US To Start Supplying LNG To Lithuania -- Chenier Energy -- February 28, 2015

Regular readers have followed the story of Cheniere and the US export of LNG (see LNG_Export_US tag). RBN Energy has provided many updates regarding Cheniere over the last few years.

Things are starting to come together. AFP is reporting:

Lithuania said Saturday it had signed a trade agreement to buy liquified natural gas from the United States in a move aimed at reducing the EU Baltic state's heavy dependence on Russian gas deliveries.

Under the deal with Houston-based Chenier Energy company, the first LNG fuel is expected to arrive in Lithuania as early as next year, state-owned company Litgas said in a statement. Lithuania's first floating LNG terminal started commercial activity in January, becoming the first such facility to sever Moscow's grip on gas deliveries to the Baltic states.

The nation of three million will initially import 0.54 billion cubic metres of gas from Statoil in 2015, covering about one-fifth of its demand.

The first US LNG export terminal is expected to starts its operations later this year.

From what I've read, and it is somewhat supported by this article, the amount of LNG that the US can actually provide is a very, very small percent of all that would be needed in any of these countries. But it's a start.

It also naturally leads to the next question: export of US oil to countries threatened with embargo by some other producer....

***************************************

Idle Chatter

See disclaimer. 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. This is for the archives. 

I don't know why I'm even posting this. I'm not even sure how I got to the story linked below. It's funny how the mind works. I was reading and posting the link to the Cheniere story above, and something led me to something else and then to something else, and I ended up reading an Investopedia article on EDP:

Enterprise Products Partners prides itself on being one of the more conservative energy infrastructure companies. That conservatism ensures it can make it through an inevitable downturn in commodity prices relatively unscathed. It also puts the company in a strong position to take advantage of rivals that aren't as well prepared -- Enterprise has historically gone on the offensive to acquire weaker rivals that find themselves in a tough spot when the commodity market turns down. Needless to say, the company would love for that history to repeat in the current market chaos.

On Enterprise's fourth-quarter conference call, COO Jim Teague took some time to discuss today's market environment:

Global energy market is somewhere between turmoil and chaos. We have no clue how low prices may go or how long they will stay depressed but then nor does anyone else. We do know that Enterprise typically thrives on change that we perform and grow in both the up and down cycles.

Teague's first comment is one of the most honest assessments any energy company has given on its view of commodity prices. In full, he offered a useful reminder that investors should not put too much stock in the bold calls we're seeing on what the price of oil will do next. Key to Enterprise investors, though, is Teague's declaration about the company's ability to thrive during times of change.

Later in the article:

In the conference call, Teague pointed out one legacy oil source in particular where the company would love to grow its footprint: the Permian Basin, where Enterprise is not as well positioned as it would like but where it also sees opportunity if the plunging price of oil dries up the capital that had been flowing into the region.

There are a number of story lines in that article. I still think 2017 is going to be a great year for oil and gas investors, if not as early as 2016.

I track "pipelines" here as well as other places on the blog.

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Global Warming Headlines Today

Coldest NYC month in 80 years....
Snow for all 50 states forecast in next week...
NOAA:  2,185 cold records broken or tied in last seven (7) days

And then this. Ice Age Now is reporting:

Lowest temperature ever recorded in Cuba during the entire month of February. Ties the record low temperature for ANY month of the year.

Cubans bundled up against a record low temperature in Havana on Friday, February 20.

The Cuban Institute of Meteorology reported that last Friday morning (Feb 20) the temperature fell to one degree Celsius (33.8^o F) in the town of Union Reyes in western Matanzas province.

It was the lowest temperature ever recorded in Cuba during the entire month of February.

Flashback: How Long Will The Bakken Last? -- February 28, 2015

Flashback, this was taken from my FAQ page:

FAQ #19. How long will "the Bakken" last? See also question #2.

Obviously that question cannot be answered with any degree of certainty. But in January, 2010, analysts suggested North Dakota's oil output will increase to 400,000 bopd by mid-2011, and that level of production will be sustained for 10 - 15 years.

And, yes, that link still works. Perhaps with the slump in oil prices, North Dakota oil output will fall back to 400,000 bopd but the above projection was not based on a slump in oil prices. Today, North Dakota's oil output is solidly above 1 million bopd.

It's quite remarkable how things have turned out. 

Random Look At A Hess Well In Blue Buttes; 50K In One Month -- February 28, 2015

• 27505, 1,628, Hess, BB-Budahn A-150-95-0403H-6, Blue Buttes oil field, t12/14; cum 55K 12/14; very little water:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2014	31	40279	41301	2937	55665	26220	29445
BAKKEN	11-2014	8	14359	13015	1389	10531	0	10531

Other data points:

• 35 stages; 2.5 million lbs sand

• Total depth: 21,195
• Drilling rig: August 24, 2014
• TD: September 10, 2014
• Middle Bakken: 10,642' TVD
• Other geologic markers not yet provided
• Deepest portion of the curve reaching 10,673' TVD
• Background gases to 4,417 units early on; later up to 9,272 units;

This is why "anti-collision plans" are required before drilling (this is part of the Blue Buttes oil field):

Zooming in. Note the two 4-wells pad to the north and the six-well pad where the 27505 is sited. Just in this small area of this section, 14 wells are sited.

I track the Hess BB-Budahn wells here.

Basin Shale ND, LLC -- New Bakken Operator? -- February 28, 2015

Updates

October 30, 2015: Bakken Shale ND is looking to place 8 wells in a 2560-acre spacing unit. When checking NDIC Well Search database I do not find Basin Shale ND, LLC, listed. 

Original Post

 

Whenever I post notes like these, I'm always concerned that I'm misreading something or posting something that is inaccurate. This is my "take" on what I see. It may be factually incorrect; there may be typographical errors. If this is important to you, go to the source, perhaps starting with the NDIC and then talking with a landman.

The full name of the company below is a very "generic" Basin Shale ND, LLC (we've talked about LLC's in the Bakken before):

From the March 25 - 26, 2015, agenda for the NDIC hearing dockets, the following cases:

• 23846, Basin Shale, pooling, 13/24-145-100, in an unnamed Bakken pool, McKenzie
• 23847, Basin Shale, pooling, 14/23-145-100, in an unnamed Bakken pool, McKenzie
• 23848, Basin Shale, pooling, 15/22-145-100, in an unnamed Bakken pool, McKenzie
• 23849, Basin Shale, pooling, 16/21-145-100, in an unnamed Bakken pool, McKenzie
• 23850, Basin Shale, pooling, 25/36-145-100, in an unnamed Bakken pool, McKenzie
• 23851, Basin Shale, pooling, 26/27-145-100, in an unnamed Bakken pool, McKenzie
• 23852, Basin Shale, pooling, 28/33-145-100, in an unnamed Bakken pool, McKenzie
• 23853, Basin Shale, pooling, 29/32-145-100, in an unnamed Bakken pool, McKenzie
• 23854, Basin Shale, pooling, 30/31-145-100, in an unnamed Bakken pool, McKenzie
• 23855, Basin Shale, pooling, 34/35-145-100, in an unnamed Bakken pool, McKenzie

When checking NDIC Well Search database I do not find Basin Shale ND, LLC, listed. 

