Tuesday, October 21, 2014

Another Company Interested In LNG Plants In North Dakota? -- October 21, 2014

In long posts, there will typographical and factual errors. If this issue is important to you, please go to the linked sources.

A reader caught this one:
Stabilis Energy and Flint Hills Resources announced the formation of a joint venture to build up to five liquefied natural gas (LNG) liquefiers serving oilfield fuel consumers on October 1, 2013.  In addition to its first LNG production facility in George West, Texas, (Eagle Ford Shale) and plans for the next location in Odessa, Texas (Permian Basin), the venture is pursuing site purchases in North Dakota (Bakken Shale) and other domestic oilfield markets for LNG production facilities that could begin production between 2016 and 2018.
From its website:
The joint venture between Stabilis Energy and Flint Hills Resources was formed to build up to five LNG production facilities in the oilfield sector. Stabilis Energy will utilize its strong customer relationships and reputation in the North American oilfield sector to lead marketing, transportation and logistics, field services, and plant operations for the venture. Flint Hills Resources will provide its experience as a leader in the processing, distribution and marketing of traditional and alternative fuels to the venture. Stabilis Energy and Flint Hills Resources share management committee responsibilities.
From wiki:
The LNG industry developed slowly during the second half of the last century because most LNG plants are located in remote areas not served by pipelines, and because of the large costs to treat and transport LNG. Constructing an LNG plant costs at least $1.5 billion per 1 mmtpa capacity, a receiving terminal costs $1 billion per 1 bcf/day throughput capacity and LNG vessels cost $200 million–$300 million.
In the early 2000s, prices for constructing LNG plants, receiving terminals and vessels fell as new technologies emerged and more players invested in liquefaction and regasification. This tended to make LNG more competitive as a means of energy distribution, but increasing material costs and demand for construction contractors have put upward pressure on prices in the last few years. The standard price for a 125,000 cubic meter LNG vessel built in European and Japanese shipyards used to be US$250 million. When Korean and Chinese shipyards entered the race, increased competition reduced profit margins and improved efficiency—reducing costs by 60 percent. Costs in US dollars also declined due to the devaluation of the currencies of the world's largest shipbuilders: the Japanese yen and Korean won.
From FERC:
There are more than 110 LNG facilities operating in the U.S. performing a variety of services. Some facilities export natural gas from the U.S., some provide natural gas supply to the interstate pipeline system or local distribution companies, while others are used to store natural gas for periods of peak demand. There are also facilities which produce LNG for vehicle fuel or for industrial use. Depending on location and use, an LNG facility may be regulated by several federal agencies and by state utility regulatory agencies.
LNG in North Dakota, press release earlier this year (May 7, 2014):
North Dakota LNG, LLC (NDLNG), the newest member of Prairie Companies, LLC’s, portfolio of oil and gas service businesses, joined North Dakota Governor Jack Dalrymple and other state officials at an event Wednesday in the State Capitol Building to announce the arrival of a liquefied natural gas (LNG) production facility. Located in Tioga, North Dakota, the plant will be the first-to-market in the state to produce 10,000 gallons per day (GPD) starting in Summer 2014.
A phase two facility is scheduled to be operational in the fourth quarter of 2014 and capable of producing 66,000 GPD. NDLNG targets the drilling, fracking and transportation sectors of the unconventional oil and gas industry and will help meet the need for a cost-effective power source by converting natural gas feedstock into value-added liquid fuels.
“North Dakota LNG is proud to announce it will be the first LNG liquefaction plant in operation for North Dakota,” said Patrick Hughes, chief executive officer at North Dakota LNG.
“This historic venture will allow NDLNG to quickly provide oil and gas operators in the Bakken and across North Dakota with a cost-effective and reliable source of alternative fuel, thereby reducing operating expenses, while also creating new markets for value-added natural gas fuel produced in the State.”
This story, I believe, was posted on the blog earlier this year. Reuters is reporting that LNG may be next on American rails:
"Everyone is talking about moving gas by rail," said David Demers, chief executive officer of Westport Innovations, which is developing technology for natural gas-powered locomotives.
Demers said Berkshire Hathaway's BNSF was one railroad considering the move.
BNSF declined to comment on its plans, but a spokeswoman said it would take time for any development of gas by rail.
Transporting gas by rail, most likely as cryogenic liquefied natural gas (LNG), faces obstacles. The technology is in its infancy, and so far no tank car is permitted to carry the fuel on U.S. rails. Nor are there enough plants that convert natural gas to LNG to support a robust gas-by-rail market, experts said.
More-volatile liquids like ethylene and propane already travel on the rails in growing volumes. But as concerns about the safety of crude by rail intensify, regulators are exercising extreme caution with uncertified fuels like LNG, said executives involved in developing the technology.

