Friday, December 5, 2014

Operators Are Circling The Wagons -- Reuters -- December 5, 2014

Link here.

It seems Reuters  couldn't have picked a worse photograph, and an area that was not even mentioned in the article. Sometimes I wonder.

Anyway, for regular readers not much in the article that you already don't know.


Wow, talk about a team dominating the game: Oregon, #2, destroys Arizona, #7: 51 to 13. Oregon Ducks take Pac-12 Title. And it could have been much worse. Oregon "left" at least 14 points "on the table."

Targeted Job Fair, Minot, ND -- December 10, 2014 -- Holiday Inn

Link here.

Company line-up:
  • Allied Oil & Gas Services
  • Fircroft, Inc
  • Gibson Energy, LLC
  • Key Energy Services
  • Nuverra Environmental Solutions
  • RockPile Energy Services
  • Rud Transportation
  • Sanjel (USA) Inc
More companies may be added.

American Express

Eagle Ford Produces Its One-Billionth Bbl Of Oil; Most Of It In The Past Two Years -- December 5, 2014

Rigzone: Eagle Ford produces one billionth barrel of oil, the majority produced within the past two years.

Meanwhile, through December, 2013, according to the NDIC:
  • Bakken: 831,017,850 bbls
  • Bakken/Three Forks: 3,590,399 bbls
  • Three Forks: 147,747 bbls
  • Sanish: 22,539,246 bbls
  • Lodgepole/Bakken: 5,883 bbls
Total: 857,301,125 bbls  

From the linked Rigzone article above:
Today, the Eagle Ford accounts for approximately 16 percent of total U.S. daily oil production.
In 2015, 2.8 million barrels of oil equivalent per day of production is expected from the Eagle Ford, and the largest share of U.S. Lower 48 spending next year will be in the Eagle Ford with $30.8 billion.
A couple of factors have allowed operators to reach one billion barrels in cumulative production over the past seven years.
One is the geology of the Eagle Ford, which offers tremendous potential in terms of productivity per well in the play’s core. The other factor is the learning curve of experience that operators have gained in working in other shale plays such as the Barnett play in North Texas and the Bakken play in North Dakota.
North Dakota accounts for 13% of the US oil production. 

Another Article On Statoil's Slump -- December 5, 2014

Reuters via Rigzone is reporting:
Norwegian energy firm Statoil extended the suspension of three drilling rigs on Friday as it battles to cut costs in the face of shrinking margins, squeezed by a 35 percent drop in crude oil prices since June.
Statoil, which had suspended more than a third of its exploration fleet this year, is upping its efforts to preserve cash having already been selling assets to pay for investments and dividends even when oil was over $100 per barrel.
The group signed contracts for many of its rigs at the top of the market for near record prices, but is suspending the rigs just as market rates tumble, making it impossible to sublet the vessels.
To some extent, in another time and place, this might be a story somewhat unique to Statoil. But certainly the current slump in prices is exacerbating things for Statoil.

Only Two (2) New Permits -- North Dakota; December 5, 2014

Active rigs:

Active Rigs188191181200164

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

Two (2) new permits --
  • Operators: Statoil (2)
  • Fields: East Fork (Williams), Stony Creek (Williams)
  • Comments:

International Rig Count Increases -- December 5, 2014

The Dow. It looks like we're going to set another record on the Dow today. Wall Street continues to runaway from Main Street. And much of Main Street this past week was impacted by protestors stopping traffic. Especially on bridges. They tried closing malls last week but that was short-lived. 

Active rigs:

Active Rigs188191181200164

RBN Energy: takes a look at how US will respond to EPA's war on coal. Or more accurately, what the US will need to do to manage the outcome if EPA wins the war on coal. Actually, I see nothing but opportunity. Huge opportunities. It's an open-book test for the young investor.

Wells reporting IPs today have been posted; Whiting with two nice wells in southwest ND.

A nice photo-essay of the Bakken, link here, sent to me by reader yesterday.

International rig count:
From Yahoo!In-Play: Baker Hughes announced that the international rig count for November 2014 was 1,324, up 16 from the 1,308 counted in October 2014, and up 13 from the 1,311 counted in November 2013 : Co announced today that the international rig count for November 2014 was 1,324, up 16 from the 1,308 counted in October 2014, and up 13 from the 1,311 counted in November 2013. The international offshore rig count for November 2014 was 341, up 15 from the 326 counted in October 2014, and up 25 from the 316 counted in November 2013.
  • Exceeds expectations.
  • Unemployment rate doesn't change.
  • More people entering the work force. Long-term unemployment benefits expired some time ago.
  • More to follow; see end of this posting.
Gasoline demand:
  • Trending up.
  • At record levels.
  • More to follow.
  • In last day before voting, Ms Landrieu closes the gap: now about 24 polling points behind.
  • No more to follow.
Gasoline Demand

Link here.

When you get to the link, do two things.

First, scroll to the very bottom, and look at the last graph, gasoline demand. Pretty impressive.

Then, after studying the graph for a moment, go to the link at the bottom of the graph on the right side, more production data, and click on the link. When you get to that page, go to the far right and click on history.

