Tuesday, March 17, 2015

Short Wednesday Agenda For White House Wednesday -- March 17, 2015

___ Congratulatory phone call to Mr Netanyahu (this is almost hilarious)

    Breakfast with daughters; read "Daily Intel Briefing"

     fill out March Madness bracket; pick obvious winner   

___ Golf

___ Washington National Cathedral, Evensong -- the Cathedral choristers sing Choral Evensong on Monday through Thursday at 5:30 pm. The Men of the Choir join the choristers on Wednesday and Thursday afternoons.


It's too bad the White House had to cancel Evensong tonight (March 18, 2015). I don't think there is anything so rewarding, so peaceful, so "relaxing" as Evensong. When I was in Yorkshire on and off during my last seven years in the Air Force, I often attended Evensong on Sunday evenings at Ripon Cathedral. It truly was one of the high points of my week. This brings back wonderful memories.

Evensong, Ripon Cathedral

Chinese Demand For Oil Highest Since 2012 -- Not Surprising -- March 17, 2015; Meanwhile, COP Expects Production To Increase 11% Over Next Three Years; Africa's Biggest Oil Producer Hit Hard

A reader caught this, sent it to me. Platts is reporting:
China's apparent oil demand rose 2.6% over the first two months of this year to 83.92 million mt or an average 10.43 million b/d, Platts estimates showed Monday, March 16, based on recently released government data.

This is the highest rate of growth over the period since the 5.7% recorded in 2012.

Last year, there was a 0.6% year-on-year contraction in China's apparent oil demand over January to February.
When I saw that, I replied to the reader:
I wrote on the blog, I think, or personal e-mail to someone, that it will be interesting to see consumption of oil at it hits new lows.
Common sense tells me human nature is such that people will conserve less when it is so cheap.
I am very, very sensitive to the price of gasoline and do what I can to limit mileage when gasoline is expensive, but for the past few months, I have truly enjoyed driving, not worried about price of gasoline.
It will be interesting to see what American drivers do over Memorial Day weekend. I think the US sets a record of gasoline consumption this Memorial Day weekend. China, it appears, is doing its best to live up to human nature -- using more oil when it is so inexpensive. Smile.
CAPEX Cut -- Production To Rise Over At COP

Reuters/Rigzone is reporting:
ConocoPhillips expects production to climb 11 percent to touch 1.7 million barrels of oil equivalent per day (mmboed) in 2017.
The company, whose forecast excludes output from Libya, produced 1.532 mmboed in 2014, a 4 percent rise from 2013.
ConocoPhillips said on Tuesday it expects output to grow 2-3 percent in 2015. It did not specify a growth rate for 2016.
The company, which cut its 2015 capital budget by $2 billion to $11.5 billion in January, said it expects to maintain spending at the new level for the next two years.
Nigeria To Cut Production

Reuters/Rigzone is reporting: Low Prices Will Hamper Nigeria's Bid To Boost Output Consistently.
Low oil prices will hamper Nigeria's bid to boost output to 4 million barrels per day (bpd), Oil Minister Diezani Alison-Madueke was quoted as saying on Tuesday at an oil and gas conference in the capital Abuja.
"Flexibility in CAPEX and funding in general will be further constrained in the year 2015."
Africa's biggest oil producer has been hit hard by global oil prices that have around halved since June, because it accounts for up to 80 percent of government revenues and about 95 percent of foreign reserves.
Individual companies will get hit hard in the US, but the country will do fine, despite the drop in oil prices. Saudi Arabia has huge cash reserve to weather the slump in oil prices. China is loving the cheap oil to fill up its Strategic Petroleum Reserve. The counties that can least afford it -- west Africa, Venezuela, will be hit very, very hard. 

However, the graphic below is interesting. This shows the amount of oil imported into the US by the various countries, in thousands of barrels per month. Note the significant increase in Nigerian oil imported into the US for the most recent reporting period:

Random Update Of Producing Wells -- March 17, 2015

Some of the wells show unusual production patterns in December, 2014, - January, 2015, time-frame. Many (most? all?) of Statoil's Pyramid wells showed unusual production (almost none) in August, 2014.  Nothing remarkable in the big scheme of things.

