PAA Acquires New Terminal In Williston/Watford City Area, Johnson's Corner, McKenzie County -- March 12, 2015

This is a big story -- maybe the biggest story of the week or month for me, but probably not for anyone else. Whatever.

Bakken.com is reporting:

Plains All American Pipeline LP recently acquired an oil terminal, currently under construction, that is well-positioned to become a central logistics hub in the Bakken oil patch, according to a report from Zacks.com.

The deal will give PAA rights to use the terminal previously owned by Legion Terminal LLC. The terminal is located in Johnson’s Corner, McKenzie County, North Dakota.

The facility, expected to be operational by the third quarter of 2015, will have 500,000 barrels of crude oil storage, pipeline interconnects, truck facilities and various other assets. The terminal has also been approved for a possible storage expansion of up to 2 million barrels.

As reported by Zacks, analysts anticipate the area, rich with oil and natural gas reserves, will continue to be one of the nation’s largest oil producing reserves for many years to come.

The U.S. Energy Information Administration (EIA) reports that North Dakota’s proved reserves have surpassed federal offshore reserves in the Gulf of Mexico.

As production continues, the demand for midstream energy services in the region will continue to grow. The terminal is conveniently located near PAA’s existing Williston Basin assets, increasing the company’s presence in the core of the shale play.

The company’s Trenton crude oil gathering system and its Manitou and Van Hook rail trans-loading facilities are located within 50 miles of the new terminal, bolstering the marketability of the facility, according to Zacks.

When I saw this I wrote to a regular reader:

I have said several times that every time I go up to Williston, I see more and more storage tanks -- thinking Williston could be a mini-Cushing hub.

If the Keystone goes through, a mini-Cushing hub would absolutely be needed to store Bakken oil before it enters that pipeline.

Disclaimer: regular readers know that I am inappropriately exuberant about the Bakken. I have no formal training or background in the oil and gas industry. The story above sounds like part (or all) of it comes from a press release. It may not be a big deal. But I think it's a big deal. I would not make any investment, financial, or relationship decisions based on what I posted above or what I post anywhere on this blog, but it is what it is. This and $1.79 will get you a cup of coffee at a Starbucks in the DFW metroplex. However, I think this is a pretty big deal. If it's important to you, go to the source, perhaps starting with Zacks or PAA.

To put this in context, one may want to look at how much crude oil storage there is by PADD.  Note, specifically PADDs 1 and 4.

The EIA states crude oil storage for PADD 1 and 4 at this site (dynamic), refineries:

• PADD 1: 15 million bbls
• PADD 4: 4 million bbls

The EIA states crude oil storage for PADD 1 and 4 at this site (dynamic), crude tank farms:

• PADD 1: 4 million bbls
• PADD 4: 13 million bbls

Again, I am probably misreading this data. If it's important to you, go to the source.

Director's Cut Is Out; Data For January, 2015; Number Of Wells Waiting To Be Fracked Rises Significantly From Last Summer; Production Decreases Slightly; Flaring Target In Sight -- March 12, 2015

Link here.

Disclaimer: this update is always done in haste; typographical errors are likely. This is for my use only. If this is important to you, you should go to the source. 

Oil:

• January, 2015: 1,190,490 (preliminary -- all time high was last month)
• December, 2014: revised, 1,227,483 (preliminary - 1,227,344 bopd - preliminary, new all-time high)
• delta: 36,993 bopd; decrease of 3%.

Producing wells: 

• January, 2015: 12,181 (preliminary -- new all-time high)
• December, 2014: 12,134 (preliminary, new all-time high)
• November, 2014: 11,951 (revised); 11,942 (preliminary, new all-time high)
• October, 2014: 11,892; revised 11,942 (preliminary, new all-time high)
• September, 2014: 11,758 (revised); 11,741 (preliminary; new all-time high)
• August, 2014: 11,565
• July, 2014: 11,293

Permitting:

• February, 2015: 197
• January, 2015: 246
• December, 2014: 251
• November, 2014: 235
• October, 2014: 328
• September, 2014: 261
• August, 2014: 273
• July, 2014: 265
• All-time high was 370 in 10/2012
  

Pricing:

• Today, 2015: $32.00 (lowest since February, 2009, and January, 2015) (all-time high was $136.29 7/3/2008)
• February, 2015: $34.11
• January, 2015: $31.41
• December, 2014: $40.74
• November, 2014: $60.61
• October, 2014: $68.94
• Sept, 2014: $74.85
• August, 2014: $78.46

Rig count:

• Today: 111 (lowest since April 2010) (all time high was 218 on 5/29/2012) 
• February: 133
• January: 160
• December, 2014: 181
• November, 2014: 188
• October, 2014: 191
• Sept, 2014: 193
• August, 2014: 193
• July, 2014:  192

Director's comments:

Drilling rig count:

• dropped 7 from November to December
• dropped 21 from December to January
• dropped 23 from January to today

Well completions:

• December: 173 (preliminary)
• November: 48

Weather:

• no major precipitation events
• only 5 days with wind speeds in excess of 35 mph (too high for completion work)
• 8 days with temperatures below -10F

Wells waiting to be completed:

• Today's (March, 2015) Director's Cut -- 825 wells -- an increase of 75
• Previous Director's Cut -- 750, a decrease of 25
• Red Queen: 115 completions per month to maintain 1.2 million bopd

Flaring:

• decreased to 22%
• Tioga gas plant increased to 80% of full capacity
• expansion of gas gathering from south of Lake Sakakawea is still delayed

Gas capture statistics:

• statewide: 78% (October 2014 target was 74%; January 2015 capture target is 77%)
• FBIR: 79% (up from 77% last month)

Twenty-One (21) New Permits -- March 12, 2015

Active rigs:

	3/12/2015	03/12/2014	03/12/2013	03/12/2012	03/12/2011
Active Rigs	111	193	187	201	173

Twenty-One (21) new permits --

• Operators: Corinthian (8), Oasis (5), XTO (3), SM Energy (3), CLR, EOG
• Fields: Souris (Bottineau), Camp (McKenzie), Siverston (McKenzie), Poe (McKenzie), Long Creek (Williams),  Parshall (Mountrail)
• Comments:

Wells coming off the confidential list Friday:

• 28469, drl, Hess, EN-Rehak-155-93-0718H-8, Alger, no production data,
• 28664, drl, MRO, Kerkhoff 14-8H, Murphy Creek, no production data,
• 28886, drl, Zavanna, Gust 2-11 2H,  Long Creek, no production data,
• 29011, drl, XTO, Nelson 24X-11A, Garden, no production data,
• 29053, drl, Stephens Production, York 3-9, wildcat, 3-156-82, no production data,
• 29231, drl, Statoil, Heen 26-35 4TFH, Todd, no production data,

This is the second well for Stephens Production; its first well, #25603, Matson 3-1, 3-157-82, was reported as dry back in mid-2013. The York well is about a mile south of t2)he Matson well, and about 6 miles north of Minot (near the Glenburn oil field.

Permits canceled:
Whiting cancels eleven (11) permits in the following counties: McKenzie (4), Dunn (5), Williams (2).
EOG cancels two (2) permits, both in Burke County.
Petro-Hunt cancels one permit, in McKenzie County.
Emerald Oil is canceling two (2)  Ron Burgundy wells in Williams County.

I believe I have heard through the grapevine that Whiting is offering for sale some non-core assets, or its positions in non-operated wells. I could be wrong on that; I don't know if there has been an official press release or news item to that effect. This is outside the WSJ article that Whiting, the company, is looking to be bought. It's also possible these permits are old KOG permits that are going to be "re-accomplished." The Whiting permits that have been canceled have these key words in their names: Koala (1), Moccasin Creek (1), Skunk Creek (4), Smokey (3), and Nystuen (2).

Pi = 3.14159265359 -- Party Time!

Saturday is the Pi(e) Day of the Century: 3.14159265359.

Date:

• 3= March 
• 14 = Day 
• 15 = Year 

Time:

• 9:26 (either am or pm -- for a party, "PM" works better) 
• 53 seconds 
• 59 milliseconds

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Obama Update

The Obama administration has a news embargo on Ebola stories but "independent" news outlets are still reporting the grim statistics.

First: an American who contracted Ebola in Africa will be treated in America. According to the AP, the individual will be admitted to NIH in Bethesda.

Reuters/WHO reports that most recent death tally stands at 10,000 from current West Africa outbreak.

Meanwhile, Variety is reporting:

Dr. Nancy Snyderman, the veteran TV-news medical correspondent, said she would step down from her job at NBC News. Snyderman was caught breaking a voluntary quarantine in New Jersey after potentially being exposed to the Ebola virus while covering the recent outbreak in Liberia, and subsequently took time off. [Comment: she will be joining Brian Williams in an undisclosed location.]

At least it's hard to catch.

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Hillary Rising

Earlier I posted that the Hillary e-mail story would be forgotten by Americans within a month. I was off by 29 days. Polls show that Hillary's popularity remains high, outstripping that of GOP rivals. Jay Leno's "jay-walkers" thought everyone had a private e-mail; they don't know what the fuss is all about.

