Sunday, January 25, 2015

Discussion Continues Over At Discussion Board Regarding Bakken Acreage -- January 25, 2015

Link is here. Continued discussion; more detail provided.


Reminder: the NDIC daily activity report was not posted Friday; I assume it will be posted first thing Monday morning.  Wells coming off the confidential list this weekend will be posted here.  The twenty-four (24) permits that will likely be on Friday's daily activity report have been posted here.

For Investors 
See disclaimer.

Reporting tomorrow:
  • Microsoft (MSFT), expectation 71 cents; after market close
  • Norfolk Southern Corp (NSC), expectation $1.63, 8:00 a.m. ET
  • Plum creek Timber Company (PCL), expectation 34 cents; after market close

Wall Street To Close Tuesday -- January 25, 2015

That's a guess, of course, that Wall Street will be closed Tuesday. But looking at the weather report, it's hard to think otherwise ...
An all-out blizzard will slam the New York City area and New England Monday night through Tuesday, bringing many communities to a standstill.
Those in the Northeast should prepare for the storm now rather than wait until the snow starts to fall, especially for those across New England.
While a clipper system will spread disruptive snow from the Midwest to the mid-Atlantic through Monday, it will explode into a monster snowstorm and blizzard Monday night through Tuesday.
The heavily-populated zone from New York City to Boston to Portland, Maine, will be brought to a standstill with impacts lingering well after the blizzard departs.
Other headlines: 
  • NYC Mayor De Blasio: "could be biggest ever"
  • blizzard blast to make history ... NYC - BOS braced
See disclaimer.

Other news: Clint Eastwood's American Sniper continues to smash box office records; "becoming #1 war film of all time."
American Sniper has set its sights on another record: Within a matter of days, it will overtake Steven Spielberg's WWII classic Saving Private Ryan to become the top-grossing war-themed film of all time in North America, not accounting for inflation.
Clint Eastwood's history-making movie jumped the $200 million mark on Sunday, putting it ahead of Michael Bay's Pearl Harbor, another WWII title topping out at $198.5 million domestically in 2001. American Sniper is distinct from those two film in being set during a modern-day conflict.
Clint Eastwood. Wow.


Another Interesting Production Profile Of Well Coming Off Confidential Status As Oil Prices Plummet -- January 25, 2015

Heart River looks to be a pretty nice field, especially in the north. See the three Heart River wells below (one Fidelity; two Emerald oil).

Heart River field is a 38-section field that is not particularly active; it is in the southwest part of the state, filling up almost the entire township south of the freeway between Dickinson and South Heart. The new MDU refinery is probably just east of the field (though I don't know for sure). Emerald Oil and Fidelity E&P seem to have most of the recent permits.


Wells coming off confidential list this weekend, Monday:

Monday, January 26, 2015 - Sunday, January, 25, 2015 - Saturday, January 24, 2015
18582, PNC, BR, Pacific Express 41-25H, Corral Creek, date PNC 12/10/14;
19120, PNC, Newfield, Jorgenson Federal 2-4H, Lost Bridge, date PNC 12/10/14;
19121, PNC, Newfield, Lost Bridge Federal 13-9H, Lost Bridge, date PNC 12/10/14;
21972, PNC, Fram Operating, Goettle 1, wildcat, date PNC 12/11/14;
22209, PNC, Petro-Hunt, Fritz 142-100-22C-23-1H, date PNC 12/11/14;
24243, PNC, Statoil, Enderud 9-4 3TFH, Banks, date PNC 12/11/14;
24586, PNC, Thunderbird Resources, Charlie State 21-16-1H, Charlie Bob, date PNC 12/11/14;
24596, PNC, Bonneville 3625-1TFH, West Ambrose, date PNC 12/11/14;
26162, PNC, Corinthian Exploration, Corinthian Sivertson 16-16-1H, a Spearfish well, wildcat, date PNC 12/11/14;
27008, PNC, Slawson, Thor 4-31-30H, Tobacco Garden, date PNC 1/16/15;
27009, PNC, Slawson, Phazor 4-1-12H, Bully, date PNC 1/26/15;
27688, 170, Murex, Rebecca Ryleigh 21-16H, Writing Rock, t9/14; cum 17K 11/14;
27924, 105, OXY USA, Elroy Kadrmas 5-3-10H-143-96, Fayette, t7/14; cum 7K 11/14;
27942, 661, Triangle, Eckert Foundation 152-102-22-15-4H, Elk, t8/14; cum 47K 11/14;
28026, 315, Fidelity, Lonnie 11-14H, Sanish, t9/14; cum 43K 11/14;
28288, drl, BR, Shenandoah 24-36TFH, Keene, no production data,
28289, drl, BR, Shenandoah 34-36MBH, Keene, no production data,
28550, drl, XTO, Schettler 14X-9D, Cedar Coulee,
28562, drl, CLR, Bailey 5-24H, Pershing,
28592, drl, Zavanna, Simmental 2-11 2TFH, Long Creek,
28615, drl, Samson Resources, Strom 2536-8H, Ambrose,
28616, drl, Samson Resources, Ranchero 1918-2H, Ambrose,
28617, drl, Samson Resources, Beetle 3031-3H, Ambrose,
28632, 267, Hunt, Smoky Butte 160-100-17-20H-1, Smoky Butte,
28676, 79, Legacy Oil, Legacy Et Al Bernstein Barbot 12-8 2H, Red Rock, a Spearfish well, t8/14; cum 9K 11/14;
28680, drl, CLR, Bjella 2-13H, Northwest McGregor, no production data,
28732, 50, Enduro, NSCU K-714-H2, Newburg, a Spearfish well, t9/14; cum 3K 11/14;
28821, 395, American Eagle, Skjermo 2-14-163-102, Skjermo, t10/14; cum 24K 11/14;
28934, 243, CLR, Nygaardsvold 1X-32H, Noonan, t11/14; cum 3K 11/14;


27394, see above, Fidelity, Barnhart1 20-17H, Heart River:

DateOil RunsMCF Sold

28277, see above, Emerald, Lloyd Christmas 4-4-9H, Heart River:

DateOil RunsMCF Sold

28488, see above, QEP, Severin 9-8-16-17LL, Grail:

DateOil RunsMCF Sold

28489, see above, QEP, Severin 1-16-17BH, Grail:

DateOil RunsMCF Sold

28490, see above, QEP, Severin 2-16-17BH,  Grail:

DateOil RunsMCF Sold


OMG! It's up -- Monday morning, 8:34 a.m. Friday's NDIC daily activity report was just posted.

Twenty-four (24) new permits as originally posted.

Four (4) producing wells completed:
  • 25764, 24 (no typo), Oasis, Hannah Kaydence 5501 12-1T, Cow Creek, 15 total drilling days, no frack data, t7/14; cum 12K 11/14;
  • 26335, 18, MRO, Powell 31-27TH, Tyler, t8/14; cum 334 bbls
  • 27615, 589, Oasis, Andre Shepherd 5501 31-8 8T,  Missouri Ridge, t12/14; cum --
  • 27803, 425, Oasis, Andre Shepherd 501 14-7 1T, Missouri Ridge, t1/15; cum --

Random Note On Enbridge Clipper Pipeline -- January 25, 2015; Agore Heads To NYC, Boston; Deniers Should Be Beheaded -- Greenpeace Activist

The Dickinson Press is reporting:
PLUMMER, Minn. — A tent east of this Minnesota town is protecting work crews as they build a new pumping station for a $200 million project to increase capacity on Enbridge Energy Partners’ Alberta Clipper pipeline.
Also known as Line 67, will move up to 800,000 barrels of heavy crude oil per day from the tar sands region of Alberta to Superior, WI.
In all, this new phase of the Alberta Clipper expansion project includes four new pumping stations and the expansion of three others in Minnesota.
The pipeline is about 1,000 miles long, entering the U.S. near Neche and extending about 327 miles to Superior, WI.
More at the link.

