Wednesday, April 1, 2015

Mideast Oil Companies Struggling -- A Big Shout-Out To Saudi Arabia -- April 1, 2015

Reuters/Rigzone is reporting:
Abu Dhabi National Energy Co (TAQA),  the state-owned oil explorer and power supplier, said on Wednesday it would slash its capital expenditure plans and costs after posting big losses in the fourth quarter on lower oil prices.
The company, 75 percent owned by the government of Abu Dhabi, would reduce its capex budget for this year by 39 percent on 2014 levels -- the equivalent of 2.5 billion dirhams ($680.7 million) -- and would implement a cost-cutting plan that would save 1.5 billion dirhams over the next two years, it said in its results statement.
Energy companies around the world have scaled back the amount of cash for expansion in response to an oil price which is down by around half since its peak in June last year, which has also pushed them to trim costs and focus on short-term returns.
TAQA's move comes after it reported a net loss of 3.63 billion dirhams for the final three months of 2014, according to Reuters calculations, wider than the 2.6 billion dirhams loss it reported in the corresponding period of the previous year.
Something tells me Abu Dhabi is not to happy with Saudi Arabia. Along with Venezuela, Russia, and a half dozen other countries. 

Whiting: Full Steam Ahead; Germany Joins New York State: Bans Fracking -- April 1, 2015

Reuters/Rigzone is reporting that Whiting says it an still grow at low crude oil prices
Whiting Petroleum Corp, North Dakota's largest oil producer, can remain profitable and increase production even at current crude prices, Chief Executive Jim Volker said on Wednesday.
The bullish comments come after weeks of uncertainty about the company's future following rumors it was about to be sold and that Volker would retire.
Those rumors, which left many on Wall Street concerned about the potential for a fire sale, were ultimately put to rest in a filing with the U.S. Securities and Exchange Commission last week that denied any transaction.
Volker declined to comment on the rumors on Wednesday, instead using a speech at the DUG Conference in Denver to tout Whiting's growth potential.
"In periods of low oil prices like we have today, we can still make money," Volker said, adding he is "rigging the company" to run with oil prices at $45 to $55 per barrel. Whiting is spending only $2 billion this year, about half 2014 levels.
Still, Volker said he is confident better technology and processes can help production rise in 2015.
"We continue to drive that well cost even lower," he said. Whiting became the largest North Dakota producer with its buyout of rival Kodiak Oil & Gas last December, helping it eclipse Continental Resources Inc for the top spot in the Bakken.
The deal gave Whiting more than 7,500 well sites to develop across North Dakota. For 2015, Whiting plans to use 13 drilling rigs, a number that could drop or rise depending on where prices go, Volker said.
The company, though, does not plan to close, or "shut in," existing wells as their economics, even at current oil prices, still fuel margins of at least $25 per barrel, Volker said.
Reuters/Rigzone is reporting Germany sets very high standards for fracking.
German Chancellor Angela Merkel's cabinet signed off on a draft law on Wednesday that imposes an effective ban on the controversial technique of fracking for shale gas.
Opposition is strong in densely populated Germany due to concerns about the risk of contaminating drinking water.
Anyone who thought the Germans would do something else hasn't been paying attention. The Germans like coal.

Coal Gasification Project In Odessa, Texas, Set To Break Ground Later This Year; Whiting To Use CO2 For Permian Basin EOR -- April 1, 2015

FuelFix is reporting:
A new power plant in West Texas that could transform coal into cleaner-burning natural gas is poised to break ground later this year, an executive in charge of the project said at a conference in Houston Wednesday.
The project, located on a 600-acre site in Odessa, uses coal as a feedstock for a 400 megawatt power plant. But instead of burning it, the plant uses a chemical process to first strip it of carbon, sulfur and mercury.
The result, project leaders say, is a hydrocarbon that can fuel the power plan but burns even cleaner than natural gas — even though it was derived from coal. The extra carbon dioxide that gets stripped away is sold to production company Whiting Petroleum, which can pump in underground through a process known as enhanced oil recovery that helps coax more hydrocarbons from the earth.
“We’re not actually burning coal; we’re unlocking hydrocarbons,” said Jason Crew, CEO of Summit Power, the Seattle-based company behind the undertaking dubbed the Texas Clean Energy Project.
The U.S. Department of Energy has awarded the project $450 million in federal grants. Even though the U.S. is moving to phase-out coal in favor of natural gas-fired plants and alternative energy sources, coal is still poised to be a vital source of energy for the U.S. and other countries for years to come, said  Jason Lewis, federal project manager at the U.S. Department of Energy’s National Energy Technology Laboratory.
The Odessa project is one of three carbon-capture projects in Texas.
  • The Petra Nova project, a joint venture involving NRG Energy Inc., is under construction in Fort Bend County. Technology added to an existing power plant is designed to capture carbon before it’s emitted into the atmosphere.
  • Air Products and Chemicals is capturing carbon from a hydrogen production facility in Port Arthur. All three projects have received federal support.

