Thursday, April 30, 2015

Breaking News: President Obama Finds Another Reason To Delay Action On Keystone XL North -- April 30, 2015

Why not? Reuters, the president's private news outlet said this was the prudent thing to do, going back to JFK:
There is historic precedent for Washington to be cautious. In 1963, when relations between President John F. Kennedy and Conservative Prime Minister John Diefenbaker were poisonous, the United States accused Ottawa of not meeting its commitments to NATO.

And, of course, he can't act on the Keystone XL once the US presidential campaign gets into full swing which will begin later this fall -- just about the time the Canadian election is over. 

And with that, I'm back on the road again.

NIne (9) New Permits; Fourteen Wells Coming Off Confidential List Friday -- April 30, 2015

Active rigs:

Active Rigs86187185210173

Nine (9) new permits --
  • Operators: Abraxas (6), Whiting (2), Slawson
  • Fields: North Fork (McKenzie), Zenith (Stark), Heart Butte (Dunn)
  • Comments:
Wells coming off confidential list Friday:
  • 28471, 533, Triangle, State 152-102-36-25-8H, Elk, t11/14; cum 58K 3/15;
  • 28566, drl, CLR, Wiley 5-25H, Pershing, no production data,
  • 28792, drl, Abraxas, Jore Federal 2-11-7H, North Fork, no production data,
  • 28980, 947, Slawson, Ironbank 7-14-13TFH, Stockyard Creek, t2/15; cum 2K 2/15;
  • 28982, SI/NC, WPX, Mandaree 24-13 HZ2, Spotted Horn, no production data,
  • 29107, drl, Hess, EN-Uran A-154-93-2215H-12, Robinson Lake, no production data,
  • 29439, drl, Murex, Sherry Ann 13-24H, Temple, no production data,
  • 29484, drl, Statoil, Charlie Sorenson 17-8 5TFH, Alger, no production data,
  • 29495, 2,442, Whiting, Koala 13-31-25-1H, Poe, t3/15; cum --
  • 29589, SI/NC, EOG, Fertile 58-0333H, Parshall, no production data,
  • 29607, 123, Enduro, NSCU M-7-8-H1, Newburg, a Spearfish/Charles well, t12/14; cum 6K 3/15;
  • 29646, SI/NC, SM Energy, Virgil 2B-16HN, West Ambrose, no production data,
  • 29753, drl, SHD, Avalanche 36-16-TF1, Big Bend, no production data,
  • 29755, conf, SHD, Avalanche 36-14-MB2, Clarks Creek, no production data, 
NOTE: "NC" = not completed (drilled to TD, awaiting completion). 

Five (5) permits canceled:
  • XTO cancels five permits for wells in McKenzie County (Arlene Federal, Cross Federal, Johnson Federal)
  • Hess cancels a permit for a GO-Dahl well in McKenze County
  • Whiting cancels a permit for a Skunk Creek well in Dunn County
One (1) producing well completed:
  • 28469, 458, Hess, EN-Rehak-155-93-0718H-8, Alger, t4/15; cum--
It appears Zavanna converted the Brushy Bill 1-19H well (#16723) to a SWD.

Oil And Gas Bills -- North Dakota State -- April 30, 2015 -- NOTE DISCLAIMER


January 12, 2016: current North Dakota oil and gas tax structure

For The Archives
No Longer Current
Current As Of Date Originally Posted
I received the following from a reader (and a huge thank-you to the reader). I posted his note as I received it (with some editing of verbs in the "not passed section).

I did not post the links (I will post those later -- for some reason the PDF links were not downloading -- probably a slow server where I am right now). You can probably find the bills by starting here:

As usual, I post these things quickly and there will be typographical/factual errors. If this is important to you, go to the source (and I will get the links as soon as I can, but it might not be today).

It will take me awhile to "digest" all of this. I'm sure some of this language -- as clear as it is -- will still result in quite a few questions. My hunch is The Bismarck Tribune and The Dickinson Press will write about these bills. Stay tuned.