The 20 sections are in the far southeast corner of McKenzie County:

Of interest is the well to the immediate west of this 20-section unnamed field:

• 16185, 136, XTO, Rhoades Federal 4-20H, t11/06; cum 43K 12/14; 

This is an unusual well, to say the least. Dual laterals, both short laterals. Minimal fracking; less than 400,000 lbs of white sand (I do not know if that was total for both laterals, or just one lateral; I believe it was the total). It took a while longer for the first lateral to begin producing; lateral #2 began producing first; both legs completed sometime in 2007; extremely high pressure; background gases often at 5,000 units; as high as 20,000 units during some aspects of the operation; production never amounted to much, considering this was two laterals (1280-acre spacing); snapshot of early production (remember, completion sometime in 2007); the well is still active, producing about 500 bbls in a full month of production; no flaring:

BAKKEN	1-2008	31	707	940	976	71	0	0
BAKKEN	12-2007	31	309	0	461	71	0	0
BAKKEN	11-2007	30	375	497	608	69	0	0
BAKKEN	10-2007	31	583	683	1141	71	0	0
BAKKEN	9-2007	30	727	732	1218	69	0	0
BAKKEN	8-2007	31	458	225	682	71	0	0
BAKKEN	7-2007	31	460	663	1030	71	0	0
BAKKEN	6-2007	30	683	759	1371	69	0	0
BAKKEN	5-2007	31	432	224	668	71	0	0
BAKKEN	4-2007	30	401	492	960	69	0	0
BAKKEN	3-2007	29	319	220	1024	797	0	726
BAKKEN	2-2007	28	298	222	1018	253	0	189
BAKKEN	1-2007	31	727	725	1986	869	0	798
BAKKEN	12-2006	27	791	1128	2040	766	0	695
BAKKEN	11-2006	23	544	0	1796	0	0	0

Comment from Don: we may start seeing many NEW small players. Yesterday on CNBC they were talking for a few minutes about BlackRock and other hedge funds getting together pools of money to invest NOW in oil , oil wells, and E+P companies.

From Reuters/CNBC, February 19, 2015:

Still, oil prices are down 50 percent from last June, leaving many energy company stocks looking cheap. A Reuters review of regulatory filings, as well as interviews with more than two dozen company executives, investment bankers, lawyers and investors, reveal that many hedge funds are seizing the opportunity to buy shares on the cheap

"Activists are secretly buying up stakes now because they believe the markets have hit rock bottom," said Kai Haakon Liekefett, a partner at Vinson & Elkins LLP in Houston who heads the law firm's shareholder activism response team. He said hedge fund activity in the oil patch "may get hot" as early as this fall or winter.

Agenda For The March, 2015, NDIC Hearing Docket -- A New Bakken Operator In Southeast McKenzie County?

This is my own shorthand; there may be errors. If this is important to you go to the source. Link here. 

Highlights of the March 25 - 26, 2015, dockets are posted here.

There appears to be a new operator in the Bakken, Basin Shale ND, LLC, (cases 23846 - 23855, inclusive). I have a separate post regarding these ten (10) cases.

March 25, 2015 

(8 pages vs the usual 14 - 20 pages)

23727, cont'd
23707, cont'd
23650, cont'd
23651, cont'd
23766, Whiting, South Fork-Bakken, amend, 12 wells on each of 3 1280-acre units; establish an overlapping 2560-acre unit; 2 wells on that unit; Dunn
23767, Whiting, Heart Butte-Bakken, amend, 12 wells on each of 2 1280-acre units; establish an overlapping 2560-acre unit, 2 wells on that unit; Dunn
23768, MRO, Reunion Bay-Bakken, amend, establish an overlapping 2560-acre unit; 1 well, Dn, Mt
23769, MRO, Van Hook-Bakken, amend, establish an overlapping 2560-acre unit; 2 wells; Mt
23518, cont'd
23666, cont'd
23770, Murex, West Ambrose-Bakken, revoke a Crescent Point Energy permit, Aldag, Divide
23235, cont'd
23771, Oasis, Willow Creek-Bakken and/or Camp-Bakken, amend, establish 3 overlapping 2560-acre units; 3 wells on each; Wms, McK
23772, Petro-Hunt, Charlson-Bakken, amen, establish a 2560-acre unit, 4 wells, Wms, McK
23773, Petro-Hunt, Little Knife-Bakken, amen, establish an overlapping 2560-acre unit; 1 well, Dunn
23774, Hess, Beaver Lodge-Bakken, amend, establish an overlapping 2560-acre unit; 1 well; establish a 1280-acre unit; 7 wells; Wms
23775, Hess, Alkali Creek and/or charlson-Bakken, amen, establish an overlapping 2560-acre unit; 2 wells; establish a 2560-acre unit, 1 well, McK, Mt
23776, BR, amend, Jim Creek and/or Murphy Creek-Bakken, extend the outline, establish 4 overlapping 2560-acre units; 1+ wells; allow up to 6 wells to be drilled on an existing 1280-acre unit; allow up to 7 wells to be driled on two existing 1280-acre units; and allow up to 8 wells to be drilled on an exsiting 1280-acre unit; Dunn
23641, cont'd
23642, cont'd
23643, cont'd
23777, CLR, revoke a Slawson permit, Lightning Federal, Mt
23778, CLR, revoke a Slawson permit, Lightning Federal, Mt
23779, CLR, revoke a Slawson permit, Lightning Federal, Mt
22803, cont'd
23580, cont'd
23581, cont'd
23582, cont'd
23780, Newalta Environmental Services, a treating plant, Wms
23647, cont'd
23376, cont'd
23781, Hess, Beaver Lodge-Bakken, amend, 8 wells on a 1280-acre unit; 10 wells on a 1280-acre unit; Wms
23782, Hess, Capa-Bakken and the Beaver Lodge Devonian Pool, amend, 9 wells in either hte Bakken or the Three Forks on a 1280-acre unit; Wms
23783, Hess, Alkali Creek-Bakken, amend, 11 wells on each of 2 1280-acre units, McK
23784, Hess, pooling,
23697, cont'd
23785, Whiting, Truax-Bakken, amend, 7 wells on a 2560-acre unit; Wms
23786, Whiting, Sanish-Bakken, amend, 11 wells on an existing 2560-acre unit; Mt
23787, Whiting, Heart Butte-Bakken, amend, 5 wells on a 320-acre unit; 10 wells on 2 1280-acre units; Dunn
23788, Petro-Hunt, pooling
23789, QEP, Blue Buttes-Bakken, amend, 5 wells on each of 3 overlapping 2560-acre units; McK
23790, MRO, pooling,
23791, BR, pooling,
23792, BR, pooling,
23793, BR, pooing,
23794, BR, pooling

Thursday, March 26, 2015 

(15 pages; low end of the usual 14 - 20 pages)