Hubbert's Curve And Peak Oil: An Inconvenient Truth -- Memo For Jane Nielson -- April 1, 2015 is reporting:
The United States hit a milestone last year that hasn’t been accomplished in over a hundred years. According to the U.S. Energy Information Administration (EIA), 2014 was the largest volume increase in oil production (including lease condensate) since record-keeping began in 1900.
U.S. crude oil production increased during 2014 by 1.2 million barrels per day (bbl/d) to 8.7 million bbl/d. On a percentage basis, the EIA stated that output in 2014 increased by 16.2 percent, the highest growth rate since 1940. Major thanks for the increase should go to the hydraulic fracturing and horizontal drilling operations in the tight oil plays in North Dakota, Texas and New Mexico.
Not exactly Hubbet's curve:

History Changing In Front Of Our Eyes

The New York Times is reporting that the oil glut is a boon to shippers, history changing in front of our eyes.
What’s happening with prices and distribution is a new chapter in the history of the oil industry. As with most products, the price of oil is based on supply and demand. But rather than any big slump in demand, the plunge in oil prices in the last year is more a result of a growing world supply — mainly from higher output in the United States and OPEC’s reluctance to cut production.
The lower price is in many ways stoking demand — particularly in big energy-importing countries like China and India, which are taking advantage of what may turn out to be a bargain opportunity to top off their petroleum reserves.
And so supertankers these days are making fewer relatively short jaunts from places like Gabon and Nigeria to the Gulf Coast of the United States, which no longer needs as much of their oil. Instead, the ships are making longer — and more lucrative — trips to India, China and elsewhere in Asia. Staging areas like the Malongo Terminal in Angola and ports as far from China as Venezuela and Brazil are also filling tankers that will deliver oil to Asia.
A huge shout-out to Saudi Arabia. Thank you on behalf of the billions of consumers worldwide. 

... And Harvard?

CNN Money is reporting:
Last week, 2,144 teenagers got the news they'd long dreamed of: they got accepted to Stanford University.
The cherry on top is that Stanford also announced it was expanding financial aid. The university said that no parents with an annual income and typical assets of less than $125,000 will have to pay a single cent toward tuition. The threshold for this aid was previously $100,000.
Stanford also said it will offer free room and board -- in addition to free tuition -- for those making less than $65,000, raised from the previous $60,000 threshold.

This is so awful on so many levels, but something brought me here. 

I Can Boogie, Baccara


My wife was born in Japan to a 19-year-old Japanese woman, Kathleen (her American name; I don't know if I ever knew her Japanese name) T******.

My wife came to the United States with her Japanese mother and her Hispanic father when she was two. I was unaware, until last evening when she told me, that when she was stationed with her father in Japan again, when she was eight or nine years old, she came in contact with her extended Japanese family again and remembers those days.

But after she returned to the states at the age of nine or ten, she never returned to Japan and never saw any member of her extended family again. Until last week.

I don't know the details but somehow through social networking, the daughter of my wife's mother's youngest brother -- a cousin -- living in San Diego learned that her cousin -- my wife -- was living in San Pedro, south Los Angeles. She contacted my wife this past week, and the two cousins met for the first time again after several decades of separation. My wife remembers that particular uncle as a most jovial/humorous prankster. As she described him, I immediately thought of May's brother who passed away some years ago; very young, and from a very non-descript but lethal viral myocarditis.