HB1476: With only a few days left in the session HB1476 was proposed and passed out of the House. Several amendments were then passed by the Senate and the House concurred with the amendments. The Governor has signed the bill.
Some of the major provisions of the bill are (please read the bill to ensure you understand all the changes):
a) It does not matter if the big trigger takes effect or not, the extraction tax will go to 5% on January 1, 2016;
b) The triggers will be eliminated. Any well completed prior to December 1, 2015 that is eligible for any exemption will only be able to take advantage of the reduced rate until November 30, 2015;
c) If the average price of a barrel of oil is above $90 (indexed for inflation) for three consecutive months, the extraction tax will increase to 6%;
d) The rate will trigger back down to 5% following three consecutive months below $90; e) Removes the tertiary recovery project using CO2 exemption for wells in the Bakken or Three Forks formations, and for those wells outside of the Bakken, the exemption would be for a period of five years; SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties.
The bill passed and was signed by the Governor.

SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties. The bill passed and was signed by the Governor.

SB2318 - This bill creates a tax exemption for materials used in compressing, gathering, collecting, storing, transporting or injecting carbon dioxide for use in enhanced recovery of oil or natural gas. The bill was heard in committee and amended to include a study on the CO2 exemption during the 2015-16 interim. It passed the Senate, was amended and passed by the House, and the House amendment was concurred with by the Senate. The bill was signed by the Governor.

SB2343 would have initially required an operator to pay royalties and taxes on any gas flared after 14 days from the initial production, was amended twice to require any orders proposed by the NDIC that could potentially have a fiscal impact on the state of $20 million or more be approved either by the Legislature or the Budget Section. It no longer includes any restrictions on flaring. The bill passed the Senate, was heard in the House, amended and received a “Do Not Pass” vote from the committee.” It was then amended by the House to make it retroactive back to 7/1/2013 and then passed. The House amendment was concurred with by the Senate. The Governor then signed the bill.


HB1187 - This bill would have voided any rules enacted by the NDIC that did not undergo the administrative rulemaking process, which would include the recent flaring and conditioning issues. The bill was amended to change the effective date from July 31, 2014 to July 31, 2015 (thus making it prospective only), and it passed the House but was unanimously voted down in the Senate.

HB1437 - would have extended the little trigger 4 more years to July 1, 2019. The bill was amended to extend the incentive only 2 years and it passed the House. The bill was then amended in the Senate to extend the trigger back to 4 years (to June 30, 2019), and a provision was added to prevent the small trigger from taking effect until 12 months after the large trigger exemption comes off – which allows the state to collect some tax revenue between triggers. The bill then passed the Senate and went to conference committee. With the passing of HB1476, this bill was voted down by the House 89-1.

SB2287 would have reduced the initial period of flaring allowed after first production to 90 days. It also prohibits exemptions unless the volumes of flared gas are less than or equal to 50,000 cubic feet per day. The bill was heard in committee and voted down by the Senate.

SB2319 - would have required an operator to notify each force pooled royalty owner of associated costs of drilling and completing a well before certifying a horizontal, horizontal reentry or two-year inactive well for a tax incentive. It would also have extended the eligibility for cost-free royalty interest to unleased interests pooled after December 31, 2014 and gives nonparticipating owners the option to become a paying owner and adjusts the royalties based on their decision. It was voted down by the full Senate.

SB2337 would have created a permanent extraction tax exemption for 18 months for Non-Bakken wells completed after June 30, 2015. It passed the full Senate, was amended in the House and then voted down 88-3.

SB2342 - would have required a vote by the NDIC to accept a settlement on penalties imposed on the oil industry. The bill was heard in committee but failed to pass.

SB2373 would have provided for payment of 50% share of property taxes on land if a producing oil or gas well is generating royalty payments to those owners. The bill was unanimously voted down.


Again, if this is important to you, go to the source. I am traveling and did not get a chance to proofread as much as I should have. I'm not concerned about the content sent by the reader; it's my additional comments that might have errors.

Feel free to leave comments if you have questions. I will get to the comments before midnight tonight if I find a cooperative McDonald's or Starbucks farther souther.


Last legislator getting "out of Dodge."

Photograph taken west of Williston on April 28, 2015.

