Tuesday, March 31, 2015

Idle Rambling On A Tuesday Night -- March 31, 2015

No matter where I lived I would brag about it. No matter where I lived, whether I loved it, hated it, or somewhere in between, I would brag about it and tell others it was just awesome, and the best place I've ever lived. So when I write that where I'm living now is absolutely incredible, take it for what it's worth.

Serving 30+ years with the US Air Force, I've lived in some pretty awful spots, I suppose, but wow, looking book, I don't recall one bad assignment. Rhein-Main Air Base, Germany, might have been the least rewarding -- we were there only ten months -- hardly long enough to do much -- but then again, wow, we did a lot even there, now that I think about it.

Now we are on the northwest side of the DFW airport -- I was thinking about that earlier today -- it seems I've lived on or near runways my entire adult life. It's somewhat ironic that we ended up at the end of another pair of runways. While watching our middle granddaughter at soccer practice, I can watch the planes coming in at the end of day -- and it gets very, very busy between 5:00 p.m. and 8:00 p.m.

I've done a lot of cross-country driving in the last five years. I've mentioned this before. The areas with the most construction in the US, it seems, are in the Bakken, and in Texas (especially on the northwest-north-northeast arc around the north end of the DFW airport); it's absolutely incredible. It is hard to imagine that there are could be any other spot in the US where there is so much land devoted to distribution centers around an airport. Certainly the Frankfurt airport in Germany would have a comparable (probably more) distribution centers, but they would be hidden among other built-up areas. But here on the flat prairie around Texas, they spread everywhere, literally as far as the eyes can see.

One would have thought most of the development would have ended years ago when the airport was first built, but all indications are that the metroplex -- at least the north side continues to grow beyond expectations. Toyota recently moved their US operations from California to Plano, Texas, just north of the airport.

While strolling our youngest granddaughter today -- on my usual daily 3-mile walk with her while my wife is in California -- I filmed a typical outdoor mall that was springing up in our neighborhood. I think they broke ground on this project less than three months ago. This is not atypical; these outdoor malls are popping up everywhere on the north side of the metroplex. I'm having dinner five miles away from this particular site this evening and a similar mall is almost complete just across the street.

Mall Construction, Euliss, Texas

The energy in this area seems so much different than what we saw in the Boston area where our granddaughters spent the last four years. I don't recall much construction up there at all. I remember, on the other hand, reading all the articles about self-interest groups trying to stop more building.

I was reminded of all this when a reader sent me the link to this article: The Northeast, despite highest gas costs, resists more pipelines. The Concord Monitor is reporting:
There is near universal agreement that the Northeast has to expand its energy supply to rein in the nation’s highest costs and that cheap, abundant, relatively clean natural gas could be at least a short-term answer.
But heels dig deep when it comes to those thorniest of questions: How and where? Proposals to build or expand natural gas pipelines are met with an upswell of citizen discontent.
At the end of last year, a Massachusetts route selected by Texas-based Kinder Morgan generated so much venom that the company nudged it north into New Hampshire – where the venom is also flowing freely.
During this winter’s town meetings, a centuries-old staple of local governance in New England, people in the nine towns touched by the route voted to oppose the project. That Northeast Direct line is one of about 20 pipeline projects being proposed throughout the Northeast, where savvy environmental and political forces combine with population density to provide a formidable bulwark.
There’s another reason the loudest protests are all coming from the region: They’re where the gas is, waiting just east of the gas-rich Marcellus Shale region. “Everyone seems to know the Northeast has a pipeline capacity problem, but not many seem to be willing to make many concessions to fix that problem,” said Andrew Pusateri, senior utilities analyst for Edward Jones.
And these are folks who pay a lot to stay warm in the winter and keep the lights on in summer. According to the U.S. Energy Information Administration, New Englanders paid $14.52 per thousand cubic feet of gas in 2014, compared with $10.94 for the rest of the nation.
ISO-New England, which operates the region’s power grid, said in its 2015 Regional Electricity Outlook that natural gas availability is “one of the most serious challenges” the region faces as more coal and oil units go offline.
And yet, the "northeast" folks resist these pipelines.

If I were Kinder Morgan I would walk away and have the folks call me when they are ready to do something.

I saw the same thing when we stationed in England. The joke was that the English still lived in the 1950's and were working half-time to catch up. In fact, England seemed to becoming more of a museum-country than anything else.

A lot of Californians are moving to Texas. A lot of folks in the northeast are moving to Texas. If I "had all the money in the world," I would have a home on Cape Cod, probably Provincetown, we enjoyed it that much. I feel badly for the folks that don't have "all the money in the world" who live in that area of the country. The Elizabeth Warrens won't freeze but a lot of other folks will this next winter. 

