Sunday, October 12, 2014

What Some Of Us Will Be Talking About Monday Morning -- October 12, 2014

The big question is what the CNN headline will be Monday morning: ISIS or Ebola?

WTI futures are solidly below $85 Sunday night. What will they be Monday?


But back to Ebola. The headline was: "Breach of protocol results in second American Ebola patient." That seemed pretty straight forward -- a breach of protocol resulted in a nurse testing positive for Ebola virus. But the reasoning turns out to be circular: the CDC seems to be saying that the protocol established to prevent Ebola infection is so ironclad that to have contracted Ebola, there had to have been a break in protocol. But, no break in protocol has been found, so far. (Of course they will find the break in protocol. They just have to get their story straight before coming out with a statement.)

However, that is not the issue. This is the issue. If the CDC protocol cannot protect American nurses in American isolation rooms in modern American hospitals from contracting Ebola even when the patient is known to be high risk; the nurse is wearing HAZMAT protection; the nurse is highly educated (four years college/nursing school following high school); the nurse was given additional training in HAZMAT protection before administering to the patient; if no obvious break in protocol has been found several days after the even occurred ... after all of that, how in the world can we expect the US military to be protected in Ebolaland? But even worse, how can we expect these third world countries in west Africa to control this epidemic? I think we were told that it was not easy to contract Ebola except through close contact with an infected patient.

I still think Ebola outbreak in the US is very, very unlikely. The real risk is a case or two of Ebola in Mexico resulting in widespread panic. OPEN BORDERS/OPEN ARMS.


But back to ISIS. Apparently ISIS is "infiltrating" the city of Baghdad. It's hard to imagine many alternate endings to this movie.

The Wall Street Journal

It sounds like one of our Mideast allies -- Qatar -- might not be helping much in the war against ISIS. And shaking up the "coalition" in the process.


Two years ago I read two books on lobsters including  Trevor Corson's 2005 The Secret Life of Lobsters: How Fishermen and Scientists Are Unraveling the Mysteries of Our Favorite Crustacean. That book explained why restrictions on the size of lobster that were allowed to be kept were critical if the lobsters were to be saved from extinction. It turns out that the "battle" is not over. The WSJ is reporting that Canadian fishermen are unhappy with the size restrictions.
Fishermen in the provinces of Prince Edward Island and New Brunswick are at loggerheads over how big a lobster’s carapace must be for a lobster to be harvested.
Fishermen in Prince Edward Island are fighting to keep the minimum carapace at 72 millimeters, or about 2.8 inches, while their counterparts in New Brunswick would like to see fishing restricted to lobsters with larger shell sizes—as much as 10 millimeters longer. That is .39 inch.
At stake is tiny Prince Edward Island’s lock on the global market for so-called canner lobsters, younger and smaller lobsters that are prized for their sweeter taste and sought after by major customers, including casinos and cruise ships. The lobster market is worth about $130 million a year to the province, which has a population of just 145,000. Across the Northumberland Strait in New Brunswick, lobster catchers say tastes have changed and that most customers prefer larger, older lobsters. Those bigger lobsters currently bring in around C$3.75 a pound—or 50 Canadian cents more than canners. Processors in their province also like them larger, in part because bigger tails mean bigger profits.
I'm sure something will be worked out.


This is cool. A Brazilian researcher has pioneered a faster, more accurate way to count brain cells.
The standard technique for the postmortem analysis of brain tissue is stereology.
Scientists thinly slice the brainstain the tissue and examine samples under a microscope to determine the presence of cells. The method is valuable, as it preserves the structure of the cells and brain. But analyzing a single mouse brain in this way takes several days. Examining 10 mouse brains would take 10 times as long. And larger brains are even more daunting.
Ms. Herculano-Houzel’s technique is drastically different. Rather than slicing the brain into sections, she divides it into its major regions and dissolves pieces weighing about three grams each in detergent to produce a liquid that contains free-floating nuclei. She then agitates the liquid to evenly distribute the nuclei and counts the units in four samples under a microscope.
Cells aren’t evenly distributed in intact brain tissue, and this homogeneous “soup” makes counting easier. She averages the counts and extrapolates the total number of cells in the volume of fluid, repeating until the entire brain is processed. The estimates are combined to yield the total number of neurons in the brain, with a margin of error of about 10%. The larger the brain, the longer it takes to process. One person can estimate the number of neurons in a mouse brain in four hours. A human brain takes one to two months if four people share the work. An elephant brain takes six months with four people.
On the campaign trail, Obama is hard to find.

The creator of the Arctic apple -- a genetically modified breed of apple that doesn't brown when when cut is seeking approval for sale in the US. Now that's cool. 

I think we heard this earlier: a bumper crop of corn and soybean predicted this year; prices falling.

The Los Angeles Times

The top five news stories are on Ebola.

Darwin at work: two women and two men were hit by train; one person killed. The four were standing on a trestle, taking pictures of the sunset when the train came 'round a corner.