22837, cont'd
23421, cont'd
23143, cont'd
23589, cont'd
23144, cont'd
23795, Armstrong, temporary spacing, Dunn
23796, Corinthian Exploration, rework a Corinthian Skarphol well, Bottineau
23446, cont't
23277, cont'd
23797, Denbury, complete a well as an exception to location, Bowman
23798, Liberty Resources, Capa and/or Manitou-Bakken, amend, establish 2 overlapping 2560-acre units; 3 wells; Wms, Mt
23799, Liberty Resources, Stoneview-Bakken, amend, terminate order #25189 (a 1280-acre unit) and instead, creating 2 overlapping 1280-acre units; 1 well on each, Burke
23800, Liberty Resources, Hanson and/or Temple-Bakken, amend, establish 2 overlapping 2560-acre units; 3 wells; Wms
23801, Liberty Resources, West Tioga-Bakken, amend, establish an overlapping 640-acre unit; 13 wells, Wms
23802, Liberty Resources, Big Meadow and/or Temple-Bakken, amend, establish 2 overlapping 2560-acre units, 3 wells; Wms
23803, Samson Resources, Blooming Prairie-Bakken, amend, establish an overlapping 2560-acre unit; 1 well; Divide
23804, XTO, Indian Hill-Bakken, amend, establish an overlapping 2560-acre unit; 2 wells; McK
23805, XTO, Camp-Bakken, amend, establish 3 overlapping 2560-acre units; 2 wells, McK
23806, XTO, Squaw Creek-Bakken, amend, establish 4 overlapping 640-acre units; 4 wells, McK
23807, XTO, Haystack Butte-Bakken, amend, establish 2 overlapping 2560-acre units, 2 wells, McK, Dunn
23808, XTO, Corral-Creek, flaring waiver
23809, XTO, Haystack Butte-Bakken, flaring waiver
23810, XTO, Killdeer-Bakken, flaring waiver
23811, XTO, Little Knife-Bakken, flaring waiver
23812, XTO, Lost Bridge-Bakken, flaring waiver
23813, XTO, Bear Creek-Bakken, flaring waiver
23814, XTO, Bear Den-Bakken, flaring waiver
23815, XTO, Cedar Coulee-Bakken, flaring waiver
23816, XTO, Murphy Creek-Bakken, flaring waiver
23817, WPX, Van Hook-Bakken, amend, establish an overlapping 2560-acre unit; 1 well, Mt
23818, WPX, Reunion Bay-Bakken, amend, establish an overlapping 2560-acre unit; 2 wells, Dn, Mt
23819, WPX, Eagle Nest-Bakken, amend, establish 2 overlapping 2560-acre units; 3 wells, McK
23605, cont'd
23145, cont'd
23590, cont'd
23712, cont'd
23713, cont'd
23714, cont'd
23715, cont'd
23716, cont'd
23717, cont'd
23723, cont'd
23724, cont'd
23725, cont'd
23013, cont'd
23820, XTO, pooling,
23821, XTO, pooling,
23822, XTO, pooling,
23823, XTO, pooling,
23824, XTO, pooling,
23825, XTO, Glass Bluff-Bakken, 10 wells on each of 3 existing 1280-acre units; McK, Wms
23826, XTO, Squaw Creek-Bakken, 6 wells on an existing 320-acre unit; McK
23827, Sinclair, pooling,
23828, Sinclair, pooling,
23829, Sinclair, pooling,
23830, Statoil, pooling,
23831, Statoil, pooling,
23832, Statoil, pooling,
23833, Statoil, pooling,
23834, Statoil, pooling,
23835, Statoil, pooling,
23836, Statoil, pooling,
23837, Statoil, pooling,
23838, Statoil, pooling,
23839, Statoil, pooling,
23840, Crescent Point, pooling,
23841, Samson Resources, pooling,
23842, Samson Resources, Blooming Prairie-Bakken, 7 wells on each of 2 existing 280-acre units; Divide
23843, Liberty Resources, pooling, 
23844, Liberty Resources, pooling,
23845, Liberty Resources, pooling,
23846, Basin Shale, pooling, 13/24-145-100, in an unnamed Bakken pool, McKenzie
23847, Basin Shale, pooling, 14/23-145-100, in an unnamed Bakken pool, McKenzie
23848, Basin Shale, pooling, 15/22-145-100, in an unnamed Bakken pool, McKenzie
23849, Basin Shale, pooling, 16/21-145-100, in an unnamed Bakken pool, McKenzie
23850, Basin Shale, pooling, 25/36-145-100, in an unnamed Bakken pool, McKenzie
23851, Basin Shale, pooling, 26/27-145-100, in an unnamed Bakken pool, McKenzie
23852, Basin Shale, pooling, 28/33-145-100, in an unnamed Bakken pool, McKenzie
23853, Basin Shale, pooling, 29/32-145-100, in an unnamed Bakken pool, McKenzie
23854, Basin Shale, pooling, 30/31-145-100, in an unnamed Bakken pool, McKenzie
23855, Basin Shale, pooling, 34/35-145-100, in an unnamed Bakken pool, McKenzie
23856, Ballard, Chatfield-Madison, flaring waiver, 
23857, CLR, commingling, Bowman
23858, CLR, commingling, Mountrail
23859, SHD, Clarks Creek Field, SWD, McKenzie
23860, EOG, Parshall Field, SWD, Mountrail
23012, cont'd
23508, cont'd

Another Stab At The Flaring Issue -- Saturday -- February 28, 2015; Chicago Colder Than Detroit Overnight

Active rigs:

	2/28/2015	02/28/2014	02/28/2013	02/28/2012	02/28/2011
Active Rigs	119	192	183	205	169

Tulsa company will use the Bakken as a laboratory to end flaring as we know it. The Dickinson Press is reporting:

B&A Global Energy, a small company based in Tulsa, Okla., has acquired the rights to the Energy Capturing Operating System, a portable refinery able to be placed at a well site. The ECOS captures and processes methane gas produced in the hydraulic fracturing process into liquefied natural gas.

B&A Global wants to bring its ECOS technology to the U.S. -- specifically to North Dakota’s Bakken and Texas’ Eagle Ford shale formations -- after witnessing the technology work in Asia.

“We have chosen the Bakken as our focus,” said Bennett, B&A Global’s board chairman and founder.

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One Winter: Weather

Consecutive Winters: Climate

Flashback: a year ago, Chicagoans were voting whether the 2014 winter was the worst on record. I don't know the results of that vote. Today I'm being told the Weather Channel is reporting that the overnight low (February 27/28, 2015) in Chicago was -10 below (actual air temperature / wind chill would be worse) which set an all-time, or 131-year,  record. In fact, new low records were being set all across the nation:

Record lows that were set on Saturday morning (new record in parentheses) include Chicago (minus 10 degrees), Rockford, Illinois (minus 16 degrees), Detroit (minus 2 degrees), Columbus, Ohio (0 degrees), Toledo, Ohio (minus 9 degrees), Cleveland (minus 9 degrees) and Bridgeport, Connecticut (8 degrees).

Update: this is what a reader said regarding Chicago:

Last winter was worse in Chicago by far. The month of February here appears to be the coldest on record as well as the 2nd or 3rd snowiest. I think by next Monday, March 9th, the weather is predicted to start breaking and a small spring warm up may be headed here.... overall this winter was much milder and less snowy then last year in Chicago....

Week 8: February 22, 2015 -- February 28, 2015

The top story of the week remains the slump in oil prices with Brent around $60 and WTI around $50. Active rigs in North Dakota have dropped to 119, well under the 190 that otherwise might be seen, and there is nothing to suggest the number of rigs won't drop further.

Operations
Halcon wells tracking well above 800,000 bbls EUR in the Fort Berthold prospect
Active rigs in North Dakota hit 119 last day of the week
NDIC case for 13 wells in an overlapping 640-acre drilling unit
Whiting to keep fracking despite slump in oil prices; shareholders not happy
Operators let 21 permits expire

Bakken economy
Man camp to close due to delinquent compliance with safety code
Williston Wire update
Capital Lodge, between Tioga / Ray to shut down

Natural gas
ONEOK to halt work on Demicks Lake natural gas processing plant in McKenzie County

Pipeline
Ethane pipeline from Tioga to Canada to expand capacity

Chicago Downgraded -- February 27, 2015

Updates

February 2, 2018: temporarily things are better. Link here.