The Bakken Still Has Legs -- March 31, 2015


April 1, 2015: the more I thought about, the more I thought this might be the most important / most interesting story of the week, the story below about "the Dickinson refinery is not expected to stabilize diesel prices."

So many story lines. First, the "refinery" (more about that later) was completed at all -- the first new refinery in the US in decades. Second, the amount of diesel if produces is a "drop in the bucket" with regard to how much diesel North Dakota farmers use, especially at harvest. Third, it reminds us how vibrant / huge the North Dakota agricultural industry is. Fourth, the MDU-Calumet partnership and how that plays into the national refinery "grid" and CBR.

After the original post below, I received a nice note from Don. The note, heavily edited to fit the story lines follows:
The "Dickinson refinery" is technically a distillery and NOT a refinery. North Dakota state usage of diesel is 53,000 bpd and is expected to grow to 75,000 BPD in 2025. The plant will be referred to as a "topping” plant because it is an early stage refinery that refines only certain petroleum components found in the crude oil. As such, it does not meet the full definition of a refinery that processes all petroleum components found in the crude oil feedstock that comes into the plant.
"It’s called a ‘topping plant’ because, in essence, it strips out the easily refined components, processes them and ships the remaining components off to other refineries for complete processing,” he said. "Topping plant facilities are typically smaller than full-scale refineries and are usually located near the primary market for their key product.” 
What is not refined is put in tank cars and shipped to Superior Wisconsin, where Calumet has a refinery..   remember there is a CBR  unit right next to the MDU plant. 
Original Post
This is almost bizarre.

This AP story was picked up by the Washington Times: Dickinson refinery not expected to stabilize diesel prices.

Give me a break. This is a 20,000 bopd diesel refinery -- hardly a rounding error among US refineries. This was simply a local entrepreneurial story; someone saw a local need and took advantage of it. It took years to get it up and running -- although the fact that it was completed at all is probably the real story.

And this story gets picked up by The Washington Times -- must have been a slow day in DC on the day this was published.

The Washington Times/AP is reporting:
A new oil refinery near Dickinson is expected to begin operations within three months, but officials don’t expect it to stabilize the price of diesel fuel during harvest.
The Dakota Prairie Refinery is expected to produce nearly 300,000 gallons of diesel fuel each day. It will be sold locally, but MDU Resources Group spokesman Rick Matteson [says] that the amount is “a drop in the bucket” compared to the demand.
North Dakota State University Assistant Professor David Ripplinger also says the refinery will have little to no impact on what farmers pay for diesel, though he says it might help ease supply disruptions. 
Wow, even regionally it's a drop in the bucket. So, why didn't they build it 10x bigger? Let's hope this was a trial run -- time to think much bigger.

Again, I'm getting a feeling for just how big the energy picture is in North Dakota, not just the "Bakken," but the energy picture driven by agriculture. 

Isn't This Interesting -- Active Rigs Increase Over 3% -- March 31, 2015; Twelve (12) New Permits; Eighteen (18) Producing Wells Completed; OXY USA With Six (6) OXY USA Wells; BR With Two Big Wells

Active rigs:

Active Rigs99194188206168

Wells coming off the confidential list on April Fool's Day:
  • 21386, 1,905, White Butte Oil Operations, Panzer 2-20MLH, Antelope, TF second bench, 3-well pad, two dual laterals, consisting of two 4,504 - 5,234' long laterals drilled to the south; the first later accessing the TF 2 was completed November 11, 2014; the second lateral penetrated the Middle Bakken was completed November 27, 2014; the second curve was landed at 10,972 feet into the Middle Bakken, after drilling the Three Forks lateral and then coming back and milling a window in the casing of the vertical hole; the initial curve was landed into the deepest of the two targeted intervals; very little background gas (20 - 50 units) were noted in the first half of the first lateral; lack of permeability and porosity suggested that a strong response to hydraulic fracturing will be needed to unlock the TF 2. Despite the low levels of drilling gas, other wells from the area drawing from the Sanish pool have performed admirably. The ideal target zone (Middle Bakken) was defined as a 20-foot interval; background gas much higher at 1,000 to 1,500 units; even averaging 2,500 units during connections. Summary: the Panzer 2-20MLH was the first of 3 wellheads with 6 total lateral objectives to be compled on the panzer pad, with the cmoplete dual-lateral well reaching completion onf November 27, 2014. The TF2 appears to be less promising than the middle Bakken in this area. The spacing unit is 320 acres; this was originally a Slawson permit; this permit has been renewed at least three times; original Slawson permit was dated 9/1/11. See graphic and spacing below.
  • 26769, 526, EOG, Mandaree 134-05H, Squaw Creek, one section, t10/14; cum 49K 1/15;
  • 26779, 1,014, EOG, Mandaree 17-05H, Squaw Creek, one section, t10/14; cum 69K 1/15;
  • 28666, 2,341, QEP, Johnson 4-9-4BH, Grail, t2/15; cum 42K 2/15; 28 days in February;
  • 29231, drl, Statoil, Heen 26-35-4TFH, Todd, no production data,
Two (2) Hess Stanley permits canceled.

