Friday, May 8, 2015

US Oil And Gas Industry -- Sputtering Back To Life, One Rig At A Time -- RIgzone

Bloomberg via Rigzone is reporting:
The oil boom isn’t dead after all. For the first time in five months, a rig in the Williston Basin, where North Dakota’s Bakken shale formation lies, sputtered back to life and started drilling for crude once again.
And then one returned to the Permian Basin, the nation’s biggest oil play, field services contractor Baker Hughes Inc. said Friday.
Shale explorers including EOG Resources Inc. and Pioneer Natural Resources Co. say they’re preparing to bounce back from the deepest and most prolonged slowdown in U.S. oil drilling on record. The country has lost more than half its rigs since October, casualties of a 49 percent slide in crude prices during the last half of 2014.
Futures rallied above $60 a barrel earlier this week, and a sudden return to oil fields would threaten to end this fragile recovery.
“You’re inviting a lot of pent-up supply to come back into the market -- not only do you have people drilling again, but you have this fracklog of over 4,000 uncompleted wells,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by phone.
“And then we’re in a situation where the market could easily go back into the mid- $50’s.” While rigs are returning to some fields, the total U.S. count has continued to decline, losing 11 this week to reaching a four-year low on Friday.
The drilling slowdown won’t reach a real bottom for about another month, James Williams, president of energy consultant WTRG Economics, said by phone from London, Arkansas.
One rig at a time. Reuters at Rigzone is reporting:
After weeks of idling rigs on slumping crude prices, U.S. oil drillers added rigs to the Permian Basin for the first time this year.
Energy companies increased by one each the number of oil rigs in the Permian basin of West Texas and eastern New Mexico - the biggest and fastest growing U.S. shale oil field - and in the Barnett in Texas. That was the first increase in the Permian since December and the first in the Barnett since March.
Overall, the number of active oil rigs declined for the 22nd week in a row, but the rate of that decline has slowed in recent weeks, suggesting the collapse in drilling may be coming to an end as prices recover after falling 60 percent from June to March.
The number of rigs drilling for oil fell by 11 this week to 668 - the smallest drop since early April - after declining 24 and 31 in the prior two weeks, Baker Hughes said. With the oil rig decline this week, the number of active rigs has fallen to the fewest since September 2010, according to Baker Hughes data going back to 1987.

Week 18: May 3, 2015 -- May 9, 2015

More videos of the Bakken
The BHI complex west of Williston
New bridge being constructed southwest of Williston
Highway 85 towards Alexander
Traffic across Lewis and Clark bridge southwest of Williston
Traffic south of Williston

Random look at a Three Forks Second Bench well; 161K bbls in less than 5 months
Twenty new permits on May 7, 2015
White Butte Oil Operations: dual lateral; 320-acre spacing; huge wells
Another staggering HRC well
Random look at a very busy area in the Bakken
Hearing dockets, May, 2015

Derailment, explosion in Heimdal, North Dakota; no injuries 
Bakken CBR to east coast refineries setting new records -- EIA

Re-fracking may not be the way to go -- EOG 
Halo effect re-visited

MDU-Calumet Dickinson refinery begins production; and here;

Bakken economy
Watford City elementary school sets records

Quarterly ND lease sales
The great oil debate
Random look at Whiting's non-core asset sale
Whiting transcript; Whiting has best well to date in the Bakken
Update on honey bee hive collapse

The "Business" Of Medicine -- May 8, 2015

What global warming? The Bismarck Tribune is reporting:
A storm with up to two feet of snow in May? 
It’s a real possibility in the Black Hills of South Dakota and maybe into the rest of western South Dakota, western North Dakota and northeastern Wyoming Saturday night into Sunday with rain turning to snow.
As much as 24 inches of snow is possible in the higher elevations of the Black Hills with lesser amounts in other winter storm watch and warning areas. Rapid City could get six to 12 inches, the National Weather Service said, with western North Dakota getting up to six inches of heavy, wet snow.
ObamaCare: The Gift That Keeps On Giving