Original Post 

Reuters is reporting:

Chicago drew closer to a fiscal free fall on Friday with a rating downgrade from Moody's Investors Service that could trigger the immediate termination of four interest-rate swap agreements, costing the city about $58 million and raising the prospect of more broken swaps contracts.

The downgrade to Baa2, just two steps above junk, and a warning the rating could fall further still, means the third-biggest U.S. city could face even higher costs in the future if banks choose to terminate other interest-rate hedges against fluctuations in interest rates. All told, Chicago holds swaps contracts covering $2.67 billion in debt, according to a disclosure late last year.

"This is an unfortunate wake-up call for anyone still asleep over the fiscal cliff facing the city of Chicago," said Laurence Msall (sic), president of the Chicago-based government finance watchdog, The Civic Federation.

Chicago's finances are already sagging under an unfunded pension liability Moody's has pegged at $32 billion and that is equal to eight times the city's operating revenue.

The city has a $300 million structural deficit in its $3.53 billion operating budget and is required by an Illinois law to boost the 2016 contribution to its police and fire pension funds by $550 million.

I track Doomsday: US Cities here.

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Birdman, The Movie

Regular readers know that of the movies nominated for best movie this year, my favorite was Grand Budapest Hotel and of the eight movies nominated, GBH was one of the few (maybe the only one) I saw.

But with Birdman winning the Oscar for best movie I was curious. I watched it tonight. Incredible. Excellent movie. I went through the list of the eight nominated movies. For me it came down to, in alphabetical order: Birdman; Grand Budapest Hotel; and, Theory of Everything.

My wife would have gone with TOE. 

Theory of Everything; American Sniper; and, The Imitation Game, for me, as weird as it sounds, are of the same genre, and I would not have voted for any one of them among this year's nominations. So, it came down to GBH or Birdman.

I don't know if I can watch Birdman several times in one week; I have watch GBH several times in one week on more than one occasion. I can watch it over and over. I don't think that will be true with Birdman.

But, for best movie, I might lean toward Birdman.

Birdman follows in the footsteps of another classic, a black and white classic that I watch maybe two or three times a year. I was curious if anyone else thought the same thing. I googled Birdman  and the name of the other classic and lo and behold, The Economist came up with the very same match: Sunset Boulevard --

A gleeful deconstruction of Hollywood superheroes and has-beens—a kind of "Sunset Boulevard" for the age of spandex—the film is constructed entirely from long, continuous takes, shot by the cinematographer Emmanuel Lubezki, who prowls the enclaves of the St James Theatre on West 44th Street with the same stealth with which he penetrated outer space in last year’s “Gravity”. Here the stars on view are just as dazzling, from the collapsing supernova that is Mike Shiner (Edward Norton), a wormy, preening method actor whose commitment to realism extends to getting drunk on stage, followed by actual intercourse; to the black holes of insecurity that are his co-stars, Lesley (Naomi Watts) and Laura (Andrea Riseborough), a young starlet who may be pregnant with Riggan’s baby.

Random Look At 5120-Acre Drilling Unit In Brooklyin Oil Field -- Spacing, Royalties -- February 27, 2015

A reader asked about Case 23758 in the February, 2015, NDIC hearing dockets:

Application of Continental Resources, Inc. for an order pursuant to NDAC § 43-02-03-88.1 pooling all interests for wells drilled on the overlapping spacing unit described as Sections 17, 18, 19, 20, 29, 30, 31 and 32, T.155N., R.98W., Brooklyn-Bakken Pool, Williams County, ND, as provided by NDCC § 38-08-08 but not reallocating production for wells producing on other spacing units and such other relief as is appropriate.

The question was whether all mineral owners would share equally in oil produced by these wells permitted for this drilling unit.

The following answer applies to those who have mineral rights only in the wells that are permitted in the overlapping 5120-acre unit in the case noted above (8 640-acre sections). The answer below does NOT affect previously drilled wells in this area or new wells drilled in this area in different drilling units.

The answer: regardless of where the well is sited, mineral owners who have interest in any well permitted for the overlapping 5120-acre drilling unit in question, regardless of the length of the horizontal or where the horizontal starts or ends, will share equally with all mineral owners who have mineral rights in this drilling unit which consists of the following sections in T155N-R98W: 17, 18, 19, 20, 29, 30, 31, and 32.

As an example: if a well is sited in section 5-154-98 (outside of the drilling unit) and the horizontal is a long horizontal (two sections) running north into sections 32 and 29, anyone who "owns" minerals in any of the eight sections will share in the royalties of this well. Even if you "own" 10 acres in far northwest corner of section 18-155-98, you will share in the royalties even though the horizontal comes nowhere near that section. Those who own minerals in section 5-154-98 will not share in royalties in this case.

I have not checked all the wells yet, but I don't think there are any permits yet for this overlapping 5120-acre drilling unit. I could be wrong. If I'm wrong, hopefully someone will give me the permit number(s) for wells on this 5120-acre drilling unit. The wells that already exist and are producing, and the wells on DRL status in these sections appear to be on different drilling units. Even the newest permits, which show up only as LOC on the GIS map server (30551, 30552, 30553, and 30554) are permitted for 2560-acre drilling units. There are a couple of wells on confidential status in this area for which I do not know the drilling unit.

The reader noted that there are about six new wells in this area; the reader wondered whether mineral owners in these eight sections would all share royalties from these six new wells. If these six new wells are permitted for different drilling (spacing) units, then "no," owners in all eight sections would not share. If these six new wells are located in the overlapping 5120-acre unit, then mineral owners in all eight sections would share but again, I don't think the "new" wells are in the 5120-acre unit, but I could be wrong. 

I did this quickly. Typographical and factual errors may be present. I will check it again later, but errors may persist. Do not use this information to make any financial, investment, or relationship decisions. If this information is important to you, go to the source (generally the NDIC) or a landman.

Richard Zeits Update On Halcon -- February 27, 2015

Richard Zeits over at Seeking Alpha on Halcon:

• Recent wells in Fort Berthold area continue to track well above Halcón’s 801 Mboe type curve.
• The current AFEs are running at $8.5 million per well; $8.0 million per well expected by mid-year.
• Ceramic proppant has been fully replaced with white sand, with no reduction in performance expected.
• At the type curve, wells are strongly economic assuming the current strip pricing. 

According to Richard Zeits:

Halcón's FBIR data points are impressive and suggest that the company should be able to realize significant full drill-out value for its FBIR asset, even assuming only moderate recovery in oil prices.

The obvious challenge is that Halcón's FBIR holdings are limited in size. The company controls ~20 operated drilling units in this area. With the high-density drilling that has been proven successful, Halcón's "core of the core" inventory likely exceeds a hundred locations and therefore represents at least several years of active drilling. In this regard, the FBIR acreage should allow Halcón to sustain its company-wide production at a relatively stable level, even in the event of a protracted commodity price trough.

However, this crown jewel asset alone is not sufficient to support the company's entire enterprise value. Other assets must also "work" well and therefore a meaningful recovery in the price of oil would certainly help.

Leonard Nimoy Dead At 83 -- February 27, 2015

Kennedy Ice Age

The New York Times is reporting:

We have reached the 69th day of winter. It seems like the 6,669th. Pretty much the same nonsense is reprised day after day. Miserable, punishing, obnoxious, teeth-rattling, bone-numbing weather. Unmitigated, merciless, are-you-kidding-me cold.

