Five Interesting Stories From Rigzone -- May 13, 2015; Iraq's Largest Refinery Could Be Destroyed

Three of the stories have to do with the current glut of global oil:

• Oil glut worsens as OPEC market-share battle just beginning -- Reuters
• North Dakota posts surprising jump in oil output in March -- Reuters
• Oil price falls as refiners reduce crude runs by most in four (4) months -- Bloomberg

A fourth story has to do with EIA / US data collection

• US set to get more accurate oil production data -- Kemp, Reuters

And perhaps most interesting of all:

• Iraqi refinery may be destroyed in battle to save it -- Reuters

Islamic State militants have dug trenches around natural gas and hydrogen tanks at Iraq's largest refinery, raising the stakes in a battle where the price of victory may be the refinery itself.

The militants launched their fiercest attack on the installation last month and now control large parts of the complex in which 200 Iraqi security forces are trapped.

The Pentagon last week said the outcome of the battle – in which Iraqi security forces backed by coalition warplanes are fighting to retake the refinery from Islamic State militants – could not be predicted but warned it was going in "the wrong direction".

Islamic State appears to have committed itself to an all-out fight there, proving it can still seize the initiative after being ejected from the city of Tikrit further south in early April, military officials and experts say.

The battle highlights the disordered state of the security forces, which partly disintegrated last summer and must now fight on several fronts whilst holding ground they have retaken.

President Obama said ISIS was simply the JVs; the Iraqis are experiencing something different:

 "What we see on the ground is a modest number of forces compared within the ongoing build-up of Islamic State inside the town and also the refinery," said Mohammed Mahmoud al-Jubouri.

As for the refinery:

Michael Knights, fellow at the Washington Institute for Near East Policy, said it would be difficult to salvage the refinery as a functioning facility.

"It's regrettable we have to lose the refinery but now that ISIS has committed itself to another one of these anvil type battles – the hammer's in the air – they've done it Kobani and they bled themselves white."

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Not Ready For Prime Time

Don sent me a comment regarding the Baghdad/Iraqi refinery. My reply, not ready to for prime time, and minimally edited:

If the refinery is destroyed, there are so many, many story lines: it is the country's biggest refinery; 

• that alone will create significant problems for country's energy infrastructure;
• it will be a huge recruiting tool for ISIS
• if Iraq throws everything it had at ISIS in this one battle and could not win, the Iraqis know what they are up against;
• it's hard to see anything good come out of this for Iraq 

The US mainstream media isn't reporting this. If Obama's goal is to make Iran the superpower in the Mideast, the fall of Iraq is monumental. He just has to make it look like he did what he could to save Iraq, but if, at the end of the day, they couldn't save themselves, there wasn't much more he could do.

By the way, if you've been following the Jeb Bush story -- how he may have gotten himself in trouble over his answers on toppling Saddam -- one gets the feeling that there is nothing more Obama would like to see than Iraq implode. It would be the end of the story -- and a very bad ending -- that was created by Bush.

I think Obama's biggest fear is that Jeb Bush gets in the White House. The GOP would re-write history; reveal everything Obama did; the GOP would destroy his legacy and destroy his programs.

If there are images of Baghdad falling just as the 2016 elections are underway, one would think that Bush would get trounced ... simply for being Bush. Somehow I think Obama is enjoying this play out. He may be even orchestrating it (in the sense of limiting the coalition response to taking ISIS out).

Looking back on all this, maybe President Obama's comments that ISIS was JV was simply to divert our attention, making it easier for Iran to take out Iraq. It's as good a conspiracy theory as any.

Random Look At Production / Well When The Boom Started And Eight Years Later -- May 13, 2015

This is mostly for newbies to the Bakken. These are screen shots from the NDIC web page, "general statistics," and then clicking on "historical monthly oil production statistics."

The Bakken boom began in 2007 in North Dakota. Data points from the first year of the boom (2007) are in the first data base (the column numbers are not in the first screen shot, but they are in the second screen shot):

Compare those numbers with those in the second screen shot, the data points for the most recent nine (9) months in which we have data:

There are many, many story lines. The single most interesting data point for me is in the second screen shot, February, 2015, "bbls per well," 2,796. It seems to be an outlier but I think it can be explained. But I will leave that for another day.