Burlington Resources Bryce wells have been updated. One Bryce remains off-line:
  • 18177, IA/1,844, BR, Bryce 31-5H, t10/09; cum 255K 11/13; minimal production since 9/13; very minor amounts as recently as 3/14; nothing in the filed report to provide any explanation
CLR's Atlanta wells have been updated.

WPX's Alfred Old Dog wells have been updated.

CLR's Hawkinson wells have been updated.

Statoil's Pyramid wells have been updated.

BR's Teton / Kings Canyon wells have been updated (nothing new; all remain confidential).

Zorro wells, QEP, in Grail oil field have been updated.

A Note to the Granddaughters

I finally finished Alison Weir's Eleanor of Aquitaine, an excellent biography. I told May earlier today that awhile back I had grown tired of Alison Weir -- she seemed to have a cottage industry with British history, British kings and queens, back in the day. But I have to admit, she is very, very good. I did not realize how good she was until reading Eleanor of Aquitaine at the same time reading Dan Jones' new book, The Wars of The Roses. His style is completely different; at this point I do not care for him, but now that I have completed Weir's Eleanor, I can go back, start over with The War of the Roses and see if it grows on me.

However, I am now starting the book I've been looking forward to for some time, Duveen: A Life in Art, by Meryle Secrest, c. 2004. It was his art collection that Norton Simon bought in toto for his Pasadena museum. Ever since visiting the Norton Simon museum last summer, I've been eagerly looking forward to reading this book. Hardcover, $35; no longer sold by Amazon except through a third-party dealer, for about $5.00 and shipping and handling. Quite incredible.

The story begins with Duveen's father in the back streets of Hull, in Yorkshire. I spent a fair amount of time in Yorkshire in my last years in the Air Force, and know Hull well. It's an industrial town now and not particularly noteworthy, I suppose, for the typical American tourist. Interestingly enough, putting together my grandfather's history, it is very likely my paternal grandfather, when he emigrated from Norway to America came through Hull. He would have taken the boat from Trondheim to Hull on the east coast of England; then a train across England, to catch a boat from Liverpool to Ellis Island. It is known that my Norwegian grandfather received "free" passage from Liverpool to America in exchange for taking care of the horses that were on board ship, in one of the lower decks.

48-Acre Multi-Use Development Project To Break Ground This Year -- March 17, 2015

KXNews is reporting:
  • a 48-acre development is set to break ground this year; easily the largest project ever to be built in the small town of Belfield
  • a multi-use development with hotels, restaurants, travel centers, convenience stores, and several retail outlets
  • Belfield Crossing will be located just North of Interstate 94 along Highway 85
  • construction of the basic infrastructure to begin this year with total completion in three to four years
  • The northern-most part of the development will consist of retail, restaurants, and a truck stop

Here We Go Again -- Solar Power In The Dead Of Winter In A Northern Latitude State -- March 17, 2015

Disclaimer: I often make simple arithmetic errors. There may be errors below. If this is important to you, a) go to the source; and, b) check the numbers yourself. 

Folks may remember President Obama's visit to Standing Rock Reservation last year.  Today the AP is reporting that the reservation will get $1 million in federal funding for a $2 million solar project that will save the college about 20%/year or about $74,000 / year.

The $2 million will fund a 636 KW solar energy project --

$2 million / 636 KW = $2,000 million / 636 MW = $3.14 million / MW. That's in line with current costs of solar energy:
From an August 25, 2014, post, this is 30-second sound bite for "cost of renewable megawatt":
  • Solar: $3 million / MW
  • Wind: $2.5 million / MW
  • Natural gas: $865,000 / MW
A reader recently wrote to tell me that in ten years the cost of solar energy would reach "parity" with coal. It should be noted that coal is less expensive than natural gas (above) but in the same ball park. It's hard to sort out the "true" cost of coal energy in the US due to all the Agore fees.

