipeline from Portland, Maine, to Montreal, Quebec, the Portland-Montreal Pipeline (PMPL), which is, to some degree, related to the Enbridge #9.

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Historically, ocean-going tankers brought crude oil to the Port of Portland (Maine) where it was offloaded and then by pipeline brought to the refineries in Montreal, Canada.

But now, foreign oil is not needed, and is more expensive than North American oil, so the port is seeing less crude oil traffic.

There is a chance that the Canadians could end up exporting their oil through the Portland, Maine, port.

At least that's how I understand the story.

From the linked story:

The rapid decline is tied to shifting market conditions in Canada that have put the operation of the pipeline and its South Portland marine terminal in jeopardy.

The pipeline’s sole remaining refinery customer in Montreal is in the process of weaning itself from imported crude oil in favor of less-costly supplies in North America.

The transition will be aided by work underway to reverse the flow of an oil pipeline that connects western Canada and Montreal through Ontario, called Line 9. These changes are on track to be done next year.

These events call into question the economic viability of the 73-year-old South Portland facility, which at its peak served several refineries in Quebec and Ontario.

The reason lies with the changing business practices of the last Montreal refinery, owned by Suncor Energy, a minor partner in the pipeline. Suncor can process 137,000 barrels per day. It’s making a transition from overseas crude oil to supplies from western Canada and North Dakota, and, to a lesser degree, off the coast of Newfoundland. It began making the switch last year via rail cars, but the big change will come next year when Enbridge Corp. reverses Line 9.

At a hearing last year before the National Energy Board of Canada on the Line 9 re-reversal, Suncor cited a consultant’s report that estimates an average $2-per-barrel price advantage for North American oil projected out to 2025. Suncor is a major producer of tar sands oil, so it’s not surprising that the company wants to use cheaper oil that it’s producing to feed its oil refinery. Suncor has indicated that the switch is critical to the refinery’s economic survival.

Various media reports in Canada have noted that both Suncor and the only other operating Quebec refinery, Valero Energy Corp. near Quebec City, plan to use only North American crude by next year.

The best bet for the future of the Portland-Montreal Pipe Line, said Auers, the Dallas petroleum consultant, is for its owners to reverse the flow to export Canadian crude through South Portland. A reversal has been proposed in the past, but it’s strongly opposed by environmental activists. The company has insisted there are no current plans to reverse the flow, but has said it’s keeping all options open.

The good folks in Portland, Maine, should visit Bedford, Massachusetts. 

What Some Of Us Will Be Talking About Tuesday; GE Closes Huge Deal; California Drought And Global Warming Not Related -- September 29, 2014

GE continues to focus on fossil-fuel: is reporting:

General Electric’s new high-efficiency gas turbines, fired at temperatures 200 degrees hotter than an erupting volcano, will see their U.S. debut at two gas power plants near Houston and Dallas.

GE is getting paid more than $500 million to build four of its most advanced gas turbines and other equipment to power two of Exelon Corp.’s planned combined-cycle gas turbine units at its existing gas-fired plants in Texas. Combined-cycle units are more flexible than plants that rely only on gas or coal.

GE’s new 440,000 horsepower gas turbines, each as powerful as about 1,000 Ferraris, use advanced air-cooling technologies to cut into electricity costs and carbon output, features that the Chicago power generator says will make its Texas power plants “among the cleanest, most efficient” units in the United States.

“Being mindful of increased water efficiency in drought-prone Texas, the new units will be cooled with air instead of water,” Exelon said in a written statement Monday. GE is also building two steam turbines and six generators for Exelon.

The new combined-cycle units will each add 1,000 megawatts to the Texas power grid, which means they can light up 2 million Texas homes combined. The four turbines combined could save Exelon up to $32 million a year in power costs.

Interesting:

[Update: a reader seems to have caught an error. The story was a bit confusing. $500 million for four turbines, but they will be used for two combined-cycle units which will each provide 1,000 MW of electricity. So $500 million / 2,000 MW = $250,000 / MW.  I will correct the error below.]

$500 million / 2,000 MW = $250,000 / MW. What does wind and solar cost?

From an earlier post, March 20, 2014:

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

The Wall Street Journal

Top story, front page: hundreds of thousands face health law subsidy deadline. The hundreds of thousands face a deadline Tuesday to reconcile their state income when applying for ObamaCare and the income reported to the IRS. Not gonna be a pretty picture.

Ford sharply cuts earnings outlook. And I thought they were doing so well. Ford cites "higher than expected costs of auto-safety recalls in the US and economic weakness in Europe.

Huge story: Encana will buy Athlon for almost $6 billion. By acquiring Texas-based Athlon Energy, Encana will acquire a large position in the Permian Basin.

Microsoft to give "sneak preview" of its new Windows software on Tuesday. 