Tax Break Unlikely To Be Triggered -- May 13, 2015

Just as I thought: it was unlikely we would have five months of WTI oil being priced below $52.29 (or whatever the "official"/"required" number was) to trigger the tax break for oil companies in North Dakota.

The AP via Bakken.com is reporting:

Unless oil prices take a sudden nosedive, North Dakota’s petroleum industry won’t start reaping the benefits of a tax cut that would decrease state tax collections by about $80 million a month through November.

State Tax commissioner Ryan Rauschenberger and North Dakota Petroleum Council President Ron Ness say the “trigger” tax break for the oil industry likely won’t happen.

If oil prices average below $55.09 a barrel in May, it will mark the fifth straight month that they will lag below the trigger price and the tax break will go into effect. But oil prices have been about $4 above that so far this month.

Eight (8) New Permits -- May 13, 2015

Active rigs:

	5/13/2015	05/13/2014	05/13/2013	05/13/2012	05/13/2011
Active Rigs	83	190	187	209	173

Eight (8) new permits --

• Operators: Whiting (4), Statoil (2), Emerald (2)
• Fields: Truax (Williams), Ragged Butte (McKenzie),  Boxcar Butte (McKenzie)
• Comments:

Three (3) producing wells completed:

• 28833, 293, SM Energy, Waters 3B-28HS, Ambrose, t4/15; cum 2K 3/15;
• 28873, 527, Hess, GN-Halseth-158-97-3130H-1, New Home, t4/15; cum --
• 29187, 746, Hess, EN-Nelson-155-94-2833H-7, Alkali Creek, t4/15; cum --

Wells coming off confidential list Thursday:

• 27613, A/SI, Oasis, Andre Shepherd 55-1 31-8 6T, Missouri Ridge, it looks like some initial production, but not fracked;
• 27690, drl, Oasis, Logan 5601 13-26 5B,  Tyrone, no production data,
• 28568, dry, CLR, Wiley 7 PA, Pershing, no production data,
• 28843, A, Fidelity, Dakota TTT 27-22-21XH, Sanish, no test date; probably 2/15; cum 45K 3/15;
• 29164, drl, Hess, SC-Norma-154-98-0706H-6, Truax, no production data,

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28843, see above, Fidelity, Dakota TTT 27-22-21XH, Sanish:

Date	Oil Runs	MCF Sold
3-2015	12743	9638
2-2015	6691	4475
1-2015	15069	3845
12-2014	10471	1116

Reason #45,984 Why I Love To Blog -- The Honey Bee Story -- May 13, 2015; Number Of Bee Colonies Increased in 2015

Remember the National Geographic article recently linked on the blog? Today a reader sent a comment regarding that post and now I see an article on the same subject linked over at the Drudge Report. The AP is reporting:

More than two out of five American honeybee colonies died in the past year, and surprisingly the worst die-off was in the summer, according to a federal survey.

Since April 2014, beekeepers lost 42.1 percent of their colonies, the second highest loss rate in nine years, according to an annual survey conducted by a bee partnership that includes the U.S. Department of Agriculture.

But then note this, something I did not know:

But it's not quite as dire as it sounds. That's because after a colony dies, beekeepers then split their surviving colonies, start new ones, and the numbers go back up again, said Delaplane and study co-author Dennis vanEngelsdorp of the University of Maryland.

What shocked the entomologists is that is the first time they've noticed bees dying more in the summer than the winter. The survey found beekeepers lost 27.4 percent of their colonies this summer. That's up from 19.8 percent the previous summer. [More died in the summer than the winter? What percent died in the winter? Spring? Fall?]

Oklahoma, Illinois, Iowa, Delaware, Maryland, Pennsylvania, Maine and Wisconsin all saw more than 60 percent of their hives die since April 2014, according to the survey.

I did not see the #1 state, North Dakota, mentioned in the article. Perhaps because there really is not much of a summer in North Dakota when the big die-off occurred last year.