This is a most interesting story. I track pipelines of interest here; at that link, scroll down to Enbridge Line 67 for some very interesting links.

A Blizzard Of Historic Proportion
Agore Heads To NYC, Boston

The National Weather Service is reporting:

Ah, yes, deniers should be beheaded. 

The story:
A climate change advocate, believed to be a Greenpeace activist and Guardian contributor, has called for the beheading of so-called “climate change deniers”, arguing the world would be a better place without them. The comments are merely the latest in a long history of warmists advocating the killing of people who question global warming dogma.
On January 21st, in it’s ‘Climate Consensus – the 97%’ section, the Guardian published an article entitled “Matt Ridley wants to gamble the Earth’s future because he won’t learn from the past,” which was illustrated with a fake, but nonetheless rather gruesome image of a severed head.
The article drew hundreds of comments, including one from ‘Bluecloud’ on the day the article was posted, reading “Should that not be Ridley’s severed head in the photo?”
Further down he added “We would actually solve a great deal of the world’s problems by chopping off everyone’s heads.
“Why are you deniers so touchy? Mere calls for a beheading evolve [sic] such a strong response in you people.
I can't make this stuff up.

A Reader's Perspective On The Bakken In The Face Of Plummeting Oil Prices -- January 25, 2015

I could not have said this better myself, a note from a reader:
The doomsdayers are having a field day-they're predicting a mass exodus from ND. As usual they're making predictions using only part of the  information.
Yes, North Dakota will lose some drilling and completion jobs -- however -- we're ready to start building two huge fertilizer plants, a huge world class plastics plant, budgeting well over one billion for catch-up infrastructure, need thousands of miles of pipeline to catch up, need more and expanded gas processing -- the list goes on and on.
Another very important thing: these oilfield workers are probably the most flexible workforce in the world, they can literally change jobs and be productive the first day in a new career.
These people are extremely hard working, have tremendous work ethics and have already proved they can be productive right through a North Dakota winter.
I also think we have other formations besides the Bakken/TF that have potential to produce at a lower cost.
AND -- don't forget -- these oil companies aren't going to stop innovating and inventing, we have a lot of innings to go. 
No, I don't think North Dakota is going to see a mass exodus, I think we'll see some temporary reshuffling and when drilling picks up again North Dakota will be ready-with a stronger and more diversified energy industry.
I think this whole story is very, very fascinating.

Events in the fourth quarter 2014 signaled a watershed event for the world, the US, Saudi Arabia, the Bakken -- literally everyone was affected. The world runs on fossil fuel and there was a tectonic shift on November 28, 2014. Daniel Yergin says the baton has been passed.

Some folks are concerned that the plummeting price of oil foreshadows a global recession (or worse). That's way beyond my pay grade. But I will say this: it is my impression that global recessions lead to lower prices overall, including energy (but not necessarily); whereas plummeting oil prices do not lead to global recessions. On the passing of King Abdullah of Saudi Arabia, one of the princes suggested that lower energy prices would stimulate the global economy. Personally, I think that statement was disingenuous if used by Saudi Arabia to explain their actions. I've never perceived a country in the Mideast, certainly not Saudi Arabia, to be a beacon of altruism. Be that as it may, regardless of why Saudi is allowing prices to plummet, the fact is, all things being equal, lower energy costs should be beneficial to the global economy.

I agree with the writer above: there is a lot of work yet to be done in the Bakken. I am still amazed, after all these years, that without rail, there is not enough takeaway capacity in the Bakken. The national crude oil pipeline system is coming up to speed -- notably with the double-pipeline Seaway to Cushing, but the local, intra-state, and perhaps regional crude oil pipelines remain inadequate. With the relative higher cost to ship by rail, operators are looking forward to more Bakken pipeline. The recent sale of Hiland to Kinder Morgan brings in another huge player, and this sale likely occurred in response to the fall in oil prices, though there may have been other reasons.