It might take a few moments to load.

It's another impressive graph.

Gasoline production (which generally is in line with gasoline demand/consumption) is trending up. Not unexpected, but considering all the Priuses on the road, and the much better gas mileage in Ford F-150's it's amazing how much more gasoline we use in the US compared to the early 1990s.

Back in 1992, the number is clearly below 7.5 million bgpd. Most recently we are trending toward 9 million bgpd.

It's instructive to look at the table. Just out of curiosity, week 4, of each of the following years, bbls of gasoline per day:
  • November, 2008: 8.9 million bgpd
  • November, 2009: 8.9 million bgpd
  • November, 2010: 8.9 million bgpd
  • November, 2011: 8.8 million bgpd
  • November, 2012: 8.4 million bgpd
  • November, 2013: 9.0 million bgpd
  • November, 2014: 9.4 million bgpd
So, scanning the table, I don't see the US ever hitting 10.0 million bgpd.

Although our November, 2014, number did not set a record, it is near the top. The record appears to be around 9.8 million bgpd back in the 3rd week of August, 2007. So, perhaps that will be an interesting poll. Will the US hit 10 million bgpd in August, 2014? I think so; it is very likely the US will blast through the 10 million milestone during the peak driving season next summer if prices stay this low, and they certainly should. It could happen as early as Memorial Day weekend.

The other data point to follow: aviation fuel. And again, over the years, the airline industry has really improved upon fuel savings (better planes, better practices).

Utilities and Battery Storage

Top story at Yahoo!Finance right now:  Why Elon Musk's Batteries Scare the Hell Out of the Electric Company.

Must be a slow news day. Musk is getting more media coverage than he probably deserves. Whatever.

It will be interesting to see how this plays out.  The writer uses Germany's experience. Utility companies in the US are watching Germany's experience closely, and my hunch is they will sort this out. The United States is a lot different than Germany in many, many respects.

This particular paragraph in the linked story jumped out at me:
Tesla has installed 135 solar-powered fast-charging stations across North America where its Model S drivers can refuel for free. NRG Energy Inc. is building a network of public charging stations in major cities that drivers can access on a per-charge basis or for a flat monthly fee of about $15. 
Read that again, 135 solar-powered fast-charging stations across North America. Parse that statement. Exactly how "fast" is "fast"? My experience suggests Americans are unhappy when it takes more than a few minutes to fill up with gasoline; conventional service stations continue to look for ways to speed up the process, including NFC payments. Fifteen minutes for a fast-charge is really, really fast, until you actually experience it. Next time you are sipping your coffee out of a styrofoam cup in the middle of nowhere while your EV is charging, count the number of cars that come and go in the gas station across the highway. Whatever.

Then, the second data point in that paragraph: 135 stations. How many gas stations are there in Dallas? 16,000. That's just Dallas. Then there's Arlington, Ft Worth, and that's just the DFW area. Sort of puts 135 solar-powered fast-changing stations in perspective.

The second data point in that article:
In California, where 40 percent of the nation's plug-in cars have been sold, about half of electric vehicle owners have solar or want to install it, according to a February survey by the Center for Sustainable Energy, a green-energy advocate.
I love the spin: "In California, where 40 percent of the nation's plug-in cars have been sold..." The source obfuscates by suggesting that's how many folks have installed solar-power at their homes -- in fact, that includes those who "want to do so" -- the question is if they want to do so, why haven't they? But more to the point, if there really were that many who had already installed solar-power at their homes, the article would have said. It didn't.

In that same paragraph, a third data point:
More than 100,000 plug-ins have been sold in California, according to data from and Baum & Associates, though EVs make up less than 1 percent of all U.S. car sales.  
After decades of pushing EV's and all the tax incentives and HOV lanes, EVs still constitute less than 1 percent of all us car sales. With gasoline prices plummeting, EVs make less economic sense than ever before.

I think battery issues are a concern for the utilities (although I think it represents huge opportunities for investors -- again, an open book test), but EVs are not the issue.

The interesting thing for me is that EVs, if successful will result in huge investment opportunities:
  • GE, or someone, is going to have to install bigger and more electric transformers in your neighborhood
  • utilities are going to have to burn more natural gas or more coal to meet the demand
  • as Germany has learned, the numbers for renewable energy don't work; that's why Germany is back to burning lignite coal (Germany going brown)
By the way, did the article say how much the cost of battery technology will add to the cost of electricity? Right now, the studies show that at $2.99/gallon of gasoline, the economics of owning an EV do not work out -- at least not over the first 7 years of owning that expensive EV -- and that was without the expensive battery pack that Musk is suggesting folks put in their garages. 

But, for the investor, it's a great story: so many opportunities for the young investor -- it's an open-book test.

Now, Back To The Monthly Jobs Report

Mainstream Obama apologists thought the numbers were superb: "mainstream media cheers 321,00 new jobs." -- Drudge Report.

Here are the links/headlines that Drudge had (some data points have link to same article):
And Ms Yellen knew all this without even reading the linked stories.