Then the war of words:

Chief beekeeper for pesticide-maker Bayer said the loss figure is "not unusual at all" and said the survey shows an end result of more colonies now than before: 2.74 million hives in 2015, up from 2.64 million in 2014.

That doesn't mean bee health is improving or stable, vanEngelsdorp said. After they lose colonies, beekeepers are splitting their surviving hives to recover their losses, pushing the bees to their limits, Delaplane said.

Memo to self: collect some honey bees and poll them -- are they being "pushed to their limits?" The ones I see here in Texas seem to be happy and heavily laden with pollen. They don't seem "pushed to their limits at all." 

I am really, really impressed with beekeepers. 

What North Dakotans really hope for: a massive mosquito die-off. It would be nice to see the mosquito population drop so low that mosquitoes were put on the endangered species list. Maybe some high school entrepreneur could market mosquito sex organs to the Chinese as a fertility aid.

North Dakota Oil Production Is Up; Data For March, 2015; The Red Queen Is Still Upright On The Treadmill; Number Of Completions Exceed Number Needed For 1.2 Million BOPD Production

North Dakota production is UP slightly more than 1%; the revised number for March, of course, will be higher:

• March, 2015: 1,190,582 (preliminary)
• February, 2015: 1,178,082 (revised, final); 1,177,094 (preliminary) 

The increase, apparently, surprised some folks. 

Full summary here.

The Director says 110 - 120 completions/month are needed to keep crude oil production at 1.2 million bopd. The number of completions in February was only 42, but the number of wells completed in March: 189. The number of completions necessary to keep daily production near 1.2 million bopd may need to increase if operators choke back wells significantly after the first month or two. Under optimal conditions, Bakken wells have best production during the first six months and then tend to decline fairly quickly.

An increase of 0.1% production in April, 2015, would put us above 1.2 million bopd. 

A lot of story lines. Remember, the EIA predicted that production in the Bakken was to decrease in June, 2015.

Oil output at the Eagle Ford shale play in South Texas is forecast to see the biggest decline, down 47K bbl/day, while production at the Bakken shale play, centered in North Dakota, is expected to drop by 31K bbl/day, the report says.

So, we'll see. 

The operators are making, for all practical purposes, little headway on completions. I guess the "good news" is that the number of wells waiting completion did not increase, but the number did not decrease all that much either -- dropping from 900 to 880. Insignificant.

But then note this: how many wells did operators have to complete just to stay "even"? A whopping 189 completions in March compared to only 42 in February. And the 189 completions were accomplished even though there were more days in March than in February that the frack spreads could not get into the field due to high winds (8 windy days in March vs 5 windy days in February). It was a lot colder lot in February - so, I guess it was pretty much a wash, though February would have been a worse month to try to accomplish completions. But if they accomplished 189 completions and the total number of wells waiting to be completed dropped insignificantly (from 900 to 880 -- well, smarter folks than I can do the math.

Another story line: you can bet a six-pack that wells are being choked back, making it even more impressive that the daily production increased. One can scroll the "high IP wells" and see just how good the IPs are these days.

Despite increased production of both crude oil and natural gas, flaring did not get worse across the state. The capture rate of 80% across the state exceeds the state's goal and things even better on the reservation: 85% of natural gas is captured on the reservation (I wonder how many wells are being choked back to make this number).

Also, did you note the Director's comment regarding permitting? A little big disingenuous, I suppose: the Director said the rate of permitting is picking up. However, only a few operators account for most of the permitting, and most of the permitting is pad drilling -- four to six permits on one pad. And the operators are circling the wagon: drilling in the best areas in McKenzie County for the most part, and some in Williams and Dunn. Except for the Sanish, I think Mountrail County is pretty quiet.

