Thursday, April 16, 2015

North Dakota's Annual Agricultural Survey Has Been Published -- April 16, 2015

North Dakota's annual agricultural survey has been released. Reported at The Dickinson Press.

I have to pick up a granddaughter from soccer practice. More on this later.

New Question Over At The Discussion Group -- April 16, 205

Over at the discussion group, a reader has a question about the price of oil that might lead to a return of "more normal rates" of drilling in Williams County.

I've talked about that at length at the blog so won't add anything new at the discussion group, but curious if anyone else has anything to add.


Readers spotted Hillary's e-mail server.

Actually they spotted the carrying case for her e-mail server.

Hillary, center; unidentified progressive, left; e-mail server carrying case, right.

SM Energy Maintains Borrowing Base -- April 16, 2015

From Yahoo!In-Play:
SM Energy announces that Q1 production is expected to be 16.8 MMBOE, or 186.4 MBOE/d; borrowing base maintained at $2.4 bln : Co announces that production for the first quarter of 2015 is expected to be 16.8 MMBOE, or 186.4 MBOE/d. This represents 6% sequential growth in average daily production from the fourth quarter of 2014, and exceeds the Company's guidance.
The Company also announces that the borrowing base under its senior secured revolving credit facility was maintained at $2.4 billion following its lenders' regularly scheduled semi-annual redetermination. SM Energy has elected to leave the aggregate commitment amount from the bank group unchanged at $1.5 billion. The redetermination was made under the terms of the existing facility and there were no other changes to the terms of the credit facility resulting from this borrowing base redetermination.
Another company maintains borrowing base, keeping with the story line. See tag. 

Also from Yahoo!In-Play:
Schlumberger beats by $0.15, reports revs in-line; co further reduces headcount: Reports Q1 (Mar) earnings of $1.06 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus Estimate of $0.91; revenues fell 8.8% year/year to $10.25 bln vs the $10.35 bln consensus.
  • Co's Q1 revenue decreased 19% sequentially driven by the severe decline in North American land activity and associated pricing pressure. International operations were impacted by reduced customer spend in addition to seasonal effects in the Northern Hemisphere and the fall in value of the Russian ruble and the Venezuelan bolivar. Three-quarters of the overall sequential decline was due to lower activity and pricing, while the remainder was the result of currency effects and non-recurring year-end sales.
  • "Despite the severity of the sequential revenue decline, we have been able to minimize its impact on our margins through prompt and proactive cost management as well as through acceleration of our transformation program across product lines and GeoMarkets. These actions have successfully improved financial performance compared to previous industry cycles, with an overall sequential decremental operating margin of 33% as North America and the International Areas reported 39% and 25%, respectively.
  • "The largest drop in E&P investment is occurring in North America, where 2015 spend is expected to be down by more than 30%. We believe that a recovery in US land drilling activity will be pushed out in time, as the inventory of uncompleted wells builds and as the re-fracturing market expands. We also anticipate that a recovery in activity will fall well short of reaching previous levels, hence extending the period of pricing weakness."
  • As a result of the severe fall in activity in North America combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, Schlumberger took the decision to further reduce its headcount by approx. 11,000 employees.

Seventeen (17) New Permits -- North Dakota -- April 16, 2015; Some Awesome QEP Moberg Wells

Lots of end-of-day stuff, so quickly and briefly:

Schlumberger is up nicely after hours; beats forecasts; cuts more employees (sad face) to cut costs. Great for investors; not so good for the employees.

American Express also topped forecasts, but missed on revenues.

Active rigs:

Active Rigs93184186204175

Wells coming off the confidential list Friday:
  • 25074, 1,515, Newfield, Sand Creek State 153-96-16-3H, Sand Creek, t1/15; cum 32K 2/15;
  • 28019, 2,509, QEP, Moberg 4-20-21BH, Grail, t11/14; cum 97K 2/15;
  • 28020, 2,325, QEP, Moberg 3-20-21TH, Grail, t11/14; cum 107K 2/15;
  • 28021, 2,529, QEP, Moberg 3-20-21BH, Grail, t11/14; cum 94K 2/15;
  • 28022, 2,566, QEP, Moberg 2-20-21TH, Grail, t11/14; cum 96K 2/15;
  • 28702, drl, MRO, Krebs 34-20TFH, Bailey, no production data,
  • 29319, drl, Statoil, East Fork 32-29 5H, East Fork, no production data,
Seventeen (17) new permits --
  • Operators: HRC (10), Whiting (4), SM Energy (3)
  • Fields: McGregory Buttes (Dunn), Truax (Williams), West Ambrose (Divide)
  • Comments:

Russian Oil Company Sets Depth Record (Drilled Almost 40,000 Feet); Huge Apple Mis-Step; Netflix Surges -- April 16, 2015

Netflix surges 16% today, up $76. This is also a new high for Netflix trading at almost $555.