What Some Of Us Will BeTalking About Tomorrow -- October 21, 2014

As most folks know, most of ObamaCare has been delayed until after the 2016 mid-term elections. The employer mandate kicks in next year. The WSJ is reporting:
With the health law’s insurance mandate for employers set to kick in next year, companies trying to avoid the law’s penalties while holding down costs, using strategies like enrolling employees in Medicaid. 
For those ineligible for Medicaid, health care coverage will be "skinny." Their word, not mine.

I've been saying that "forever."

The Wall Street Journal

Other stories up for discussion tomorrow (personal commentary mixed with headline news from WSJ and Los Angeles Times):

Late in the game, top US officials concluded the Syrian city of Kobani had become too symbolically important to lose; they raced to save it.  During the waning days of Vietnam, it was said LBJ personally picked the targets. That could explain how the most recent airdrop of military aid was accidentally dropped directly to ISIS. Just saying.

This is very, very interesting, taking a page from Apple: fear of hackers, terrorists, and natural disasters has the Pentagon pushing construction of independent power grids at military bases across the US.

The chess game continues: Russia will ban all fruit and vegetable imports from the Ukraine starting Wednesday.

McDonald's outlined plans for what it calls fundamental changes after reporting one of its worst quarterly profit declines in years. I probably have as much experience as McDonald's as anyone: among a gazillion other things, my hunch is that many customers have found the $1-menu adequate and caloric-friendly. Soft drinks for $1 and unlimited refills whle inside the restaurant. Sa "no" to the fries and one has an adequate lunch for $2 and change.

Target offers free holiday shipping. I haven't charged anything at Target, on-line or in the store, since ever since their major security breach. Oh, one exception: a camera, but didn't use the Target Red Card.

Daimler sold its remaining 4% stake in Tesla; made a gain of almost a billion dollars. Daimler will work on its own in-house battery.

The Los Angeles Times

No sympathy from me. They kicked us out. Told us to stay out. Now, Iraqis complain that US isn't doing enough against Islamic State. No sympathy from me.

"The Big Dig" in Los Angeles? I say go for it

Never Saw This Coming -- A Crude Oil Refinery In Devils Lake? -- October 21, 2014


Later, 9:48 p.m. CDT: Don caught this one. Note the estimated cost of the Devils Lake refinery proposal, $200 million. Same capacity refinery in Dickinson:
With an estimated 20 percent of work still to finish — “the hardest,” said project manager Jeff Rust — the $350 million refinery is on schedule to begin processing roughly 20,000 barrels of crude oil per day later this year.
So, the Devils Lake refinery, same capacity, is "only" $200 million vs $350 million for the Dickinson refinery?

Original Post 

The Dickinson Press is reporting:
A $200 million, 20,000-barrel-a-day clean fuels oil refinery could be operating near Devils Lake within three years.
The refinery, similar to one being built in Dickinson, would employ about 100 people and could create as many as 400 spin-off jobs in the area, according to Rachel Lindstrom, executive director of Forward Devils Lake, the region’s economic development agency.
It's getting to the point that almost nothing surprises me any more when it comes to the Bakken.

You Can't Get Ebola On The Bus -- President Obama

The AP is reporting:
After emerging months ago in eastern Sierra Leone, Ebola is now hitting the western edges of the country where the capital is located with dozens of people falling sick each day. So many people are dying that removing bodies is reportedly a problem.
Forty-nine confirmed cases of Ebola emerged in just one day, Monday, in two Ebola zones in and around the capital. More than 20 deaths are being reported daily.
Authorities say the uncontrolled movement of people from the interior to Waterloo which is the gateway to Freetown, the capital, has fueled the increase of Ebola cases in the west. There is a strong feeling that people are violating the quarantines elsewhere and coming to Freetown through Waterloo.
I know the folks aren't taking airplanes from rural Ebolaland to get to cities; and I know most of them aren't driving their own cars, and it's too far to walk, which pretty much leaves ... buses. 