But if a $2 million project (equating to $3 million /MW compared to $865K / MW -- natural gas) is going to save the college 20% ($74,000 / year), it begs the question: what in the world was the college using for energy?

The 636 KW is nameplate capacity; no solar project reaches nameplate capacity. 

North Dakota has lots and lots of natural gas and coal, but not a whole lot of sunshine in the middle of winter ... oh, never mind ... some smart folks have really thought this out...

At Least It's Hard To Catch

Another four Americans who have come in contact with the "hard-to-catch-disease" are being flown out of Ebolaland to the US. Reuters is reporting

Eight (8) New Permits; Tomorrow 5/8 Bakken Wells To DRL Status -- March 17, 2015

Active rigs:

Active Rigs110191185205170

Eight (8) new permits --
  • Operators: WPX (4), BR (3), XTO,
  • Fields: Van Hook (McLean), North Fork (McKenzie), West Capa (Williams)
  • Comments:
Wells coming off the confidential list Wednesday:
  • 27058, 875, HRC, Miller 157-101-12D-1-4H, Otter, t9/14; cum 51K 1/15;
  • 27939, drl, SM Energy, Davis 1-32H, Camp, no production data,
  • 28381, drl, XTO, McCoy 44X-23H, Siverston, no production data,
  • 28681, drl, CLR, Leonard 4-12H, Northwest McGregor, no production data,
  • 28765, 2,190, Newfield, Sand Creek Federal 153-96-21-28-3H, Sand Creek, t1/15; cum 26K 1/15;
  • 28924, drl, Slawson, Howo 5-33-4TFH, Big Bend, no production data,
  • 28989, 50, Legacy Oil, Legacy Et Al Berge 8-1H, North Souris, a Spearfish well, t11/14; cum 7K 1/15;
  • 28999, drl, CLR, Norfolk 6-1H1, North Tobacco Garden, no production data,
  • 29186, 817, Hess, EN-Nelson-155-94-2833H-8, Alkali Creek, t2/15; cum --
Seven (7) Fidelity (MDU) permits canceled:
  • Two in Stark County (Wagner, Ehrmantraut); five in Mountrail County (CB, Emily, Jerome, Peggy, and Oscar Anderson Family)
One (1) producing well completed:
  • 28054, 315, Slawson, Ironbank 4-14-13TFH, Stockyard Creek, t2/15; cum --

27058, see above, HRC, Miller 157-101-12D-1-4H:

DateOil RunsMCF Sold

28765, see above, Newfield, Sand Creek Federal 153-96-21-28-3H, Sand Creek:

DateOil RunsMCF Sold

ObamaCare For Investors -- March 17, 2015

In one of my self-directed investment vehicles, I am "allowed" to select the funds and allocations.

Every six months the company sends me the "returns."

In the screenshot below, one can see the entire list of funds available for selection.

By the name of the fund, one can probably get a pretty good idea what the fund is all about.

I have opined for the past three years that the health insurance industry will be the real winner with ObamaCare.

Look at the 1-year and the 5-year returns. I put two of them in bold so they would be easier to see.

Over the past five years, only one fund did better (real estate) than healthcare and that was marginal -- 16.88 vs 16.01, insignificant. High-cost catastrophic insurance is the best definition I have for ObamaCare.

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 at this blog.

The Paradox Basin


See this post.


February 2, 2018: petrolithium and the Paradox Basin.

August 14, 2017: The region is home to the Paradox Basin, which is estimated to hold between a quarter to a third of the nation's domestic potash resource.

June 29, 2016: BLM to okay 6,000 new Newfield wells (MDU no longer involved, after selling Fidelity).

December 17, 2015: random update on the Moab/Paradox Basin, from MDU perspective.

May, 2015: Cane Creek shale of the Paradox Basin, geology report/summary.

