The Million Dollar Way (The Bakken Oil Blog): 12/26/14

Friday, December 26, 2014

Tweeting Now: A Man Killed By An Amtrak Train In Auburn, Washinton -- December 26, 2014

Tweeting right now: Man dies after being struck by Amtrak train in Auburn, Washington, police say - @KING5Seattle

January 20, 2014: a man killed by an Amtrak train in Auburn, Washington.

April 15, 2013: a man killed by an Amtrak train in Auburn, Washington.

October 29, 2012: a man killed by an Amtrak train in Auburn, Washington.

April 10, 2012: a man killed by an Amtrak train in Auburn, Washington.

July 7, 2008: a man killed by an Amtrak train in Auburn, Washington.

March 10, 2008: a man killed by an Amtrak train in Auburn, Washington.

Saudis Are Losing Somewhere Between $106 Million / Day And $138 Million / Day By Quibbling Over 600,000 BOPD -- December 26, 2014

With all its cash reserves, this is no big deal at all for Saudi but it's an interesting data point, to say the least. Rigzone is reporting:

Saudi Arabia's Finance Ministry will discuss with the central bank its options for financing the large state budget deficit expected next year, and may cover some of the shortfall with borrowing.

Responding to the plunge of oil prices, the ministry announced on Thursday a 2015 budget plan which envisions a deficit of 145 billion riyals ($38.7 billion).

A ministry statement said the government could cover the deficit with its huge fiscal reserves, but [a Saudi official said] that borrowing might also be used. "There is also a chance to borrow at good rates."

$38.7 billion / 365 days = $106 million / day.

Fitzsimmons said it was about $138 million / day. (If that link breaks, as I expect it will, here's the original post.)

The numbers ($106 million and $138 million) are in the same ball park. One has to assume Saudi Arabia is low-balling their deficit, and Fitzimmons might be a bit on the high side, not having access to all the data. Fitzsimmons, I would say, was pretty much on target.

By the way, this also permits one to calculate Saudi Arabia's "break-even" price that everyone seems to be talking about.

Demand In-Destruction -- December 26, 2014

When gasoline was approaching (and occasionally exceeded) $5.00/gallon, there was much talk about "demand destruction."

So, what's happening to gasoline consumption / demand destruction as the price of gasoline slides?

First, this spreadsheet at EIA. Some observations:

the data is current through the end of 2013
this is "gasoline supplied," not consumed, but one has to assume that most/all gasoline supplied was consumed
it appears the record consumption was 3.389 billions of gallons of gasoline in 2007
after 2007, US consumption decreased from that peak for any number of reasons
for the most recent full year reported, 2013: 3.228 billion bbls

Now, to 2014, the weekly consumption (demand) for gasoline in the US, scroll to the very bottom of that page:

the graph is AVERAGE; the spreadsheet below the graph is million bbls/day
look at the graph first: for 2013, this time of year, about 8.75 million bbls/day, AVERAGE
for 2014, in December, reaching 9.5 million bbls day (daily, spreadsheet)
the trend has been rising every month since September (with one exception)
the delta between 2013 and 2014 during the LOW driving season is widening
I can't tell for sure, but it appears that we are now exceeding the record set on Memorial Day weekend and early June, 2014

Now look at the numbers:

one year ago: 9.176 million bbls/day (spreadsheet)
today: 9.518 million bbls/day (spreadsheet)
9.518 - 9.176= 0.342/9.176 = 3.7% increase year-over-year
take the high point this month, 9.518 * 365 = 3.474 billion bbls annual rate
3.474 (current annual rate) - 3.228 (total consumed 2013)/3.228 = 7.6% increase
until recently, the record amount of gasoline supplied was in 2007, at 3.389 billion for the year
compare that with the current annual rate (during the LOW driving season): 3.474 billion

It's hard for me to believe that gasoline demand won't increase (all things being equal) by Memorial Day, 2015, for at least two reasons:

lower price at the pump will drive more consumption
US economy is improving (most recent GDP at an astounding 5% growth rate)

It would be telling and it would be ironic and it would be notable if US gasoline consumption hits a new all-time record in 2015, despite the CAFE standards, the slow economy, the EVs, the hybrids, the Teslas, and the shift to smaller cars.