Consumer Reports is reporting:
When it came time for Lisa of Santa Cruz, California, to have her baby, she checked in to her local in-network hospital, using her in-network OB/GYN and neonatologist. She hadn’t been planning on getting an epidural, but ended up needing one.
Lisa, who has insurance, also hadn’t planned on the hefty price tag for that epidural. Everything—from the doctor and delivery, to the hospital room and nursing services—was covered under her insurance . . . except for the anesthesiologist who administered the epidural. Cost for the anesthesiologist: $3,000.
Lisa eventually found out that even though the anesthesiologist worked at the in-network hospital, this physician was considered out-of-network. Even worse, it turned out there were zero in-network anesthesiologists at that hospital.
You have no idea how much I detest the "business" of medicine. And of them all, the anesthesiologists are most likely, it seems, to work "out-of-network."

It would be interesting to know, in addition, how much Lisa's co-pay was, and what her deductible was.

ObamaCare and the "business of medicine."


Fox News is reporting:
The Illinois Supreme Court on Friday struck down a 2013 law that sought to fix the nation's worst government-employee pension crisis, a ruling that forces the state to find another way to overcome a massive budget deficit. 
In a unanimous decision, the seven justices declared the law passed 18 months ago violates the state constitution because it would leave pension promises "diminished or impaired." 
"In enacting the provisions, the General Assembly overstepped the scope of its legislative power. This court is therefore obligated to declare those provisions invalid," Justice Lloyd Karmeier said in writing the court's opinion. 
The decree puts new Republican Gov. Bruce Rauner and Democrats who control the General Assembly back at the starting line in trying to figure out how to wrestle down a $111 billion deficit in what's necessary to cover its state employee retirement obligations. The hole is so deep the state has in recent years had to reserve up to $7 billion -- or one-fifth of its operating funds -- to keep pace.
Wouldn't it be a hoot if tight oil or tight natural gas was found under Chicago? Talk about "Hobson's Choice."
It's a Muscle Shoals Night, I Guess

Steal Away, Jimmy Hughes

Thirteen (13) New Permits -- North Dakota -- May 8, 2015

Active rigs:

Active Rigs84191185209177

Thirteen (13) new permits --
  • Operators: XTO (7), BR (5), Ballard
  • Fields: Heart Butte (Dunn), Sand Creek (McKenzie), Chatfield (Bottineau)
  • Comments:
QEP abandons a producer:
  • 17261, PA/535, QEP, Henderson 4-1H, Spotted Horn, 500,000 lbs (frack), t12/08; cum 61K 3/15; the goal to target the Three Forks was not achieved due to unstable shale in the upper 10' of the Three Forks and the absence of a Sanish section. They, instead, drilled the Middle Bakken. According to a report in the file, this well "has extremely high H2S conditions; this is a safety hazard. Due to this hazard, the well is only produced once a month."
This is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

The AP is reporting:
Dakota Plains Holdings Inc. on Friday reported first-quarter net income of $183,000, after reporting a loss in the same period a year earlier.
The Wayzata, Minnesota-based company said it had profit of less than 1 cent on a per-share basis.
The oil pipeline company posted revenue of $9.4 million in the period.
The company's shares closed at $1.49. A year ago, they were trading at $2.10.

Talk About A Goldilocks Economy -- May 8, 2015

Jobs numbers coming in just right -- not too much, not too little. It will allow Ms Yellen to try raising the "rate" a quarter of a percent if we continue seeing numbers like the one we saw today. [And, of course, the numbers are bogus, but it doesn't matter; it is what it is. Ms Yellen simply needs a "cover story" to defend her actions.] Having said that, the market movers and shakers think different. The market surged almost 300 points today? Why? They know how weak the numbers are -- almost 100 million Americans have dropped out of the labor force -- the market movers and shakers know Yellen won't raise rates any time soon.

No sign of "new" inflation.

Oil is cheap --- really cheap if one considers what it should be priced simply on historical models, taking "inflation" into account. A huge "thank you" to Don:
February, 1974, the "first' oil crisis: WTI priced at $50.30

Inflation guide can be found here: inflation calculator.