Big travel article on Pike Place Market -- Seattle market which has been a hit with locals and tourists since 1907. Where first Starbucks is located. It's called Pike Place Roast. Not Pike's Place roast.

WTI Oil Futures Dropping; QEP Will Report Several Nice Wells Monday; CLR Will Report A Nice Well -- October 12, 2014

WTI oil futures solidly below $85 tonight, could go below $84.

Active rigs:

Active Rigs190184192197152

Columbus Day does not appear to be an official North Dakota state holiday. If not, tomorrow these wells will be reported:
Monday, October 13, 2014:
  • 27368, drl, Petro-Hunt, Brenna 152-96-24C-13-1HS,  Clear Creek, no production data,
  • 27855, 40, Legacy, Legacy Et Al Fett 13-18 2H, Red Rock, Spearfish, t5/14; cum 5K 8/14;
  • Sunday, October 12, 2014:
  • 27505, drl, Hess, BB-Budahn A-150-95-0403H-6, Blue Buttes, no production data,
  • 27616, drl, XTO, Hansen 34X-10C, Temple, no production data,
  • 27810, drl, Statoil, Maston 34-27 8TFH, Banks, no production data,
  • 27980, drl, Hess, BLSU E-406, Beaver Lodge, Silurian, no production data,
Saturday, October 11, 2014: 
  • 26292, 1,256, Whiting, Newton Federal 44-4PH, Bell, t4/14; cum 44K 8/14;
  • 26300, 1,441, QEP, Veeder 2-27-23BH, Grail, t6/14; cum 46K 8/14;
  • 26301, 1,411, QEP, Veeder 2-27-34TH, Grail, t6/14; cum 47K 8/14;
  • 26302, 1,146, QEP, Veeder 3-27-34BH, Grail, t6/14; cum 55K 8/14;
  • 26303, 2,170, QEP, Veeder 3-27-34TH, Grail, t6/14; cum 44K 8/14;
  • 26304, see below, QEP, Veeder 4-27-34BH, Grail, a very good well (not unexpected)
  • 26860, 770, Hess, EN-State D-154-93-2635H-10, Robinson Lake, t9/14; cum 6K 8/14;
  • 27561, 960, CLR, Rolfsrud 3-11H1, Elidah, t7/14; cum 18K 8/14;
  • 27726, 277, Hunt, Scorio 159-101-14-23H-1, Zahl, t7/14; cum 13K 8/14;
  • 27785, 36, Enduro, NSCU-Q-712-H1, Newburg, Spearfish/Charles, t6/14; cum 3K 8/14;

26300, see above, QEP, Veeder 2-27-23BH, Grail, a huge well (not unexpected),

DateOil RunsMCF Sold

26302, see above, QEP, Veeder 3-27-34BH, Grail, a huge well (not unexpected),

DateOil RunsMCF Sold

26304, see above, QEP, Veeder 4-27-34BH, Grail, a very good well (not unexpected)

DateOil RunsMCF Sold

27561, see above, CLR, Rolfsrud 3-11H1, Elidah:

DateOil RunsMCF Sold
A Note To The Granddaughters

Beautiful biking weather and two soccer games this afternoon will interrupt the regularly scheduled programming.

[Update, 4:10: our varsity team won their game, 3 - 0. The JV game starts at 5:30 p.m.]

[Update, 8:40: our junior varsity won their game 6 - 1.]

Hedgehog home project by younger granddaughter.

The apartment complex is still under construction. Note that the hedgehogs have begun decorating their complex for Halloween.

Could The Shale Oil Boom Be Ending? Depends On Price Of Oil -- October 12, 2014


October 17, 2014: the NY Times on the slump in oil prices.  My feelings, exactly, in general.  

October 13, 2014:  two articles on this issue.
First, Reuters, Meeyoung Cho -
SEOUL, Oct 13 (Reuters) - Global oil prices lost more than a dollar on Monday in early Asian trades, as Kuwait said OPEC is unlikely to cut ouptut to support prices and Saudi Arabia privately told oil markets that it is ready to accept oil prices perhaps down to $80 a barrel.
U.S. front-month November crude futures fell $1.01 a barrel at $84.81, and Brent crude oil declined $1.12 a barrel at $89.09.
Kuwait's oil minister Ali al-Omair was quoted as saying by state news agency KUNA on Sunday that OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective.
Second, Reuters, get used to it -
Saudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch.
Some OPEC members including Venezuela are clamoring for urgent production cuts to push global oil prices back up above $100 a barrel. But Saudi officials have telegraphed a different message in private meetings with oil market investors and analysts recently: the kingdom, OPEC’s largest producer, is ready to accept oil prices below $90 per barrel, and perhaps down to $80, for as long as a year or two, according to people who have been briefed on the recent conversations.
Original Post