Snowiest US Cities This Past Winter -- Or Where The Kennedys Can Take Their Grandchildren To See Snow -- March 12, 2015

As of February 12, 2015, according to The Washington Post, the five snowiest cities in the US, this winter (with "normal" at this point in time):

• Syracuse, NY: 74.7 (87 inches)
• Boston, MA: 78.5 (27.4 inches) -- WOW!
• Erie, PA: 85.9 (73.6 inches)
• Buffalo, NY: 86.4 (68.8 inches)

And the snowiest city in the US, so far, this year .... drum roll ...

• Worcester, MA: 92.1 (40.6 inches) -- WOW!

Obviously the Kennedys won't have to travel far to show their kids and grandkids snow.

However, Syracuse.com is reporting:

We keep hearing about Boston and Massachusetts getting so much snow that people are diving out second-story windows.

We've heard about Syracuse being the center for last month's cold and snow. Who really has the most snow in the United States?

Lewis County's village of Copenhagen: 256.2 inches.

Copenhagen is in New York State. 

Syracuse.com's Glenn Coin took a ride up there Friday to let you see what it's like to live in a place that's has received more than 21 feet of snow.

We determined that small village got the most snow in the nation by gathering reports from more than 20,000 places in all 50 states collected by NOAA's Regional Climate Centers.

We also created a database that will let you look up snowfall totals throughout the nation, filtering by place and/or state.

See database at the linked article. 

Idle Chatter; Emerald Oil May Be Just One Of The Biggest Movers Today -- March 12, 2015.

Tweeting right now:

Iceland says it is dropping bid for EU membership - @AFP

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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.

Let's see. Two days ago the market drops 300 points and pundits said it was because the Fed might possibly raise rates ever so slightly, and now today the market is up about 200 points because investors, it appears, forgot that story, that the Fed might possibly raise rates ever so slightly.

Obviously it's all about taking profits two or three days ago -- and making up some flimsy explanation, and once the market was driven lower, the same folks moved in and bought. Interestingly, all the headlines today over at Yahoo!Finance seem more negative than the news we saw two days ago.

Emerald Oil may just be one of the biggest movers in the market today:

WTI is down today; all the news about oil seems more negative today, and yet Emerald Oil is up almost 14% after reporting yesterday. Two thoughts: a) volatility in the oil and gas sector is the name of the game, right now; and, b) at some point, we will see the "Hillary re-set."

There were thirteen (13) new permits yesterday for North Dakota -- not trivial. Missouri River Resources will be putting in four short laterals in the same 320-acre drilling unit in Squaw Creek.

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Apple

From Bloomberg:

Yes, I Saw It -- Please Don't Send Me The Link -- March 12, 2015

Here's the link for the story: http://www.wsj.com/articles/crude-oil-price-collapse-takes-toll-on-willston-1426184505?mod=WSJ_hp_RightTopStories.

Meanwhile, reported earlier, at this very blog:

Job fair in Williston had great turnout. 

I think this is going to be the most interesting two years (2015 - 2017) in the Bakken since the boom began in Montana in 2000 and in North Dakota in 2007. You said it, or someone else said it, the roughnecks are the most flexible workers to be found. If they banked some of their money, they can take a lower-paying job now and wait for the boom again. In addition, some of those roughnecks will learn to build their own business, their own boss.

Huge NGL Capacity Increase In The Bakken -- ONEOK -- March 12, 2015

Link here; this is from the March, 2015, presentation. Williston Basin slides, #14 - #18.

Reiterates flaring goals in North Dakota:

• 23% by January 1, 2015
• 15% by January 1, 2016
• 10% by October 1, 2020

Still plenty of natural gas to be captured and flared in the Williston Basin

• currently processing capacity: 600 million cubic feet/day
• by 3Q16: 980 million cubic feet/day 
• represents a 63% increase in processing capacity

Update on Bear Creek

• increase CAPEX from $230 million to $330 million
• 80 million cf/d
• on-line: 3Q16

Pipeline to connect Bear Creek to Bakken NGL pipeline

• increase CAPEX from $35 million to $45 million
• to be completed by 3Q16

Update on Lonesome Creek

• increase CAPEX from $550 million to $680 million
• 200 million cf/d
• on-line: 4Q15

Bakken NGL Pipeline expansion

• expanded capacity from  60,000 bpd from 135,000 bpd; completed 9/14
• will expand again; from 135,000 bpd to 160,000 bod by 2Q16
• connects third-partts and Sage Creek in Powder river Basin to Bakken NGL Pipeline which connects to the Overland Pass Pipeline Expansion (ONEOK with 50% interest)

Natural Gas Fill Rate -- Gap Widens -- March 12, 2015

Natural gas fill rate (a dynamic link): -198.