PIMCO is in a race to keep investors after Bill Gross exits. Too big to fail?

A US judge declared Argentina in contempt of court.

Deep pockets: Bank of America will pay $7.65 million in penalties.

Venezuela's currency hits a new low. I wonder if Venezuela is still giving away free heating oil to Massachusetts?

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From The Los Angeles Times: early snow blankets Sierra Nevada, delighting drought-weary Californians, stunning warmists. 

An unusual early snowstorm blanketed the Sierra Nevada over the weekend, but the welcome sight isn't expected to last long as a warming trend spreads across California.

The first snow of the season dumped up to 3 inches along the Lake Tahoe Basin, forcing authorities to shut down California 108 at Sonora Pass, which remained closed Monday, said Tom Dang, a meteorologist for the National Weather Service in Sacramento.

It was the first time in several years that a storm had dropped so much snow on the Sierra this early in the year, he added.

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Global Warming

From The Los Angele Times (I think this article was previously posted, but it has a September 29, 2014, dateline): no evidence that California drought and climate change are linked -- study.

Global warming contributed to extreme heat waves in many parts of the world last year, but cannot be definitively linked to the California drought, according to a report released Monday.

The third annual analysis of extreme weather events underscored the continuing difficulty of teasing out the influence of human-caused climate change on precipitation patterns.

One of three studies examining the California drought in 2013 found that the kind of high-pressure systems that blocked winter storms last year have increased with global warming.

But another study concluded that a long-term rise in sea surface temperatures in the western Pacific did not contribute substantially to the drought. And researchers noted that California precipitation since 1895 has "exhibited no appreciable downward trend."

Overall, the report editors concluded that the papers didn't demonstrate that global warming clearly influenced the drought, which is one of the worst in the state record.
In the report, published in the Bulletin of the American Meteorological Society, 20 research teams explored the causes of 16 extreme weather events recorded in 2013, including torrential downpours in Colorado, heat waves in Korea and Australia and a blizzard in South Dakota.

That's refreshing. And reassuring. 

Reader With Question About Four CLR Banks Permts Expiring This Month -- September 29, 2014

A reader asked about the status of permits, 23790 - 23793. They were originally permitted in September, 2012; and, permits renewed in September, 2013. No activity yet; curious if CLR will renew the permits?

• 23790, conf, CLR, Pasadena 2-2H, Banks, 
• 23791, conf, CLR, Pasadena 3-2H, Banks, 
• 23792, conf, CLR, Monroe Federal 2-2H, Banks, 
• 23793, conf, CLR, Monroe Federal 3-2H, Banks, 

I doubt CLR would lose these permits. Banks oil field is a great field.

Paperwork often lags events; posting data to the NDIC website takes a bit of time. The wells are still shown as confidential on the GIS map server and the scout tickets.

Sited in this same section, just a few feet to the north of the proposed four-well pad is this well:

• 22891, 947, CLR, Monroe 1-2H, t8/12; cum 209K 7/14;

And another well on 1280-acre spacing ends in this same section; the well is sited in the section to the south:

• 21148, 809, CLR, Pasadena 1-11H, t7/12; cum 138K 7/14;

From a mineral owners perspective, I would be happy if CLR waited until all their new completion data was analyzed, to get the best possible well. It's possible CLR simply has more work than it can handle and is prioritizing based on available resources. It's also possible that CLR is still analyzing the data. This is a great field; they might as well optimize it.

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Wind

If you enjoy spin, you might enjoy this Prairie Business article on wind farms in North Dakota. I'm not going to go through it again, but I link/post it to remind folks of the relative cost of wind/solar/coal:

“A 500 megawatt project will cost about $1 billion when it’s done and we just can’t raise that kind of capital in South Dakota,” Johnson says.

He anticipates the project could be complete by 2018. The company, which is based in Colorado with regional offices in Texas and Minneapolis, has been developing projects in North America since 1997 but didn’t log its first North Dakota project until earlier this year with the purchase of the Border Winds Project near the Canadian border in Rolette County.

Construction began in June and is expected to be complete in October next year, when ownership will transfer to Excel Energy. 

The wind farm will be spread across 23,000 acres and will be capable of producing 150 MW of power from 75 turbines. The cost of the project is not being disclosed, but Morgan says Xcel Energy expects the project could reduce customer costs by about $45 million over its lifetime. 

The cost of the project is not being disclosed; isn't that interesting? That speaks volumes and suggests the cost ....

For comparison in cost:

From an earlier post, March 20, 2014:

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

In this Prairies Business article, it sounds like the wind projects are over $2.0 million / MW, in line with other wind projects. New coal plants are in the $600K range. 

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For Newsaholics / Political Junkies

I am currently reading two books on the Kennedy assassination (Crossfire: The Plot That Killed Kennedy) and A Cruel and Shocking Act: The Secret History of the Kennedy Assassination.