Philip Morris is also surging after beating expectations. 

But you all know that this is not an investment site.

Nothing to do with the Bakken but still very interesting. is reporting:
Rosneft, an integrated oil company majority owned by the government of Russia, broke another world record Tuesday. Off the coast of Russia’s Sakhalin Island at the Chayvo field, the company reports that it has drilled the longest well in the world. Petro Global News reports that the O-14 production well drilled to a depth of 44,291 feet and reached horizontally to 39,478 feet.
Part of the Sakhalin-1 project, the offshore drilling endeavor is tapping into the Arkutun-Dagi, Odoptu and Chayvo deepwater fields. Since the project’s beginnings, Rosneft has broken nine world records. In 2013 alone, the company set two world records for measured drilling depth.
Two more feet and they would have reached 39,480 feet horizontally. 

How Big Was Apple's Mis-Step?

The big question of the day: how badly did Apple miscalculate this time? Apple said that the AppleWatch would be launched on April 24th -- which also meant that one could make reservations for that day at one's local Apple retail store, select a watch, buy one, and walk out the same day with a new Apple Watch. But that isn't going to happen. On launch day, all one can do is order on-line and then wait -- for up to two months.

With dozens of choices, I think it's going to be quite some time before watches will be available in-store for same-day selection and purchase. 

News Embargo Partially Lifted

Two news stories coming out of the Middle East: 1) Saudi Arabia - Iran compete for domination of the Middle East (with Iraq no longer functioning as a viable state); and, b) Yemen falling into chaos (that's a news story?).

First, the Saudi Arabia - Iran rivalry to control the Mideast. The AP is reporting:
Saudi Arabia's government insists it is not at war with Iran despite its three-week air campaign against Tehran-backed rebels in Yemen, but the kingdom's powerful clerics, and its regional rival's theocratic government, are increasingly presenting the conflict as part of a region-wide battle for the soul of Islam.
The toxic rivalry between Sunni Saudi Arabia and Shiite Iran is playing out on the battlefields of Yemen and Syria, and in the dysfunctional politics of Iraq and Lebanon, with each side resorting to sectarian rhetoric. Iran and its allies refer to all of their opponents as terrorists and extremists, while Saudi Arabian clerics speak of a regional Persian menace.
The rivalry between Saudi Arabia and Iran does not date back to Islam's 7th century schism, but to the 1979 Islamic revolution in Iran, which toppled a U.S.-backed and Saudi-allied monarchy and recast alliances across the region. The standoff worsened after the 2003 U.S.-led invasion of Iraq, which toppled a Sunni-led dictatorship that had long been seen as a bulwark against Iran's efforts to export its revolution. But even if today's power struggle has more to do with politics than religion, the unleashing of increasingly sectarian rhetoric on both sides has empowered extremists and made the region's multiplying conflicts even more intractable.
The second story, the AP is also reporting:
Al-Qaida seized control of a major airport, a sea port and an oil terminal in southern Yemen on Thursday, consolidating its hold on the country's largest province amid wider chaos pitting Shiite rebels against forces loyal to the exiled president and a Saudi-led air campaign.
Military officials and residents said al-Qaida fighters clashed briefly with members of one of Yemen's largest brigades outside Mukalla, a city the militants overran earlier this month and where they freed prison inmates. The militants then seized control of the Riyan airport and moved to secure their hold on the city's main sea port, which is also an oil terminal.
The latest advance marks a major gain for al-Qaida in the Arabian Peninsula, as the Yemeni affiliate is known, which has been linked to several failed attacks on the U.S. and is widely seen as the global network's most dangerous franchise. The group claimed responsibility for the attack on a French satirical magazine earlier this year.
Demise of The American Buffalo

Perhaps the best "reader's digest" explanation of the demise of the American buffalo (Bison bison) might have been written by an English writer, Jonnie Huges, On the Origin of Tepees, c. 2011.