With the average temperature for the month of February lingering around 24 degrees, some 11 degrees shy of normal by the National Weather Service’s calculation, this insult of a month looks as though it will clock in as the coldest recorded February in New York City since 1934. That is 81 years of weather. That is all the way back to the Depression, when there were so many more dire things to worry about than whether 7-Eleven had salt or whose turn it was to walk the dog.

Active rigs in North Dakota:

	2/27/2015	02/27/2014	02/27/2013	02/27/2012	02/27/2011
Active Rigs	119	194	181	205	169

Eight (5) new permits --

• Operators: Whiting (4), Oasis (3), MRO
• Fields: Pleasant Hill (McKenzie), Morgan Draw (Billings), Camp (McKenzie), Antelope (McKenzie)
• Comments: 

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

Statoil cancels three permits -- a Michael Owan permit in Williams County, and two Margaret permits in McKenzie County.

Agenda For March, 2015, NDIC Hearing Dockets Are Posted -- February 27, 2015; This Should Get Your Attention -- 13 Wells In An Overlapping 640-Acre Unit

Link here to source (NDIC).

Full agenda here.

Just a quick look for now:

Wednesday, March 25, 2015 (8 pages; well below the typical 14 - 20 pages)

• a lot of 2560-acre units; most with 1 - 4 wells; nothing unusual
• BR with one case for seven wells on a 1280-acre unit; with 8 wells on another 1280-acre unit
• Hess with a case for ten wells on a 1280-acre unit;
• Hess with a case for nine wells on a 1280-acre unit;
• Hess with a case for eleven wells on each of two 1280-acre units;
• Whiting with a case for 5 wells on a 320-acre unit; 10 wells on each of two 1280-acre units; 12 wells on a 1280-acre unit

Thursday, March 26, 2015 (15 pages; on the low side; typically 14 - 20 pages)

• this should get your attention: Liberty to drill 13 wells on an overlapping 640-acre section (case #23801); see below
• XTO with several cases requesting flaring relief
• lots of "continued" cases
• typical number of pooling cases

****************************
13 Wells In An Overlapping 640-Acre Spacing Unit
Why Not 14?

23801: Application of Liberty Resources Management Co., LLC for an order amending the field rules for the West Tioga-Bakken Pool to create and establish an overlapping 640-acre spacing unit comprised of Section 33, T.158N., R.95W., Williams County, ND, authorizing the drilling of a total not to exceed thirteen wells on said overlapping 640-acre spacing unit, eliminating any tool error  .....

About four miles northwest of Tioga, the oil capital of North Dakota:

Look at the spacing in this area: 320-acre spacing, 640-acre spacing, and 1280-acre spacing. This is the first case that I am aware of that is an overlapping 640-acre spacing unit. I'm sure there are many more; this is just the first one that caught my attention.

In the graphic below:

• purple: 320-acre spacing -- section 33-158-95 is currently spaced at two 320-acre drilling units; this new case will ask for an overlapping 640-acre unit and 13 wells
• brown: 640-acre spacing
• green: 1280-acre spacing

For those interested, the eight horizontal wells directly above section 33-158-95:

(I'll finish this later) - but look at that 313,000 bbls from a well that was tested in 3/13; there's a reason Tioga is the oil capital of North Dakota.

26192, 510, Liberty, t12/13; cum 86K 12/14;

29310, SI/IA, Liberty, no production data, 1/15;
29311, SI/IA, Liberty, no production data, 1/15;
29313, SI/IA, Liberty, no production data, 1/15;

23206, SI/IA, Liberty, t3/13; cum 313K 12/14;

29514, SI/IA, Liberty, no production data, 2/15;
29515, SI/IA, Liberty, no production data, 2/15;
29516, SI/IA, Liberty, no production data, 2/15;

But there's more! Look at that vertical well, #10328, three targets, which I'll break out separately:

• 10328, 35, Samuel Gary Jr, Hemsing 1, West Tioga, a Red River well, t12/83; cum 19K 8/88;
• 10328, 79, Samuel Gary Jr, Hemsing 1, West Tioga, a Stonewall well, t10/88; cum 145K 11/03;
• 10328, 6, Samuel Gary Jr, Hemsing 1, West Tioga, a Bakken well, t12/83; cum 33K 12/14; the Bakken was perforated between/inclusive 9,622 feet to 9,636 feet (14 feet thick); 180,000 lbs of sand and ceramics; so that gives you an idea of how thick the Middle Bakken seam is here; and howmuch it produces with minimal fracking

Active Rigs Fall Below 120 -- February 27, 2015

Active rigs:

	2/27/2015	02/27/2014	02/27/2013	02/27/2012	02/27/2011
Active Rigs	119	194	181	205	169

***********************************

Watching AppleWatch

Apple will roll out the Apple Watch in March, 2015, less than a month from now.

Until then we will start seeing stories on what the Apple Watch is likely to be used for. Example: Fortune is reporting:

Cook envisions the Apple Watch replacing car keys, particularly the fobs now used for a number of newer vehicles. As The Telegraph notes, such a feature is sure to add fuel to the rumors swirling around Apple’s potential entry into the automotive industry.

Quick: how much does your replacement fob cost you now? About $250. 

More:

The watch will have a battery life that lasts an entire day. And, it won’t take as long to charge as an iPhone, thanks to what The Telegraph called “special magnet technology” used in the watch’s charger.

And more:

• The new product differs from previous Apple product rollouts because it’s the first time the company has released something that users have to try on before purchasing. That may lead to Apple “tweaking the experience in the store,” said Cook. The CEO also praised the company’s new retail chief, Angela Ahrendts, left her role as Burberry’s CEO last year to run Apple’s online and retail stores.

This is going to be exciting. Tim Cook will tell you why you need an Apple Watch. LOL.

******************************

Watching India

Forbes is reporting:

The World Bank predicts India will overtake China to become the world’s fastest-growing major economy within the next two years. It might even happen sooner. Not long ago India was considered the weakest link among BRIC countries. Now, led by competent leadership in the central bank and government for the first time in decades, the economy is quickly turning the corner.

India is expected to benefit from a “demographic dividend” for years to come. The country will soon have 20% of the world’s working-age population, and boasts a birthrate of 2.5 children per woman. The statistics are staggering. The working-age population, aged 15-64, will rise by 125 million over the next decade, and another 103 million over the following decade. India probably needs to create 100 million net new jobs over the next 10 years just to keep pace with its explosive population growth.

Ah, Yes, An Inconvenient Truth With Regard To EVs -- February 27, 2015; How Bad Is The Slump? CRC Drops Rigs From 27 To 3

See disclaimer. This is not an investment site. Do not make any financial, investment, or relationship decisions based on what you read here or think you may have read here. One big piece of advice: never marry a lawyer named "Sue." Having said that, Barron's is reporting:

California Resources Corporation is rising on Friday, after announcing that the exploration and production company’s board of directors approved a dividend of a penny a share.

It is the first quarterly dividend announced for California Resources since it was spun out from Occidental Petroleum at the start of December. Of course, dividends and capex are being widely watched at energy companies, which have been pulling back amid continued low energy prices. Despite its dividend increase, California Resources otherwise slashed its spending budget for the full year by 80%, announced in its fourth-quarter earnings report last week.

Raymond James’s Pavel Molchanov noted that the budget “all but eliminates shale drilling” and reduces its rig count from 27 in November to just three today.

“It is virtually unheard of for a single operator’s activity to adjust this quickly,” he wrote, but the deep cuts come as the company grapples with debt:

Put simply, CalRe may well end up with the steepest spending cut of any U.S. E&P company in this downcycle…CalRe’s debt/cap ratio of 71% is near the high end of the E&P universe (currently averaging around 50%), a direct consequence of the $6 billion dividend paid to Occidental.

