Tuesday, March 3, 2015

Update On Tax Break Operators Get If Price Of Oil Remains Low; The Magic Number Is $52.95 -- March 3, 2015

Reuters is reporting:
WILLISTON, N.D., March 3 (Reuters) - The clock is still ticking on a potential $5.3 billion, two-year tax break for North Dakota's oil industry after a state-calculated average of February's crude price fell below $52.59 per barrel last month. 
The state waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below an inflation-adjusted limit, set at $52.59 per barrel for 2015, for five consecutive months. 
For February, the average calculated price was $50.86 per barrel, according to North Dakota Tax Commissioner Ryan Rauschenberger. The average was an increase from the January average of $47.98 per barrel.The tax break kicks in if the average monthly price is below that $52.59 level for each of the next three months. If it is off even one month, the clock resets.  [The delta between $52.95 and $50.86 = $2.09.]
The tax returns if the average price exceeds that level for a subsequent five consecutive months. The countdown, which has officially entered its second month out of a possible five, holds the promise of crucial financial incentive for oil producers and their contractors in the No. 2 oil-producing U.S. state as they grapple with a roughly 50 percent drop in crude prices since last summer. 
Indeed, many North Dakota energy companies have sharply scaled back drilling and hydraulic fracking. A tax break could encourage activity to pick back up in June, even if oil prices do not rebound. North Dakota legislators designed the tax waiver in 1987 specifically with that very goal in mind. 
Rauschenberger estimates North Dakota will take in $2.9 billion in oil taxes in the next two years without the oil extraction tax. With the tax, the projection is $8.2 billion.

Eight (8) New Permits -- March 3, 2015

Despite the slump in oil prices, at least some of the operators still have a sense of humor. Emerald Oil now has permits for three "Chip Diller" wells along with the Ron Burgundy and other wells. Chip Diller was a character in Animal House Other great Emerald Oil oil well names can be found here.

Target to lay off thousands. More at CNBC. A $2-billion cost-cutting program. It looks like Target sees digital sales where the growth will be. I follow the demise of big box stores here. The company also said it had the capacity to buy back up to $2 billion worth of its own shares this fiscal year, and look to repurchase $3 billion annually from the following year and beyond. Target has to do something: everyone loves going to Target but the stores are always empty as are the parking lots; everyone hates going to Walmart where the stores are always way too crowded and you can't find a parking place.

A state visit without a visit to the White House? What's not to like? It appears Prime Minister Netanyahu's visit to Congress was a resounding success. It will be followed by the Pope speaking to Congress in September. Maybe this should be the focus of the new Congress. It can't get anything done anyway. It might as well host visiting dignitaries on a monthly (or more often) basis. Mr Boehner could invite who he wants (without consulting the White House). The invitee would be a guest of Congress, but could pursue an audience with this majesty over on Pennsylvania Avenue in a big White House if he/she so chose. The big White House is still closed to the American public so there's plenty of room on the schedule for a guided tour.  

Active rigs:

Active Rigs116189184207170

Wells coming off the confidential list today have been posted; see sidebar at the right.

Eight (8) new permits --
  • Operators: WPX (5), Emerald Oil (3)
  • Fields: Reunion Bay (McKenzie), Mondak (McKenzie)
  • Comments:
Ten (10) producing wells completed:
  • 26783, 174, OXY USA, Shuck 2-33-28H-144-97, Little Knife, t12/14; cum 2K 1/15;
  • 27398, 671, OXY USA, State Knopik 2-21-16H-144-97, Little Knife, t12/14; cum 29K 1/15;
  • 27608, 1,440, BR, Bullrush 44-10MBH, Elidah, t2/15; cum 3K 1/15;
  • 28289, 1,643, BR, Shenandoah 34-35MBH, Keene, t2/15; cum 5K 1/15;
  • 28613, 812, CLR, Debrecen 3-3H1, Bell, t2/15; cum --
  • 28640, 801, CLR, Boise 3-24H1, Brooklyn, 4 sections, t2/15; cum --
  • 28641, 878, CLR, Boise 2-24H, Brooklyn, 4 sections, t2/15; cum --
  • 28642, 818, CLR, Boston 3-25H1, Brooklyn, 4 sections, t2/15; cum --
  • 28643, 858, CLR, Boston 2-25H, Brooklyn, 4 sections, t2/15; cum --
  • 28944, 1,049, Whiting, Alison 14-6H, Sanish, t2/15; cum 1K 1/15;
MRO's Mylo Wolding 14-11 well (#18511 is now a SWD well.