Now, look at the spike in the price of oil back in early 1974:

Prior to the spike: $13.00 oil -- equates to $62.43 today (assuming the exchange in the US dollar is the same).

The 1974 price spike equates to $241.54 today.

And that is what I mean by cheap oil today. 
 And not only is oil cheap, it's in abundant supply, and it's in abundant supply in the US.

A Different View

For the archives:
The Federal Reserve is facing new kind of conundrum: The U.S. economy is slowing even as labor costs are rising.
Consistent with the minuscule first-quarter GDP growth already reported, the government on Wednesday said Q1 productivity fell 1.9% on annualized basis -- marking the first back-to-back quarterly decline in productivity since 1993.
In the same report, unit labor costs rose 5%, the most since the first quarter of 2014 and the latest sign of what the Fed called "modest upward pressure on wages" in last month's Beige Book report.
Meanwhile, ADP reported private sector payrolls rose just 169,000 last month, the lowest since January 2014 and the fourth-straight month of weaker-than-expected growth.
The latest reports aren't making life any easier on Fed Chair Janet Yellen and the FOMC.  While "further improvement" in both growth and the labor market remain elusive, a rebound in oil prices, rising wages and the recent backup in bond yields could mark the early stirrings of higher inflation expectations, if not actual inflation.
But don't expect a Fed rate hike in June or September -- or anytime in 2015 for that matter, says Sri Thiruvadanthai, director of research at the Jerome Levy Forecasting Center. "The Fed is not going to be able to raise rates" this year, he says.
"Underneath all the distortions, the economy is weakening."
And that's why the stock market is trading near all-time highs. The economy is weakening.

Buy High, Sell Low
The big disconnect in the US stock market just keeps getting bigger.
A new Bank of America Merrill Lynch survey published Thursday finds that US investors have pulled $99 billion out of equities year-to-date — including net outflows in 11 of the past 12 weeks — despite stock prices continuing to break record highs.
Sophia explaining the volatility ("ups and downs") of the stock market to her grandfather:

The gears on the side of the box are used by the "invisible hand(s) of the movers and shakers" who manipulate Wall Street.

Prediction Re-Visited

A while back I predicted that US gasoline demand would hit a new record over the three-day Memorial Day weekend later this month.

Today the AAA reported:
With more money in their pockets thanks to lower gas prices and an improved job market, AAA expects more than 37 million Americans to travel for Memorial Day, the most since 2005.
AAA said Friday that the number of Americans taking a trip of 50 miles or more will rise 4.7 percent to 37.2 million over the period May 21 to May 25.
Nearly nine of 10 travelers, or 33 million, will drive to their destination, making for crowded highways.
Gasoline should be around $1 cheaper this Memorial Day. The average price for a gallon of gas Friday was $2.66. Last year on the holiday it was $3.66.
AAA says the number of people flying should rise 2.5 percent. A thriving stock market has boosted the net worth of wealthier Americans, who more easily can afford to fly for vacation.
Of course, if everyone drives EVs and everyone flies solar-powered aircraft, all bets are off. So, we'll see. This will be the chart to watch.

Random Look At A Three Forks Second Bench Well; 161K Bbls In Less Than 5 Months -- May 8, 2015

The scout ticket shows an IP of 171; that was in error; the sundry form has 1,771 bbls for an IP:
  • 27589, 1,771, Enerplus, Swallow Tail 152-94-32D-29H, Antelope, Sanish pool, Three Forks 2nd bench, 39 stages, 9.4 million lbs, t11/14; cum 161K 3/15; the scout ticket is in error; 
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This Is Not An Investment Site; Do Not Make Any Investment Or Financial Decisions Based On What You Read Here Or Think You May Have Read Here -- May 8, 2015

Yellen says market overpriced -- May 6, 2015
Yellen was right; markets are overpriced -- May 7, 2015

Market surges, oil up -- May 8, 2015:

Global Warming A UN Ruse -- Australian Prime Minister Advisor

AFP is reporting:
Australian Prime Minister Tony Abbott's top business advisor on Friday claimed climate change was a ruse encouraged by the United Nations to create a new authoritarian world order under its control.
Maurice Newman, chairman of the Prime Minister's Business Advisory Council, said the real agenda was "concentrated political authority. Global warming is the hook".
Kennedys Flying To Rapid City To Go Skiing

Link here. Snowstorm in the Black Hills and another one forecast for this Sunday; recent snowstorm in Colorado.

