Thursday, February 26, 2015

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:

Active Rigs121193183204169

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:

DateOil RunsMCF Sold

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

DateOil RunsMCF Sold

Natural Gas Fill Rate -- Biggest Draw To Date This Winter? -- February 26, 2015

Natural gas fill rate (dynamic link): -219. One of the biggest draws, if not the biggest draw, this winter. Stocks were 576 Bcf higher than last year at this time and 30 Bcf below the 5-year average of 1,968 Bcf.

Also, note earlier posting regarding this.

Emergency Responders Respond To Possible Ebola In Virginia

Link here.

At least it's hard to catch. 
Quote of the Day

"There is no such thing as consensus in science. If it's consensus, it isn't science. It it's science, it isn't consensus." -- Michael Crichton (from Rocket Girl, George D. Morgan, c. 2013, p. 199)

"The discussion is over; it's closed." -- Warmists

Industry Cutting Back On Renewable Energy; Coal Production Increases In North Dakota -- February 26, 2015; 3/3 Wells To DRL Status

Wells coming off the confidential list today have been posted. Link here; all three went to DRL status. Although it's only an estimate, the question arises whether North Dakota will set a new record of number of wells waiting to be fracked when the March, April, and/or May, 2015, Director's Cuts are posted. During most of the boom the number of wells waiting to be fracked was in the 250 - 450 range. Most recently, two months running, the number is closer to 750. During the winter (January, February, March) and during spring thaw (March, April, May) fracking is also negatively impacted. The Director's Cut that comes out in mid-March will be the first report for 2015 data, starting with January, 2015.

Biofuel production cut. The Dickinson Press is reporting:
Archer Daniels Midland, one of the world’s top biofuels producers, has slowed North American biodiesel output, the latest sign the industry is battling uncertainty over U.S. renewable fuel policy while the oil rout curbs demand.
The Chicago-based agri business has “temporarily” shifted production at its Velva oilseeds processing facility from biodiesel to other products and cut production at its other North American facilities, ADM spokeswoman Jackie Anderson said in an emailed statement.
With 140 million gallons of annual capacity at its wholly-owned Velva site and two joint ventures in Missouri, ADM is a sizeable player in the 2-billion gallon U.S. industry.
The ADM spokeswoman declined to give the timing and size of the cutbacks. The Northern Canola Growers Association said the switch in North Dakota took place a few months ago.
Meanwhile, North Dakota coal production increases. The Dickinson Press is reporting:
While North Dakota leaders question the future of the oil industry, another natural resource is increasing in production.
The state’s four lignite mines sold approximately 28.7 million tons of coal last year, up from 27.7 million tons in 2013. The mines near Beulah, Center and Underwood increased or maintained their 2013 production levels.
Less than two years left in this presidency. Funny how things turn out.

The Ukraine

I believe I read somewhere in the last 24 hours that the Ukrainian government forces ("the good guys") are starting to remove their military equipment from the Eastern Ukraine. In the old days, this was called a "strategic retreat."

Meanwhile, the AP is reporting that Russia ("the bad guys") could cut off natural gas supply to the Ukraine by the end of the week. Not to worry: the French will take up / make the slack. The move by Russia is not political; it's 100% financial; the Ukraine is not paying for the natural gas they get from Russia. I'm sure the Germans will be happy to pay for that natural gas.

Good Timing

Tweeting now:
US wraps up Ebola military mission in Liberia - @AFP 
Yesterday's tweet:
Guinea, Liberia, Sierra Leone report 99 new confirmed Ebola cases in week ending Feb. 22, per World Health Organization - @Reuters
At least it's hard to catch.

Unemployment Claims Surge 31,000; Now, Back Over 300,000 -- February 26, 2015; "Surged Unexpectedly" -- Bloomberg; "Far Outside" The Forecast -- Econoday


Later, 8:28 a.m. CT: Bloomberg notes that "the number of Americans filing for unemployment benefits rose by the most since December 2013 last week from a week earlier, a sign of uneven progress in the labor market."
Original Post

First time unemployment claims surge 31,000 to 313,000. Just heard that on the radio. Can't wait to read the spin. I'll bet a week's pay that Reuters says this is evidence that job market remains healthy.

Yes, here it is, from the AP:

  • Applications for US unemployment benefits jump to 313,000; level still points to solid hiring.
Well, that's good news for the 313,000 that just got pink slips.

Bloomberg not quite so enthused with the report:
Initial jobless claims surged unexpectedly in the February 21 week, up 31,000 to a 313,000 level that is far outside the Econoday consensus (279,000 to 300,000).

The 4-week average is up 11,500 to 294,500 but is still more than 10,000 below a month ago in a comparison that, despite the latest week's surge, still points to improvement for the labor market.

Data on continuing claims, which are reported with a 1-week lag, are mixed. Continuing claims for the February 21 week fell 21,000 to 2.401 million but the 4-week average rose 2,000 to 2.399 million. The unemployment rate for insured workers is unchanged at a recovery low of 1.8 percent.

The impact of the disappointment for initial claims is likely to be mitigated by a couple of factors: the February 21 week was a week shortened by Presidents' Day, a factor that makes for outsized adjustments to the data, and the prior week, the February 14 week, not the latest week, was the sample week for the monthly employment report.