I am not follow the conspiracy theory but the books are excellent resources to help understand the processes involved.

Meanwhile, I have just finished watching the first two full seasons of House of Cards on DVD.

The two books and the TV series really, really put The (London) Mail in perspective: Obama had accurate intelligence on ISIS before the 2012 election. It's pretty clear the president was disengaged from running the country these past two years, and things are now starting fit the timeline quite well. From The (London) Mail:

• a national security staffer in the Obama administration said the president has been seeing 'highly accurate predictions' about the rise of the ISIS terror army since 'before the 2012 election' 
• Obama insisted in his campaign speeches that year that America was safe and al-Qaeda was 'on the run' 
• the president said during Sunday's '60 Minutes' program that his Director of National Intelligence had conceded he underestimated ISIS 
• but the administration aide insisted that Obama's advisers gave him actionable information that sat and gathered dust for more than a year 
• 'He knew what was at stake,' the aide said of the president, and 'he knew where all the moving pieces were' 
• Obama takes daily intelligence briefings in writing, he explained, because no one will be able to testify about warning the president in person about threats that the White House doesn't act on 

Harvard trained him well. He can always say he never saw the briefings.

Eleven (11) New Permits In North Dakota; SHD Will Report A Huge Clarks Creek Well Tuesday;

Active rigs:

	9/29/2014	09/29/2013	09/29/2012	09/29/2011	09/29/2010
Active Rigs	187	184	190	196	143

Wells coming off the confidential list over the weekend, today were posted earlier; see sidebar at the right.

Eleven (11) new permits --

• Operators: Hess (5), HRC (2), Corinthian (2), Enduro (2)
• Fields: Alkali Creek (Mountrail), Tyrone (Williams), Souris (Bottineau), Newburg (Bottineau)
• Comments:

Seven (7) producing wells completed:

• 25673, 3,165, Statoil, Lucy Hanson 15-22 3TFH, t8/14; cum --
• 26307, 847, Hess, LK-Bice-147-97-1201H-6, t8/14; cum --
• 26791, 1,166, Hess, BB-Belquist-150-95-1110H-5, t9/14; cum --
• 27023, 1,307, Hess, HA-Nelson A-152-95-3427H-4, t9/14; cum --
• 27024, 1,074, Hess, HA-Nelson A-152-95-3427H-3, t4/14; cum --
• 27091, 581, Hess, GN-Alice-158-97-1324H-1, t8/14; cum --
• 27316, 490, Hess, EN-Joyce-LE-156-94-1721H-3, 4 sections, t9/14; cum -- 

Wells coming off the confidential list Tuesday:

• 26956, 300, CLR, Overloon 1-34H1, Ukraina, t6/14; cum 5K 7/14;
• 27040, 2,082, SHD, Thud 12-36H, Clarks Creek, one section, Three Forks B1, 20 stages; 3.7 million lbs sand, t6/14; cum 39K 7/14;
• 27152, 2,253, MRO, Cloon 14-32H, Reunion Bay, 4 sections, middle Bakken; 30 stages; 2.55 million lbs sand, t8/14; cum --
• 27350, drl, Hess, GN-Willard-158-98-0508H-1, Rainbow, no production data,
• 27469, drl, Petro-Hunt, Moody 159-94-15B-22-4H, North Tioga, no production data,
• 27574, drl, Hess, EN-Jeffrey A-155-94-2734H-9, Alkali Creek, no production data,
• 27748, drl, XTO, Willey 31X-3F, West Capa, no production data,

Comments: SHD has permits for eight wells sited in that section; one 4-well pad; two 2-well pads; this is going to be quite a location for SHD. To learn a bit more about SHD, click here.

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27040, see above, SHD, Thud 12-36H, Clarks Creek:

Date	Oil Runs	MCF Sold
7-2014	28993	24058
6-2014	7536	0

Odds And Ends From The Bakken And Elsewhere -- September 29, 2014

Updates

September 30, 2014: even I missed this one. I had seen the story before but had forgotten all about it. The mainstream media is getting all excited about the fact that the US will become the #1 crude oil producer in the next month or so, taking the lead over Saudi Arabia. What folks have forgotten (including me), is that the US has been the #1 producer in petroleum products (oil + condensate) for the past 20 months, since November, 2012. I don't think the president has mentioned "it" once -- nothing about the oil and gas industry since 2012. Prior to that his only reference to the oil and gas industry was "putting his foot on the neck of BP" or something to that effect, or some platitude about the need to continue "studying" the Keystone pipeline.