Reader Sends Link Regarding Crude Oil's Recent Sawtooth Price Pattern -- April 30, 2015

A reader over at the Discussion Group sent this link; nice article. An excerpt:
On a go forward basis, the reason for price excursions will be real changes in shale oil production together with speculative beliefs in this regard. I have asserted in previous posts that the US has unwittingly become the swing producer, meaning when it sneezes world oil catches a cold. The Saudis used to have this status together with OPEC determinism of oil supply.
Recently Boone Pickens shared a stage with former EPA head Carol Browner and ex-secretary of energy, Steve Chu, discussing the environmental safety of shale oil and gas production; no doubt the debate was entertaining. Associated with this occasion Pickens stated to the press that the US was responsible for the oil price crash, not the Saudis. While this is not exactly news to at least readers of my posts, I cannot recollect a causal link being suggested by any person vested with expertise.
Most of the press has been on why the Saudis did it, rather than whether they did it. Damaging US shale oil production and hurting the economy of Iran and weakening Syria’s Assad (the latter through impoverishing financier Russia) were the principal theories advanced. Assuming the validity of Pickens’ assertion, one can conclude that if US production brought the price of oil down, then reduction in the same would send it back up. One theory of Saudi motivation would be supported.

Paddlefishing In North Dakota -- April 30, 2015

The Dickinson Press is reporting:
Snagging is legal in all areas of the Yellowstone River in North Dakota, and in the area of the Missouri River lying west of the U.S. Highway 85 bridge to the Montana border, excluding that portion from the pipeline crossing (river mile 1,577) downstream to the upper end of the Lewis and Clark Wildlife Management Area (river mile 1,565).
Snaggers should be aware that mandatory harvest of all snagged paddlefish is required on Tuesdays, Wednesdays, Fridays and Saturdays. On these days, all paddlefish caught must be tagged immediately.
Legal snagging hours are from 8 a.m. to 9 p.m. daily. Snaggers are allowed only one tag per season.
Snag-and-release of all paddlefish is required on Sundays, Mondays and Thursdays.
Those planning to participate during snag-and-release-only days need to have in their possession a current season, unused paddlefish snagging tag. Use or possession of gaffs is prohibited on snag-and-release-only days, and, if it occurs, during the snag-and-release extension period.
All paddlefish snagged and tagged must be removed from the river by 9 p.m. of each snagging day. The use or possession of a gaff hook within one-half mile in either direction of the Highway 200 bridge on the Yellowstone River is illegal at any time during the snagging season.
If the season closes early because the harvest cap is reached, an extended snag-and-release-only period will be allowed for up to four days.
Much, much more at the link. 

For newbies: paddlefishing is NOT the same as paddleboat fishing. 

Apparently Someone Missed The Memo: The Bakken Boom Is Over -- April 30, 2015

The Bismarck Tribune is reporting:
The North Dakota Public Service Commission approved Wednesday permits for three electrical power infrastructure projects in western North Dakota being planned by Basin Electric Power Cooperative.
The projects, costing about $445 million, involve expansions of two natural gas powered generating stations and a new electric transmission line in the Oil Patch.

The first permit is for a $161.2 million expansion of the Pioneer Generating Station in Williams County, about 15 miles northwest of Williston. Basin Electric plans to add 111 megawatts of electric generation capacity to the station consisting of 12 engines running on natural gas supplied to the site by an existing pipeline. The new engines will be constructed adjacent to three existing turbines at the location, bringing the total capacity at the site to 246 megawatts. [$161.2 million / 111 MW = $1.5 million / MW]
The second permit is for a $149 million expansion of the Lonesome Creek Station in McKenzie County, about 14 miles west of Watford City. Basin Electric plans to add 135 megawatts of electric generation capacity to the station by adding three 45-megawatt, natural gas-fired combustion turbines. The turbines would be adjacent to three similar turbines at the location, bringing the total capacity at the site to 270 megawatts. [$149 million / 135 MW = $1.1 million /MW]
The third permit issued is for a $135 million North Killdeer Loop Phase I project in McKenzie County, which involves 28 miles of a new 345 kilovolt electric transmission line. The project will also include the construction of two substations. The line would start from the proposed Patent Gate Substation north of Arnegard and would extend generally eastward to the proposed Kummer Ridge substation east of Watford City.
The locations are very, very interesting. Maybe more on that later, when I get caught up, after traveling. 

California Reality -- April 30, 2015; Dickinson Refinery To Be On-Line By May?

The Dickinson Press is reporting:
Progress [of the MDU-Calumet topping plant west of Dickinson] toward operation, which began with a March 2013 groundbreaking, has been slower than expected. Rasmussen said the goal of having the facility fully operational by the end of May looks certain.
Interim plant manager replaced; new manager named.  

IIRC, this plant was supposed to be on-line last November/December time frame, then slipped to 1Q15, and now is near the end of 2Q15. 