I am also amazed after all that has gone on before, that although the drop in flaring is significant, from 36% to 27%, it appears to have hit a plateau. In the most recent Director's Cut, I believe, the percent actually increased slightly. And this occurred despite more natural gas processing plants, new NDIC rules on flaring, and the drop in oil prices.

I am assuming the drop in oil prices will not completely shut down unconventional / tight oil / shale plays. If that assumption is correct, readers are well advised to look again at this post regarding the relative costs of drilling/completing wells in such plays in North America. Likewise, the footprint of the "best Bakken" has increased substantially since 2007 when the boom began as noted in the most current "heat map" available. 

This is not to say we aren't going to see some changes in the Bakken. Regular readers are aware of my thoughts on some of those changes. We see these changes, again, in the list of permits issued two days ago:
In the old days one would have been looking at 12 - 20 operators being issued 24 permits, and an expectation that there would be 12 - 20 rigs drilling these wells; today, these 24 wells can probably be drilled with six rigs. But they still all have to be fracked (eventually); this is all pad drilling on established pads, as far as I know.
And I didn't even get to the fertilizer plants and the plastics plant.

Meanwhile, In Washington, It's All About Obama...When It Comes To Obama

The Washington Post is reporting:
That is Iran’s march to nuclear weapons, and Obama’s foolish complicity. His claim at the State of the Union that “we’ve halted the progress of its nuclear program and reduced its stockpile of nuclear material” would be laughable if it weren’t so dangerous. The claim earned him three ­Pinocchios, with four being an outright whopper, by The Washington Post.
The ticking doomsday clock is what led to the remarkable comments by Democrat Robert ­Menendez. After Obama warned that more sanctions, even if they would not take effect unless the talks collapsed, could scare off the Iranians, the New Jersey senator said Obama was repeating talking points that “come straight out of Tehran.”
That’s a zinger for the ages — and has the added advantage of being true.
I love it when politicians are honest. It is so seldom we see such honesty. The last time I recall such honest was when ObamaCare was called a "train wreck."

Sunday Morning Coming Down -- January 25, 2015; And "Purt-Near" Ain't Enough ... Unless

Active rigs:

Active Rigs157187190204161

Well, this is interesting, The Williston Herald is reporting:
“During this period there are trace amounts of hydrocarbons in the water that are producing an odor,” said Public Works Director David Tuan. “It is still small enough that it is safe to consume. People may not want to consume it, which is understandable because it tastes bad and smells bad, but it is safe to consume.”
The city is not sure if the higher amount of hydrocarbons is because of the spill in Glendive, or coming from another source. The EPA says "not."
When Glendive, Montana’s plant was shut down early last week, it was receiving a 15 parts per billion (ppb) reading coming from the Glendive Water Treatment Plant. The highest it has been in Williston is 3.39 ppb, which is still below the state mandate of 5 ppb. The amount of hydrocarbons in the water have been dropping since the highest 3.39 reading was measured.
“Water quality has nothing to do with the smell, color and odor. Those are subjective things we try to meet. We try to meet these so we can put out the highest quality product because people are paying for it,” Tuan said. “Your water could be yellow, blue or smelly and still be safe. In the spring, water can have a musty smell during the runoff period.”
Water takes around two days to get from the water treatment plant to a tap, he said, which could explain the odor coming days after the spill affected Glendive.
“It could be a lag effect to get through the system,” Tuan said, adding they may never find out where the higher amount of hydrocarbon is coming from.
He said it is easy to make the assumption it is a result of the Glendive spill, but because the EPA is telling them no oil has come into North Dakota, they cannot make that assumption.
Even though my yellow, blue or smelly water could be safe, I prefer colorless, odorless, and generally tasteless water.