Doesn't Sound Like Shale Is Going Away Any Time Soon -- Operators Stockpiling Sand; Investors Pouring Money Into Oil Funds -- October 21, 2014


October 21, 2014: just after posting the note below, Don sends me the link to this story. Reuters is reporting: investors are putting money into funds that track oil prices at the fastest rate in two years, betting that crude will rebound from a bear market.
The four biggest oil exchange-traded products listed in the U.S. have received a combined $334 million so far this month, the most since October 2012, according to data compiled by Bloomberg. Shares outstanding of the funds, including the United States Oil Fund and ProShares Ultra Bloomberg Crude Oil, rose to 55 million yesterday, a nine-month high. 
This is not an investment site. Do not make any investment, financial, or relationship decisions based on anything you read here or think you may have read here. 

Original Post

A long time ago I said it was taking a 100-unit train of fracking sand to frack one well. It's nice to see someone confirm my math. Reuters is reporting:
As fracking accelerates in North American shale fields, oilfield services providers Halliburton Co and Baker Hughes Inc are stockpiling sand to protect themselves against rising costs and are buying more railcars to transport the haul.
Halliburton, the world's largest provider of fracking services, is more than doubling its railcar fleet and capacity for sand terminals - where sand is stored and transferred to truck from rail. It had about 3,500 railcars under management as of June 30.
Baker Hughes, the world's No.3 oilfield services provider, said at the Barclays CEO Energy Power conference last month that it had "significantly" increased the number of its railcars and is buying more sand under contract, which helps buffer it against price rises.
Companies are pumping in as much as a trainload of frac sand into a single well to coax more oil and gas from shale rocks.
But the shale rush, especially in Texas and North Dakota, coupled with a rail jam that began after last year's severe winter has resulted in shortage of sand at drilling sites.
For newbies, my thoughts which I sent to Don, after reading the above article:
It certainly doesn't look like folks are leaving the Bakken despite slumping oil prices.
In the Bakken, EOG was the first to go from 1 million lbs of proppant to 10 million and even 12 - 14 million lbs of proppant to frack a well.
BEXP/Statoil started with and has pretty much stayed with 4 million lbs.
Most recently CLR has said that "large volume proppant" is the answer. CLR has generally gone with 1 - 4 million lbs. If CLR goes with 10 million lbs per well, one can see why so much sand is going to be needed.
Again, these are my thoughts, my opinions, what I thought I saw based on file reports and corporate presentations. They may be completely wrong. If this information is important to you, go to the source. 

I sometimes use "sand" colloquially to refer to "proppant," which could be sand alone, ceramic alone, or some combination of both. I am unaware of anything other than sand and man-made ceramic being used as proppant (there are other components mixed with sand/ceramic; whether or not others consider that "proppant," I don't know. For me proppant is sand/ceramic.

Never Saw This Coming: Alaska Crude Oil "Piling Up" At Port -- Bloomberg; Ten (10) New North Dakota Oil Permits; BR Reports Two Nice Wells Today -- October 21, 2014

Bloomberg is reporting:
Stockpiles of oil from Alaska’s North Slope have surged to a five-year seasonal high as tanker maintenance slows loadings, forcing the grade to trade at a discount to U.S. crude for the first time since 2010.
Inventories at the Valdez terminal, the northernmost ice-free port in North America and the loading point for Alaskan oil, have averaged 4.38 million barrels this month, the most for October since 2009, data posted on the Alaska Revenue Department’s website show. Tanker repairs have shrunk the pool of vessels available. 
A couple of data points from the linked article:
  • California is bringing in a record volume of oil by rail from other states and the region has increased imports from countries including Iraq and Saudi Arabia.  
  • Alaska North Slope crude for delivery to the U.S. West Coast weakened by 50 cents a barrel to a discount of 40 cents relative to domestic benchmark West Texas Intermediate. It’s the first time the grade has been discounted against WTI since Dec. 9, 2010. The oil fell $1.53 a barrel versus the international benchmark North Sea Brent for prompt delivery to a $3.81 discount. 
  • Production of [Alaskan] oil has declined from a peak of 2.1 million barrels a day in 1988 to an average of 523,797 barrels a day this month, state data show.  
  • The tanker work is another blow for Alaskan oil producers as the West Coast replaces their output with less-expensive barrels from other states including Utah and North Dakota. California took 16,373 barrels of oil a day by rail in July, a record for the month.
And that's why I love to blog. Read the linked Bloomberg article above in context with one of my recent postings on the growing relationship between California and North Dakota