Quick summary:
  • the Oregon trail cut the vast American buffalo herd into the "northern herd" and the "southern herd"
  • the transcontinental railroad, Union Pacific and Central Pacific followed the Oregon Trail from Missouri/Iowa to Idaho where Oregon Trail continued northwest to Oregon; railway straight west; the railroad continued to separate the northern herd from the southern herd
  • the American buffalo could survive one railroad
  • the Kansas Pacific, came second, straight through the heart of the southern herd, wiping it out
  • the southern herd might have been saved had the banking panic of 1873 not delayed the Northern Pacific
  • by the time the Northern Pacific was built, the southern herd was gone
  • the Northern Pacific finished off the northern herd
The American buffalo could outrun one railroad, and even a second railroad, but not three.

Today's EIA "Energy Cookie" -- April 16, 2015


May 10, 2015: a Harvard study, published in the New York Times supports my thesis that drivers licenses and access to a dependable automobile is critical for success more often than not in the 21st century. 
His commuting problems highlight a central theme for many low-income people trying to build a better life: A lack of reliable and efficient transportation is often a huge barrier.
In a large, continuing study of upward mobility based at Harvard, commuting time has emerged as the single strongest factor in the odds of escaping poverty. The longer an average commute in a given county, the worse the chances of low-income families there moving up the ladder.
The relationship between transportation and social mobility is stronger than that between mobility and several other factors, like crime, elementary-school test scores or the percentage of two-parent families in a community, said Nathaniel Hendren, a Harvard economist and one of the researchers on the study.
Later, 6:32 p.m. CT: buried at the end of this post were my thoughts on this from the linked article:
More teens and 20-somethings are waiting to get a license. Less than 70 percent of 19-year-olds now have one, down from 87 percent two decades ago.
"I wonder if they've decided that there's another, better way to be free and to be mobile," says Cotten Seiler, author of "Republic of Drivers: A Cultural History of Automobility in America."
A reader noted that today's teens and 20-somethings may not be driving automobiles because
  • they are more risk-averse these days, and
  • less need for cars 
More risk-averse: readers my age grew up not wearing helmets while riding bicycles, and wrist protectors while skateboarding; today's kids grew up with mandated helmets and recommended wrist protectors; they've carried that risk-aversion into adulthood.

In urban areas with great mass transportation and while going to college, for example, there is less need for automobiles.

My 30-second soundbite: today's kids are no different than the kids of fifty years ago. About the same percent of kids -- in today's world compared to the 1950's -- would love to have a car. If the percent is dropping, there must be a reason.

I think the reader is exactly correct on less need for cars but I wonder if it might not be for a different reason: delayed adolescence. More and more kids are living at home with their parents longer and longer. They save rent money and they save money by driving one of the two, three, or four family cars registered to their father and/or mother. (The problem with this explanation, of course, is the data below apparently talks about the decline in driving licenses; so even if living at home with access to a car, a lot of "kids" still don't have a license. So, I'm back to square one and very confused. I won't talk about it any more.)

If there are more kids in college, that, too, would help explain the declining car ownership. All things being equal, there's less need for a college student to have a car than for a young adult living on his/her own and having a full-time job. Except for a few cities on the east coast and San Francisco on the west coast, there are very few areas where mass transportation works. To get around in most places in the US, a car is needed.

I think it's a) delayed adolescence; living at home with parents; and, b) higher percentage in college.

If there is an element of risk-averse accounting for declining car registration, .... 
Original Post

Today's EIA "energy cookie":
Households with more vehicles also tend to drive their primary (most-used) vehicle more than households with fewer vehicles.
While a two-vehicle household travels almost 16,000 miles annually with the most-used vehicle, a six- (or more) vehicle household travels more than 22,000 miles annually with the most-used vehicle.
The average use per vehicle within a household is greatest in a two-vehicle home, where the average vehicle travels about 11,800 miles. This average declines as the households gain more vehicles so that a six-vehicle home averages about 9,600 miles per vehicle. --- EIA
And exactly how many folks do you know that have six or more vehicles (not counting farmers and ranchers)?

A google search was not helpful, though I did not spend much time on this article. The Huffington Post noted, back in 2014
After rising almost continuously since World War II, driving by U.S. households has declined nearly 10 percent since 2004, with a start before the Great Recession suggesting economics is not the only cause. "There's something more fundamental going on," says Michael Sivak of the University of Michigan Transportation Research Institute.
The average American household now owns fewer than two cars, returning to the levels of the early 1990s.
More teens and 20-somethings are waiting to get a license. Less than 70 percent of 19-year-olds now have one, down from 87 percent two decades ago.
"I wonder if they've decided that there's another, better way to be free and to be mobile," says Cotten Seiler, author of "Republic of Drivers: A Cultural History of Automobility in America."
I think I may have linked this article some time ago. This simply tells me that with or without the Great Recession, younger folks simply have difficulty making / saving money to buy a car and pay for the insurance and the maintenance.

