Wednesday, November 12, 2014

Will Saudi Kill US Shale -- Rigzone; Global Warming Hits West, Midwest Hard -- November 12, 2014

A nice essay over at Rigzone, asking whether Saudi / OPEC will kill US shale? The conclusion:
Past experience suggests the fortunes of the U.S. oil industry, Saudi Arabia and OPEC are bound tightly together.
Part of the adjustment process now underway in the oil market is likely to be a prolonged period of lower prices and a slowdown in the growth of the U.S. shale industry.
North Dakota's Bakken has become a relatively mature play, so this time around it might be spared the worst of the slowdown. Drilling has slowed in some outlying counties, but in counties at the core of play continue to report strong activity. North Dakota's Bakken is far more cost-competitive than it was in the 1990s thanks to technical advances and improvements in drilling efficiency.
The shale revolution will not be reversed, and the United States will continue to have a much bigger role in global supply. But some slowdown in shale growth is inevitable and will probably come on the fringes of the Bakken and in less developed shale oil plays, which have taken its place at the vulnerable high-cost frontier for U.S. onshore oil exploration.

From BreakingNews:
Casper, Wyo., hits low of -26 degrees, breaking 2 different temperature records -

NDIC Expected To Rule Thursday On Stripping Volatile Gases From Crude Oil Before Shipping -- November 12, 2014

From the Wall Street Journal:
Regulators set to decide on crude-by-rail shipping rules are relying on testing methods that may understate the explosive risk of the crude, according to a growing chorus of industry and Canadian officials.
The tests’ accuracy is central to addressing the safety of growing crude-by-rail shipments across the continent: whether Bakken crude contains potentially dangerous levels of dissolved gases. Several trains carrying Bakken crude have exploded after derailing, including a fiery accident last year that killed 47 people in a small town in Quebec.
The North Dakota Industrial Commission is expected to rule Thursday on what steps, if any, producers must take to strip volatile gases out of crude oil before loading it into railroad tank cars.
The regulator’s decision will be based, at least in part, on the testimony of a half-dozen oil executives who urged the state to consider the conclusions of a study by the North Dakota Petroleum Council, a lobbying group for energy producers.
That study found Bakken crude was no more volatile than other so-called light crudes commonplace in Texas and elsewhere.
But that finding may reflect a problem with the methodology, which could have allowed flammable gases, or light ends, to escape in the process of collecting and handling the crude samples. This means that tests aimed at determining how explosive crude is within a tank car might be significantly underestimating the risk of combustion.
For googling, this is known as "crude oil stabilization."

The Wall Street Journal

Russia entering the Ukraine ... again -- NATO.


Is part-time work the new post-recession norm? This is the lede:
The unemployment rate has fallen sharply over the past year, but that improvement is masking a still-bleak picture for millions of workers who say they can’t find full-time jobs. Now economists are wondering whether the elevated level of part-timers is a post-recession norm.
The only question I have, is ObamaCare mentioned? Yes:
On one side are economists like Ms. Girard, who say greater economic uncertainty and rising labor costs—from increases in the minimum wage, regulations or health-care expenses stemming from the Affordable Care Act—explain higher levels of part-time work.
“There is a structural element to this at the very least,” she said. The health-care law requires employers with 50 or more full-time equivalent workers to offer affordable insurance to employees working 30 or more hours a week or face fines.
“Companies are just more inclined to hire part-time workers, not necessarily because of the health-care law, but for business reasons that make it a more attractive option,” Ms. Girard said.
Anecdotal reports have suggested employers have cut hours to prepare for the implementation of the health-care law, but that hasn’t been borne out by economic data.
An analysis by Bowen Garrett of the Urban Institute and Robert Kaestner at the University of Illinois at Chicago found a small increase in part-time work this year, but the increase occurred for part-time jobs with between 30 and 34 hours—above the 30-hour threshold that would be affected by the health-care law.
So, don't blame ObamaCare.


Could we see another government shutdown? GOP may use must-pass spending legislation to thwart Obama's threatened immigration rules.

Supreme Court considers voting-rights case in Alabama. It appears the court might be upset that African-Americans are getting too good at gerrymandering. LOL.