Active rigs in North Dakota:

Active Rigs191182186195151

Wells coming off the confidential list Wednesday:
  • 27308, drl, BR, Lillibridge 21-27MBH, Johnson Corner, no production data,
  • 27581, 2,342, MRO, Viani USA 44-10H,  Chimney Butte, t6/14; cum 42K 8/14;
  • 27797, drl, Hess, AN-Evenson-152-95-1003H-8, Antelope, no production data,
  • 28112, 11, Legacy, Legacy Berge 13-31H, North Souris, a Spearfish well, t6/14; cum --
  • 28161, conf, Hess, BB-Budahn A-LS-150-95-0403H-1, Blue Buttes, no production data,
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Ten (10) new permits --
  • Operators: Hess (4), XTO (2), Whiting (2), Murex (2),
  • Fields: Robinson Lake (Mountrail), Dollar Joe (McKenzie), Grinnell (McKenzie), Temple (Williams)
  • Comments:
Nine (9) producing wells were completed:
  • 26382, 331, Oasis, Mallard 5692 21-20 9T2, Alger, t8/14; cum 3K 8/14;
  • 26769, 526, Mandaree 134-05H, Squaw Creek, t10/14; cum --
  • 26898, 548, Oasis, Delta 6093 24-15 3B, Gros Ventre, t9/14; cum --
  • 27059, 1,320, BR, Denali 21-4TFH, Johnson Corner, 4 sections, t9/14; cum --
  • 27580, 1,440, BR, Sequoia 41-4TFH, Hawkeye, t9/14; cum --
  • 27677, 290, Delta 6093 44-15 8T, Gros Ventre, t8/14; cum 5K 8/14;
  • 27767, 698, SM Energy, Todd 13X-35H, Camp, t9/14; cum --
  • 27769, 965, Tracy 13-35H, Camp, t9/14; cum --
  • 28480, 262, Dishon 5893 44-36 1T2, Enget Lake, t8/14; cum 2K 8/14; 

Tuesday Already -- October 21, 2014


Later, 1:40 p.m. CDT: there's an interesting article over at The Atlantic Monthly asking the same question many others are asking: Is the Chinese economy about ready to go over a cliff? The link may require a subscription. The article doesn't say anything of which regular readers should already know. However, there was an interesting data point:
Even after all the progress China has made, it isn’t a rich country. According to World Bank data, its per-capita G.D.P. in 2013 was $6,807, which puts it on about the same level as Iraq and South Africa. By comparison, per-capita G.D.P. in the United States was $53,143; in South Korea, it was $25,977. Looking at the experience of South Korea and other “Asian tiger” economies, there is no obvious reason for the rate of economic growth to slow down dramatically at the income level China has reached. Unless, of course, the government puts a wrench in things.
I was not aware the gap between South Korea and the United States was so great. 


Later, 11:13 a.m. CDT: a reader notes that they are starting to move earth west of Richardton for this new transloading terminal

It was also noted that earth is being moved just east of Richardton between the interstate and the railroad tracks but reason unknown.  

Later, 1:18 p.m. CDT: the reader also notes that a small trucking company in Minnesota is trucking 52 loads of fracking sand / day from Wisconsin, 7 days/week, which translates into almost 2.5 million lbs of sand on a daily basis from one trucking company. This is an interesting story for this reason: when I return to the Bakken, invariably I run into someone who has built a single-truck business into a fairly large operation. My hunch is that prior to the Bakken, this trucking company in Minnesota was not moving 52 loads of anything into North Dakota.

Original Post
Wow, what a great way to start the morning: a review of the Lana Del Rey Hollywood Forever Cemetery concert in Grantland. The reviewer and I traveled the same road -- initially we were not fond of LDR but over time ... the concert seemed so very ... Hollywood. Ha. My biggest surprise: I would have bet the reviewer was a man, but no, unless he/she is using a pseudonym, the writer has a very feminine name, Emily.