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Seeking Alpha's Summary on Bakken Completions

• North Dakota recorded a surprising jump in oil and natural gas production in March, as producers successfully wring efficiencies out of existing operations in an attempt to maintain production even at depressed prices.
• The state's oil producers pumped nearly 1.2M bbl/day in March, up ~15K from February, while natural gas output rose 14% to 47.2M cf, according to the Department of Mineral Resources.
• The agency says 189 North Dakota wells were completed in March at locations owned by Exxon Mobil, Hess, Continental Resources, and ConocoPhillips, as "these four appear to be more in tune with having normal cash flow, and continue to complete their wells in a more aggressive manner."
• But in a sign of divergent strategies in the state, EOG Resources and Marathon Oil continue to delay fracking.
• Other top Bakken producers include WLL, OAS, NOG and EOX

Director's Cut Is Out, March, 2015 Data; Bakken Production Increased; The Number Of Producing Wells At An All-Time High; It Takes Workers To Maintain Producing Wells

Director's Cut is out.

Disclaimer: this update is always done in haste; typographical and factual errors are likely. This is for my use only. If this is important to you, you should go to the source. 

Comments on today's Director's Cut can be found here: link here. 

Oil:

• March, 2015: 1,190,582 bopd (preliminary)
• February, 2015: 1,178,082 bopd (revised, final); 1,177,094 (preliminary)
• January, 2015: 1,191,198 bopd (all time high was last month)
• December, 2014: revised, 1,227,483 bopd (preliminary - 1,227,344 bopd - preliminary, new all-time high)
• delta: 12,500 bopd; increase of 1%.

Producing wells: 

• March, 2015: 12,439 (preliminary -- new all-time high)
• February, 2015: 12,199 (final revised -- new all-time high)
• January, 2015: 12,181 (preliminary -- new all-time high)
• December, 2014: 12,134 (preliminary, new all-time high)
• November, 2014: 11,951 (revised); 11,942 (preliminary, new all-time high)
• October, 2014: 11,892; revised 11,942 (preliminary, new all-time high)
• September, 2014: 11,758 (revised); 11,741 (preliminary; new all-time high)
• August, 2014: 11,565

Permitting: drilling permit activity decreased slightly from February to March and significantly more from March to April as operators positioned themselves for low price 2015 budget scenarios.

• April, 2015: 168
• March, 2015: 190
• February, 2015: 197
• January, 2015: 246
• December, 2014: 251
• November, 2014: 235
• October, 2014: 328
• September, 2014: 261
• August, 2014: 273
• All-time high was 370 in 10/2012
  

Pricing:

• Today, 2015: $46.00
• One month ago, 2015: $36.25 (lowest since February, 2009, and January, 2015) (all-time high was $136.29 7/3/2008)
• April, 2015: $38.33
• March, 2015: $31.47
• February, 2015: $34.11
• January, 2015: $31.41
• December, 2014: $40.74
• November, 2014: $60.61
• October, 2014: $68.94
• Sept, 2014: $74.85
• August, 2014: $78.46

Rig count:

• Today: 82 (lowest since January 2010) (all time high was 218 on 5/29/2012)
• One month ago: 91(lowest since January 2010) (all time high was 218 on 5/29/2012) 
• April: 91
• March: 108
• February: 133
• January: 160
• December, 2014: 181
• November, 2014: 188
• October, 2014: 191
• Sept, 2014: 193
• August, 2014: 193
• July, 2014:  192

Director's comments:

Rig counts continue to fall. Then number of well completions rose sharply from 42 (final) in February to 189 (preliminary) in March. Oil price is by far the biggest driver of the slow-down followed by oil extraction tax triggers, NDIC gas capture goals, and NDIC oil conditioning rules.

Drilling rig count:

• since April, has dropped another 8 as of today
• dropped 17 more from March to April
• dropped 25 from February to March
• dropped 27 from January to February
• dropped 7 from November to December
• dropped 21 from December to January
• dropped 23 from January to date of previous month's Director's Cut

Rig utilization:

• has fallen rapidly
• 20,000+ feet rigs: 45% (down from 50% last month)
• shallow well rigs: 25% (down from 30% last month)

Well completions:

• March: an astounding 189 (preliminary figures)
• February: 42
• January: 63
• December: 173 (preliminary)
• November: 48

Weather:

• no major precipitation events
• 8 days with wind speeds in excess of 35 mph (too high for completion work)
• 1 day with temperatures below -10F

Wells waiting to be completed:

• At end of March, an estimated 880 wells were waiting to be completed, a decrease of 20
• At end of February, an estimated 900 wells waiting to be completed, an increase of 75
• March, 2015, Director's Cut -- 825 wells -- an increase of 75-- January data
• Previous Director's Cut -- 750, a decrease of 25
• Red Queen: 110 - 120 completions per month to maintain 1.2 million bopd

Flaring:

• unchanged at 19%
• Tioga gas plant steady at 83% of full capacity (84% last month)
• expansion of gas gathering from south of Lake Sakakawea is still delayed

Gas capture statistics:

• statewide: 80% (October 2014 target was 74%; January 2015 capture target is 77%)
• FBIR Bakken: 85% 
• percent of flaring was unchanged even as the volume of flaring increased 7.7 million cfd
• FBIR: 83% (up from 79% last month, which was up from 77% the month before) 

Fracking policies/regulations:

BLM revised final regulations for hydraulic fracturing on federal and Indian lands were published in the CFR on 3/26/15 so they will go into effect 6/26/15. North Dakota and Colorado have intervened in the Wyoming legal challenge of the rules a nd plan to seek an injunction or temporary restraining order to prevent the rules going into effect until the case is settled.

Cold In Texas -- May 13, 2015

Nooners

Wow, it's cold in Texas; had to turn the heat on in the apartment today. Global warming? LOL. The atmospheric CO2 must have dropped below 400 ppm. By the way, rumors are there's an atmospheric CO2 app for the new Apple Watch. It comes pre-installed on the Algore Apple Watch edition. $15,000 edition. Just a rumor.

Today's atmospheric CO2 report:

Today's atmospheric CO2 report was brought to you by Scripps CO2 - Mauna Loa Laboratory - CO2 now.org.

• Delta from 2013 to 2014: 2.94 (0.7%)
• Delta from 2014 to 2015: 1.97 (0.5%)

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For the women, and perhaps for some of the men out there, the book recommendation for this month: Jane Hawking's Traveling To Infinity: The True Story Behind The Theory Of Everything. Surprisingly good. Especially for Anglophiles.

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Good news: Stark County (Dickinson area) rejects new wind farm. The Dickinson Press is reporting:

Applause erupted Tuesday morning after the Stark County Commission rejected a conditional use permit for an 87-turbine wind farm stretching between Richardton and Gladstone.

The developer, NextEra Energy, is headquartered in Florida. Needs to go back home.  NextEra  has no wind farms or solar farms in its home state.

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Reason #5: Why I Love To Blog -- Connecting The Dots -- May 13, 2015

Do a blog site search with this single word: Riverstone.

• Dumbbell crude, March 23, 2015
• Liberty Resources II, LLC, is back in the Bakken, an update, April 20, 2014
• Liberty II Re-Enters the Bakken, January 30, 2014
• Snapshot, May 19, 2013
• Nice article on Liberty Resources, April 26, 2012
• Data points regarding Liberty Resources, April 26, 2012
• Week 12, March 25, 2012
• Liberty Resources, Riverstone Holdings, Carlyle Group, March 21, 2012
• Snapshot, October 23, 2010
• Bakken: other producers, service companies in the Bakken, October 25, 2009

We can add another post to that list.

A reader sent me the link to this Forbes story. Fascinating. But I doubt few readers connected all the dots. Some random paragraphs from the article that are quite fascinating:

Goldman and Aron (where Goldman Chief Executive Lloyd Blankfein got his start) have had a deep connection with Semgroup. In 2004 two former Goldman bankers bought a 30% stake in Semgroup for $75 million through their New York private equity firm, Riverstone. Both men, Pierre Lapeyre and David Leuschen, had helped form Goldman’s commodity trading business, and Leuschen had been a director at Aron.

One possible answer: the Goldman connection. Going after Aron’s cash would complicate matters with Riverstone, which still wields sway over the board. The creditors have reason to keep Riverstone and Goldman happy; the duo has teamed up to buy myriad energy assets in recent years, most notably a $22 billion leveraged buyout of pipeline king Kinder Morgan. They are likely to team up again to buy choice Semgroup assets out of bankruptcy.