At Least It's Hard To Catch

Fox News is reporting:
Ebola has been discovered inside the eyes of a patient months after the virus was gone from his blood.
Some survivors have reported eye issues, but how often they occur is not known. The virus also is thought to be able to persist in semen for several months. Ebola has infected more than 26,000 people since December 2013 in West Africa.
The new report concerns Dr. Ian Crozier, a 43-year-old American physician diagnosed with Ebola in September while working with the World Health Organization in Sierra Leone.
Crozier was treated at Emory University Hospital’s special Ebola unit in Atlanta and was released in October, when the virus was no longer detected in his blood. Two months later, he developed an inflammation and very high blood pressure in one eye, which causes swelling and potentially serious vision problems.
The Ebola news embargo remains in effect. 


The Boston Globe is reporting:
What’s more, a disproportionate chunk of the money that the city has goes to its most pressing need: public safety. While cities like Boston and New York capitalized on dramatic declines in crime to fuel urban renaissances over the past three decades, Baltimore continues to suffer from chronically high levels of violence. In 2016, Baltimore will spend about $130 million more than Boston will on policing. This makes sense and it doesn’t — Baltimore had 235 homicides in 2013. Boston had 40 that year. (Baltimore's population is slightly less than that of Boston.)
Sort of goes back to the same questions that need to be asked in Milwaukee.


Unemployment rate drops to 5.4%. Folks are coming out of the woodwork to snatch up those jobs now that the minimum wage has been raised. Reuters is reporting:
U.S. job growth rebounded last month and the unemployment rate dropped to a near seven-year low of 5.4 percent, signs of a pick-up in economic momentum that could keep the Federal Reserve on track to hike interest rates this year. Nonfarm payrolls increased 223,000 as gains in services sector jobs offset weakness in mining, the Labor Department said on Friday.  
The one-tenth of a percentage point decline in the unemployment rate to its lowest level since May 2008 came even as more people piled into the labor market. 
"... as more people piled into the labor market." LOL. Whatever.

This has nothing to do with "people piling into the labor market." The 5.4% unemployment is all about people dropping out of the labor market. A record 93,194,000 Americans are NOT working; a record 56,167,000 women are not in the labor force. That's 93 million Americans are not working. Most of them are in Baltimore. That's 56 million American women not working. Most of them are in the suburbs.

Typographical Errors

Back to this story: look at all the typographical errors in a story on "education." I assume the story was a press release written by the NEA. If you missed the typographic errors, two hints:
  • parental volvement is missing a syllable
  • el-sewhere is divided in an interesting spot
The second typo (el-sewhere) has been fixed; the first typo has not.

Not In The News Today

Saudi Arabia.

In The News Today

Puerto Rico could run out of cash by September; miss debt payments.
The Bakken 

Active rigs:

Active Rigs84191185209177

RBN Energy: ocean-going ships and low-sulfur requirements. Not all that painful. Cruise ships were saved by lower oil prices overall.
About this time last year (May 2014) ship owners and companies using their vessels to transport everything from dry bulk cargo to oil and even people (cruise liners) were pretty concerned about the impact of the new 0.1% sulfur regulations coming into effect in January 2015.
That was because back then the options open to bunker fuel buyers needing to comply with the new ECA rules were all looking expensive to implement and it was expected by many in the market that shipping costs would increase sharply as a result. We’ll first take a look at the options available to meet the ECA regulations, then at how shipping companies chose to respond before January and finally at what has happened since.