Later, 6:18 p.m. CDT: with regard to the Simplot story below, a reader sent the following comment which I brought up here for easier access:

This is a very planned move by Simplot. It was announce last year that there would be 20,000 natural gas wells developed 70 miles west of Rock Springs, starting in 2016. This maske for a cheap and easy business decision for Simplot.
http://trib.com/business/energy/plans-for-wells-buoy-wyoming-s-oil-and-gas-future/article_f3d3ec28-41a5-566c-bde1-3009881dbe48.html.

From the linked article:

A series of Wyoming oil and natural gas project proposals which carry more than 20,000 planned wells are making their way through the study and permitting process.

The vast majority of the proposed wells are contained in only a handful of projects in western and central Wyoming, primarily targeting natural gas.

Each project proposal is likely to create hundreds or thousands of direct and immediate jobs and millions or billions in tax revenue for local governments. Each developed field could produce oil or gas for five decades.

"Five decades of production." In North Dakota they are drilling about 2,000 wells/year. If that holds true in Wyoming that's ten years of drilling.

Original Post

Stories sent to me by readers today.

US poised to become world's largest oil producer, surpassing Saudi Arabia, this month or next. President Obama will, most likely, schedule a presidential press conference in Watford City next month. The first linked story was in the Financial Times five hours ago. VOAnews, quoting EIA, almost exactly one year ago , said the US would be the largest oil producer by 2015:

The International Energy Agency (IAE) says that by 2015, the United States will surpass Saudi Arabia and Russia as the world's biggest oil producer and is on track to become energy self-sufficient in two decades.

The IEA said Tuesday that for the next 10 years the recent U.S. and Canadian success with shale oil drilling and deepwater production in Brazil will reduce the role of the Middle East-dominated Organization of the Petroleum Exporting Countries as the world's most prominent oil producer.

But the Paris-based adviser to 28 energy-consuming nations said the U.S. position as the top world oil producer will end by the mid-2020s as resources diminish at the fields being tapped at the moment in the mid-country states of North Dakota and Texas. The IEA said Middle East countries will then provide most of the increase in the global oil supply.

Mid 20's? I doubt it.

The Casper StarTribune is reporting:

But some business leaders see signs of change in fertilizer maker J.R. Simplot Co.’s plans to build a $300 million ammonia production plant near Rock Springs. The ammonia will be used as a key ingredient in the fertilizer made at Simplot’s existing production facility 4.5 miles outside the southwestern Wyoming town.

Others see the development as a result of the fertilizer industry’s unique dynamics, namely its need for cheap natural gas and its rural customer base.

The pay-off for Rock Springs, and Wyoming, is potentially large. At its height, in 2015, construction will require 440 workers. The project is expected to generate more than $11 million in local tax revenue for Sweetwater County through 2016, according to company filings with the state. And 25 fulltime jobs are anticipated to be added once it begins operations in 2016.

Simplot has long bought ammonia for its fertilizer production. Now the company will be able to improve the efficiency of its operations by producing ammonia on its own, said David Cuoio, a Simplot spokesman. The new plant, which will produce 600 tons of ammonia daily, is expected to cut the company’s shipping costs, he said.

Natural gas is key to ammonia production.

And finally this story from The Washington Post. I normally don't post these stories; there are plenty of sites that will archive them. My response when I got to the end of this article, "So what?" There has been a huge alcohol problem in the Dakotas for decades, and if one takes the time to google the issue one will find the same problem with "meth" in the Dakotas. Colorado found one way to deal with the marijuana issue: legalize it.

[Later. After posting the link to the Washington Post story, I posted an update regarding SHD. It would be interesting for that same reporter to do an in-depth story on the background of the folks running SHD. I think there would be quite a story line there. One can spend one's life reporting stories like the one linked above (the Washington Post story) or one can write stories that show how folks overcame diversity to became highly successful (however one wants to define success); or stories on redemption. But a story that tells me drugs exist where there is billions of dollars being spent, is a "dog-bites-man" story. Okay.]

The SHD story can be found here and here:

• 27040, see below, SHD, Thud 12-36H, Clarks Creek, producing, a huge well,

Comments: SHD has permits for eight wells sited in that section; one 4-well pad; two 2-well pads; this is going to be quite a location for SHD. To learn a bit more about SHD, click here.

Update On EPD's Fractionating Facilities Around Houston, TX -- September 29, 2014; NGL Fundamentals

Updates

October 1, 2014: this is the best description yet, from the comments below:

Y-grade pipelines have in-line analyzers and flow meters that continuously measure both and density. A quality assurance (QA) system is in place so that accuracy is ensured.

The Vantage pipeline to Alberta from the Hess plant is probably the longest ethane pipeline in North America. OneOK y-grade pipe line takes Bakken NGLs to Conway, Kansas, where the propane is fractionated and sent to north to Iowa and points north. The rest of the NGLs are sent to Mt Belvieu, TX, where the rest of the fractionations occur.