Michael Sivak needs to ask the twenty-somethings if they would like a car if it were free, sort of like an ObamaCar. My hunch is that 99.9% of twenty-somethings without a car would gladly take a free Ferrari and keep it if someone paid the maintenance, gas, and insurance.

Here's the answer to the original question (how many people own six or more vehicles?): 1%.

Al Gore, Warren Buffett, Jay Leno, and 3,599,997 others.

Link here.

Great, Great Story On Expanding Aviation Industry / Drones In North Dakota

From a press release:
In partnership with local leadership, Northrop Grumman Corporation confirmed its dedication to the future of unmanned systems development in the Red River Valley region by signing a lease agreement to anchor the new Grand Sky Technology Park in Grand Forks County.
Northrop Grumman is working to identify specialized opportunities for the Grand Sky facility. The opportunities, as permitted by the lease, will allow employees to do general office work, research and development, flight test, flight training, flight operations, hangar activities, light manufacturing, assembly operations and warehouse operations. The signed lease permits Northrop Grumman to complete its initial designs and plans for the new facility on ten of the approximately 217 acres that will make up the Technology Park on Grand Forks Air Force Base.

Northrop Grumman designed and manufactures the RQ-4 Global Hawk high-altitude, long-endurance unmanned aircraft system flown out of Grand Forks Air Force Base.
Some time ago I posted a number of stories about aviation and North Dakota. The aviation industry in North Dakota is much bigger than most folks might realize. It's quite a story. I think the UND - Grand Forks AFB relationship was the key. 

This was back from a post in December, 2013:
FAA authorizes commercial drone testingThe WSJ mentioned North Dakota first:
The winning applicants were the commerce department of North Dakota; the state of Nevada; a public airport some 250 miles north of New York City; the University of Alaska; Texas A&M University in Corpus Christi; and a partnership between Virginia Tech and Rutgers University. The first site is expected to begin operating within six months. 
At that same post, the following story and a note that California did not win any federal bids
Disappointed California officials were at a loss to explain their failure to land a test site, though some suggested the state didn't do enough to win in the fierce nationwide competition.
The state lost out to Alaska, Nevada, New York, North Dakota, Virginia and — adding salt to the wound — longtime rival Texas.
Not only that but California was the only state with two groups submitting bids — one based in Ventura County and the other in Kern County.
"How California was left off the list, I haven't got a clue," said Bill Buratto, who, as president and chief executive of the Ventura County Economic Development Assn. helped pitch a bid for a test site in California. "It would seem to me that the FAA would look favorably on California." 
My hunch: the FAA didn't need a bunch of crap from activist Californians screaming about privacy issues
When I think of drones, I think of Amazon. So, naturally, google, "Amazon 'North Dakota'". This was back in 2009: is moving about 15 jobs in its merchant-support operations from Seattle to Grand Forks, N.D. A dozen merchant-support jobs will remain in Seattle, said Amazon spokeswoman Patty Smith. The move completes a shift that began nearly a year ago, she said. Amazon has been in Grand Forks since 1999, handling calls from consumers and now merchants who sell their products on its Web site. The 15 merchant-support workers in Seattle will keep their jobs until June. 
From wiki:
Amazon, with 600 employees in Grand Forks, is listed as the 7th largest employer in the city.
Fargo: no Amazon in Fargo but Microsoft has over 700 employees in Fargo.  

Amazon has no fulfillment centers in the state of Minnesota. The nearest fulfillment centers to the Bakken are Kansas and Wisconsin.

Great Article On Ceramics Over At Seeking Alpha -- April 16, 2015

Nice article in Seeking Alpha on ceramics:
FracFocus data reveals some troubling trends for the ceramics industry and for Carbo. Last year, significant investor attention was placed on Carbo when major customer Rosetta Resources switched to all-sand completions in the Eagle Ford. A review of the FracFocus database indicates further customer losses for the ceramics industry and Carbo.