The steep spending cut needs to be seen in that context, and management clearly wants to achieve some deleveraging before organic growth becomes a priority.

For newbies: this is for the archives. I have no financial interest in following this story. I have a huge interest in following this story for reasons I have posted before as it relates to the Bakken. 

This is going to be so much fun. I still think oil and gas investors are going to enjoy 2017, if not 2016. Saudi Arabia is going to look back on 2014 as a watershed year.

***************************

Used EVs A Great Bargain

LOL

This is a great story. I have talked about this issue from "the very beginning." I'm not going to re-hash it. Regular readers know the story. Bottom line, used EVs won't sell:

• gasoline is cheap (and could get much cheaper once Cushing reaches capacity)
• there is an oil glut as far as the uninformed can see
• mileage on new cars keeps getting better and better
• conventional cars keep getting better and better, fancier, and bigger
• batteries don't last forever; most folks assume batteries in EVs might last about seven years
• when gasoline was $5.00/gallon, EVs still did not make economic sense
• gasoline is now $2.00/gallon

The Wall Street Journal is reporting:

Nissan Motor Co. ’s Leaf electric car has been a big seller for Atlanta car dealer Pat Hoban over the past three years, thanks to its low monthly lease price. But as those car leases are beginning to expire amid cheap gasoline, the vehicle is becoming a bit of a headache.

Mr. Hoban expects between 100 and 150 of the leased vehicles to be returned to his Capitol City Nissan dealership on a monthly basis over the next two years as their leases expire. The problem: used Leafs aren’t attracting much demand.

With gas prices down 33% from a year ago, and buyers cooling toward electric vehicles, some auto makers are offering deep discounts or attractive leases on battery-powered vehicles and plug-in hybrids. Nissan, for instance, slashed the price of a new Leaf by $6,400 in 2013 and is now offering a $199-a-month lease, or $3,500 cash back and 0% financing for 72 months, on brand new Leafs.

One can buy a new Honda Civic for about $169/month right now -- a new car for less than leasing a three-year-old Leaf, and there's no comparison between a Leaf and a Honda Civic.

Used cars:

Other electric cars, including plug-in versions of Ford Motor Co. ’s Focus and Toyota Motor Corp. ’s Prius, are depreciating as fast as the Leaf with the average trade-in value in 2014 falling between 22% and 35%, depending on model. The depreciation rate on plug-in electric cars is nearly twice that of a comparable gasoline-engine car.

In December and January the average selling price of a 2012 Nissan Leaf at auction was about $10,000, nearly a quarter of the car’s original list price and down $4,700 from a year earlier.

Three-year-old Volts, a plug-in car with a backup gasoline motor, were selling for an average $13,000 at auction in January, down from about $40,000 excluding the federal tax credit.

Resale values “have been crushed on these cars,” said Chris Coleman, co-founder of Carlypso, an online used-car shopping site. “As a used-car value, they’re an absolute bargain.”

And that's the problem: a used car salesman telling me a used Volt is an absolute bargain but not telling me a) when a new battery will be needed; b) how far a charge on an aging battery will take me; c) how much a new battery will cost me; and, d) who replaces the batteries.

Tesla, too, might be "over-building." It is generally reported that Tesla builds to demand -- when an order comes in they build -- and they are behind in meeting demand. A writer over at SeekingAlpha suggests that Tesla has "time" to build cars on speculation they will find a buyer -- meaning that they are keeping up with demand, and simply not selling as fast as they can produce. 

************************

iCloud

After the recent near-miss -- thinking I had a hard drive crash -- I started looking into whether I should have a better back-up process in place (rather than external hard drive) and so I started looking into iCloud.

Setting up iCloud was one of the easiest things I've ever done, but it was like following the proverbial rabbit down the proverbial rabbit hole. Every time I thought I was done, there was, as Steve Jobs might say, "one more thing to do."

This is the process: perhaps through Google I found iCloud (I forget how I found iCloud but Google is always the fastest). (But now that I've found it, it's bookmarket. LOL.)

All I really wanted to do was store my photos on iCloud and possibly one file folder of documents. Pretty simple.

It turns out I already had an iCloud account (free), an Apple ID, and a password, set up some years ago and it all still worked. I still had $1.87 in my iTunes account which hasn't changed for about three years, I suppose.

But I was surprised that my operating system "10.8.something" was not sufficient; I had to upgrade to "10.10 Yosemite" -- something I  had put off for months for various reasons, but now I had no choice. So at 11:00 p.m. last night when my internet is working best I started the download. It took about an hour. I watched old Seinfeld DVDs.

I was surprised how well Yosemite worked.

Then to load the photos. Another surprise. I could not access iPhoto because it also had to be upgraded. At midnight, I was not about to start another upgrade, so this morning, at Starbucks, that's the first thing I did, start the iPhoto download. That also took about an hour, and the bad news: there is no bar showing update status; you just have to have faith that something is happening.

And then, there it was, a notification that the installation was complete. My photos are there. Awesome.

Another Bakken Man Camp To Close -- February 27, 2015; A Shout-Out To Firestone

Bakken.com is reporting:

Officials in Williston are standing by their previous decision and forcing a 400-bed man camp to close because of city code violations.

Black Gold Lodge petitioned the city to reverse a January 13 decision to shut down the facility Tuesday evening. City commissioners moved to take no action, allowing their previous vote to stand.

Black Gold came under city limits in 2013 through a land annexation. The city requires sprinkler systems and commissioners had given Black Gold until Dec. 31, 2014, to install one, but the company says contractor issues stalled the installation.

************************************

A Shoutout To Firestone

I prefer to take my car to Firestone for servicing. I started going to Firestone about ten years ago while living in San Antonio. I'm not sure why I started: I think the Chrysler dealer that I had been going to moved to a new location much farther away from where I lived. It seems dealers are a bit farther out of town; Firestone seems to be nearer residential areas. Maybe, maybe not. Whatever.

I always buy my tires at Firestone. The tires on our 2007 Chrysler minivan have less than 20,000 miles on them. Yesterday I noted that the rear passenger tire looked slightly low -- I thought I might be imagining things, or that it might be due to the colder weather we've been having, but I didn't need any surprises on all the soccer and swimming event trips we take four days out of seven.

I drove up to Firestone in Grapevine; they were busy, but not more than one would necessarily expect. Talk about friendly. I expected to wait about 90 minutes to be seen (they said it would be an hour to an hour and a half wait) but I saw them move the car in about 15 minutes (big surprise) and about 20 minutes later was told that yes, there was a nail in the side of the tire, which meant it had to be replaced.

I'm not even sure Chris asked; he simply told me they put on a brand new tire and the total cost would be $14.

I had forgotten I had bought "Road Hazard Insurance" when I bought the tires -- normally I don't buy this kind of insurance, but for some reason I did that time (and will do so in the future, with all the construction in the area). The new tire automatically came with road hazard insurance, although I may have misheard him because the total bill was $23 or something like that -- I wasn't quite sure what the extra $9 was for but the paperwork looked fine and for $23, a brand new tire, tire rotation, and road hazard insurance I wasn't going to ask. [I also bought "free tire rotation for life" when I bought these original times some years ago.]