Some shippers have started to use tankers to take ethane to Asia and Europe. Bakken ethane is left with the methane, as OneOK doesn't find it profitable to transport it to Conway and then to Texas. Bakken ethane may have billions of dollars in economic potential for ND if a cracker is ever built.

Later, 4:00 p.m. CDT: a reader is wondering how y-grade is transported to the fractionator since different components have different monetary value. Hopefully a reader will provide more insight. My hunch is that there is a "black box" at the pad that measures the percentage makeup of the NGL. But I really don't know. Way beyond my expertise. But it's a great question. Wiki comes close to answering the question, but not quite (unless I missed it, which is possible). It's very possible, the value of the y-grade (and its components) is determined "after the fact," after it has been processed at the natural gas processing plant.
 

Original Post

Houston Business Journal is reporting: 

Houston-based Enterprise Products Partners LP will build its ninth natural gas liquid fractionator at its complex in Mont Belvieu that is just east of Houston.

The massive pipeline company is increasingly busy in the Houston region, already building the world's largest ethane export facility at the Houston Ship Channel, and also just completing this week the the first segment of the Aegis ethane pipeline between Mont Belvieu and Beaumont.

Enterprise's fractionators are used to separate ethane and NGLs like butane and propane from the natural gas, or methane. This ninth fractionator will have a capacity of 85,000 barrels a day and is expected to begin operations as early as January 2016, according to Enterprise.

Enterprise also said it has secured the required permits and emission credits for a similarly sized 10th NGL fractionator at the same complex. Upon completion of the ninth fractionator, Enterprise will have gross NGL fractionation capacity of 755,000 barrels a day at Mont Belvieu and total gross NGL fractionation capacity of approximately 1.2 million barrels daily. Enterprise will have 265,000 barrels a day of propane production capability at Mont Belvieu upon the completion of the ninth fractionator.

I would assume RBN Energy has discussed these developments; I can't recall everything RBN Energy has touched on but they have discussed the activity in the Houston and the Houston Ship Channel on many occasions and in great detail. A search of "Houston Ship Channel will bring you to several posts of all the activity going on there.

RBN Energy provides a great introduction to the NGLs:

Let’s start at the beginning – before the NGL products become NGL products. 

The majority of US natural gas liquids (NGLs) reach fractionation centers such as Mont Belvieu in the form of semi-processed y-grade. Traders do not trade y-grade and there is no posted price for it.  All you can do with y-grade is fractionate it into purity products. 

The value of y-grade is all in the purity products. So when you talk NGL trading, you are talking trading of the individual NGL products.

Recall that once fractionated, y-grade becomes five unique purity products; ethane, propane, normal butane, isobutane and natural gasoline. Unlike y-grade, each of these products has a specific market value and they are traded each day.  A lot.  The majority of those trades occur at market hubs where there is a critical mass of infrastructure – with the two biggest being Mont Belvieu, TX and Conway, KS.

Purity products are traded both physically (transfer from seller to buyer at a point within the physical trade location) and financially (via derivative transactions where the parties settle up against an index price, usually OPIS). 

NGL fundamentals can also be found here. 

A New Madison Oil Field In North Dakota? Cool, Clear Water -- September 29, 2014

Updates

October 5, 2017: wells in Chatfield oil field have been updated.

October 21, 2015: update on two Chatfield wells. At the moment, Chatfield is a two-section oil field.

Permits

2015
31307, conf, Ballard, Barton Trust 31-30, Chatfield,
31222, conf, Ballard, Fines 14-19, Chatfield,
31118, conf, Ballard, Fines 23-19, Chatfield,
31117, conf, Ballard, Nelson 33-19, Chatfield,
29807, 352, Ballard, Nelson 34-19, Chatfield, t3/15; cum 39K 8/15;
29622, conf, Benergy, Borstad 30-3, Chatfield,
2014
27319, 600, Ballard, Fines 24-19, Chatfield, t6/14; cum 66K 8/15;
 

Original Post

This is really, really cool. Subtle, but cool.

A Madison update. A writer reminded me about the Madison with a recently reported well:

• 27319, 600, Ballard Petroleum, Fines 24-19, t6/14; cum 9K 7/14; 

This well was a wildcat; it's now said to be in Chatfield oil field. It is a vertical well, drilled successfully, total depth of 4,700 feet, to the MC-2 Anhydrite. The main objective of the well was to test the Wayne Pay interval. It is located approximately four miles north of Glenburn, about 20 miles NNE of Minot. At the time it was drilled, it was in the "wildcat field of Bottineau County." The well was spud on February 27, 2014, and reached TD on March 14, requiring 15 operational days to drill, core, and test.

The "stratigraphic correlation chart" is located here. See also the North Dakota Geological Survey site. At that link scroll down/search "Wayne."