Two of last year's major E&P mergers are having a significant negative impact on Carbo: Whiting's acquisition of Kodiak Oil and Gas, and Encana's acquisition of Athlon Energy. Both deals closed at the end of the fourth quarter, and their impact only began to be felt in the first quarter. These acquisitions are likely to have an impact similar in scale to the loss of Rosetta in 2014.
Based on FracFocus data, it is likely that Kodiak was one of Carbo's top ten customers. Kodiak used ceramics as its primary proppant. However, Whiting is primarily using sand. Whiting still uses ceramics for a portion of its wells in McKenzie County, but ceramics are typically no more than 30% of the proppant volume for those wells. With the exception of Kodiak's Polar acreage, Whiting is now primarily using all-sand completions on the former Kodiak acreage.
Proppants are a key ingredient in the fracturing of oil and gas reserves. Proppants are the largest non-water ingredient in a typical frac fluid mix. Proppants keep the fractured oil and gas well "propped" open, allowing for oil and gas recovery. See Wikipedia for basic information. For a more technical understanding of the fracturing process, this Baker Hughes presentation is excellent.
There are three main categories of proppant: raw sand, resin-coated sand and ceramics. Raw sand is the cheapest and comes in several sizes and qualities. Ceramics are made from a variety of metal ores, and claim to offer superior strength and performance, but charge a premium price. Resin-coated sand is a hybrid, attempting to offer some of the benefits of ceramics, but at a lower price point. Major frac sand companies include Fairmount Santrol, US Silica, Hi-Crush Partners, and Emerge Energy Services.
And more:
According to PacWest Consulting Partners, overall proppant consumption on a per pound basis has been growing at a 30% CAGR heading into the current industry downturn. Increases in the total number of horizontal wells fractured, frac stages per well and pounds of proppant per stage have all contributed to this high rate of growth. However, raw sand has seen almost all of the growth, with resin-coated sand only having modest growth and ceramics volumes flat. Resin-coated sand and ceramics have both lost share in the number of wells using them and in the percent of proppant per well.
While ceramics cost more than ten times raw sand at the source, transportation costs disproportionately impact the price of raw sand. For example, Northern White Frac Sand costs between $60-$70/ton at the mine, but typically costs $120-$160/ton at the basin after rail transportation costs. In 2014, Carbo realized a price of $600/ton for its ceramic products. Thus, in basin pricing is typically 4-6x higher for ceramics.
Given the historical pricing disparity between sand and ceramics, most E&P customers have chosen to frac with sand. According to a Freedonia Group study, raw sand accounted for 81% proppant volumes by weight in 2013, and that likely increased to nearly 90% of proppant volumes in 2014, as frac sand continued to take share.
Much more at the link. This is one of the better articles I've seen on this subject; it's a keeper; it will be archived at the source.

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

Note The Break-Even Cost In The Eagle Ford -- And Saudi Says Their Oil Is "Cheap" -- April 16, 2015

I forget if I posted this story earlier. The link was sent to me by a reader at a time when I was off the internet for awhile and had forgotten about it. With the news that the bulk of uncompleted wells in the Bakken belong to EOG, the article at this FuelFix link caught my interest:
There are nearly 1,400 wells in the Eagle Ford Shale that have been drilled but not completed.
Oil prices are hovering around $50 per barrel, down by half since last summer. And some Eagle Ford oil producers have been drilling but not fracking wells. The delay in completing wells avoids sending new barrels of oil into a cheap market.
For a small handful of operators, IHS reports that the drilled-but-not-completed wells will give them a big advantage over competitors.
Nearly 40 percent of those 1,400 delayed wells have a break-even costs below $30 per barrel.
The operators include BHP Billiton, Chesapeake, Anadarko Petroleum, EOG Resources, ConocoPhillips and Pioneer Resources.
When I think of the Eagle Ford, I think of EOG. 