It turns out her cousin also married an American military man and eventually moved to the US, being stationed several places before she finally ended up in San Diego. Like many Japanese (and perhaps non-US) brides, she and he divorced. She raised her two (?) daughters and became a very, very successful entrepreneur in the San Diego area. Without mentioning the franchise, she bought into a franchise back in the day for $100; those franchises now cost around $150,000. [The franchise has to do with education, not fast food.]

Her uncle is still alive; he must be 75 years old or so, but he still sings karaoke twice a week. My wife's cousin telephone her husband and my wife and her uncle spoke to each for the first in fifty-some years. He remembered my wife very, very well, and said he "will hang in there, until she visits him in Japan."

I don't know if they Skyped or called the traditional way.

Where Did You Come From, Hot Chocolate

Oasis With Some Interesting News From The Bakken; ONEOK To Construct A Natural Gas Pipeline From The Permian To Mexico -- April 1, 2015

From Seeking Alpha:
  • Oasis Petroleum may create an MLP for a $200M North Dakota plant it plans to build over the next two years to process natural gas from the Wild Basin portion of the Bakken Shale, President Taylor Reid says.
  • "We have potential JV partners for that, or we could go down the path of an MLP," Reid says at a conference in Denver.
  • The CEO also says OAS is well positioned to weather low oil prices, helped by the company's unit that fracks wells, meaning OAS is not reliant on Halliburton or peers for that service; for example, OAS plans to frack 80 wells this year using its own two frack crews, saving ~$400K/well, Reid says.
From Seeking Alpha:
  • ONEOK Partners says it is forming a 50-50 joint venture with a subsidiary of Mexico's Fermaca Infrastructure to construct a pipeline that will transport natural gas from the Permian Basin in west Texas to Mexico.
  • The first phase of the project for 170MM cf/day of available capacity is scheduled for completion by Q1 2016; final completion is expected by 2019 and will increase available capacity on the pipeline to 640MM cf/day.
  • OKS will manage project construction and become operator of the pipeline upon completion; the project is estimated to cost $450M-$500M.
Zacks also reports on this pipeline:
  • Roadrunner Gas Transmission -- name of the pipeline
  • around 200-mile long, 30-inch wide, Roadrunner will stretch from the 2,227-mile long ONEOK WesTex Transmission natural gas pipeline system at Coyanosa, TX in the U.S. to Fermaca's Tarahumara Gas Pipeline in Mexico. Once completed, the pipeline will transport up to 640 million cubic feet per day (“MMcf/d”) of natural gas.
  • to be completed in three phases. The first phase is expected to be concluded by the first quarter of 2016 with transportation capacity of 170 MMcf/d. Upon completion of the second phase in first-quarter 2017, transportation capacity of Roadrunner will scale up to 570 MMcf/d. The final phase is expected to be completed in 2019 and will increase the available capacity to 640 MMcf/d.

Disclaimer: this is not an investment site.  Do not make any investment, financial, relationship, travel plans, or religious decisions based on anything you read here or think you may have read here. This site does not discriminate against any person, place, or thing, based on sexual orientation.

No Mention Of Hydraulic Fracking

California may be in a bit of trouble with regard to water. The Los Angeles Times is reporting:
Electronic readings on Wednesday at about 100 stations across the Sierra showed that the water content of the snow was only about 5% of the state average for April 1, the date on which snowpack is normally considered at its peak. Official manual readings will be announced Wednesday afternoon. Early data show snowpack in the Sierra Nevada is lower than any year since 1950
Governor Brown has issued new statewide water restrictions. 

I have not yet read the restrictions. I will do that in a few seconds. I will know how serious everyone is taking this if golf courses are / are not mentioned. So, let's see (the link:

They must be serious: the very first thing mentioned after the general announcement:
--Require golf courses, cemeteries and other large landscaped spaces to reduce water consumption. 
But quite vague; need to see the fine print:
Craig Kessler, director of government affairs for the Southern California Golf Assn., said complying with stronger water conservation requirements will be especially challenging for golf courses.
"Golf is not any different than any other industry," Kessler said. "We're simply going to have to make the best of what Mother Nature, and lack of past planning has left us."
I wonder if the state would accept a "water cap and trade" for golfers. Instead of drinking California-produced bottled water, and instead drinking out-of-state beer while golfing, that would offset watering the golf course -- let's say one hour of watering / 100 bottles of beer consumed on the golf course.