The Madison Group has been divided into a number of informal, wireline log-defined intervals (Harris and others, 1966; Voldseth, 1986). In ascending order, they are the Bottineau, Tilston, Landa, Wayne, Glenburn, Mohall, Sherwood, Bluell, Coteau, Dale, Nesson, Midale, Ratcliffe, and Poplar intervals. Hendricks (Hendricks-1988)subdivided the Ratcliffe interval into several subintervals, the Berentson, Alexander, Flat Lake, Charles C, Lustre, and Eggebrecht.

I did not find the Chatfield oil field on GIS map server. The scout ticket says the well is in the Chatfield oil field:

NDIC File No: 27319     API No: 33-009-02354-00-00     CTB No: 127319
Well Type: OG     Well Status: A     Status Date: 6/2/2014     Wellbore type: Vertical
Location: SESW 19-159-81     Footages: 660 FSL 1980 FWL     Latitude: 48.576280     Longitude: -101.181315
Current Operator: BALLARD PETROLEUM HOLDINGS, LLC
Current Well Name: FINES 24-19
Total Depth: 4700     Field: CHATFIELD
Spud Date(s):  2/27/2014
Pool: MADISON     

If this is a new oil field, it is the first new oil field since the Cottonwood oil field, to the best of my knowledge.

An IP of 600 compares favorably with any Bakken well, though the EUR will be much, much less.  That statement needs to be retracted; see comments below. But this would have been a relatively inexpensive vertical well.

Later: this is really quite exciting. Ballard has two more wells in the same general area, both on confidential. The Fines well is in section 19-159-81. The other two Ballard wells on confidential are 6 to 10 miles north in township 160-81.

• 27703, conf, Ballard, Middaught 33-23, wildcat, 23-160-81;
• 27704, conf, Ballard, Drovdal 13-2, wildcat, 2-160-81; 

If these are also good wells, we might start to see the minimum extent (north-south) of this new field.

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

Later, see first comment below. As of this date, from the NDIC website, some selected formations, cumulative production, number of wells, and average production/well to date:

Bakken: 831,017,850 bbls / 7,353 wells =  113,017 bbls/well
Bakken/Three Forks: 3,590,399 bbls / 34 = 105,600 bbls/well
Madison: 939,049,431 bbls/ / 5567 = 168,681 bbls/well
Red River: 110,277,553 bbls / 736 = 149,834 bbls/well
Red River B: 149,294,668 bbls / 550 = 271,445 bbls/well

The current Bakken boom in North Dakota began in 2007. The heyday of the Madison wells was back in the 60's and 70's I believe. The Red River came a bit later but even now is producing some incredibly good wells.  (I could be very wrong on the relative timing of Madison wells vs Red River wells.)

The vast majority of Bakken wells are less than five years old. 

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A Note to the Granddaughters

I am really, really enjoying Judith Nies' 2014 Unreal City: Las Vegas, Black Mesa, and the Fate of the West. The book provides a superficial, but informative, history of Hopi/Navajo conflicts, the Mormons, coal, water, and the growth of Phoenix, Los Angeles, and Las Vegas in the 1950's. I first mentioned the book a few days ago. It is a short book, and so easy to read, one could read it in one setting, but it is so enjoyable to read, I wish it would not end, and that's why I'm reading it slowly. It reads like a very, very long New Yorker article.

I probably wouldn't have posted this, but I needed a music video to re-charge my blogging batteries.

This is not my favorite version, but it is said to be "vintage," and I'm a sucker for "vintage":

Cool, Clear Water, Sons of the Pioneers
I probably shouldn't post this. Spoiler Alert: this will ruin your memories of this song:

Cool, Clear Water, Gaither
For the archives:

• a growing list of northern California communities that may run out of water in less than 60 days (are their golf courses still open?)
• daily allocation of water per house?
• harvest much smaller than normal

Sounds like the 1976 - 1977 drought; I was living in California; the motto was "Shower With A Friend," and, yes, ....

Gasoline Prices May Not Drop As Fast As Some Had Hoped; Will Put Damper On Political Talk To Export Oil -- September 29, 2014

Hearing dockets for October, 2014, should be out today

RBN Energy: Third in a 5-part series on the tsunami of condensate coming out of the Eagle Ford.

By Q2 of 2015, the Plains and Enterprise joint venture pipeline in the Eagle Ford will carry up to 470 Mb/d of crude and condensate to market in Houston and Corpus Christi including barrels shipped from the Permian Basin on the Cactus pipeline.

This pipeline expansion will easily make the two-midstream operators the largest players in the Eagle Ford market.

On top of that, Enterprise already has a leg up in the race to crank up condensate exports – having recently won one of the coveted BIS letters. Today we describe recent expansions in these two company’s Eagle Ford networks.

In our series updating an analysis of Eagle Ford infrastructure. In Part 1we described a five-fold increase in Eagle Ford crude oil production over the past three years to 1.5 MMb/d.