The Los Angeles Times is reporting:
Gov. Jerry Brown is expected to announce Thursday that the state is substantially trimming the amount of fish and wildlife habitat it plans to restore in connection with a controversial project to replumb the heart of California's water system.
This month, state water officials said they were overhauling a proposal to construct two massive water tunnels under the Sacramento-San Joaquin River Delta and restore more than 100,000 acres of delta habitat.
Among the changes that Brown is expected to detail at an Oakland news conference is the decision to move ahead with just 30,000 acres of habitat work in the next 3.5 years.
Years in the making, the plan is designed to lessen the environmental harm of delta water exports by building a new diversion point on the Sacramento River that would feed two 30-mile tunnels connected to existing pumping facilities that send supplies south to San Joaquin Valley growers and Southland cities.
The project also called for restoring 100,000 acres or more of habitat over five decades at a cost of $8 billion in federal and state funds.
A major goal of the plan was to gain a 50-year environmental permit for delta exports that would ease the endangered species restrictions that have cut delta deliveries.
But state water resources Director Mark Cowin this month said it had become apparent that the project couldn't meet the tough federal requirements for such long-term approvals.

Earnings -- This Is Not An Investment Site -- April 30, 2015

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

XOM earned $4.9 billion in the first quarter, down 46 percent from the same period in 2014, the company announced Thursday. That breaks down to $1.17 per share vs forecast of 83 cents/share. Huge beat.
Meanwhile, Exxon increased its dividend by 6% on Wednesday to 73 cents a quarter up from 69 cents. That implied a $12.2 billion payout to investors, but it wasn’t certain the payout would be that big until the company said Thursday how many shares are outstanding. But, yes, that’s the right projection
Business Insider says XOM "smashes" expectations

COP tops forecast.  COP reported an 18 cent per-share loss on Thursday for Q1, but beat analysts estimates for a 19-cent loss.

Calfrack earnings press release here. 29 cents vs loss of 14 cents forecast?

CARBO Ceramics press release here. $1.24 loss vs a loss of 49 cents forecast?

Cardinal Health beats by 3 cents; profit rises by 16%; proxy for ObamaCare.

Marathon Petroleum Corporation beats by 38 cents.

Phillips 66 profit falls 37%. $1.79/share vs forecast of $1.43.

Ultra Petroleum beats by 9 cents.

Abraxas sinks after hours; declares a 10% increase in quarterly dividend. Reported 17 cents/share vs forecast of 27 cents/share.

Cheniere with a big beat; forecast a loss of 37 cents; came in at a lost of 23 cents.

Enbridge Energy Partners (EEP) beats by 3 cents.

EPD: barely misses; forecast, 33 cents; reported 32 cents; increased distribution to $1.50/unit on an annualized basis;

"Hot-Dam" As We Used To Say: Spending Up, Unemployent Down -- April 30, 2015

Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 262,000 for the week ended April 25, the lowest reading since April 2000.
It was the eighth straight week that claims remained below 300,000, which is usually associated with a strengthening labor market, suggesting March's moderation in job growth was likely an aberration. 

Economists polled by Reuters had forecast claims falling to 290,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 last week to 283,750.
Active rigs:

Active Rigs86187185210173

RBN Energy: this is a keeper -- an update on the Monterey tight oil play.
RBN Energy takes a closer look at the Monterey tight oil play, which sits beneath parts of central and south-coastal California.
As recently as 2011, the EIA was saying the Monterey play had about 15 Billion Bbls of technically recoverable oil, more than all the other tight-oil/shale plays in the Lower 48 combined. (In that same estimate, the Bakken was estimated to have about 4 Billion Bbl of technically recoverable oil, and the Eagle Ford about 3 Billion Bbl.)
By 2014, however, EIA had dramatically honed back the Monterey estimate to only 600 Million Bbl—a 96% drop. (That’s like hearing, “No sir, your gas tank’s not full. You’re actually running on fumes.”)
EIA said the big downgrading of the Monterey play’s potential—at least given current technology—was tied to new geological information and the lack of production growth like that seen in the Bakken and Eagle Ford shales.
Subsequent industry reports have  indicated that the Monterey play’s geology and that of the Bakken and Eagle Ford are like night and day, with the Monterey play’s being much more complex—and less predictable.
As noted, this is a keeper. It will be archived by the source, at the source.