Six (6) New Permits -- North Dakota -- April 1, 2015

Active rigs:

Active Rigs97191186207170

Six (6) new permits --
  • Operators: QEP (4), BR, XTO
  • Fields: Grail (McKenzie), Elidah (McKenzie), North Tobacco Garden (McKenzie)
  • Comments:
Wells coming off the confidential list Thursday:
  • 21790, SI/IA, Enerplus, Tipi 148-93-22A-21H,  South Fork, no production data,
  • 28270, drl, MRO, Zook 41-25TFH, Reunion Bay, no production data,
  • 28674, 963, Whiting, Koch 34-19PH, Bell, t1/15; cum 23K 1/15 (that's one month's data)
  • 28782, conf, BR, Hammerhead 31-26-2MBH, Sand Creek, no production data,
  • 29175, drl, XTO, Granli 34X-20H, Arnegard, no production data,
  • 29230, drl, Statoil, Heen 26-35 7H, Todd, no production data,

28674, see above, Whiting, Koch 34-19PH, Bell:

DateOil RunsMCF Sold

April Fool's Joke Coming Out Of The Office Of The Department Of The Interior -- April 1, 2015

Obama and the Arctic: drill, baby, drill. At the link, see the April 1, 2015, update. It must be an April Fool's joke coming from the Department of the Interior. LOL.

Meanwhile ...

The EIA blurb for the day:
For 2014, the U.S. Energy Information Administration estimates that, excluding Iran, members of the Organization of the Petroleum Exporting Countries (OPEC) earned about $730 billion in net oil export revenues (unadjusted for inflation).
This represents an 11% decline from the $824 billion earned in 2013, largely because of the decline in average annual crude oil prices, and to a lesser extent from decreases in the amount of OPEC net oil exports. --- EIA
Wow, a 11% decline in 2014 -- and the slump in prices occurred late in the year. Imagine what 2015 will bring for OPEC. I wonder if Jane Nielson is following this story?

Reason #897 Why I Love To Blog -- Helps Put The Bakken Into Perspective -- April 1, 2015

Had I not been blogging on the Bakken all these years, this story would not have meant much to me. I probably wouldn't have read it in the first place, but that's another story.

I would not have read this story had it not been for the headline: new technology. I was curious what Apache's new technology was. Unfortunately, the article does not provide any insight.

Apache Corp over at Rigzone is reporting:
Five wells, including the discovery wells, have been completed to date by Khalda Petroleum Company, Apache's joint-venture company with EGPC. All five wells are producing without the need for fracture stimulation at a combined rate of more than 13,600 barrels of oil per day (bopd) with first production starting in November 2014. The wells have produced approximately 1 million barrels of oil to date. Apache has invested $14 million to install production facilities and plans to invest another $35 million to handle the forecasted production increase.
The Ptah field started producing light oil from the Paleozoic-aged Shiffah Formation in December 2014. This field also has substantial target zones logged in the AEB-3D/-3E formations that have yet to be tested. In the Shiffah, the field discovery well (Ptah-1X) is currently producing 2,350 bopd and a second well (Ptah-3X) started production in March 2015 at a rate of 2,000 bopd. Shiffah pay zones have averaged 130 feet while the AEB-3D/-3E formations yet to be completed have logged an average net oil pay section of 65 feet. Further appraisal drilling and AEB-3D/-3E production testing will be conducted with the Ptah-4X and Ptah-6 to further define the field size and reserves.
Drilling depth to the deeper Shiffah is approximately 13,800 feet, while the AEB-3D/-3E targets average a depth of 11,000 feet. Completed-well costs are expected to average around $3.7 million for Shiffah wells and $2.5 million for the AEB-3D/-3E wells.
So, some data points:
  • Egypt
  • two new oil fields discovered in the Western Desert: the Berenice and Ptah fields
  • development leases approved by Egypt in record time: 13 days (Berenice); 6 days (Ptah)
  • no need for fracture stimulation
  • five wells: 13,600 bopd 
  • pay zone: Shiffah formation, 130 feet (compare with Bakken formations of 4 - 30 feet)
  • pay zone: AEB-3D/-3E, at least 65 feet thick on average
  • drilling depth, Shiffah: 13,800 feet (compare to 9,000 for middle Bakken; deeper for TF)
  • drilling depth, AEB-3D/-3E: 11,000 feet (comparable to deeper middle Bakken/TF wells)
  • cost: Shiffah, $3.7 million; AEB, $2.5 million (compare to $6 million minimum for Bakken/TF wells)

A Well Worth Following -- April 1, 2015

A well that might be interesting to follow over time:
  • 21386, drl, White Butte Oil Operations, Panzer 2-20MLH, Antelope, TF second bench, 3-well pad, two dual laterals, 
From the file report:
... 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.