For a 30-second sound bite: 8.75 million bbls/day of gasoline supplied in 2013 vs current 9.25 million bbls/day during the LOW driving season today.

I mentioned a few weeks ago that of all the metrics I follow, this one (US gasoline demand) will be one of the most interesting. My hunch is that we will set a new record for gasoline consumption by Memorial Day, 2015, if the economy keeps growing and the Saudis keep giving away their oil for $50/bbl. And despite the conclusions reached by the authors of that silly Bloomberg story, December, 11, 2014.

The record was 2007: 3.389 billion bbls for the year = 9.28 million bbls/day. Now, during the LOW driving season, 9.518 million bbls/day.

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From another site:

Random Update Of Two Huge EOG Wayzetta Wells, Parshall Oil Field, December 26, 2014

26458, conf, EOG, Wayzetta 45-0311H, Parshall:

Date	Oil Runs	MCF Sold
10-2014	38324	9982
9-2014	40065	5226
8-2014	42294	5134
7-2014	32508	3467

26216, conf, EOG, Wayzetta 43-0311H, Parshall:

Date	Oil Runs	MCF Sold
10-2014	19577	255
9-2014	25235	170
8-2014	30932	2933
7-2014	33402	2572

Week 52: December 21, 2014 -- December 27, 2014

Operations
Several "high IP" wells reported
Four "high IP" wells reported
QEP with three huge Grail wells
Average production per well per day in North Dakota
MRO's high density pilots

Fracking
MRO re-fracking program; post here; post here; j#16778; #16772; #16686; #16626;

Natural gas
First well in Sleeping Giant comes off confidential status; three days to drill 1500 feet; on DRL status;

Bakken economy
Lighting for US Highway 85, State Highway 23 Corridor in Watford City area
North Dakota, #1, population increase, 2014, year over year
North Dakota, #1, in job creation
North Dakota taxable sales and purchases, Dickinson story;
El Rancho Motel in Williston sold

Bakken 101
Permitting slump

Natural Gas Fill Rate, Unremarkable Report -- December 26, 2014

Natural gas fill rate: -49. (the link is a dynamic link). This week's natural gas fill rate has finally reached the "lower limit" of the five year average; current storage is about 170 Bcf below the five year average. Unremarkable.

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New York Times Reports The Obvious

Falling oil prices have ripple effects in oil-producing states.

Eight (8) New Permits -- North Dakota, USA

Eight (8) new permits:

Operators: SM Energy (4), EOG (4)
Fields: West Ambrose (Divide), Parshall (Mountrail)
Comments:

Permitting projections tracked here.

Wells coming off confidential status over the last two days were posted earlier; see sidebar at the right.

Active rigs:

	12/26/2014	12/26/2013	12/26/2012	12/26/2011	12/26/2010
Active Rigs	173	186	186	197	162

Best Christmas Gift This Year, 2014

Derailment

Tweeting right now: 16 cars from Canadian Pacific freight train derailed west of Banff, Alberta, railway says; cars were carrying grain, concrete; no injuries, no dangerous goods - @CBCAlerts

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A Note to the Granddaughters

About every four or five years I "luck out" and find the perfect gift for my wife. This was one of those years.

My wife has the iPhone 6. For the first time in her many years of having iPods and iPhones she went to iTunes and bought all the songs she wanted to put together her "perfect playlist." She says she now has her perfect playlist.

Unfortunately, she doesn't like buds or even over-the-ear headphones. I had been looking at the Dr Dre/Beats Pill speaker for quite some time.

Two days before Christmas, while she was somewhere else in the mall, I stopped in the Apple store, and after a few minutes of looking, once again, at the Beats Pill speaker, I pulled one off the wall. In passing I asked one of the Apply employees if the sound was as good as advertised. I really was not asking for information; it was more of a way of small talk, conversation, whatever, and perhaps reassurance I was doing the right thing.

He said the Pill was very, very good, but he himself preferred the UE (Ultimate Ears) speaker. He noted the Beats speaker was on sale and UE was full price. Something about his demeanor and his reply suggested he was an audiophile and knew what he was talking about. I put the Pill back and bought the UE at full price.

Wow, I can't believe how incredible it was. I'm always leery of setting up new technology, but when he said it was easy to set up, he wasn't kidding. It came with almost no paperwork, no instructions to speak of, except Step 1: push the ON button. Fortunately, a graphic showed where the ON button was. As it was, I had to go through a 10-second tutorial to find the volume controls.