"Everyone" now wants the Keystone, it seems -- Democrats in the Senate are looking for a unanimous vote to approve the Keystone. Previously reported.

A fourth African country -- Mali -- now has two cases of Ebola. Fortunately it's not that east to contract. In another note, POTUS seeks $6.2 billion in emergency funding to fight Ebola. And yet another Ebola story: trials of antivirals to treat Ebola start next month. 

Obama to nominate a lizard Lazard banker for a top Treasury post.

I assume there is a lot more but my time is up.

Oasis To Report Eight (8) Wells Thursday -- November 12, 2014

For newbies: "everybody" expects the rig count in North Dakota to start dropping, but the drop in the past couple of days could certainly be due to the predicted polar vortex as much as anything else. I think the rig count could be very, very volatile from this point on, until next summer, after the spring road conditions are lifted, and after the dust has settled with regard to the current slump in oil prices (which may continue for quite some time).

Active rigs:

Active Rigs187181191201158

Wells coming off confidential list Thursday:
  • 26505, 455, Oasis, Hendricks 5602 43-36 5B, Tyrone, t5/14; cum 29K 9/14;
  • 26715, 1,725, Emerald, Pirate 2-2-11H, Foreman Butte, t5/14; cum 53K 9/14;
  • 26950, drl, CLR, Oakdale 3-13H, Jim Creek, no production data,
  • 27014, 294, Oasis, State 5792 31-15 3B, Cottonwood, t9/14; cum 11K 9/14;
  • 27112, 506, Oasis, Hagen Banks 5298 42-31 4T2, Banks, t/714; cum 56K 9/14;
  • 27157, drl, Oasis, Delta 6093 24-15 4T2, Gros Ventre, producing,
  • 27222, 1,386, Oasis, Mallard 5692 31-22 7T, Alger, t8/14; cum 23K 9/14;
  • 27466, 177, Oasis, Shaw 6092 11-23 3B, Cottonwood, t9/14; cum 2K 9/14;
  • 27615, drl, Oasis, Andre Shepherd 55-1 31-8 8T, Missouri Ridge, no production data,
  • 27642, drl, Oasis, Holmes 5501 11-5 2T, Tyrone, no production data,
  • 27799, drl, Hess, HA-Mogen-152-95-0805H-7, Hawekey, no production data,
  • 28210, 77, Legacy, Legacy Et Al Berge 12-6H, Red Rock, a Spearfish well, t6/14; cum 3K 9/14;

27112, see above, Oasis, Hagen Banks 5298 42-31 4T2, Banks:

DateOil RunsMCF Sold


Five (5) new permits --
  • Operators: American Eagle (2), Slawson (2), XTO
  • Fields: Skjermo (Divide), Big Bend (Mountrail), Indian Hill (McKenzie)
  • Comments:
There were ten (10) well name changes:
  • Oasis will drill a Three Forks well instead of a middle Bakken well (#21371)
  • OXY USA: cancels five (5) wells; I don't know if this had been previously reported (#23171, #23687, #23819, #24125, and #24151). One was in Stark County; the other four in Dunn County. It's possible these permits were canceled for any number of reasons; it is not necessarily uncommon to see canceled permits, but one does see canceled permits when an operator sells leaseholds.
  • The others seemed to be minor changes. 

War On Coal -- November 12, 2014

The more one thinks about it, the more one has to ask: exactly with whom did President Obama negotiate the war-on-coal over in China? The Chinese were told that in exchange for them continuing to build as many coal-powered plants as they want, they were promised two things: a) no restrictions on CO2 emissions; and, b) the US would cut emissions by 26%, thereby improving Chinese ability to compete with US on energy. One almost wonders if Amy Carter was President Obama's chief negotiator. Putin was correct: Obama is a terrible negotiator.