Apple Investing In Solar In China: The Importance Of Spin -- April 16, 2015

Okay, so this is the lede:
Apple is expanding its environmental efforts by investing in a new Chinese solar power project and preserving 36,000 acres of "sustainable" timberland in Maine and North Carolina.
The initiatives come as the tech giant this year met a self-imposed goal of powering all its U.S. operations with renewable energy to reduce carbon emissions — initiatives that have won high marks from environmental groups like Greenpeace.
On Thursday, Apple announced a new focus on using paper from trees harvested under environmentally sound conditions. It's also promising to use more renewable power overseas, where Apple relies heavily on contract manufacturers — and where a top executive acknowledged the company can do more.
Sounds like Apple is making a huge Chinese solar investment. Let's see. Deep in the article:
The new solar project in China has a capacity of 40 megawatts, which is smaller than some projects Apple has announced in the United States. By comparison, Apple is spending $850 million for rights to nearly half the output of a 280-megawatt solar facility planned for construction south of Apple's Cupertino, California, headquarters. That project will produce enough energy to power all of Apple's California offices, a computer center and 52 retail stores.
Still, the Chinese project will produce more than the amount of energy consumed by Apple's 19 corporate offices and 21 retail stores in China and Hong Kong, Jackson said. She added that Apple uses renewable energy for 87 percent of the power at its facilities worldwide.
So, two long paragraphs with lots of numbers to hide the "40-megawatt" figure. In the US:
The current national average of homes powered by a MW of solar photovoltaics is 164.
164 x 40 = 6,560 homes. About half of Williston before the boom. And this new Apple project is in ... drum roll ... China.


Now, back to $850 million for 140 megawatts = $6 million / MW.

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
So, for a few million dollars, Apple gets:
  • a huge headline
  • more exposure
  • kudos from the environmentalists
What's not to like.

Disclaimer: I often make simple arithmetic errors. There may be factual and/or typographical errors above. If this information is important to you, visit the source.

Oh, that 36,000 acres of forestland? About 56 sections. Less than two townships in North Dakota.

I assume the money spent on these projects comes out of Apple's "advertising" budget.

But there's more: the wood chip industry in North Carolina is huge -- clearing forests to sell wood chips to England and Europe. The Apple connection is interesting. 

Highlights From The June, 2015, Agenda, NDIC Hearing Dockets

Highlights from the agenda, NDIC hearing dockets for April.

Whiting is very, very active. For example:
  • 23875, Whiting, Sand Creek-Bakken, 14 wells on each of 2 1280-acre units; McKenzie
  • 23876, Whiting, Poe-Bakken, 14 wells on 6 1280-acre units; McKenzie

The norm is now 8 -12 wells on 1280-acre units.

Only a few requests for flaring exemption.

Only one risk penalty case.

EOR: 23911, Zargon, EOR, Mackobee-Coulee Madison, Renville County.

Peregrine Petroleum: has six permits in North Dakota; the previous five were back in the early 1990's; this is the first new permit in North Dakota in two decades for Peregrine:
  • 23920, Peregrine Petroleum, Covered Bridge-Bakken, establish a 1280-acre unit; 4 wells, McKenzie; Covered Bridge is a 3-section field in south central McKenzie County, far from the sweet spots in McKenzie; Peregrine did have some Bakken wells back in the 1990's; there is a huge Birdbear well in this little section that has produced almost 500,000 bbls since 1983; a stripper well now
Horizontal drilling in the Madison:
  • 23925, Souris-Spearfish/Madison, appropriate spacing for horizontal wells, Bottineau
  •  23954, Northeast Landa-Spearfish/Madison, appropriate spacing for horizontal wells, Bottineau

XTO with deep pockets:
  • 23943, XTO, Capa-Bakken, 12 wells on each of 9 1280-acre units; 2 lease-line wells on an overlapping 260-acre unit, Williams
  • 23944, XTO, West Capa-Bakken, 12 wells on each of 12 1280-acre units; 2 lease-line wells on each of 11 overlapping 2560-acre units; Williams
  • 23945, XTO, Dollar Joe-Bakken, 12 wells on each of 7 1280-acre units; and 2 lease-line wells on each of 3 overlapping 2560-acre units; Williams
  • 23946, XTO, Grinnell-Bakken, 12 wells on each of 18 1280-acre units; 2 lease-line wells on each of 9 overlapping 2560-acre units, McKenzie, Williams
Unusual size drilling units:
  • 23916, CLR, Elm Tree-Bakken, terminate some large drilling units (Order # 21151, Order #24889); creata 480-acre unit; create a 1280-acre unit; create 2 1680-acre units; multiple wells on each unit; McKenzie, Mountrail 
Bakken Well Production Prior To Fracking