Once it was set up, my wife began her playlist -- I think it started about 2:30 p.m. -- just before the first guests arrived for Christmas dinner -- and it played continuously until 10:30 p.m. My wife asked me to charge it overnight but I suggested we wait until the red light comes on indicating that charging is soon to be required. The Apple audiophile said the speaker would last 8 hours on a single charge; the graphic that came with the box said 15 hours. So, we'll see.

Below are some internet reviews of the Beats Pill and the UE. Both have a suggested retail price of $199, but it appears one can find locations (Amazon, for example) where one can get these for as much as $30 off, maybe more. My hunch is that by the end of 2015, the price will come down.

UE Boom

http://www.cnet.com/products/logitech-ue-boom/

Shaped like an energy drink and named like one, the Ultimate Ears Boom has some kick to it -- and that kick lasts all day long.

This rugged wireless Bluetooth speaker is being touted as a more powerful and durable version of the Jawbone Jambox and has a special "acoustic skin with plasma coating" that makes it water- and stain-resistant. That means you can wash it should it get dirty, and UE is marketing it as a speaker you take with you everywhere you go –- indoors and outdoors. At 1.2 pounds, it's not heavy, but it's also not light and has a little bit of heft to it.

What's interesting about the speaker is that using it indoors I was initially a tad underwhelmed. Yeah, it delivers good sound for a speaker its size, but at $200, it's pricier than competitors such as the JBL's cylindrical Flip and Charge, so I was expecting a little more, particularly in the bass department.

Somewhat pricey; while the sound quality is very good for a speaker this size, the bass could be fuller.

The Bottom Line: the $200 UE Boom is a versatile and durable wireless Bluetooth speaker that plays loud and is great for on-the-go use.

Beats Pill
http://www.cnet.com/products/beats-pill/

In recent months I've reviewed several compact, portable Bluetooth speakers and the list of Jawbone Jambox competitors just keeps growing. One of the higher-profile entries in the field is the $199 Beats by Dr. Dre Pill, which, needless to say, looks like a pill -- the capsule kind, anyway.

While it wasn't without a few glitches, its striking design, strong sound for its size, and some extra features, such as tap-to-pair NFC (for smartphones like the Samsung Galaxy S3 that support near-field communication), an audio output, and Apt-X technology, help set it apart, though it is overpriced.

The Pill is somewhat pricey, and Apple iOS 6 users may encounter an unacceptable amount of Bluetooth hiccuping. The speaker doesn't acquit itself terribly well with big bass tracks from artists like Dr. Dre.

The Bottom Line: The Beats Pill outperforms the Jawbone Jambox and has a couple of intriguing extra features, but the speaker is overpriced at $199.

A guide to NFC speakers: http://www.what4k.com/top-5-nfc-speakers/

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Another Note to the Grandduaghters

My best Christmas gift this year? Brenda James, Henry Neville and the Shakespeare Code, 2008. This is a follow-up to Brenda James 2007 The Truth Will Out: Unmasking the Real Shakespeare.

I have looked at this book in Barnes and Nobel over the past several years, wondering whether I wanted a copy. Finally, this year, I ordered it from Amazon, gave it to my wife to wrap for me for my Christmas present, and yesterday morning, unwrapped it.

Wow, it is really good. I have just started reading it. It reads like a journal, or a memoir, or a diary, explaining how a woman finally cracked the code (no pun intended, but it sure fits).

Ms James was fourteen years old when she first realized "that one could lead out from the [Shakespeare] texts, becoming a kind of historical detective -- and [her] favourite novels had always been detective stories."

She was born a half-hour's journey from Stratford upon Avon and had grown up among the Shakespearean fantasy. Her uncle had written an article on the Shakespeare Authorship Question.

For those unfamiliar with these two books, I would not read the 2008 book until after reading her 2007 book on Shakespeare.

[After reading the first chapter of the 2008 book for the first time a couple of years ago, I found it too much of a stretch, and that's why I delayed buying the book. However, now after reading that first chapter much more closely, I have a much better impression of this book. If one takes Ms James at her word, and I do, it is absolutely amazing how she discovered the "real" Shakespeare.]