There is nothing more exciting than Wall Street interest in the Bakken. 

2Q15 GDP Forecast: A Whopping 0.8 Percent -- 8 Times Better Than The 0.1% In 1Q15

Updates

Later, 11:08 p.m. CT: this headline from CNBC if the story below was not clear enough. The headline: "disappointing April retail sales spell bad news for 2Q15 GDP."

April retail sales come in unchanged, below expectations of a 0.2 percent gain.

Remember, this is not a first quarter number. This is second quarter, and retail sales are a significant component of GDP. Look for downward revisions for second quarter GDP. [GDPNow -- a Federal Reserve forecast -- already suggests how bad the 2Q15 GDP may come in -- see original post.]


Retail Sales are now flat or down four of the last five months.

• April: flat
• March: up 1.1 percent
• February: down 0.6 percent
• January: down 0.8 percent
• December: down 0.9 percent

The pull of Easter spending into March was likely an issue, but what happened to the lower gasoline prices that were supposed to save consumers money?

Later, 11:31 a.m. CT: in the original post below I noted the 1Q15 GDP was 0.1%. In fact, it was revised upward to 0.2% a month later. However, there are now indications that when the final revision comes out this month/next month, we will find that the US economy actually contracted in 1Q15. Definition of a recession: two consecutive quarters of negative growth.
 

Original Post

GDPNow forecast:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.8 percent on May 5, unchanged from May 1. The nowcast for the second-quarter change in net exports in 2009 dollars declined from -$14 billion to -$24 billion following this morning's international trade report from the U.S. Census Bureau.

The talking heads and the pundits will forecast a 2Q15 GDP of 2.5 to 4.25%. The federal reserve is forecasting ... drum roll ... 0.8%.

Meanwhile, in Europe, The Wall Street Journal is reporting:

For the first time since 2010, all four of the eurozone's largest economies (Germany, France, Italy and Spain) recorded growth.

And for the first time since Q1 of 2011, the currency area grew more rapidly than both the U.S. and U.K. The eurozone economy expanded by 0.4% at the start of the year, marking a pickup from the 0.3% growth recorded in the final quarter of 2014. (Comment: is that even statistically relevant?)

Although Germany's economy slowed more than forecast in Q1 (due to sluggish foreign trade and domestic demand), France marched higher. German GDP rose 0.3% at the start of the year, missing forecasts for 0.5% growth, while France expanded at its fastest pace in nearly two years (+0.6%) due to higher consumer spending.

Germany is still on track to outperform the euro area over the next two years as other countries lag behind on the reforms needed to sustain the recovery.

The only good news about these numbers? The numbers did not fall below zero percent.

Best $25 Million Ever Spent By The President -- May 13, 2015

Regular readers know that I am in my John le Carré stage, re-reading Tinker, Tailor and re-watching and re-watching the movie. It becomes fascinating then to read the "true" story of "taking out Osama bin Laden." It appears that OBL was employed as a spy in his later days.

Yahoo!Finance is reporting:

As soon as legendary journalist Sy Hersh's controversial story on the Osama bin Laden raid was published Sunday night, critics pounced and skeptics ripped his account because of its reliance on anonymous sourcing and its lack of documentary evidence.

Now a respected New York Times foreign correspondent, who was based in Afghanistan and Pakistan, writes about a key detail "in Seymour Hersh's Bin Laden story that rings true."

Carlotta Gall writes that she also learned from sources that Pakistan's intelligence service, ISI, had kept bin Laden prisoner since 2006 and that the CIA learned about his location from a Pakistani informer who sold the information for $25 million — not, as the White House claimed, by tracking bin Laden's couriers.

"On this count, my own reporting tracks with Hersh's," Gall writes.

Gall heard the same story about the informer "circulating in the rumor mill" in the days after the raid, but it was too difficult to corroborate without any documentary evidence.

Two years later, as Gall was researching her book, The Wrong Enemy: America in Afghanistan, she writes that she "learned from a high-level member of the Pakistani intelligence service that the ISI had been hiding bin Laden and ran a desk specifically to handle him as an intelligence asset."