Eighteen (18) producing wells completed:
  • 28264, 5, Denbury, CHSU 24-23NH 15, Cedar Hills, a South Red River B well, t8/14; cum 6K 1/15;
  • 28905, 1,441, Oasis, Harbour 5601 42-33 2B, Tyrone, t2/15; cum --
  • 28352, 2,445, BR, CCU Pullman 1-8-7TFH, Corral Creek, t2/15; cum --
  • 29218, 1,643, BR, CCU North Coast 4-8-23TFH, Corral Creek, t3/15; cum --
  • 28551, 1,057, XTO, HM Hove 34X-33C, West Capa, t3/15; cum --
  • 28650, 1,701, XTO, HM HOve 34X-33H, West Capa, 4 sections, t2/15; cum --
  • 29061, 964, Whiting, Barb W. 11-6TFH, Sanish, 1 section, t2/15; cum --
  • 25849, 1,223, Whiting, Elsie Bartleson Federal 14-29TFX, Sanish, ICO, t2/15; cum --
  • 28581, 226, OXY USA, State 4-21-16H-143-96, Fayette, t3/15 cum --
  • 28759, 854, OXY USA, Raphael Stroh 3-13-24H-143-97, Fayette, t2/15; cum 14K 1/15;
  • 28758, 963, OXY USA, Raphael Stroh 4-13-24H-143-97, Fayette, t2/15; cum 15K 1/15;
  • 28757, 633, OXY USA, Kenneth Stroh 4-12-1H-143-97, Cabernet, t2/15; cum 13K 1/15;
  • 28582, 438, OXY USA, Schneider 2-28-33H-143-96, Fayette, t2/15; cum 3K 1/15;
  • 28583, 661, OXY USA, Schneider 3-28-33H-143-96, Fayette, t2/15; cum 4K 1/15;
  • 29124, 633, CLR, Kennedy 3-31H, Dimmick Lake, 4 sections, t3/15; cum --
  • 29123, 605, CLR, Kennedy 4-31H1, Dimmick Lake, 4 sections, t3/15; cum --
  • 29122, 639, CLR, Miles 3-6H, Dimmick Lake, 4 sections, t3/15; cum --
  • 29121, 567, CLR, MIles 4-6H1, Dimmick Lake, 4 sections, t3/15; cum --

Twelve (12) new permits --
Operators: XTO (6), BR (3), Hess (3)
Fields: McGregor, Elidah, Dimmick Lake, Robinson Lake


26769, see above, EOG, Mandaree 134-05H, Squaw Creek:

DateOil RunsMCF Sold

26779, see above, EOG, Mandaree 17-05H, Squaw Creek:

DateOil RunsMCF Sold

28666, see above, QEP, Johnson 4-9-4BH, Grail:

DateOil RunsMCF Sold

Graphic and Spacing for the Panzer Well-Pad

News From All Over -- March 31, 2015

Well, that was it. It's a wrap. The US-Iran-French-Chinese-et-al talks have come to an end. A "general statement" will be released later and the group will re-assemble in June, 2015.

Today's EIA Blurb

And here it is:
For the first time, EIA is providing monthly data on rail movements of crude oil, which have significantly increased over the past five years. The new data on crude-by-rail (CBR) movements are integrated with EIA's existing monthly petroleum supply statistics, which already include movements by pipeline, tanker, and barge. The new monthly time series of crude oil rail movements includes shipments to and from Canada and dramatically reduces the absolute level of unaccounted for volumes in EIA's monthly balances for each region…

Total CBR movements in the United States and between the United States and Canada were more than 1 million barrels per day (bbl/d) in 2014, up from 55,000 bbl/d in 2010. The regional distribution of these movements has also changed over this period. --- EIA 
Well, that was helpful. 

In other news, the sun came up in the east today.