A reader asked how productive a Bakken well was before fracking. My unedited, knee-jerk reacion:
Production before fracking. It depends. Some areas the Bakken has some natural fracking and production is decent when comparing to Madison wells, I suppose, but in general the pre-fracking production is pretty poor.
The better the natural fracking, the less proppant that the operators have to use, and that accounts to some extent the variation in the amount of proppant we see from well to well. It looks like in the same well, there can be a substantial difference between natural fracking in a middle Bakken well and a Three Forks lower bench.
I can find some Bakken wells that were drilled horizontally back in the early 1990's but they were not fracked.
An example:
NDIC File No: 13479  Well bore type: Horizontal   
Well Type: OG     Well Status: IA     Status Date: 3/16/1993   Location: NWNE 15-146-102    Latitude: 47.471586     Longitude: -103.65782
Current Well Name: STENSRUD 1
Total Depth: 11952     Field: COVERED BRIDGE
Spud Date(s):  12/30/1992
Completion Data
   Pool: BAKKEN     Perfs: 10965-11951     Comp: 3/16/1993     Status: AL     Date: 3/16/1993     Spacing: SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 38,798     Cum MCF Gas: 58692    
Production Test Data
   IP Test Date: 3/16/1993     Pool: BAKKEN     IP Oil: 183     IP MCF: 150     IP Water: 0
So this well was drilled back in 1993 and has produced slightly less than 40,000 bbls total. It is currently producing about 7 days a month for a total of about 75 bbls per month. It's initial production was about 2,000 bbls/month but by the seventh month down to zero; re-worked, back up to 1,000 bbls/month in 1994, but declined to 300 bbls/month pretty quickly.
I don't know how the NDIC feels about an "non-fracked Bakken" well remaining unfracked for over a year (defined as "not completed") but yet producing some oil -- thus letting the operator off the hook for having to complete the well. I don't know if the Peregrine well above is representative but that well seems to be about what I expect when I run across an old Bakken well before fracking.

Saudi Arabia Continues To Raise Production -- April 16, 2015

Bloomberg is reporting:
Saudi Arabia boosted crude production to the highest in three decades in March, with a surge equal to half the daily output of the Bakken formation in North Dakota.
The kingdom boosted daily crude output by 658,800 barrels in March to an average of 10.294 million, according to data the country communicated to the Organization of Petroleum Exporting Countries’ secretariat in Vienna. The Bakken formation, among the fastest-growing shale oil regions in the U.S., pumped 1.1 million barrels a day in February, according to data from the North Dakota Industrial Commission.
Peak oil? What peak oil?

Thursday -- April 16, 2015; Unemployment Claims Surge; Far Exceeds Expectations; Previous Week Revised Up

SLB reports today after market close. 

Active rigs:

Active Rigs92184186204175

RBN Energy: more on the Marcellus.
Growing volumes of natural gas liquids (NGLs) produced in the Marcellus and Utica need to find a market – inside or outside the region.  Getting them to outside markets involves transportation by pipeline, rail, truck or barge. Local demand is either from traditional “legacy” customers that consume propane, butane and natural gasoline or from new ethane-consuming projects such as proposed ethylene crackers. What’s already been done to address the demand side of the NGL equation, and what’s being planned?  Today, we conclude our series on NGL infrastructure in the Upper Ohio River Valley with a look at where all those NGLs will be heading.
NGL production in the Marcellus and Utica is expected to top 800 Mb/d within a year or so and may top 1 MMb/d or even 1.2 MMb/d by the 2020 if the recent pullback in drilling is reversed. Given that it can be challenging to store NGLs (ethane in particular) and that the region has little in the way of NGL storage capacity, the increasing supply of NGLs from southwestern Pennsylvania, northern West Virginia and eastern Ohio needs to “join together with demand” (as our series title has been hinting at). Of course some ethane can be “rejected” into the natural gas, but there are BTU limits to pipeline-quality gas—and besides, gas/NGL producers would prefer to sell their ethane to petchem producers, assuming the price is right. The question is, where will the demand for Marcellus/Utica-sourced NGLs come from? Local crackers? Gulf Coast crackers? Export markets?   All of the above?
The last pieces of the region’s NGL puzzle are takeaway capacity and local consumers, whose combined receipt of NGLs needs to roughly match the volumes being produced (minus any ethane being rejected into outlet gas). First, let’s look at pipelines. There are a total of seven existing or planned NGL takeaway pipelines out of the Marcellus/Utica, some ethane-only, some capable of moving batches of ethane and other NGLs, and one planned system focused on moving mixed or “Y-grade” NGLs.

North Dakota natural gas plant expansion: is reporting:
The North Dakota Public Service Commission is deciding on a proposed expansion of the Little Missouri Gas Plant in McKenzie County.
State regulators say Targa Badlands LLC has submitted an application to expand the facility to four gas processing units, at a cost of about $140 million.