I remember years ago when we were living in Turkey we had a brand new Saab 900 which we had bought while stationed with the USAF in Germany, and brought it with us to Turkey. To pass Turkish inspection (required by USAF and Turkey) we had to get a new exhaust pipe. Knowing that original parts sent in from Germany would cost $300 to $400 I gave that amount of cash to my wife and told her to take the car "downtown" to have the exhaust pipe replaced.

When she returned, she said it cost $5.00.

It turns out that the Turks (who repair stuff whenever they can just enough to pass inspections, apparently) simply patched the small hole in the exhaust pipe. My wife was told the problem was fixed (something lost in translation) and would cost $10. My wife, known to have fairly expressive facial reactions (perhaps it's a Hispanic thing; certainly not her Japanese heritage) appeared shocked, saying, "What, $10?" She expected at least $250 based on what I had told here.

The Turkish mechanic, apparently taken aback by my wife's reaction, in best English he could muster, "For you abla, $5 and we give free calendar."

My wife gave me the calendar and kept the $400 in cash I had given her.

["Abla" in Turkish: 1. older sister. 2. ma´am (a respectful term of address for a woman). poet. water.]

By the way, that exhaust pipe never needed to be replaced or repaired again in all the years we owned that car. I forget when/where we sold that Saab but I believe I sold it before we left Turkey. I didn't want all the hassle of customs, etc.

Vantage Ethane Pipeline -- Carrying Ethane From Tiogo To Alberta To Expand -- February 27, 2015

In the original report on this pipeline, the company said it could increase capacity to 60,000 bpd. The company has announced it will do the expansion, and will actually exceed the original 60,000 bpd -- bringing capacity up to 68,000 bpd. A big deal considering the concerns about the Bakken and the slump in oil prices.

Bakken.com is reporting:

Pembina Pipeline Corp. has announced plans to expand the Vantage pipeline system which would link Bakken’s growing supply of ethane with the petrochemical market in Alberta.

The recently constructed high-vapor-pressure Vantage pipeline runs from a gas processing plant in Tioga, North Dakota, and extends 430 miles to Empress, Alberta. From there it connects to the Alberta Ethane Gathering System pipeline. The $85 million expansion will increase the mainline capacity from 40,000 barrels per day (bpd) to roughly 68,000 bpd. The additions will include new pump stations and a new 50-mile 8-inch gathering line.

Active Rigs Down To 120 -- February 27, 2015; Williston Wire Update

Reporting today:

• NRG, forecast 52 cents (but Zacks average was 93 cents/share); misses (21cents) but swings to profit; misses forecast; shares up; story here;
• Goodrich Petroleum (GDP), forecast a lost of 45 cents; misses by 2 cents; story here;

Active rigs:

	2/27/2015	02/27/2014	02/27/2013	02/27/2012	02/27/2011
Active Rigs	120	194	181	205	169

From the Williston Wire (headlines only; easy to subscribe to the Williston Wire):

• Developers to present plans on new airport
• Mississippi BBQ to open in Williston, located inside the Sitting Bull Auction Stockyards
• McKenzie County School District has final cost for new high school: $52.3 million
• Border States Electric expands to Watford City; distribution center at Hunter's Run
• More than 340,000 people have visited the Williston Rec Center since it opened less than a year aog (April, 2014); $76 million facility
• Williston Area Recreation Center (ARC) to hos swim meet; first time hosting; EJ Hagan Natatorium
• Virgil Hill's final box match, tomorrow, Saturday, in Bismarck

The Spin Continues -- 4Q14 GDP Revised Downward -- February 27, 2015

Related: Job Watch.

"Job Watch" has consistently suggested that the economy is not doing as well as pundits suggest. Today we get a bit of that confirmation: GDP for 4Q14 revised sharply down, from 2.6% to 2.2%.

In a sense that's not a big deal, I suppose, in some folks' minds, but some pundits would have rounded the 2.6% to 3%, and now it's been revised to 2.2%, which for all practical purposes is 2%. There's a big difference between 2% and 3% for folks who follow this stuff.

But I love the spin (in bold below):

Reuters is reporting:

U.S. economic growth braked more sharply than initially thought in the fourth quarter amid a slow pace of stock accumulation by businesses and a wider trade deficit, but the underlying fundamentals remained solid.

Gross domestic product expanded at a 2.2 percent annual pace, revised down from the 2.6 percent pace estimated last month, the Commerce Department said on Friday. The economy grew at a 5 percent rate in the third quarter.

I believe there is one more opportunity for another revision. I could be wrong, but I think the final revision is next month. 

Did Imported LNG And Oil "Save" New England This Winter -- RBN Energy -- February 27, 2015

Related tag: natural gas fill rate.

Related: did imported LNG and oil save New England this year?

RBN Energy: distillate fundamentals in New England.

Freezing weather along the Atlantic Coast has disrupted refinery operations threatening supplies of refined products – in particular distillates – in an already tightly balanced market. The resultant spike in heating oil prices has encouraged European traders to ship cargoes to New York – a reversal of flow patterns seen in recent years. Today we look at northeast distillate fundamentals and explain why European imports are headed across the pond.

The balance between supply and demand for distillates – mostly ultra-low sulfur diesel (ULSD) for road use and heating oil for residential and commercial heating - is traditionally tight in the northeast. We first described the challenges of distillate supply in this market in the context of growing refinery closures back in 2012. Since then, access to cheaper crude transported from North Dakota and (to a lesser degree) from Canada, has rejuvenated the region’s refining industry. Distillate supply is still problematic however and – as we shall see- supply interruptions like those caused by freezing cold weather – can prompt unusual trade patterns.

According to data from the Energy Information Administration (EIA) the 9 operating refineries in Petroleum Administration District for Defense (PADD) 1 – representing the northeast and Atlantic Seaboard from Maine to Florida - have 1.3 MMb/d of crude processing capacity and produce about 350 Mb/d of distillates. Distillate demand in the region averages more than 3 times that local refinery output at 1.2 MMb/d with the largest consumption being on-road diesel (60%) and heating oil (25%).

Whiting To Keep Fracking -- February 26, 2015; Off-Shore Drillers To Face Years Of Pain

Reuters via Rigzone is reporting:

WILLISTON, N.D., Feb 26 (Reuters) - North Dakota's largest oil producer, Whiting Petroleum Corp, struck a confident tone for 2015 on Thursday, saying it will hydraulically fracture all wells it drills even as peers scale back, but its bold tactic prompted a sharp drop in its share price.

Executives said they were sure that the company can still make a profit with oil prices around $50 per barrel. Whiting shares dropped three percent as details of the plan were announced on a conference call Thursday morning and were down more than 8 percent in afternoon trading.

Though the company has cut capex in half for 2015, some analysts said a deeper reduction is needed.

The Denver-based company plans to drill and frack 265 wells this year, mostly in North Dakota but also in Colorado's Niobrara shale formation. The number is at least 15 percent lower from 2014, though final levels for last year won't be disclosed until filings set for release Friday with the U.S. Securities and Exchange Commission.

Rather than hold off on fracking some wells, a step North Dakota rival Continental Resources Inc has taken, Chief Executive Jim Volker said Whiting is moving forward.

Volker and fellow executives said the key to remaining profitable while still fracking lies in improving technology and processes that can push well costs below $7 million, cheaper than many peers.

Fracking normally eats up 60 percent of a well's total cost.

Offshore drillers face years of pain. Reuters via Rigzone is reporting:

OSLO, Feb 26 (Reuters) - The world's biggest offshore drillers reported plunging earnings and orders on Thursday but managed to get a grip on costs to improve their chances of riding out a sectoral crisis that could last several more years.

Transocean made a net loss in the fourth quarter while rival Seadrill's bottom line nearly halved as both wrote down the value of their business and earned lower revenue after charter rates plunged. Still, their underlying operations were better than the market had forecast and both managed to reduce their near-term spending commitments for new vessels, giving them cash for the lean years.

Rig firms that drill for oil companies have been hit as lower oil prices prompt firms to curb exploration. There is also an abundance of capacity as new vessels ordered during the boom times are being delivered.

Rig firms are also squeezed by a corruption scandal at Brazil's Petrobras, the world's biggest offshore producer, and sanctions on Russia.

Minor Notes -- February 26, 2015

Reporting Friday:
NRG, forecast 52 cents; before market open;
Goodrich Petroleum (GDP), forecast a lost of 45 cents; before market open;

*********************************

A Note to the Granddaughters

Update: The Bismarck Tribune has a review/recommendation for a Christmas gift: the biography of a North Dakota woman who invented rocket fuel. Posted December 17, 2017.

Original Post

 
I just finished reading Rocket Girl: The Story of Mary Sherman Morgan, America's First female Rocket Scientist, George D. Morgan, c. 2013. 

Simply a delightful book.

I posted the summary of my notes from the book at this site.

Born 1921; grew up on a farm near Ray, North Dakota. Graduated valedictorian from Ray High School, despite starting elementary school two to three years late. Affinity for math and chemistry. Recruited by Plum Brook Ordnance Works (Ohio) during WWII; unable to complete college; no degree; later to North American Aviation (precursor to Rocketdyne); singularly responsible for inventing hydyne -- the rocket propellant that was used to launch America's first satellite, Explorer I, into space, following Sputnik.

Wiki biography here. 

Irving Kanarek biography here.

Great description of North Dakota rural life in the 1930's; the women working the munitions plants in WWII; the Cold War; a little bit of this, a little bit of that.

A very, very easy read. Fascinating story; very well told. Bittersweet.

I bought my copy at Books on Broadway, bookstore, Williston, near the corner of Main Street and Broadway, Williston, North Dakota.

WTI Vs Brent -- February 26, 2015

At one time I used to track and post WTI and Brent, to compare the spread between the two, but for some reason, I lost interest. I even had / have a WTI-Brent spread tag.

Today/tonight, from the Bloomberg site (dynamic site):

• WTI: $48.90
• Brent: $60.05

I haven't been following the spread, and I have no background in this, so I may be wrong, but here are some thoughts, some of which may be incorrect:

• WTI priced at Cushing
• Brent is "North Sea" oil
• years ago, WTI was the global benchmark
• more recently Brent became the benchmark
• everything I'm reading suggests challenges for those drilling in the North Sea
• it is being widely reported (and I've posted the links at this blog) that Cushing will reach full capacity by May, 2015, and perhaps as early as April, 2014
• no matter how fast the rigs are stacked, there's a lot of oil flowing into Cushing that is hard to stop
• it looks like Brent and Cushing are diverging (well, duh --  yes, but that was not being talked about back in 2013)
• the American cartel pits Brent against OPEC
• OPEC can probably move its price in the direction Brent is headed
• WTI becoming more and more "unrelated" to Brent, OPEC

Maybe it's time to track the WTI-Brent spread again. At one time we were watching to see how narrow the spread would get; whether they would reach parity; and/or, if WTI would become the new benchmark.

It looks like the new metric -- how large will the delta become as a) oil from the North Sea declines; and, b) Cushing reaches capacity.

Maybe oil companies will reward customers for coming into their service stations to buy gasoline, perhaps even paying customers to fill their tanks. 

Eight (8) New Permits -- February 26, 2015; Twenty-One (21) Permits Expired

Active rigs:

	2/26/2015	02/26/2014	02/26/2013	02/26/2012	02/26/2011
Active Rigs	121	193	183	204	169

Eight (8) new permits --

• Operators: MRO (4), XTO (3), Whiting
• Fields: Haystack Butte (Dunn), Antelope (McKenzie), Sanish (Mountrail)
• Comments:

Wells coming off the confidential list Friday:

• 26968, 1,307, Statoil, Liffrig 29-20 7H, Little Knife, t12/14; cum 3K 12/14;
• 28000, drl, CLR, Jersey 6-6H1, Alkali Creek, no production data,
• 28174, 640, Triangle, Wahlstrom 152-102-34-27-2H, Elk, unusual profile pattern, t9/14; cum 35K 12/14;
• 28175, 613, Triangle, Wahlstrom 152-102-34-27-1H, Elk, t9/14; cum 59K 12/14;
• 28268, drl, MRO, Dickey 11-30TFH, Reunion Bay, no production data,
• 29031, dry, MBI, Hueske 30-1, Wildcat, targeting the Winnipeg;

In addition to wells coming off the confidential list and reported earlier, look at this list of permits expired:

• 19217, EXP, Wesco, Federal 42-1, Bicentennail, a Red River well,
• 19708, EXP, Whiting/KOG, Koala USA 4-78-15H, Sand Creek,
• 20522, EXP, Newfield, Sand Creek Federal 153-96-30-1H, Sand Creek,
• 20523, EXP, Newfield, Sand Creek Federal 153-96-30-10H, Sand Creek,
• 21699, EXP, Whiting/KOG, Skunk Creek 13-18-17-16H, Heart Butte,
• 23801, EXP, MRO, Eagle USA 41-5TFH, McGregory Buttes,
• 24058, EXP, Whiting/KOG, Moccasin Creek 14-11-2-4H2, Moccasin Creek,
• 24110, EXP, Whiting/KOG, Skunk Creek 4-10-11-1H3, South Fork, 
• 24115, EXP, Whiting/KOG, Skunk Creek 4-18-17-1H3, Heart Butte,
• 24116, EXP, Whiting/KOG, Skunk Creek 4-18-17-1H, Heart Butte,
• 24117, EXP, Whiting/KOG, Skunk Creek 4-18-17-8H3, Heart Butte,
• 24720, EXP, Statoil, Greenstein 30-31 2TFH, Camp,
• 24887, EXP, Statoil, Margaret 5-8 2TFH, Spring Creek,
• 24888, EXP, Statoil, Margaret 5-8 7H, Spring Creek,
• 26634, EXP, Whiting, W Nystuen 159-98-1-30-18-1H3, Big Stone,
• 26635, EXP, Whiting, W Nystuen 159-98-1-30-31-16H, Big Stone,
• 26657, EXP, Statoil, Stallion 33-28 6H, Ragged Butte,
• 27335, EXP, Emerald Oil, Ron Burgundy 2-23-14H, Temple,
• 27336, EXP, Emerald Oil, Ron Burgundy 1-23-14H, Temple,
• 27508, EXP, Corinthian Exploration, Corinthian Skarphol 4-31-1H, Souris,
• 27659, EXP, Enduro, SND 28E, Tree Top,
• 90256, EXP, Mann Oil, Skarda SWD 1, Antelope, 

 *****************************

28174, see above, Triangle, Wahlstrom 152-102-34-27-2H, Elk, producing, unusual profile pattern:

Date	Oil Runs	MCF Sold
12-2014	5387	2482
11-2014	336	20
10-2014	9136	5327
9-2014	16225	14501
8-2014	3506	3019

28175, see above, Triangle, Wahlstrom 152-102-34-27-1H, Elk:

Date	Oil Runs	MCF Sold
12-2014	13847	10243
11-2014	13477	8573
10-2014	7133	2997
9-2014	19922	12944
8-2014	4525	3118