The Keystone XL

An informal note that I sent to Don. This and $1.89 will get you a cup of coffee at our local Starbucks:
The Keystone XL is completely in the political arena, from my point of view.
Canadian oil is getting to the coast; the Keystone is not absolutely required. I'm not even sure if TransCanada would be quick to build it -- I don't recall if you saw the recent new cost estimate -- but it's up to $7.5 billion, if I recall.
Be that as it may, politically it's a huge, huge deal. If Obama were to approve it before the December 6, 2014, Louisiana election, he would effectively be throwing Tom Steyer under the bus. Politics is very, very cold, and I can hear Obama telling Steyer, who spent billions (okay, maybe just hundreds of millions) in the election, that "Steyer, you did not deliver -- we lost 8 Senate seats -- you did not deliver, and I'm approving the Keystone." I can't believe Obama would do that, but he would be throwing Steyer and his basket of Hollywood fruits and nuts under the bus.
Second, if Obama approves the Keystone, it makes him look incredibly inconsistent -- he has a war on coal which his democratic senators don't want (West Virginia, for example) and then he turns around and gives Canada what they want -- and both Canadian oil and US coal are about equal in CO2 emissions.
Third, if Obama approves the Keystone, it pretty much ends the debate on pipelines. Sure, the folks in Minnesota, Iowa, and Nebraska will hold out for as much money as they can get for approving the pipelines, but the political debate regarding pipelines is over if the Keystone is approved. It completely takes the wind out of the environmentalists' sails with regard to pipelines. And with all the rail congestion and (history of) spills/derailments, the average American knows pipelines are safer.
So, for me, the Keystone XL is not an investment issue, a Bakken issue, or even a "real" issue -- it is simply political theater.
If both the House and the Senate unanimously approve the Keystone XL BEFORE the new Congress is sworn in, it will be very, very interesting to see what POTUS Obama does. And he really only has one "window of opportunity" in which to approve it. If he is going to approve it, he needs to approve it before the Landrieu election in Louisiana; after the new Congress is sworn in, if he were to approve it, he would gain nothing politically from so doing. Possibly a compromise to approve the Keystone XL in exchange for more war-on-coal, but that's about it, but even if he goes that route, maximum advantage would be before the Louisiana election.
By the way, it's my understanding that Mr Rick Santelli (CNBC) noted that for the past six years Harry Reid did not allow the Keystone XL to even be debated in the Senate chambers, much less bring a vote on the issue; and, now, barely a week after the midterm elections, Reid has brought the bill to the floor, and (apparently) is supporting a unanimous vote in favor.

I could really, really be wrong on all of this but that's what I'm hearing. If it's important to you, go to the source. I'm simply relaxing and opining. And drinking another cup of coffee. Now that out-of-town family members are back out-of-town.

Why Is There No Drilling Under The River In The Center Of The Reservation? -- November 12, 2014; TrainWreck (Their Word, Not Mine)

A reader has asked a very interesting question over at the discussion group.

The reader is wondering why there is no drilling under the river in the center of the reservation? It is not simply because it is under the river because there are plenty of areas in the North Dakota Bakken where drillers have long horizontals under the Missouri River.

There is probably a simple explanation. My hunch is it has to do with all the bureaucratic steps required to satisfy federal, state, tribal, BLM, US Army Corps of Engineers, requirements and regulations, but I could be wrong.

The area in question:


I can't remember if I posted a short blurb on this earlier. I was not aware of the full story. Bloomberg Politics has the full story. If Chief Justice Roberts doesn't get it right this time .... well, let's just say, a lot of folks will feel the Supreme Court is as political as the rest of Washington....
He's also behind a series of scoops that could convince the Supreme Court to dismantle part of the Affordable Care Act. Weinstein has absorbed hours upon hours of interviews with Jonathan Gruber, an MIT professor who advised the Massachusetts legislature when it created “Romneycare” and the Congress when it created “Obamacare.”
Conservatives had been looking for ways to demonstrate that the wording of the ACA denied insurance subsidies to consumers in states that did not create their own health exchanges. Weinstein found a clip of Gruber suggesting that states that did not create health insurance exchanges risked giving up the ACA's subsidies; it went straight into the King v. Burwell brief, and into a case that's currently headed to the Supreme Court.

Bloomberg Businessweek Interviews Harold Hamm -- November 12, 2014

There's a one-page Q&A with Harold Hamm in this week's issue of Bloomberg Businessweek.

The last question in the interview is, well, ... entertaining. It provides an opportunity for a new poll.

First, the results of the poll in which we asked, in light of the oil price slump, is it better to be a:
  • a small privately held company .....  74%
  • a small publicly traded company .... 26%
I tend to agree, but it's all about liquidity, not profitability.