Best $25 million ever spent by the Obama administration. Better than the $305 million spent by President Obama on Oregon's ObamaCare website. 

And all this time I thought it was President Obama flying the first helicopter in with Michelle piloting the second helicopter into the compound. 

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Costs Are Down Almost 60% Per Foot On Horizontal Laterals

Tweeting now: https://twitter.com/Range_Resources/status/598142814510166017/photo/1.

Wednesday, May 13, 2015; Active Rigs Hit A New Post-Boom Low -- 83

Quickies

Now that gay marriage is legal, employers are telling their employees they need to be married for their partners to be eligible for health (and other) benefits.

With the incredible Amtrak disaster on the northeast corridor (train traveling from Washington, DC, to NYC via Philadelphia last night) it's time to slow passenger trains to 5 mph across the entire US. Flying down the tracks at 20 mph is criminal. More people were killed in that one "accident," than have been killed in the US by Bakken CBR.

Hawaii's ObamaCare exchange has imploded.

In its first year, Hawaii enrolled only 8,592 individuals – meaning it spent almost $23,899 on its website for each individual enrolled. Currently over 37,000 individuals are enrolled in Hawaii’s exchange - well below the estimated 70,000 enrollees that is required to make the website financially viable. Unfortunately, taxpayers will have to hand out an additional $30 million so that Hawaii can migrate to the federal system.

This is not the first time that a state exchange has failed, and taken millions of dollars in federal funds down with it. Earlier this year, Oregon’s state exchange was officially abolished at an estimated cost of $41 million. Cover Oregon, as it used to be known received $305 million in funds from HHS but failed to produce a workable website months after the 2013 November deadline.

EIA daily "energy cookie":

If ethanol plant yields per bushel of corn in 2014 had remained at 1997 levels (when ethanol made up just 1% of the total U.S. motor gasoline supply), the ethanol industry would have needed to grind an additional 343 million bushels, or 7% more corn, to produce the same volume of fuel. To supply this incremental quantity of corn without withdrawing bushels from other uses would have required 2.2 million additional acres of corn to be cultivated, an area roughly equivalent to half the land area of New Jersey. ---EIA

 Bakken Economy

Airline loadings down in North Dakota except for .... drum roll .... Williston and Bismarck. 

Active rigs:

	5/13/2015	05/13/2014	05/13/2013	05/13/2012	05/13/2011
Active Rigs	83	190	187	209	173

I track active rigs here. I believe this (83) is a new post-boom low.

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The Year of Deals

First Noble buys Rosetta, now Williams Companies buys its subsidiary Williams Partners. Partners surges.

Energy company Williams Companies is buying its subsidiary Williams Partners L.P. in a stock deal worth about $13.8 billion. The deal, expected to close in the third quarter, is expected to generate adjusted profit of about $5.4 billion in 2016. It will pay a third-quarter dividend of 64 cents per share.

Comment: at $60 oil and rising, it's possible the "reset" button was set.

Another comment and reminder: 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. This is also not a weather site, but be advised there are warnings of more flash flooding in Texas. This is also not a travel site but rail travel along the northeast corridor may be disrupted this morning. If this information is important to you, go to the source. This is also not a global warming site, but for those updating their Yahoo calendars, this might be a good time to note that it's going to be really, really hot on July 4, 2053, due to global warming. On Venus. Finally, be prepared for another announcement from Goldman Sachs that oil will drop to $20/bbl by the end of this week.

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RBN Energy

The latest Energy Information Administration (EIA) Drilling Productivity Report projects natural gas production in the Marcellus and Utica up 170 MMcf/d  in April, and forecasts growth of another 150 MMcf/d in May and June to average about 3.8 Bcf/d higher in Q2 than in the same period last year.

While there is talk of deferred well completions and shut-ins, it has yet to translate to a slowdown in production volumes in the Northeast region. Our analysis suggests that barring record-high demand, the region will struggle to balance growing supplies this summer with potentially dramatic consequences for prices.

Today RBN concludes its analysis of the Northeast gas supply/demand balance.