Putting Things Into Perspective -- April 1, 2015


Later, 11:04 p.m. CT: four deaths
Original Post

I am not aware of any CBR deaths in the US but I could be wrong.

However, the Gulf of Mexico? Here we go again.

Daily Mail is reporting:
A fire broke out on an oil platform belonging to Mexico’s state Pemex petroleum giant in the Gulf of Mexico, leading to the evacuation of about 300 workers. According to the company at least one person has died and 16 have been injured.
Pemex said on Twitter that the fire on the Abkatun Permanente platform in the oil-rich Campeche Bay broke out overnight and eight firefighting boats were tackling the blaze. 
And we haven't even begun talking about the environmental disaster yet to be reported.

I'll be off the net for awhile; there may be more to the story that I missed but that's my knee-jerk response. I may be way off-base here.

Auto Sales Fall, Year-Over-Year In March, 2015 -- April 1, 2015

I always find it amazing how quickly the automobile manufacturers can get their monthly statistics posted. They always manage to do it the day after the end of the month. Think about that. Yesterday, at 4:00 p.m. in California folks were signing for new cars, and today, first thing, American auto manufacturers already have the data for March.

One of the big reasons why they can get his data out so fast: they do not give it to government bureaucrats who massage it, cross-check it, massage it again, until they get the number the administration is looking for.

I am also amazed how fast analysts can explain the data, having seen it for less than 24 hours. For example this explanation for the decrease in sales this March compared to last March:
" .... consumers who were slow to return to showrooms after a cold, snowy winter."

Had sales increased significantly, the analysts would have said, "the reason car sales surged in March, despite one less weekend, consumers were eager to get back to the show rooms after being cooped up indoors during much of this snowy winter."

This is what surprises me: March is coming out of winter, into spring. We should start to see more interest in cars -- every year, not just this year. But this year with gasoline prices bottoming out and everything suggesting gasoline prices will go even lower, consumers should be flocking to showrooms. Interest rates are still zero but there is talk that rates could rise; that should draw consumers into looking at big-ticket items sooner than later.

The one less weekend is a good explanation and that may account for the decrease in sales. 

The article linked above begins:
Sales declined for most automakers in March, including Ford and General Motors, even though the industry remains on track to sell about 17 million new cars and trucks this year -- the most since the Great Recession.
In March, weak industry were largely caused by one fewer weekend falling in the month compared with last year and consumers who were slow to return to showrooms after a cold, snowy winter.

No Update On Trucking Fracking Sand From Wisconsin, Minnesota -- April 1, 2015


Later, 11:36 a.m.: after posting the note below, I received this from a reader who has a brother-in-law it the trucking business, located in Minnesota:
We only have one frac job running and that one is running into Texas. No ND or CO loads happening that we can get our hands on. Freight rates have really dropped off on the sand and all the other freight, too. Freight-wise, still kind of quiet out there. Waiting for the spring fertilizer push. 
Original Post
A reader asked if I knew of any updates regarding trucking (not rail, but trucking) fracking sand from Minnesota and Wisconsin to the Bakken.

I did not have any updates, but did reply:
I do not have any updates but can only assume that rates have dropped. I did hear from another read that a trucker in Minnesota had this to say about two months ago: "no fracking sand was being shipped by truck."

I would assume it's less expensive and more efficient to ship by rail. I assume trucking sand in was due to lack of adequate rail, but that's just my opinion.
I am most curious to see what this summer brings, with upwards of 850 wells waiting to be fracked. 