November 1, 2014: random update on the Moab/Paradox Basin:

An interesting thing happened after Fidelity Exploration and Production Co. started drilling near the entrance to Dead Horse Point State Park.
Cane Creek Well 12-1 let loose.
Without the aid of pumps or fracking, the oil just flooded out — more than 600,000 barrels in its first year, making it the nation’s most productive on-shore well in 2012.
The hydrocarbon bounty, however, includes unexpectedly large amounts of methane and other components of natural gas that Fidelity has to burn off because there is no way to get those fuels to market.
To solve its delivery problem, the company proposes an intensive network of pipelines that is fueling a backlash among red-rock recreationists and preservationists alike.
My understanding was that when this well hit in 2012, it was the largest onshore well in 2012 in the lower 48. In February, 2014, it was still flowing without a pump; I don't know if it still is.

April 13, 2014: Million-plus EURS in the Paradox Basin for MDU, far exceeding Fidelity EURs in the Bakken.

Original Post 

Ah, yes, the things I forget to link. I just noticed that among the myriad oil basins I have linked at the sidebar at the right, somehow I forgot to include the Paradox.

Here is the USGS pdf on the Paradox Basin, dated 2011.

Here are a few posts from the blog that are relevant:

WTI Nearing $40/Bbl -- March 17, 2015

I believe Citi said WTI could go to $20. They said that some weeks ago.

Off The Net For Awhile

When in Boston, I rode my bicycle regardless of the weather, including on the days the city was shut down due to snow. I didn't always ride far, but I rode almost every day.

Here in DFW metroplex this past "winter," I've gotten very lazy -- I didn't ride much during inclement weather.

To correct that, this will be the summer I dedicate to biking again. I will look on it as my last summer to bike. Hopefully that won't be the case, but after a long, dismal "winter" here in the DFW metroplex, I really look forward to some great biking weather.

So, with that, I'm off again. Have a great day, everyone. 

OXY USA Posts Another ... OXY USA Well -- March 17, 2015

Three of four wells go to DRL status, and OXY USA has another ... drum roll ... OXY USA well.

And The Blame Game Begins

Did misleading EIA statements send oil into freefall? OilPrice.com reports. I don't know if Oil Price has a history of archiving their articles. How this plays out is yet to be seen.

Printing Money

It appears to some that the only difference between Greece and the US is that the latter can print its own money. The US reached its debt limit this week. So has Greece.

Funny How Folks See Things

There will be a lot of discussion about ObamaCare's new numbers, but the fact remains: ObamaCare is high-priced catastrophic health insurance. The health care industry is going to do very, very well because of ObamaCare. Folks are paying high premiums but will seek less medical care because they cannot afford the deductibles or the co-pays. "Bad policies" -- those that consumers liked but health insurance companies did not like, were deemed "illegal" under ObamaCare and those were the policies folks lost.

The stories from the administration coming out now are to help sway the Supreme Court. IBD.com is reporting:
The Obama administration says more than 16 million have gained insurance, thanks to ObamaCare. But a closer look at the numbers shows they're once again playing fast and loose with the data.
A two-page report from the Dept. of Health and Human Services claims the uninsured rate fell from 20.3% to 13.2% since ObamaCare began.
Officials there cheered this news, with one saying that "nothing since the implementation of Medicare and Medicaid has come close to this kind of change."
It's not what it seems. To get to its 16 million number, HHS uses Gallup poll data — not the Census Bureau's far more comprehensive survey — for its calculations.
Gallup does show a drop in the uninsured rate. Although its numbers differ from the administration's, it finds that the rate dropped from around 17% in 2013, where it had been since 2011, to 12.9% in Q4 2014.
Whatever numbers are used, the administration conveniently overlooks the fact that those years of high uninsured rates were also when the economy was in the middle of Obama's jobless recovery.
I remember when I first started talking about the "Affordable Care Act," I was taken to task for calling it ObamaCare by Obama apologists who monitored the blog for accuracy. LOL. Now, "everyone" calls it ObamaCare .... except the White House. 

Disclaimer: this is not an investment site. Do not make any financial, investment, or relationship decisions based on what you read here or what you think you may have read here. Just remember, the health insurance industry wrote the Affordable Care Act. By the way, the editorial in yesterday's Los Angeles Times suggesting a middle ground as an option for the Supreme Court completely misunderstands the issue.