Wells coming off the confidential list Wednesday:
  • 27265, 1,418, Emerald Oil, Slugger 3-16-21H, Charbonneau, producing, interesting production profile, t9/14; cum 35K 1/15;
  • 28677, 660, WPX, Roggenbuck 4-9HY, Van Hook, t12/14; cum 21K 1/15;
  • 29037, IA, CLR, Salem 4-6H, Dollar Joe, producing a small amount of oil before it was shut in;
  • 29139, 932, Hess, BW-Stoveland-149-100-1003H-3, Ellsworth, t1/15; cum 24K 1/15;

Sixteen Away From Hamm's Hunch -- March 3, 2015

Active rigs in North Dakota:

Active Rigs116189184207170

Talk About Hyperbole! -- Even In The WSJ -- March 3, 2015; Apple #1 Worldwide Phone Sales

Headline story in today's WSJ: the train that derailed in West Virginia two weeks contained high amount of combustible gas. Look at the numbers (OMG):
The crude oil aboard the train that derailed and exploded two weeks ago in West Virginia contained so much combustible gas that it would have been barred from rail transport under safety regulations set to go into effect next month.
Tests performed on the oil before the train left North Dakota showed it contained a high level of volatile gases, according to a lab report reviewed by The Wall Street Journal. The oil’s vapor pressure, a measure of volatility, was 13.9 pounds per square inch.
That exceeds the limit of 13.7 psi that North Dakota is set to impose in April on oil moving by truck or rail from the Bakken Shale. Oil producers that don’t treat their crude to remove excess gas face fines and possible civil or criminal penalties, said Alison Ritter, a spokeswoman for the North Dakota Industrial Commission.
The article neglects to mention that the national standard is 14.7 psi. The first paragraph seems to imply that the cargo would have exceeded national standards. Not. Disingenuous.

The spin never quits.

What Does It Matter?

Just for the record: the fact that the State Department now admits that Hillary broke the law by using private e-mail for official work means there was a conspiracy to cover up this fact. Obviously "everyone" in the State Department at the time knew she was using a private e-mail account. If not "everyone," certainly the IT folks.

But, then, what does it matter?

[Update, March 3, 2015, later: it turns out -- according to ABC News -- everybody does it or did it, including Colin Powell; this is a non-story; getting it out of the way before she announces her candidacy for Democratic nomination for US presidency.]

The Arctic Is Still Warming After All These Years

From 1922:
The Arctic seems to be warming up, states George Nicolas Ifft in 1922. He was at that time American consul at Bergen, Norway, and submitted from time to times reports to the the State Department, Washington, D.C.
The following text represents an extract from his report, which was published in the journal Monthly Weather Review October 10, 1922.
"The Arctic seems to be warming up. Reports from fishermen, seal hunters, and explores who sail the seas about Spitsbergen and the eastern Arctic, all point to a radical change in climatic conditions, and hitherto unheard-of high temperatures in that part of the earth's surface."
In August, 1922, the Norwegian Department of Commerce sent an expedition to Spitsbergen and Bear Island under the leadership of Dr. Adolf Hoel, lecturer on geology at the University of Christiania.
Its purpose was to survey and chart the lands adjacent to the Norwegian mines on those islands, take soundings of the adjacent waters, and make other oceanographic investigations.
Dr. Hoel, who has just returned, reports the location of hitherto unknown coal deposits on the eastern shores of Advent Bay - deposits of vast extent and superior quality......The oceanographic observations have, however, been even more interesting. Ice conditions were exceptional. In fact, so little ice has never before been noted. The expedition all but established a record, sailing as far north as 81 degrees 29 minutes in ice-free water. This is the farthest north ever reached with modern oceanographic apparatus.....

Oil companies will move more oil by pipeline than by rail if the price of oil goes up -- yup, that's what Bloomberg says. The writer is obviously clueless.
Texas, the only state that produces more oil than North Dakota, had a century to build its oil infrastructure before the shale boom hit. The Bakken, by contrast, basically went from nothing to a gusher. That left a whole lot of oil without pipes to move it. Since no one was quite sure how long it would last, no one wanted to take the risk of building a big pipeline system to service the area. 
Cheap oil weakens the incentives to build pipelines into North Dakota. At current prices, a lot of wells in North Dakota are no longer profitable. Drilling activity has already declined. Production is likely to follow in the next 12 months. That's hardly a recipe for building a big, expensive capital project. New rules governing the safety of oil trains, proposed by federal transportation regulators, will probably make crude-by-rail more expensive, once they take effect in the next couple of years. Until then, however, the best way to keep trains from exploding is to put that oil into pipelines. That isn't likely to happen without higher oil prices.
Really? The writer's entire article suggests just the opposite. 