Wednesday -- April 1, 2015

Active rigs:

Active Rigs99191186207170

RBN Energy: how the dollar affects the price of oil.
RBN has documented many fundamental influences on crude oil prices including supply, demand and inventory levels as well as infrastructure constraints. One that we don’t often mention is the strength or weakness of the U.S. dollar. As with most international commodities - oil is bought and sold priced in U.S. dollars. As a result, a change in the value of the dollar relative to other currencies has an impact on oil prices. Likewise the dramatic fall in oil prices since June of 2014 has been mirrored by the dollar rising to levels not seen since 2003. Today we look at how oil prices are impacted by the value of the dollar.
Since the 1980’s crude prices have generally been determined through bilateral negotiation between counterparties based on differences in quality and location as well as other market fundamentals. Counterparties in these transactions typically make reference to widely traded benchmark crudes to link their deals to spot market prices and. We recently described the formula pricing system used by Saudi national oil company Aramco to determine the price buyers pay for their crude – based on a benchmark linked to destination and a monthly adjustment factor. All of these transactions are carried out using a single currency – the U.S. dollar. The reason why oil transactions take place in dollars dates back to the early dominance of the U.S. oil industry – that was originally the center of world production and the largest exporter in the 1930’s.
Since World War II the dollar has been the dominant reserve currency and most international commodity transactions are carried out in dollars for the convenience and security of both parties.
Of course, the fact that oil is priced in dollars provides U.S. companies an inherent advantage over their competitors in other countries. For one thing, buyers and sellers here do not have to pay currency exchange fees to buy or sell the dollars they use in crude trades. In addition to those fees they also avoid any currency risk associated with refining outside the U.S. For example, overseas refiners have to buy their crude using dollars and sell their refined products to consumers in the local currency – so that exchange rate fluctuations can end up costing them money if they do not hedge that risk.
One side effect of oil being priced in dollars is that large investors often take financial positions in oil (usually in paper form e.g. in the futures market) as a hedge against a decline in the value of the dollar. The theory behind these hedges is that if the dollar loses value against other currencies then the price of oil will increase to compensate for that weakness – protecting the investor from dollar deflation. Obviously that works the other way around as well – with a stronger dollar tending to push prices down. With oil being such a huge commodity these financial players have an influence on the physical crude market because of the strong links between oil futures markets and physical prices.
Annus Horribilis

Queen Elizabeth II referred to 1992 at England's annus horribilis.

It is very likely that Saudi Arabia will see 2015 as their own annus horribilis.

This was the year that the US made it very clear that Saudi Arabia and the US had parted ways. Saudi was no longer guaranteed US protection, something guaranteed since 1933 by FDR.

It was the year that it also became clear that the dominant resident power in the Middle East would be Iran.

It was the year that, through gross miscalculation on their part, oil prices crashed.

And it was the year that Saudi Arabia was pretty much surrounded by the Shi-ites -- Iraq to the north; Iran to the East; Yemen to the south. Saudi Arabia had to resort to going to war on its own -- attacking Yemen -- and losing at least one fighter aircraft in the conflict -- which seems pretty hard to do going against Yemen.

There is some irony: I believe Iran is the only country in the Mideast to have global sanctions placed on exports, and yet, the country has a positive balance of trade in each of 70 sectors. I'm not sure the US can even claim that. I doubt Saudi Arabia even has 70 sectors in which it has a trading relationship. They have oil, that I know. 

Disclaimer: I often make factual errors in my opinion and comments. There may be factual errors above. If this information is important to you, go to the source.

North Dakota's New CBR Rules Take Effect Today -- April 1, 2015

This is why the flurry of stories on CBR safety / risks the last few days. North Dakota's new CBR rules kick in today. The Dickinson Press is reporting:
Starting today, oil companies in North Dakota will be required to remove more volatile gases from Bakken crude oil so it has a vapor pressure of no greater than 13.7 pounds per square inch. Oil conditioning occurs at the well through equipment that separates the oil, gas and water. Companies can meet the new standard by operating their equipment at specific pressures and temperatures. If they choose an alternative method, companies will need to submit documentation that shows they are meeting the standard.
How was 13.7 chosen? The independent standards organization ASTM, formerly American Society for Testing and Materials, defines stable crude oil as having a vapor pressure of 14.7 psi. Equipment that tests for vapor pressure has a margin of error of 1, so state regulators chose 13.7 to ensure that it meets the definition, said Alison Ritter, spokeswoman for the Department of Mineral Resources.
The article conveniently forgot to mention that the North Dakota standard is a full pound below the federal requirement. The article alludes to this fact by stating that the federal government considers crude oil to be stable if the vapor pressure is 14.7 psi or less. However, from an earlier post:
The order, to go into effect April 1, will limit Bakken to a vapor pressure of no more than 13.7 per square inch, 1 psi below the national standard of 14.7. It also requires that operators separate light hydrocarbons from the crude and prohibits blending light hydrocarbons back into the oil.
A full pound -- almost 7% -- below the federal requirement. The state could have mandated 14.7 psi for Bakken crude oil, but chose to go significantly lower. 