A Note To The Granddaughters

Our older granddaughter's water polo team will be participating in a tournament later today. They must have had the best record this season because they were the only team to have been given a first-round bye. If they win their first game, they are guaranteed a first or second place finish. Just like NASCAR, points earned during the season are very, very important, apparently in North Texas water polo.

Speaking of NASCAR, I drove by the Texas Motor Speedway about 8:30 this morning. I was taking drinks and snacks to the aforementioned water polo tournament. The tournament starts early this morning and lasts all day. Our granddaughter's first game is later this afternoon. NASCAR was quiet; the only folks speeding were SUVs on I-35E going north and the Texas Highway Patrol was out in full force, stopping many speeders.

I don't know why anyone would want to go so fast on such a beautiful morning. It was absolutely gorgeous (and still is). The highlight of the day this time of year in Texas is to see the new calves alongside the yearlings. I also saw a couple of oil well pads; they were not new, but I always forget they are there. So, a beautiful day: Texas Motor Speedway; cattle ranches; and, oil wells in North Texas.

With gasoline so "cheap," it seems driving distances are much shorter. I normally don't look forward to long drives just to do an errand, but with gasoline so inexpensive (and the day so beautiful), it was a great drive. I'm even "trying" out a new Starbucks. When I arrived, it was purt-near empty but now it's filling up.

Purt Near, Randy Rieman
Two stories of note coming out Vermont, one story is very old but pertains to the new story. First, the old story, as reported by
The Supreme Court yesterday struck down a Vermont law barring the sale of prescription drug records for marketing purposes, potentially derailing an effort by Massachusetts lawmakers to enact a similar patient privacy law.
The court, in a 6-to-3 ruling, said Vermont violated the free speech rights of drug manufacturers by forbidding pharmacies from selling doctors’ prescription information to them yet allowing the data to be sold for other purposes, such as research.
The ruling was a victory for pharmaceutical companies, which buy the data to uncover prescription patterns so they can better market their drugs to doctors. But it dampens the hope of physician groups, consumer health advocacy organizations, and some Massachusetts legislators of passing the state’s own prescription privacy bill.
“I’m not so sure that a Massachusetts law would have much viability now,’’ said Dr. Lynda Young, president of the Massachusetts Medical Society. “We consider the sale of prescription data commercial activity, not free speech. It is an intrusion into the physician-patient relationship.’’
The second story, as reported by Modern Health Care:
Vermont Gov. Peter Shumlin stunned the healthcare policy world last week when he announced the state was scrapping plans to create a single-payer system. The state said the economics didn't work, but not everyone is convinced.

Shumlin has long advocated for a publicly funded healthcare system and even embraced it as part of his first gubernatorial win in 2010. When the state ratified the law establishing a single-payer-like system in 2011, many viewed Vermont as an incubator of whether it could succeed in the U.S. But until recently, officials didn't really explain the major question that was on everyone's minds: How exactly would the state pay for this system?

Vermont's plan was supposed to work like this: All Vermont businesses would be subject to an 11.5% payroll tax, similar to how the federal government taxes them to support Medicare. For companies that currently offer private health insurance to their employees, the payroll tax would replace those private expenses. State residents would also pay a sliding-scale income tax. The income tax would be capped at 9.5%, and no Vermont resident would pay more than $27,500 per year toward the healthcare system. In exchange, all 626,000 Vermonters would have insurance policies that cover 94% of their healthcare costs.
So, what we have here:
  • businesses would pay 11.5% payroll tax for this health care program
  • state residents would see an income tax of 9.5% (and I've seldom seen an income tax that did not rise over time)
  • state residents would still be subject to as much as $27,500/year in health care premiums, deductibles, and co-pays
And even with all that, a Vermonter would not see "free health care." All of this would cover 94% of their health care costs. 

In a Boston Globe story today (requires a subscription), it was said that the proposed (now scrapped) Vermont health care plan would have cost $4.9 billion /year. To put that in perspective, Vermont's annual budget is $4.8 billion.   

Forbes analysis was even more stark.