Update On Bakken -- Helms; Housing Starts Plunge; The Cheese Fell Off His Cracker A Long Time Ago -- March 16, 2015

The Bismarck Tribune is reporting:
“I think we’ve seen the worst of it,” Lynn Helms, director of the Department of Mineral Resources, said of layoffs.
As stockpiles of cheap oil -- waiting for better prices -- grow at storage facilities around the U.S., a storage shortage is mounting. North Dakota oil industry representatives predict the oversupply will have substantial affects on the workforce and the economy in the state.
Ron Ness, president of the North Dakota Petroleum Council, maintains that the financial strength of every company is going to be tested in the coming months.
State oil production declined 3 percent in January to about 1.2 million barrels per day, Helms reported Thursday. He said the production decline is coming as wells age and new wells are not replacing them.
Ness said it won’t be a freefall but production declines likely will persist. Companies need to complete 115 wells a month to hold production steady, according to Helms, who expects production to decline and rise in a cycle – three months of decline followed by a surge as unfinished wells are brought online.

The Los Angeles Times is reporting:
As millions of private employees lost their pension benefits in recent years, government workers rested easy, believing that their promised retirements couldn't be touched.
Now the safety of a government pension in California may be fading fast.
Feeling the heat is the state's huge public pension fund, the California Public Employees' Retirement System, known as CalPERS.
The fund spent millions of dollars to defend itself and public employee pensions in the bankruptcy cases of two California cities — only to lose the legal protections that it had spent years building through legislation.
The agency's most significant setback came in Stockton's bankruptcy case. The judge approved the city's recovery plan, including maintaining employees' pensions, but ruled that Stockton could have legally chosen to cut workers' retirements.
As the focus now shifts 400 miles south — to the city of San Bernardino's bankruptcy case — the pension fund faces a new legal challenge from two companies owed $50 million. The companies say it's illegal for the city to continue paying CalPERS to fund workers' pensions while they get nothing.
"This is significant," Tatum said. "It has put a chink in CalPERS' armor."
San Bernardino could be the first city in California to consider cutting worker pensions in a bankruptcy.
Housing Starts Plunged
 But It's Just Temporary

One word you don't want to hear when talking about housing starts: plunge.

The spin never quits -- bad news is always "temporary." CNBC is reporting:
U.S. housing starts plunged to their lowest level in a year in February likely as harsh weather kept building crews at home, in the latest indication that the economy hit a soft patch in the first quarter.
Groundbreaking tumbled 17 percent to a seasonally adjusted annual pace of 897,000 units, the lowest level since January 2014, the Commerce Department said on Tuesday.
January's starts were revised up to a 1.08 million-unit pace from the previously reported 1.07 million-unit rate. February's decline was likely a temporary setback for housing as permits for future construction rose 3 percent last month.
The Cheese Fell Off His Cracker A Long Time Ago

George Carlin on Johnny Carson

Tuesday -- Happpy St Patrick's Day -- March 17, 2015; Newfield Suspends Drilling In Utah's Uinta Basin

A word you do not want to hear used when describing housing starts: plunge.


Disclaimer: this is not an investment site. Do not make any financial, investment, or relationship decisions based on what you read here or what you think you may have read here.

From Yahoo!In-Play:

ConocoPhillips announced its 2015 to 2017 capital budget and growth outlook; co reduces annual capital expenditures to ~$11.5 billion, versus the co's previous plan of ~$16 billion: Co announced its 2015 to 2017 capital budget and growth outlook. Details of the 2015 to 2017 plan will be reviewed at the co's upcoming Analyst and Investor Meeting on April 8, 2015.

Greenbrier announces that it received new orders in its second quarter ended February 28, 2015 for 10,100 railcar units valued at $1.09 bln: Orders for the quarter include double stack intermodal cars, covered hopper cars primarily for grain transportation, refrigerated and insulated boxcars, gondolas and tank cars, both for transportation of crude oil and other commodity types.