Now, the question that Mr Hamm was asked by Bloomberg Businessweek. Does President Obama get credit for overseeing the fastest increase ever in US oil production?
  • Yes
  • No
  • Are you kidding?

BNSF Blocking Oil Tank Cars To Ease Rail Traffic Jam -- Bloomberg -- November 12, 2014

Bloomberg is reporting:
BNSF Railway Co., the carrier owned by Warren Buffett’s Berkshire Hathaway Inc., is blocking some shippers from adding tank cars to its system in a bid to prevent a worsening of the gridlock that sparked regulators’ ire.
BNSF, which has come under scrutiny this year from the U.S. Surface Transportation Board over late grain deliveries, has told some oil shippers its network can’t accommodate more tank cars, said Mike Trevino, a company spokesman. In June, BNSF and Canadian Pacific Railway Ltd. were ordered by the board to report plans for resolving the service disruptions.
While BNSF has said it’s spending $5 billion this year to add workers, rail cars and expand track, Berkshire acknowledged in a filing last week that the railroad’s service is still “well below” its standards. Compounding the problem is the prospect of a record soybean and corn crop in the U.S., which will put additional pressure on railroads.
The tea leaves suggest Bakken production will drop below 1 million bopd by the end of the year (remember, we won't know the December, 2014, production until mid-February, 2015). The numbers coming out in a few days will be for the month of September, 2014.

US Shale Circling The Wagons -- Financial Times -- November 12, 2014

The Financial Times is reporting:
If there is “price war” in the oil market, as Adel Abdul Mahdi, Iraq’s oil minister, has suggested, the US shale industry is refusing to take flight at the first sound of gunfire.

Some operators that have not yet decided their 2015 capital spending budgets have said that they are reassessing their drilling programmes. A few that had already set out spending plans have in the past couple of weeks announced cuts. So far, though, they look like tactical withdrawals to concentrate their efforts where they will be most effective, rather than admissions of defeat.
Activity is already starting to slow. There were 1,568 rigs drilling for oil onshore in the US last week, 41 fewer than in mid-October, according to Baker Hughes, the oil services group.
That figure is likely to fall further over the coming months. Halcon Resources, which operates in the Eagle Ford shale of south Texas and the Bakken of North Dakota, said on Monday it planned to run just six rigs next year, compared with the eight it is running now and the 11 it had previously planned for 2015. -- previously reported.
Other leading shale oil companies have announced reductions in their capital spending plans: Continental Resources cut its 2015 budget from $5.2bn to $4.6bn; Rosetta Resources said it would spend about $950m next year, down from $1.2bn in 2014; and ConocoPhillips said it planned to spend less next year than the $16bn it is spending this year.

Other companies have suggested they are likely to follow suit. EOG Resources, one of the most successful shale oil producers, said at the time of its third-quarter results last week that it planned to ensure that its capital spending plus its dividend payments were in line with the cash flow it has coming in, and that would probably mean reduced activity in some areas.
The pressure on shale producers is not so much profitability as liquidity. William Thomas, chief executive of EOG, said last week that even if oil fell to $40 the company could still earn a 10 per cent return in some areas, including the Bakken and the Eagle Ford shales.
Much more at the link. In line with previous posts.

This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or what you think you may have read here. Make no travel plans based on what you read here. I post quickly and frequently; typographical and factual errors are likely. If this information is important to you, go to the source.

On a completely different note, it is interesting to listen to the ads on conservative talk radio in Texas. There are many, many ads trying to get folks to buy gold, telling them that gold is poised to go over $2,000 per ounce (one would think the government would act on these ads). In fact, the pundits suggest gold, currently around $1,000 an ounce, could plummet to $700/ounce. For some "investors," oil and gold tend to follow each other.

Wednesday, November 12, 2014; Did The GOP Pick Up Ten (10) Senate Seats? Will Tom Steyer Be Thrown Under The Bus, Metaphorically Speaking?


November 13, 2014: looks like the 9th Senate seat for sure. Landrieu is down 16 points.


Original Post
Active rigs:

Active Rigs188181191201158

RBN Energy: the diluent trail across Canada, part 4.