The fourth section of The Wall Street Journal today is "Business & Environment." Lots of EPA stuff, green energy stuff, lots of short interviews with movers and shakers. After going through the four or five pages of interviews very, very quickly, I was left with these notes:
  • green energy folks talk a lot in generalities; not a lot of facts or figures
  • everyone in the know agrees that renewable energy accounts for 1% of all US energy
  • think tank representative on renewable energy: "[for solar] there are a range of subsidies, and they are very, very substantial. My back-of-the-envelope calculations of my own system is about two-thirds of the cost is subsidized."
  • as in oil, there are sweet spots when it comes to solar -- the US is not in the sweet spot; Chile is
  • the elite, the rich can personally afford solar panels on their roofs, mostly as tax credits
  • Lisa Jackson over at Apple is still unintelligible
  • when Apple talks about their green energy successes, they are talking apples and oranges (US and overseas) -- their US carbon footprint represents 2% -- two percent -- of their total global carbon footprint (they manufacture almost everything overseas; they have non-carbon-producing retail stores in the US)
I did not read the "Utilities Adapt to a New Era," but I did note the graph that depicts global energy growth over the next 25 years:

  • nuclear power will grow the most: 90% -- probably in China
  • natural gas will grow almost as much: 88% -- advantage -- the US
  • not only is coal still the most important, but coal energy will grow a whopping 51%
  • solar and wind will more than double -- and will approach a third of natural gas energy
  • the amount of energy that will be needed in 2015 is astounding
In another interview (which I can't find on-line but is in the print edition), Robert Murray discusses coal. He notes that "China burned four billion tons last year, a new 500-megawatt power plant, every year. Australia killed their carbon tax. They're going back in coal world-wide."

For The Archives

New York Times -- as US and Iran make deals, Saudi makes its own moves.
As America talks to Iran, Saudi Arabia is lashing out against it.
The kingdom, Iran’s chief regional rival, is leading airstrikes against an Iranian-backed faction in Yemen; backing a blitz in Idlib, Syria, by jihadists fighting the Iranian-backed Assad regime; and warning Washington not to allow the Iranian-backed militia to capture too much of Iraq during the fight to roll back the Islamic State, according to Arab diplomats familiar with the talks.
Through Egypt, a major beneficiary of Saudi aid, the kingdom is backing plans for a combined Arab military force to combat Iranian influence around the region. With another major aid recipient, Pakistan, Saudi Arabia is also expected to step up its efforts to develop a nuclear bomb, potentially setting off an arms race in the region.
Foreign Policy -- How France became an Iran hawk.
France’s policy is dictated by a set of principles with regard to nonproliferation that have guided administrations on both sides of the political spectrum in the talks with Tehran since 2002. And the tension with Washington is just one expression of a larger disagreement between the two countries over U.S. strategy in the Middle East.
Differences between Washington and Paris have been quietly brewing for months. The French feel that they are being kept out of the loop in critical discussions. The multilateral framework of Iran and the P5+1 (the five permanent U.N. Security Council members plus Germany) has turned into a bilateral discussion between Iran and the United States.
At the end of his administration, the president will have thrown everyone under the bus except, a) Valeri Jarrett; b) Iran; and, c) environmental fanatics.

Port Of North Dakota Announces Expansion -- March 31, 2015

KXNET is reporting:
Drilling rig numbers and oil prices are slowing down, but the industrial park in Minot is picking up speed.
Promoters are looking to a 3,000-acre expansion with developing the first 120 acres this year with eight miles of railroad track for easy exportation from the business to the Port of North Dakota on the main track less than a mile away.

Tuesday -- March 31, 2015

Active rigs:

Active Rigs96194188206168

RBN Energy: Infrastructure development in the Marcellus / Utica.
Natural gas liquids production in the Utica and “wet” Marcellus has taken off like a rocket, and all that ethane, propane, butane and natural gasoline needs to be either moved out of the region or consumed there. That presents a real operational challenge to midstream companies, mostly because the Upper Ohio River Valley offers very little of the NGL storage capacity that Mont Belvieu—the center of the NGL universe—has in spades. Storage is the mechanism that helps balance out supply and demand on any given day.  How can the nation’s fastest-growing NGL production play function without the luxury of significant NGL storage? Today, we continue our look at infrastructure development in the region.
It's All About American Drivers

Update on crude oil storage "crisis": Reuters is reporting -- 
A month ago, it seemed inevitable: a massive global oversupply of crude oil production would overwhelm storage tanks in Oklahoma and fill supertankers off Singapore.
Now, there are growing signs that the U.S. oil market can avoid the doomsday scenario in which it runs out of room to stockpile surplus crude, a development that oil traders worried would send crude prices into another tailspin.
I'm still looking for an all-time gasoline consumption record over the 3-day Memorial Day weekend here in the US.