The writer fails to mention the number of pipelines any number of companies are trying to build but are being stymied by environmental-nazis - but that's another story.

Rock Beats Scissors
Apple Beats Samsung

For years, anti-Apple folks have said, "okay, Apple may sell more smart phones in the US, but worldwide, Apple is a distant second to Samsung." Not any more. Macrumors is reporting:
Apple surpassed Samsung in worldwide smartphone sales during the fourth quarter of 2014 to become the world's largest smartphone maker. Samsung lost the top spot to Apple for the first time since 2011.

Apple narrowly edged Samsung as the two rivals had quarterly sales of 74.8 million and 73 million smartphones respectively. Apple's 20.4% market share was also marginally higher than Samsung's 19.9% share during the three-month period ending December.
Steve Ballmer on the iPhone
Last night, while watching our older granddaughter get ready to start water polo practice, I noted a couple of swimmers -- middle school swimmers -- checking their Apple iPhones. One had the "standard size" iPhone; the other had the larger iPhone -- I know I've seen the larger iPhones at the Apple store but I was surprised (again) how big they are; they are about the size of a small iPad And every time I see someone with an Apple product, I know they will never, ever switch. Not true of non-Apple users. The video above was posted on YouTube in 2007; at that time Mr Ballmer said Apple was selling no (zero, nada, zilch) phones at that time -- whereas Microsoft was already selling "millions and millions" of smart phones. It's amazing that in just seven years, Apple has gone to #1 and I'm not even sure what Microsoft calls their smart phone? It doesn't show up at the Gartner site.

Tuesday, March 3, 2015

West Dickinson bypass - exit 56 funded / passed:
The Dickinson City Commission approved funding Monday evening for the construction of a bypass that will connect Interstate 94 to Highway 22 west of the city. 
Data points:
  • $5 million
  • large part of the project funded by the state
ExxonMobil With More Acreage In Russia Than In The US

ExxonMobil snapping up Russian oil acreage:
Exxon Mobil Corp shook off the chill of sanctions and continued to snap up drilling rights in Russia last year, giving it more exploration holdings in Vladimir Putin’s backyard than in the U.S.
Taking the long view, Exxon boosted its Russian holdings to 63.7 million acres in 2014 from 11.4 million at the end of 2014 (sic), according to data from U.S. regulatory filings. That dwarfs the 14.6 million acres of rights Exxon holds in the U.S., which until last year was its largest exploration prospect.
Ford's February Report Not So Great; But One Bright Spot

From the press release: Mustang sales increased 32 percent with 8,454 vehicles sold – representing its best February sales since 2007 and making it the best-selling sports car in America since the launch of the all-new model last fall.

WSJ Headlines

Is GE's Immelt on his way out? Victim of low oil prices; lack of interest in wind turbines?
Boehner caves to Pelosi, Reid, and Obama.

All In -- Getting Off Easy

The New York Times is reporting:
WASHINGTON — David H. Petraeus, the best-known military commander of his generation, has reached a plea deal with the Justice Department that will allow him to avoid an embarrassing trial over whether he provided classified information to a mistress when he was the director of the C.I.A.
Mr. Petraeus will plead guilty to one count of unauthorized removal and retention of classified material, which carries a maximum penalty of one year in prison. Mr. Petraeus has signed the agreement, said Marc Raimondi, a Justice Department spokesman.
The plea deal completes a spectacular fall for Mr. Petraeus, a retired four-star general who was once discussed as a possible candidate for vice president or even president. He led the wars in Iraq and Afghanistan and was the architect of a counterinsurgency strategy that at one time seemed a model for future warfare.
The mistress, Paula Broadwell, is a former Army Reserve officer who had an affair with Mr. Petraeus in 2011, when she was interviewing him for a biography, All In: The Education of General David Petraeus.
This, I suppose, will be the last entry on the long-running Petraeus series which is followed here. It's hard to believe the blog has covered so much irrelevant material that helped keep the blog interesting. LOL.

Keystone Or No Keystone: Canadian Heavy Oil Reaches Gulf Coast -- RBN Energy -- March 3, 2015

President Obama given two pinocchios by Washington Post for his statements on Keystone XL. Fox News is reporting:
President Obama earned a double-barreled rebuke Monday from The Washington Post's fact-checker, for repeating a faulty claim that the Keystone XL pipeline "bypasses" the U.S. -- and for saying it would only carry "Canadian oil." 
The president made the claims in an interview last week with WDAY of Fargo, ND. Obama continued to downplay the impact of the Canada-to-Texas oil pipeline, just days after vetoing a bipartisan-backed bill that would approve the construction project. Senate Majority Leader Mitch McConnell, R-KY, has teed up a vote to override that veto later this week. 
In the local interview, Obama said: 
"I've already said I'm happy to look at how we can increase pipeline production for U.S. oil, but Keystone is for Canadian oil to send that down to the Gulf. It bypasses the United States and is estimated to create a little over 250, maybe 300 permanent jobs. We should be focusing more broadly on American infrastructure for American jobs and American producers, and that's something that we very much support." 
The president has been called out before for claiming the oil would bypass the U.S.
Active rigs:

Active Rigs119189184207170

RBN Energy: Canadian heavy oil starts to compete at Gulf Coast refineries.
Last week (February 19, 2015) Enterprise Product Partners announced the start of line fill on their 780 Mb/d ECHO to Beaumont/Port Arthur pipeline. The new route will open access for Canadian heavy crude shippers on the recently completed Seaway Twin pipeline from Cushing to Houston to 1.5 MMb/d of refining capacity in Beaumont/Port Arthur including 0.3 MMb/d of heavy crude coker processing. These refineries were a key target of the Keystone-XL pipeline from Canada to the Gulf Coast that still awaits approval. Today we look at demand and competition for Canadian heavy crude on the Texas Gulf Coast.
In Episode 1 of this two part series we looked at the rather painful progress developing pipeline infrastructure to deliver heavy Canadian oil sands crude to Gulf Coast refineries. Midstream developers have been beset by difficulties including headline grabbing delays to the Keystone XL pipeline and less dramatic but no less damaging setbacks to expansion of the Enbridge system. Since December about 240 Mb/d of heavy Canadian crude has flowed into the Houston Enbridge ECHO terminal on the Seaway Twin pipeline where it must now duke it out with incumbent suppliers to the Gulf Coast’s 1.5 MMb/d of heavy crude “coking” capacity. The largest of the incumbents is Mexican national oil company PEMEX that has already begun discounting it’s flagship Maya crude to do battle with Canadian producers.  In this episode we look at heavy crude refining capacity on the Texas Gulf Coast that Canadian barrels will be competing to supply. We also ponder how the volumes of crude flowing on Seaway Twin today will impact the incumbent suppliers.

Update on West Coast ports job action. BunkerPortNews is reporting:
West Coast port terminals were inundated with inquiries from businesses across the U.S. that rely on the swift movement of their products, as port delays reached near gridlock. Mr. Molinaro said many of his customers, frustrated with their supply chain’s snail’s pace, insisted on coming to see and ask for themselves, “What is going on?”

All the pressure has management at the Southern California ports, which combined handle 40% of all containerized freight for the U.S., thinking about ways they can speed things up. Port terminals are developing new ways to organize cargo at the docks and systems for getting that cargo moving off the docks as quickly as possible. Software developed by a local technology startup called Cargomatic, a sort of Uber for moving cargo around the Los Angeles region, serves as one creative solution.

As contract talks between the Pacific Maritime Association and the International Longshore and Warehouse Union crept along, the line of massive ships in San Pedro Bay became longer and container stacks in the terminal yards rose higher. Even now, since a tentative contract was reached Feb. 20, experts estimate it could be as long as six months before shipping returns to normal, and the delays could cost retailers billions of dollars this year.
Some novel ideas:
So some terminals have been trying a novel idea: When a truck driver shows up, put the first container off the top of the stack on the truck and send it on its way. No more moving other containers around to dig out specific cargo—just get it all off the dock as fast as possible.

The concept isn’t entirely new. Many megaretailers use what is known as free-flow or peel-off operations at the ports. If there are enough containers destined for the same cargo owner, all arriving on the same ship, longshore crane operators can stack them together and load them on to the retailer’s trucks as they arrive.
Running operations on an app from Silicon Valley:
Other port terminals and trucking companies also are augmenting their free-flow programs. Last week, the Port of Los Angeles launched a similar system—minus the smartphone app—at four marine terminals. Under that program, as many as 600 containers a day could be moved off the docks as soon as they are unloaded from ships, Mr. Seroka said.

“Most shippers don’t have the volume to do this,” Cargomatic co-founder Brett Parker said. The software “allows multiple shippers and multiple carriers to participate in free flow,” he added.

Mr. Parker and co-founder Jonathan Kessler run Cargomatic out of an office in Venice, Calif., part of Southern California’s so-called Silicon Beach region. The app is also running in beta mode in New York City. In January, Cargomatic closed $8 million in venture-capital investment.

Though small in scale, the Cargomatic test proved to be a rare instance where the port’s productivity actually increased amid the labor strife. The average so-called turn time for Cargomatic truck drivers was 35 minutes, roughly half the time it usually takes under the standard dig-out process.