Bakken Operations

These are some interesting stories coming out of the Bakken, posted earlier:
Bakken Human Interest Story

I'm still getting caught up with all the stories I missed last week. Don sent me this story. This may be one of the best stories I have read in quite some time.  Billings Business is reporting. Pay attention to this young woman's background, the obstacles, and her age. 
Hanna Olson, now 22, moved to Williston three years ago as a 19-year-old high school dropout to work and make a lot of money.

Grateful for the company housing and increased hourly wage as a cashier, Olson, who grew up on a 15-acre farm near Mt. Rainier, soon learned the cost of living was high in the boom town.
It was during a short stint delivering small parts to locations for an oil field company where she first saw hotshots — drivers who quickly respond to requests for tools and equipment using a 1-ton pickup with a 40-foot flatbed trailer.
With the help of a roommate, who saw her struggling and wanting more, she got her commercial driver’s license permit.
But without a truck and trailer and the skills necessary to take the practical test, her dream eluded her — until she met Alton after cold-calling a dozen hotshot companies.
It's an incredible story. Now imagine that 20-something driving a one-ton truck with a 40-foot trailer, at midnight, in the middle of winter, on the roads in the Bakken, like the ones you see here:

Driving Down Into The Bear Den, Western North Dakota, The Bakken
Why 30-Hour ObamaCare Rule Is A Trainwreck

The Coyote Blog is reporting:
Note the household income per earner for the lowest quintile.  It equates to something over $14 an hour, well above minimum wage almost everywhere in the US and nearly as high as the $15 national minimum wage proposed as an anti-poverty program.
The problem with most poor households is not wage rate, it is getting full time work.
The household income per earner is nearly as high as the average income of the second quintile.  The problem is that most poor households do not have full-time earners.   The key stat is that only 16% worked full-time and only 30% had any sort of job at all.
The writer doesn't mention ObamaCare and the 30-hour rule. At one of the places I often visit for coffee, I listen to the employees -- and they are all anxious about getting enough hours. I assume that is very true for McDonald's, also.

Don't Trust This Story

EcoWatch: Transforming Green is reporting:
As Republicans get set to test their new majority in the U.S. Senate and their complete control of Congress to push through approval of the Keystone XL pipeline, a new investigative report by editor Lou Dubose at the Washington Spectator reveals that the construction of a “Keystone XL clone” pipeline with almost the same capacity is already taking place.
While TransCanada continues to battle the public outcry against its Keystone XL project, another company, Enbridge, is quietly building the Alberta Clipper pipeline. Like Keystone XL, it will pumped 830,000 oil barrels (bbl) a day of tar sands bitumen crude oil from the Alberta oil fields to U.S. refineries.
“In six to eight months the Canadian tar-sands spigot opens to full capacity,” wrote Dubose. “Barring litigation or action by the State Department, Enbridge will achieve what has eluded TransCanada. And it will have done so with scant attention from the media and without the public debate generated by campaigns against the Keystone XL.”
The Spectator analyzed State Department documents, annual reports and interviews with Enbridge officials and lawyers to learn how the company pushed through a pipeline virtually identical to Keystone XL without a public process or attracting much attention.
While a pipeline that crosses international borders requires presidential and State Department approval declaring that the project is “in the national interest,” the Spectator says Enbridge used a creative interpretation of an existing 1967 permit to circumvent the law and public opinion. 
The rest of the story is at the link.
Other News

For investors, trading at new highs: AAPL, BRK-A, BRK-B, CAH, CSX, NSC. In addition, UNP (thank you Minnesota, Iowa, and Nebraska) is flirting with new highs.

A Sempra Energy unit, U.S. Gas & Power, has teamed up with Consolidated Edison Development, a unit of Consolidated Edison Inc., for a 75-megawatt wind project in Custer County, NE. The financial terms of the agreement were not disclosed.

Under this 50:50 joint venture, the wind facility − Broken Bow II – will be operated and maintained by Sempra. The plant will generate enough renewable power to serve approximately 30,000 Nebraska homes.

Earlier this year, Sempra Energy and Consolidated Edison announced plans to tie up for five solar projects in Nevada and California. To date, the two companies have partnered in six solar facilities and one wind facility.
Remember, this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or what you think you may have read here. Make no travel plans based on what you read here. I post quickly and frequently; typographical and factual errors are likely. If this information is important to you, go to the source.