Again, at the link, scroll to the bottom of the page, and look at the graph. I find this absolutely incredible. The gap is widening -- between 5-year average and current draw. See screenshot below.

Brent-WTI Continues To Widen; Thursday -- March 12, 2015

Active rigs:

	3/12/2015	03/12/2014	03/12/2013	03/12/2012	03/12/2011
Active Rigs	111	193	187	201	173

RBN Energy: Moving Marcellus natural gas through New England, to Canada.

As if there weren’t enough reasons to add new natural gas pipeline capacity through New England, it’s time to consider another: the Sable Island and Deep Panuke gas production areas off the coast of Nova Scotia are quickly losing their oomph, and soon the Canadian Maritimes will need to rely more heavily on gas from other, more distant sources, including the Marcellus. Developing pipelines to move large volumes of Marcellus gas through New England to New Brunswick and Nova Scotia will not be easy though. Today we continue our look at the challenges of supplying gas to New England and its northern neighbors.

The gas supply/demand dynamic in the Canadian Maritime provinces of New Brunswick and Nova Scotia adds another layer of complexity to the situation in New England, which already struggles with gas supply during very cold winter days. The Sable Island Offshore Project (SIOP) and Deep Panuke discoveries once were viewed as the next big things for New England gas supply. SIOP started producing in December 1999, and was the first to use the 800 MMcf/d Maritimes & Northeast Pipeline (MNP), which runs 730 miles from Goldboro, NS to near Boston. SIOP for a time was a big deal, producing more than 350 MMcf/d through most of its first 10 years.

But in the past five years production has steadily declined; in January 2015 it produced only 175 MMcf/d, and gas flows are expected to continue falling until SIOP is shut down a few years shy of its predicted 25-year lifespan. Deep Panuke had been seen as a supplement to--and eventual replacement for—SIOP, but it’s turned into something of a disappointment. For one thing, Deep Panuke came online more than three years behind schedule, producing its first gas in August 2013, by which time Marcellus production was approaching 12 Bcf/d (Marcellus/Utica production now tops 19 Bcf/d). For another, Deep Panuke’s production levels—originally targeted at 400 MMcf/d, then dialed back to 300 MMcf/d—fell short of expectations.

Production peaked in January 2014 at 282 MMcf/d (teal green layer) and owner Encana Corp. has since decided to focus Deep Panuke production on the winter months (when gas demand and prices are higher). In February 2015 Encana also reduced its estimate for remaining gas reserves at Deep Panuke to 80 Bcf, from its earlier estimate of 200 Bcf. All this suggests that offshore Nova Scotia gas production will be playing a smaller and smaller role.

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EIA Note

From the EIA today (dynamic link):

The decline in spot oil prices in the last half of 2014 and first month of 2015 has reduced oil and natural gas production tax revenues in some of the largest oil- and natural gas-producing states…Texas, North Dakota, Alaska, and Oklahoma are four of the five top oil- and natural gas-producing states, and they derive a significant share of their unrestricted operating revenues from taxes on oil and natural gas production. Although California produces more oil than both Alaska and Oklahoma, its economy is much larger, making it relatively less affected by changes in oil and natural gas prices and production.

Well, that's pretty much stating the obvious, but I had forgotten that California produced more oil than both Alaska and Oklahoma. Something to think about.

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Brent-WTI Continues To Widen

It looks like the Brent - WTI continues to widen. Brent up slightly; WTI down due to so much production; constrained capacity. It's hard to believe the spread will not worsen. Saudi is gradually (and quietly) raising its prices, but that will hardly affect WTI. Two cartels: the OPEC (mostly Saudi) cartel and the US cartel. 

The Job Spin -- March 12, 2015

The spin from Bloomberg:

The number of Americans filing for unemployment benefits declined more than forecast last week, returning to a level that’s consistent with an improving labor market.

Initial jobless claims dropped 36,000 to a three-week low of 289,000 in the period ended March 7 from a revised 325,000 in the prior week, a Labor Department report showed Thursday in Washington. The median forecast of economists surveyed by Bloomberg called for 305,000 new applications. 

Another report Thursday from the Commerce Department showed retail sales unexpectedly declined for a third month in February. Purchases fell 0.6 percent after a 0.8 percent slump.

The four-week average of claims, a less-volatile measure than the weekly figure, fell to 302,250 from 306,000 the week before.