Kinder Morgan: will raise its quarterly dividend to 48 cents a share, up 6.7% from the previous dividend of 45 cents. The new dividend will be payable May 15 to shareholders of record on April 30. The energy pipeline company said it remains on track to pay an annual dividend of $2 a share, which would imply an increase in its quarterly dividend to 50 cents a share. Also, expect more acquisitions.

Netflix: shares "explode" after unexpected subscriber growth -- Business Insider.

Hillary suffering from "Brian Williams" syndrome -- invents her grandparents' immigrant history.

News embargo continues:
  • Ebololand
  • ISIS and Mideast implosion
  • Ukraine war
  • Russian ships in English Channel
Greece "drop dead date" now April 24th (earlier, April 9th).

The real story? Reuters is reporting:
Russia's Lukoil was asked to sharply reduce output in Iraq this year and earlier after the country's exports were disrupted by bad weather and quality issues.
"We've got the letter to curb our enthusiasm," Ravil Maganov, who is in charge of Lukoil's upstream division, told reporters.
Regarding Lukoil's production at the huge Iraqi West Qurna-2 oilfield, Maganov said: "We were restricted to 250,000 barrels per day (bpd) due to weather and level of sulphur, we are dealing with the problem."

Jobs: claims surge another 12,000, but Bloomberg sees only good news --
While a Labor Department report in Washington Thursday showed jobless claims increased by 12,000 to 294,000 in the week ended April 11, readings this low are typically consistent with an improving job market. The median forecast of 50 economists surveyed by Bloomberg called for 280,000. The total number of people currently receiving benefits was the lowest since 2000.
  • expectations: 280,000
  • 280,000 would have been a decrease from previous week
  • instead, it's an increase
  • and, a huge increas
and, Bloomberg sees nothing but good news. Wow. 

Estimates in the Bloomberg survey for jobless claims ranged from 260,000 to 300,000. The Labor Department revised the prior week’s reading to 282,000 from an initially reported 281,000.
The four-week average of claims, a less-volatile measure than the weekly figure, was little changed at 282,750 compared with an almost 15-year low of 282,500 in the prior week.
It would be interesting to see who forecast 260,000. Must have been joking. Or smoking.

This comes on top of the 14,000 surge in new claims last week; these past two weeks completely "erase" the anomalous / strange report of April 2, 2015.


Apple Watch pre-orders likely exceeded 2.3 million; they sold out in six hours. 

Apple clarifies:
Apple Watch orders will continues to be taken exclusively online through May and deliveries will begin April 24 as planned. Apple is limited to on-line puchases of the Apple Watch because of "high global interest combined with [their] initial supply...[they] expect this to continue thorough the month of May."
With no walk-in purchases of the Apple Watch available at Apple Stores until at least June, and product reservations for in-store pickup not available yet, it would appear that the Apple Watch's upcoming April 24 launch day could be quieter than usual. The long lines that typically accompany an iPhone launch, for example, could be a lot shorter than usual at many Apple retail stores around the world.

Fortunately, disappointed customers can rest assured that Apple's iconic lineups will not be going away forever. Ahrendts ensured in her memo to retail employees that not all Apple products will launch the same way as the Apple Watch, adding that both Apple and its customers love the long lines and that there will be many more of them to come in the future.
And yes, Ms Ahrendts is back-pedaling on her feelings about Apple lines. Give her a break. She's new to Apple. She's used PCs all her life.

A Note To The Granddaughters On Why The Apple Watch Will Do Well

One of the books I'm currently reading -- for the second time -- is On the Origin of Tepees, Jonnie Hughes, c. 2011, which I picked up on my last trip to the Bakken. I bought it at Books on Broadway, perhaps the best bookstore west of the Missouri-Mississippi until you get to Powells in Portland, Oregon.

From pages 90 - 91:
Then, from 1865, appearing in the stores on Main Street, a unique addition: the Boss of the Plains, a hat made back east by one J. B. Stetson. It fitted the Wild West like a glove. It was shaped like some of the existing western creations, but it was much better made, crafted form quality fur felt, which ensured that it was entirely waterproof; and most important, it was new. The townfolk clamored for it. An elegant, civilized western hat -- with a great name!

Buyers wanted to be "bosses of the plains."

Compared with the other hats in circulation, the Boss was pricey -- at least a half a month's wage to a cattle driver -- but because it was pricey, it became a status symbol; and because it became a status symbol, it was extremely desirable. Within only a few months every frontiersman and cattle driver had to have one.
The Apple Watch watch has begun; social media sites are noting celebrities wearing the new Apple Watch. Sort of proves the point.