A reader sent me this link from Fortune:
Most analysts predict that companies will stay the course for the short-term as prices of West Texas Intermediate crude, the U.S. benchmark, briefly dipped below $85 Friday before recovering to $86. In June, a comparable barrel cost as much as $105.
But if oil prices fall below $85 and remain there for several months, analysts predicted companies would start taking a hard look at next year’s drilling plans. Should they fall below $80, then mid-sized and small producers may cut back their spending and suspend some of their operations.
“If it falls below $80, the companies start having the conversation of slowing down their drilling activity,” said Daniel Katzenberg, an analyst with Robert W. Baird. “It would have to be there for several months for them to actually follow through and reduce drilling plans.”
It's an interesting discussion, but focusing on one data point (the spot price of WTI) is extremely short-sighted.

In the big scheme of things, I feel strongly that politics in Washington, DC, in general, and politics in Bismarck, ND, specifically, will have more effect on the Bakken than the spot price of WTI.

And, of course, it doesn't help that farmers in Minnesota, Iowa, and Nebraska prefer the more costly way to transport oil, by rail, adding anywhere from $1 to $12 to barrel for transportation costs (the range in transportation costs are my own WAG; others have firmer and more reliable figures, but the "general" idea is probably correct). 

The Bakken's main competitor is probably Texas (the Eagle Ford and the Permian). Northern California and the Northeast may be the Bakken's advantage over Texas.

I'm not worried about Saudi flooding the market to cripple the North American energy revolution; Saudi may flood the market but it won't be for that reason. But I don't think they will flood the market in the first place.

When we get into these discussions, one might find it useful to:
  • look at the price of WTI over the years (be careful; the link may take a long time to load);
  • recall that the Montana Bakken boom began in 2000;
  • recall that the North Dakota Bakken boom began in 2007;
  • recall the number of active rigs over the years;
  • recall that current rigs are significantly better than earlier rigs;
  • recall that completion techniques are incredibly different than when the boom started
  • note that cost of wells have remained fairly constant throughout the boom when comparing apples to apples and oranges to oranges;
  • transportation costs have an impact and are negotiable; 
  • North Dakota's new flaring rules are in effect;
  • oil services costs have an impact and are negotiable;
  • one could argue, exploration is more expensive than development; the Bakken is in the development phase for the most part;
  • any slowdown "now," will simply prolong the duration of the development phase in the Bakken; I doubt any new huge fields (bigger and better than the Permian, Eagle Ford, and the Bakken are going to be found during the period of decreasing oil prices);
  • when the going gets tough, the tough get going; and,
  • there's more to life than the crude oil.
Again, for newbies, it might be best to read my welcome/disclaimer with regard to purpose of the blog. 

This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or think you may have read here.

The Charlson Oil Field Is updated -- October 12, 2014

Link here.

For The Record -- October 12, 2014

I really appreciate my readers catching my BIG errors.

The very first time I posted about the Duvernay I noted that it was a shale play.  But that was a long time ago, and somehow over time I forgot, or never remembered in the first place, and recently referred to the Duvernay as part of the Canadian oil sands. Wrong. Very wrong.

Fortunately a reader caught that mistake. I think I have corrected all references that were in error.

Update On New CBR Tank Cars -- Washington State -- October 12, 2014

From a reader (I don't recall having previously posted this link), Fox Business is reporting:
A refinery in northwest Washington state says it will no longer accept any volatile North Dakota crude oil unless it arrives on newer-model tank cars.
By the first week of October, the BP Cherry Point facility had stopped using pre-2011 standard tank cars, known as DOT-111 cars, for the shipments, The Bellingham Herald reported ( ).
The National Transportation Safety Board, which recommended upgraded regulations for crude oil and ethanol cars in 2011, is working on updating rail safety standards and could require companies to phase out the DOT-111 cars for shipping crude oil during the next couple of years.
Cherry Point was already using newer, safer tank cars to receive about 60 percent of its crude oil, but expedited the switch to the newer cars in response to community concerns, BP spokesman Bill Kidd said. The refinery now uses a fleet of about 700 newer cars, called CPC-1232s.
The newer cars have thicker shells, head shields on both ends and improved valve protection.
Of course, not everyone agrees that the new cars are that much safer (at the linked story).

Also note "ethanol" in the story. 

And folks should find this interesting:
About 70 percent of the crude-oil rail cars that BNSF Railway currently moves through Washington state are already the newer design, railway spokesman Gus Melonas said.
For two decades, the Cherry Point refinery received crude oil only by pipeline, Kidd said. It later added shipments by sea.
But Alaskan crude oil has turned into the last type the refinery is interested in because of the higher price. Crude oil from mid-continent shale formations has become a cheaper option for the refinery, Kidd said.
"It's completely turned the industry on its head," Kidd said. "Without access to crude by rail, this refinery cannot compete."
Note the tag, CBR_WashingtonState, for other articles about CBR/Washington State.