So, a great way to start the day.

Earnings today, anything of interest?
McDonald's, expectations, $1.37; actual: $1.09; "profit plunges"; "earnings ugly"; "profit drops 30%; shares tumble"; okay, I get the picture, not good news; and that was it for earnings today; nothing else interested me. Canadian National and Canadian Pacific report today for those interested. Back to McDonald's: McD is my go-to-on-the-road-fast-food-restaurant when traveling, but I have to admit, the experience is less and less enjoyable. Simply utilitarian. The dollar-menu to recharge and quickly back on the road. Purely utilitarian. Folks don't say, "hey, let's go to McDonald's" any more. I'm not sure what they mean by "shares tumble"; right now shares are down about half a percent, down 60 cents on a $90-stock. Shares were down 2% in pre-market trading (which isn't exactly "tumbling" either.
Active rigs:

Active Rigs190182186195151

RBN Energy: the fifth in a series on condensates in the Eagle Ford; this time on Koch Industries and NuStar. I bike right past a NuStar storage facility every day when I ride over to Starbucks in Southlake. 

Chief of Total Oil killed in plane crash, Moscow airport on take-off, struck a snow-plow. I don't often get a two-fer: two stories in one. Global warming hits Moscow and plane hits snow plow. AFP via Yahoo!News is reporting:
Russian and French experts were investigating Tuesday a plane crash at a Moscow airport which killed the CEO of French oil giant Total, Christophe de Margerie, whose private jet struck a snowplough on takeoff. Total, one of the world's biggest oil company, confirmed the death of its 63-year-old boss known affectionately as the "Big Moustache" because of his distinctive facial hair.
Later, if I get a chance, I will note another "the Moustachioed" from Andrew Bridgeford's 2005, 1066: The Hidden History in the Bayeux Tapestry.

A Note to the Granddaughters

At one time there was nothing more boring (for me) than British history. But after several years of living in England, particularly Yorkshire, I have come to really enjoy British history. 

Some years ago I read for the first time Andrew Bridgeford's 2005, 1066: The Hidden History in the Bayeux Tapestry, but as so often with my reading, I did not really recall the thrust of the book. Rushing out the door the other day, I grabbed a book to read just in case I had spare time. It was Bridgeford's book again.

For background one may want to quickly read Wiki's overview of the Angle-Saxon Chronicle.

Then, this paragraph (which I have broken up) -- second from the end in Bridgeford's book:
It was at St Augustine's Abbey that one of the versions of the Angle-Saxon Chronicle was kept up, nowadays called the E version. The E version of the Chronicle tends to be the most favourable towards Earl Godwin and his family, but it, like the other versions of the Chronicle, passes over in silence the whole matter of Harold Godwinson's fateful journal to the continent that was the catalyst of all that followed.
The truth behind Harold's mission, and with it King Edward's crucial wishes toward the end of his reign, was recorded at St Augustine's not, on this occasion, in ink scratched upon parchment but with colourful stitches pierced through white linen cloth (the Bayeux Tapestry).

In this sense, the Bayeux Tapestry can truly be described as the lost Angle-Saxon Chronicle as wellas the secret Chronicle of the House of Boulogne, a generation before the blood of Charlemagne achieved a new pinnacle of success in the Kingdom of Jerusalem.
I can add something to the mysteries of the book: the origin of the coat-of-arms for the French region of Boulogne: the three balls.

Modern heraldry is traced back to the 12th century. The knights, 1066 A.D., in the Bayeux Tapestry carry shields, but there appears to have been no system of hereditary coats of arms. However, if one looks closely, one sees the "three balls" on the shield of Eustace II.

The tapestry begins with the scene of a juggler holding a couple of horses readied for the invasion of England by William the Conqueror.

Heraldry, juggler, the importance of Turold the juggler in the tapestry, and the three balls on the shield of Eustace's shield seem to be several dots that can be connected.

Turold, through the Song of Roland is considered the father of French literature. The Song of Roland relates the exploits and successes of Charlemagne. Eustace was a descendent of Charlemagne. Eustace II, Count of Boulogne, showed his respect for Turold by placing him in the tapestry, at the very beginning, no less, and perhaps further "honored" him by placing the juggler's "universal symbol" on the coat of arms for Boulogne. See also Taillefer.