We explained that unlike other basins such as the Bakken in North Dakota, takeaway capacity has not been a big challenge for Eagle Ford producers. Instead the varying quality and in particular the high percentage of condensate in liquids output (about 45 percent) has caused headaches for producers and refiners alike. We also noted that two main pipeline routes to market have developed from the Eagle Ford – south to the Port of Corpus Christi and East to Houston area refineries.

In Part 2 we described the growth and continuing expansion of the crude takeaway systems developed by Magellan Midstream Partners and Kinder Morgan that provide producers and shippers multiple destinations for condensate and crude. This time we focus on the competing midstream takeaway infrastructure developed by Plains All American Pipeline (Plains) and Enterprise Product Partners (Enterprise). These two companies built out separate crude and condensate gathering systems in the Eagle Ford that are now joined by a 350 Mb/d joint venture pipeline.

Bloomberg reports that gasoline prices may not come down as fast as some had hoped; issues with refineries:

Speculators increased wagers on higher U.S. gasoline prices by the most since February as refinery closures constricted supply.

The net-long position jumped 45 percent from a four-year low as hedge funds pared record short bets and added long wagers for the first time in six weeks, weekly U.S. Commodity Futures Trading Commission data through Sept. 23 show.

Refineries in eastern Canada and Texas shut gasoline units for unplanned repairs as others began seasonal maintenance. Futures contracts for October traded at the highest premium to November since 2012, reflecting heightened concern about supply. The closures threaten the retreat at the pump that has drivers paying the lowest late-September prices since 2010.

“People have covered their positions or moved away from short to long,” Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London, said by phone Sept. 26. “There’s a huge amount of FCC outages in North America at the moment,” she said, referring to fluid catalytic crackers that make gasoline.

And, then, of course, we now have ObamaWar in the Mideast. It's always something.

Speaking of which, this is the most ill-conceived war I have seen in my short lifetime, the C-130 War on Ebola. From the linked article and the photograph, it looks like the US weapons of choice will be a) hand sanitizer' and, b) thermometers. I can't make this stuff up.

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

Paglia 

Some say Paglia is a provocateur, but if she is, she is one of my favorites. I knew nothing about her when I first read her Sexual Personae: Art and Decadence from Nefertiti to Emily Dickinson. Wiki describes the book as such: a 1990 work about sexual decadence in Western literature and the visual arts by scholar Camille Paglia.

At Time.com, Paglia writes:

Wildly overblown claims about an epidemic of sexual assaults on American campuses are obscuring the true danger to young women, too often distracted by cellphones or iPods in public places: the ancient sex crime of abduction and murder.

Despite hysterical propaganda about our “rape culture,” the majority of campus incidents being carelessly described as sexual assault are not felonious rape (involving force or drugs) but oafish hookup melodramas, arising from mixed signals and imprudence on both sides.

Colleges should stick to academics and stop their infantilizing supervision of students’ dating lives, an authoritarian intrusion that borders on violation of civil liberties. Real crimes should be reported to the police, not to haphazard and ill-trained campus grievance committees.

I would not have posted/linked this, but I happened to catch a segment on NPR this morning which took the Obama view. As their only first-person example, NPR interviewed one woman who complained that her university failed to investigate her rape. She said that she went to her "boy friend's" dorm room, engaged in consensual sex, but after "it" was over, and she decided to say "goodnight," he would not let her leave. She was thrown back on the bed, injuring her head. No more specifics were given; she says she reported the incident to campus police "some" days later but nothing ever came of the investigation. Something tells me there is more to the story.

By the way, if you don't feel inclined to read the several-hundred-page Sexual Personae, Paglia published a "Reader's Digest" version of sorts called Glimmering Images: A Journey Art From Egypt To Star Wars. I believe there were 20 pieces of part that she discussed in the book (I forget; I have it on the shelf but I'm not home write now to check): one page with the reproduction of the art work (generally a painting) and then two to four pages of essay on the work of art. It might be a good book for a high school senior to read during the summer if attending a liberal arts college in the autumn.

Active Rigs Down To 186 From Recent High Of 200 -- September 29, 2014

Active rigs:

	9/29/2014	09/29/2013	09/29/2012	09/29/2011	09/29/2010
Active Rigs	186	184	190	196	143

 
I was eagerly awaiting "the number" this morning. When I noted the "precipitous" drop from 200 to 194 (or thereabouts) I suggested there were two possible reasons; a reader told me to expect the drop because the "surface" rigs generally began drilling on Sunday and the number gradually declined as the week wore on.

So, I was curious to see if Monday's (today's) number would be the same, or perhaps even a bit better than Friday.