This is really cool. I've mentioned this twice in the past couple of days -- the need for mainstream media to move President Obama off center-stage to make room for the next anointed one. It would start with a barrage of negative Obama stories over the next few weeks/months, and then the positive stories on Hillary. But this is very interesting. Someone else noted this, also. The Washington Post is reporting:
As the presumptive Democratic front-runner in 2016, Hillary Rodham Clinton has many of the same goals as President Obama, starting with reassembling and reenergizing the coalition responsible for Obama’s victories in 2008 and 2012.
But if she becomes the nominee, Clinton will have to unlink herself from Obama while positioning herself to inherit the bloc of young people and minorities that helped put Obama in the White House.
The unlinking will be accomplished by negative stories on Obama, removing him from center stage (that has already begun); and then we start hearing the positive stories on Hillary. My hunch: Hillary's popularity peaked some years ago. 

Prior to the mid-term elections, there were predictions that the GOP would take control of the Senate by one or two senators. The most exuberant pollsters suggested the GOP would pick up six (6) Senate seats. I do recall that one or two pollsters/pundits thought we might see the GOP pick up as many as eight, but I think most folks blew that off as hyperbole. No one is reporting it except Fox News but the GOP just picked up the 8th senate seat. Alaska. And it is very, very likely that Louisiana will provide the 9th GOP senator. If that happens, that far exceeds the wildest imaginations of (m)any.

Over at CNN where front-page headline news includes such stories as "Errors at Rivers' clinic"; "US soccer looks to college for talent"; and, "Predicting college football's final 4", there is no mention that the GOP picked up the Alaska senate seat.

By the way, there are indications a Democratic federal senator may switch parties. If so, that might mean President Obama lost 10 seats to the GOP in the midterm elections. That midterm already set records, and no matter how "good" or "bad" it was when first reported, the story seems to be getting even more dramatic.

There is some talk that Democratic senators could "approve" the Keystone XL to help Landrieu keep her Senate office. The election will be held December 6. The Senate can do what they want; I doubt SecState John Kerry and POTUS Obama could act that fast. And if they do, will it make a difference? Will Tom Steyer be thrown under the bus, metaphorically speaking?

War On Coal

President Obama "signs" deal with China on war on coal. China gets to keep building coal plants through 2035 at whatever rate they went (generally about a new coal-powered plant every week, on average); US must cut coal emissions by 26% by 2025. Or something to that effect. This is my recollection; it may be incorrect. If it's important to you, go to the source. But from my viewpoint, it appears, China, 1; USA, 0. A big "zero." Putin said the president was a terrible negotiator. I don't know. Maybe he got something in return that was not reported.

ESA landed a small probe on a comet ... but early reports suggest that anchors meant to hold the probe onto the comet failed to deploy. Ten years chasing the comet; perfect landing; early reports that the anchors / harpoons to hold the probe to the comet failed to fire. But radio news say the anchors did fire. More to follow.

EOG Reports A Well Having Produced Almost 150,000 Bbls In Less Than Five (5) Months; 46 Stages; 14 Million Lbs Sand, A Middle Bakken Well -- November 12, 2014

  • 26459, 1,182, EOG, Wayzetta 44-0311H, Parshall, middle Bakken; 46 stages; 14 million lbs sand, t5/14; cum 148K 9/14;
NDIC File No: 26459  
Well Type: OG     Well Status: A     Status Date: 5/12/2014     Wellbore type: Horizontal
Location: LOT3 3-153-90     Latitude: 48.108894     Longitude: -102.235669
Current Operator: EOG RESOURCES, INC.
Current Well Name: WAYZETTA 44-0311H 
Total Depth: 19193     Field: PARSHALL
Spud Date(s):  10/16/2013
Completion Data
   Pool: BAKKEN     Perfs: 9909-19151     Comp: 5/12/2014     Status: F     Date: 5/21/2014     Spacing: ICO
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 148264     Cum MCF Gas: 66552     Cum Water: 82439
Production Test Data
   IP Test Date: 5/21/2014     Pool: BAKKEN     IP Oil: 1,182     IP MCF: 603     IP Water: 995
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare