Ford Is On A Roll; Manufacturing Stage Of The Bakken Boom; Legalese In The Bakken -- June 1, 2015

For some reason, the auto manufacturers scheduled their May numbers to be released on June 2, rather than on the first full business day of the new month, which would have been today. I assume it is due to Memorial Day sales. From Seeking Alpha:

• TrueCar estimates the average U.S. automobile transaction price rose 4% in May.
• Prices were up 0.5% compared to April's ATP, according to the research firm.
• The group of automakers with 4% or more gains in pricing includes Subaru, Fiat Chrysler Automobiles, and Ford.
• The ratio of incentive spending by automakers fell 10 bps to 8.2% during the month.

Ford is on a roll, and Americans are spending more money on cars, iPhones, and food. On the rest of the stuff American has to offer, not so much.

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Manufacturing Phase Of The Boom 

Okay, folks, pay attention. Another reader has sent a link to a story that I never should have missed. I've been slacking off. I was getting a bit bored with the whole energy story. I started the blog to educate myself about the Bakken and thought there was something to be gained by sharing it with the general public. Regular readers have become better educated about the Bakken than I have because a) they have better memories; b) aren't sidetracked by ridiculous articles on global warming or ObamaCare; and, c) gave up on Obama years ago. I'm a very, very slow learner, very gullible, and too optimistic.

Be that as it may, the aforementioned reader / link / story is from The Wall Street Journal: the shale oil boom shifts into higher gear. I skimmed the article, but need to go back and read the whole thing. From what little I read, it appears that we've talked about all of this numerous times in the past couple of years. I guess that's why I get bored. It's yada, yada, yada, Bakken, yada, yada, yada, Bakken.

What really got me excited about this article was the 250 comments (and counting). That's the most comments I have ever seen for any article in the WSJ on a subject like this. I may not be able to go through all the comments, but the comments, as is often the case, may be more interesting, and more valuable, than the article itself.

This is the type of comment that really gets me excited. It reminds me of something about the Bakken that I used to know and then forgot. I started the blog to educate myself about the Bakken. I feel more educated just from this one comment:

Great article, but I'm always surprised that the 3rd big innovation is never mentioned in these stories. Mitchell Energy fracked a lot of horizontal wells in the 90's and couldn't make a profit until they started using microseismic mapping. The same methods that map the San Anreas fault can map hydraulic fractures, but the microearthquakes are a million times smaller than damaging level (magnitude -1 to -3). Profit margins are so small that if the fractured zones overlap, frac fluid is wasted and if they have gaps, oil or gas is left behind. Only when the zones fit like a jigsaw puzzle is there a profit.

The next step is efficiently refracking old existing wells. So there is still room for lower break even prices.

Not only refracking old wells, but drilling first-time laterals in other formations following natural frack lines. 

I used to say the Bakken never ceases to amaze me. I need to adjust my horizon a bit: the Williston Basin never ceases to amaze me.

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Quiet Title Action

Okay, folks, pay attention again. This is another important story, the link sent to  me by another reader. I hope I understand the legal argument and outcome correctly.

I've always maintained there are three Bakkens:

• the geographical/geological Bakken where oil happens to be located and recoverable
• the political/commercial Bakken where government jurisdictions, the oil industry, and ordinary private citizens are working together for the best possible outcome with no evidence of corruption/influence peddling by the regulators or governmental agencies
• the Bakken as a laboratory where operators are using out-of-the-box thinking, trying new things, to get better production at lower cost. 

This article, in The Bismarck Tribune, is an example of the "second" Bakken. The Bismarck Tribune is reporting:

A federal court of appeals affirmed a North Dakota district court’s decision Monday to deny environmental groups from intervening in a quiet title case involving the federal government and four western North Dakota counties.

The U.S. Court of Appeals for the Eighth Circuit agreed with U.S. District Court Judge Daniel Hovland’s denial last fall of allowing three environmental groups, including the Badlands Conservation Alliance, the Sierra Club and the National Parks Conservation Association, from intervening in the case.

Billings, Golden Valley, McKenzie and Slope counties sued the U.S. government seeking to quiet title what they allege are right-of-ways along section lines of land owned by the federal government on the Dakota Prairie Grasslands. The state of North Dakota later filed suit, and the cases were consolidated.

The counties argue that section lines with few exceptions in North Dakota are subject to public easements allowing for right-of-way. The federal government doesn’t recognize these rights-of-way.

The groups contended they have environmental, recreational and aesthetic interests in the area. The court ruled that the groups failed to show they had a specific interest in the case.

The appeals court received the appeal in October following Hovland’s denial of the groups’ request to intervene.

The full opinion can be found at media.ca8.uscourts.gov/opndir/15/06/141785P.pdf.

Quiet title action: A special legal proceeding to determine ownership of real property.  A party with a claim of ownership to land can file an action to quiet title, which serves as a sort of lawsuit against anyone and everyone else who has a claim to the land.  If the owner prevails in the quiet title action, no further challenges to the title can be brought.

I hope I'm interpreting the article correctly. I often make simple mistakes reading simple English. 

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