Boxing Day, 2014

RBN Energy: company-by-company review of NGL takeaway in the Permian and Eagle Ford, a continuing series.

It remains to be seen to what extent the recent crash in oil prices--and the sympathetic decline in prices for natural gas liquids (NGLs) - will lead to major drilling and production pull-backs in some U.S. shale plays. What seems clear, though, is that the higher-grade, liquids-rich areas at the heart of the Eagle Ford and Permian Basin will continue to experience at least modest levels of drilling activity and still-strong production for some time to come. That should provide considerable relief to the midstream companies that have been investing heavily in NGL infrastructure in the Eagle Ford and Permian the past few years. Today, we continue our company-by-company look at existing and planned natural gas processing plants, fractionators and NGL pipelines in two of the most productive plays in the U.S.

Active rigs:

	12/26/2014	12/26/2013	12/26/2012	12/26/2011	12/26/2010
Active Rigs	173	186	186	197	162

Flashback: To Hurt Putin (Over The Ukraine), Push The Price Of Oil To $60 -- December 25, 2014

I linked this story back on May 15, 2014 (note the date of the linked article and the linked post, May 14/15, 2014):

There is, however, another approach that would undermine Russia's (and like-minded oil autocracies') efforts at regional domination while strengthening Western economies. Russia's geopolitical influence in Europe derives in part from its hand on the natural-gas tap, but its Achilles' heel is the price of oil.

A successful effort to drive the price of oil down to, say, $60 a barrel—far below the $117 per barrel that Russia requires to balance its national budget—would benefit the West, as well as China and India. Neither of the latter two countries, on the other hand, is likely to cooperate with sanctioning major energy exporters. How can we reduce prices when the bulk of the world's low-marginal-cost oil supplies are held by the OPEC cartel, which has not increased production in 40 years? By opening the door to arbitrage among different energy commodities in the market for transportation fuel.

For the record, I was "way wrong" suggesting that the proposal to drive down the price of oil, "to, say, $60 a barrel" was ludicrous, DOA (dead on arrival). That's where we are now (by the way, there is an op-ed out there somewhere that I read, but did not link) suggesting exactly this: that the US (under Mr Obama's direction) and Saudi Arabia are/were in cahoots to drive down the price of oil to $60 to severely hurt Mr Putin. I don't buy into that (that the US and Saudi Arabia were in cahoots, but I don't doubt for a moment that Saudi had its eyes on Russia as much as its OPEC colleagues ...

It looks like the author's proposal for getting oil to $60/bbl was too complicated; Saudi Arabia managed to do it by "doing nothing."

There is another op-ed out that that I did link -- from The New York Times -- linked early this morning, sent to me by a reader late last night -- also saying exactly this: that $60 oil is a huge "win" for the US, and a huge "loss" for foreign producers (if you disagree, ask Venezuela).

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A Note to the Granddaughters

This was one of the best Christmases I have had in awhile -- we are back in southern California; our granddaughters are skiing in Colorado with their mom and dad; our younger daughter and her husband are with us in southern California; and we had a wonderful Christmas dinner with one long-time friend, and my wife's brother/sister-in-law.

Along the way, a most incredible gift for my wife which I will blog about separately later; it's in draft now and I'm simply too tired to finish it and post it.

For me, several DVDs of classic movies and four wonderful books, three of which were on my Christmas list and one book a complete, and pleasant surprise:

The Innovators: How A Group of Hackers, Geniuses, and Geeks Created The Digital Revolution, Walter Isaacson, c. 2014, Christmas gift
Captain Gray In The Pacific Northwest: Captain Gray's Voyages of Discovery, 1787 - 1793, Francis E. Cross and Charles M. Parkin, Jr., c. 1987, Christmas gift
Henry Neville and the Shakespeare Code, Brenda James, c. 2008, Christmas gift
Ada's Algorithm: How Lord Bryon's Daughter Ada Lovelace Launched the Digital Age, James Essinger, c. 2014, Christmas gift

Japan No Longer A Saving Nation -- December 25, 2014; Back To Chess

I remember reading about this some time ago, but I can't remember if I actually blogged about it. Now I see it is being tweeted tonight:

Japan's household savings rate goes negative for 1st time since government started compiling comparable data in 1955, authorities say - @MarketWatch.

The Million Dollar Way (The Bakken Oil Blog)

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