Samson Oil & Gas reports February production was significantly higher due to a number of North Stockyard being returned to production: Co provides its monthly update. Co reports February production was significantly higher due to a number of North Stockyard being returned to production. All of the infill development wells drilled in North Stockyard during 2014 are now in a position to be produced, however given the low oil price, 6 of the wells will remain shut in pending the recovery of the oil price.
  • All wells in the North Stockyard field are currently being produced at lower than maximum capacity due to pipeline constraints and the weak oil price. 
  • All of the 17 drilled in fill wells in North Stockyard have now been fracked and cleaned out and are capable of producing however 6 are currently shut in, waiting on an improvement in the oil price.

Active rigs:

Active Rigs111191185205170

RBN Energy: Newfield suspends drilling in the Utah's Uinta basin.
Newfield Exploration - the largest crude oil producer in Utah’s Uinta basin - has temporarily suspended new drilling operations there in response to lower prices. Other producers in the region have reduced their drilling and capex budgets as well. The cutbacks stem in part from the extra logistics expense required to deliver and process the thick yellow and black “waxy” Uinta crudes that do not flow at room temperature. Today we describe how low prices are impacting Uinta basin production.
The Uinta Basin (pronounced you-IN-tah, sometimes spelled Uintah) located about 150 miles southeast of Salt Lake City in Northeast Utah, has produced crude oil since the 1950’s. As we previously described back in 2013, the strange looking yellow and black waxy crudes produced from the Uinta Basin resemble shoe polish at room temperature.
Since 2011 the basin has attracted a lot of producer interest with crude output increasing from new horizontal drilling as well as the use of enhanced recovery on older wells through water flooding. Production stood at about 50 Mb/d in January 2011 but has more than doubled since then to 110 Mb/d by the end of 2014 (source: Bentek). Granted that expansion pales beside the nearby Bakken crude boom that saw output jump threefold from 400 Mb/d to 1300 Mb/d over the same period, but it is significant when you consider the logistical challenges faced by producers to get their Uinta waxy crude to market and processing it. Those challenges arise from the fact that Uinta waxy crude does not flow unless it is heated and unlike Canadian bitumen, can’t be diluted using light hydrocarbons as diluent. 
Waxy crude also requires specialized refinery configuration to handle its high paraffin content that few refiners outside Utah have developed.  As a result, these crudes have traditionally been consumed close by at Salt Lake City refineries – delivered heated in special insulated trucks - placing a firm ceiling on production based on how much waxy crude those refineries can process.

Regular readers read this years ago -- accurately predicted -- this was the very first non-advertising supported blog to predict that ObamaCare heralded the demise of employer-provided health insurance. MarketWatch is reporting:
Could employer-provided health insurance be going the way of employer-sponsored pension plans?
Rick Lindquist, president of Zane Benefits, which specializes in individual health insurance reimbursement for small businesses, says: Not only could it happen; it’s happening already.
Lindquist and Pilzer’s Salt Lake City, Utah-based company stands to profit if employers shift from traditional health insurance and toward their defined-contribution reimbursement system. In that model, employees are given a flat amount of cash from their employers — say $500 a month — told to buy a health-care plan with it and that their firms will cover their medical costs.
Q: Why are employers moving away from offering health insurance?
Lindquist: There will be a massive shift; in fact, we’re in the middle of it. People categorize this as employers dumping health insurance. Yes, they stop offering insurance but they don’t stop offering benefits. They’re just changing they way they deliver them and replacing them with defined-contribution plans. It could save millions of dollars for employees and employers.
Q: How fast is this switch happening? A: In our book, we project that by 2017, the majority of small businesses that now offer health insurance will switch to defined-contribution. This is being led by small-business owners. But it doesn’t stop there. A few years ago, some big companies [Verizon and AT&T] leaked documents saying they were evaluating dropping health insurance plans.
Some big companies will drop their plans and that will have a snowball effect. We project that 90% of all businesses will drop offering health insurance plans in the next 10 years. Why don’t we see more big companies doing this? They don’t understand it. Plus, there’s a cost to make the transition: To avoid a revolt, you need to educate employees, which is hard. It will happen.
I predicted this would happen, though I thought I read somewhere the IRS / HHS said employers could not "manage" ObamaCare this way. Maybe I misread.....