Not only did we not see a slight increase (as the reader suggested should happen), another significant drop. This is what I wrote then:

Comment: When I see the number of active rigs drop from 200 to 193 in just a few days, I at least have to ask the question: is there a particular reason? Probably not. Just one of those things. But remember, it's the best time of the year in North Dakota to be drilling. Why would the operators be stacking rigs? What has changed in the past few weeks? Two things: price of oil and new flaring rules are about to go into effect.

It is my impression that the price of oil, in the short term (less than 6 months), has no effect on CAPEX or the drilling plans for operators.

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

Miscellaneous Rants

From The Los Angeles Times: ObamaCare networks will get even tighter as more physicians are taken off the list.  Somewhere I seem to recall, "if you like your doctor, you can keep your doctor." No.

From The NY Post: ObamaCare's first anniversary report card -- F.  This is very, very good news; the next report won't be worse.

Also from The Los Angeles Times: Govenor Brown vetoes bill that would have curtailed law enforcement surveillance using drones except in oil spills. I can't make this stuff up. Reminds me of the North Dakota criminal case against an operator for the death of six ducks in the worst spring flooding ever in the recorded history of North Dakota.

And finally, one last story from The Los Angeles Times: the city of Ferguson is about ready to explode/implode, and folks want law enforcement to leave. I can't make this stuff up. This Ferguson is not in California. Or Colorado. That I could understand.

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

Miscellaneous Rants

It looks like riots in Hong Kong will affect the US financial markets more than ObamaWar.

PIMCO: too big too fail? I think this is a scarier story that some folks realize. I can't say why. It's just a feeling. The headline: billions flow out the door at PIMCO.

Tesla has to persuade skeptics to install chargers in China. The concern: watching iPads and iPhones blow up when folks try to charge their mobile devices at these car charging stations.

LOL. Team USA heads for the repair shop after (another) Ryder Cup defeat.

Car sales may be doing well in the US, but overseas, a big concern. Platinum skids on car-demand worries; platinum is used in vehicle exhaust filters.

Speaking of which, down here in Texas, it really does feel like "Ford country." Which reminds of a CNG - Ford - Texas story a reader sent me, if I can find it. Here it is ("mail search" certainly works nicely). This was from a recent issue of The Wall Street Journal:

At Mike Scully's Apple Towing in Houston, just one of their big Ford F650 tow trucks saves more gasoline each year than 20 Nissan Leaf electric cars.

When it comes to reducing carbon dioxide, nitrogen oxides and other pollutants, Mike's F650s are equally impressive, and his fuel cost per mile is about the same as that of a four-seat Jeep Wrangler. What is Apple Towing's secret?

The F650 tow trucks run on natural gas, which they refuel for less than $1.70 per gasoline-gallon equivalent, or gge.

PIRA Energy Group estimates that natural gas in transportation will approach 800 million gges this year. Do some simple math and it quickly becomes apparent that natural-gas vehicles (NGVs) will displace 10-12 times more gasoline and diesel than the 250,000 electric cars currently on the road.

When complete, Apple Towing's small fleet of 24 natural-gas tow trucks will displace more gasoline than around 700 Chevy Volts.

And here is a nice side benefit: Those Volts would cost federal taxpayers a whopping $5.3 million in subsidies while Mr. Scully's F650 Fords cost them nothing.

For more than a decade, policy makers and the automotive press have been enamored of electric vehicles, lavishing them with attention and incentives. All this even though when it comes to reducing oil dependence, pollution and fuel cost, the transition of America's truck fleet to natural gas is the hands-down winner.

Mention NGVs to a Washington policy wonk, however, and he will immediately start chattering about chickens and eggs. Received wisdom tells us that natural-gas vehicles won't sell until a huge national refueling infrastructure is built (and refueling infrastructure cannot get built without vehicles).

Apple Towing's Mr. Scully, not being a poultry farmer and thus unaware of this seemingly insoluble dilemma, asked our company, Nat G Solutions, to upgrade his F650s and at the same time install a natural-gas fueling compressor in his parking lot and hook it up to his city gas line. The great infrastructure crisis disappeared.

The other solution to the infrastructure challenge lies in the new generation of multi-fuel systems found on most modern NGVs. For trucks with gasoline engines, most natural-gas upgrades allow them to run on either natural gas or gasoline. These bi-fuel vehicles are user-switchable and they automatically revert to gasoline if the compressed natural gas runs out or the system has a fault.

For diesel trucks, a new generation of retrofit systems—from companies like NGV Motori USA and Landi Renzo —allow us to upgrade the big diesel engines to run on a 60/40 blend of natural gas and diesel, which is combined in real-time inside the engine. If the compressed natural gas runs dry, the truck switches back to 100% diesel and keeps on driving.

This dual-fuel approach is now opening the door for long-haul natural-gas trucking without the need for multibillion-dollar infrastructure incentives or even the need to go out and buy new tractor-trailers.

We're done.