No April Fool's Joke -- But Sales Tax In San Francisco Bay Area Now In Double Digit -- March 1, 2015

CBS San Franciso is reporting:
Buy something in Hayward and you’re going to get whacked with a 10% sales tax. Take a few steps outside the city limits and the tax is a half cent cheaper.
Last summer, Hayward voters taxed themselves. Measure C passed with an overwhelming 68% approval.
City spokesperson Frank Holland says it could mean $10 million more for the city to hire more police and build better roads. 
It's not often you can find something that 68% of the folks agree on -- and raising taxes seems to be about the last thing.

There are several story lines here: just because sales tax rise, does not necessarily mean the overall prices will increase; competition is such, businesses will find other ways to cut costs to try to minimize what consumers pay overall.

Unfortunately, the Bay area is also ground zero for raising the minimum wage. 

Fortunately Hayward is not in my travel plans.

Apple: A Semiconductor Powerhouse

... being reported at Seeking Alpha

Samson Resources May Request Bankruptcy -- April 1, 2015

I saw this story last night but ran out of time to get it posted. I'm getting a fair number of e-mails on the story, so I better get it posted before I get any more e-mail.

FuelFix is reporting:
Oklahoma oil producer Samson Resources says it doesn’t expect to be able to repay its debt with income from battered oil fields and it may have to file for Chapter 11 bankruptcy protection or face liquidation.
Samson, which had nearly 1,000 employees at the end of last year, also said in its annual report Tuesday it began laying off 30 percent of its workforce this month.
Though it will weigh asset sales, securing more debt and other measures to avoid liquidation, Samson said filing for bankruptcy protection “may provide the most expeditious manner in which to effect a capital structure solution.”
The cash streaming in from oil fields run by Samson and other companies across the U.S. has slowed dramatically as crude prices have plummeted from above $100 a barrel last summer to less than $50 a barrel now. Samson, which operates oil and gas fields in the Rocky Mountains region and in East Texas, said it had $4.2 billion in debt and $220.7 million in cash on hand at the end of February, and is considering whether  to pay upcoming interest payments on its debt.
It cut its annual budget by $156.5 million and said it is selling non-core assets. It collected $48 million selling its properties in Oklahoma and Arkansas’ Arkoma basin.
“We expect ultimately to seek a restructuring, amendment or refinancing of our debt,” Samson said.
In response to a note I received from a reader on this story last night, I responded:
I used to get Samson Resources and Samson Oil and Gas (SSN) mixed up.
The former is a US company (Oklahoma); the latter is Australian.
The former has really mediocre to poor property -- up north in Divide County; at $100 oil it's wonderful; at $50 oil, horrendous.
The latter (SSN) has really good property southeast and east of Williston -- Stockyard Creek.
This bankruptcy is probably just one of the first; and many other companies will sell out before declaring bankruptcy. It's all about liquidity. If CLR and Whiting and EOG can survive, they could pick up a lot of cheap mineral acres. Samson Resources had a respectable 19 permits in 2015; and even as many 5 permits this year. In the big scheme of things, it's really sad; lots of good people will be out of work.
Diclaimer: the response above was opinion only. I often make factual errors in my comments and opinions. If this information is important to you, go to the source. Do not make any investment, financial, travel, or relationship decisions based on what you read here or what you think you may have read here.

Some time ago, GMXR, a relative latecomer to the Bakken, also restructured through bankruptcy and is still operating in North Dakota as Thunderbird Resources. This company, and most others operating in the Bakken, are linked at the sidebar at the right.