In Part 1 of this series RBN showed how Northeast production growth thus far has largely been accommodated by pushing out traditional supply flows into the region. That cushion has now been used up and will not be available this summer. As a result, incremental production growth this year needs to find about 3.5 Bcf/d of additional demand in order to prevent widespread supply congestion and the prospect of a price meltdown.

In Part 2, RBN assessed the ability for regional storage and consumption to absorb the incremental supply. On the storage front, RBN found that even record injections and filling storage to capacity would soak up no more than 0.5 Bcf/d of incremental demand. On the consumption side, power burn shows the most promise, given gas-fired electric generation capacity additions, coal plant retirements and competitively low natural gas prices. But RBN Energy calculated that even a quite optimistic demand growth scenario would bring only about 1.2 Bcf/d of incremental demand, again not enough to offset the 3.5 Bcf/d of additional supply. If both storage and power burn achieved these lofty volumes, combined they would offset at most 1.7 Bcf/d of production.

So it’s clear that the regional balance this summer depends on outflows and new demand sources outside the region. That brings us to today’s discussion of the third balancing item:  outflows. RBN Energy looks first at additional takeaway capacity added since last summer, and then wrap up with a discussion of the net effect of storage, power and outflows, including high and low demand scenarios.

Much, much more at the link. 

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US Economy

Reuters is reporting:

U.S. retail sales were flat in April as households cut back on purchases of automobiles and other big-ticket items, indicating the economy was struggling to rebound strongly after barely growing in the first quarter.

The weak retail sales report from the Commerce Department, and other data on Wednesday showing the 10th straight month of declining import prices in April, suggest little urgency for the Federal Reserve to start raising interest rates.

While March's retail sales were revised up to show a 1.1 percent increase instead of the previously reported 0.9 percent rise, that was not enough to offset the general weak tone of the report. Economists had forecast sales rising 0.2 percent in April.

Futures markets continued to show that traders do not expect an interest rate hike until December at the earliest. The dollar fell to session lows against the euro and Swiss franc, and approached a near one-week low versus the yen.

And that's why oil is up today: the falling dollar. Nothing else. Simple as that.

And, now, off to breakfast with my lovely wife. Off the net for awhile.

Some Of The World's Best Caviar Is Produced In North Dakota -- Business Insider, May 13, 2015

I love the byline -- "Williston, ND."

I love the source -- Business Insider.

I love the story -- Some of the world's best caviar is produced in North Dakota.

The link.

The story:

North Dakota is known globally not just for prolific oil production, but also, it turns out, for caviar.

A distinctly American version of the salty delicacy prized for centuries by Russian czars gets its start each May in the cool waters where the Missouri and Yellowstone rivers converge, the same spot where explorers Lewis and Clark camped two centuries ago.

As paddlefish, one of North America's largest freshwater fish, make their way north to spawn, their eggs, or roe, are processed at the water's edge to make more than 2,000 pounds of caviar prized by clients from Tokyo to Toronto to New York.

"Everyone will tell you that Russian sturgeon caviar is the best, and since the quality of our caviar is so close, we feel like we're second," said June Sheaks, executive director of North Star Caviar, the nonprofit company behind the caviar operation.

Years ago my brother dropped my brother-in-law and me off south of the confluence and we paddled a canoe up to the confluence, getting off near the Fort Union Trading Post. It's been a long time; I don't remember where the pick-up point was.

And, yes, you can order North Dakota caviar on-line.

Pipe Being Stored Near Aberdeen For ETP Pipeline -- May 13, 2015

Don saw this site while driving across the Dakotas this past week (click to satellite view at the coordinates to see the rail yard): https://www.google.com/maps/place/Aberdeen,+SD+57401/@45.4552429,-98.5662416,11z/data=!4m2!3m1!1s0x52d24491364bf1b7:0x3050ebf3cfc7ac35.

The link should work, but if it doesn't, here are the coordinates: 45.455224429, -98.5662416.

Bakken.com is reporting:

A proposed oil pipeline that would stretch from the Bakken formation to Illinois wouldn’t cut through Brown County in South Dakota, but a site just west of Aberdeen is serving as a temporary home to dozens of miles of pipe.

Farmer Todd Ochsner has rented out a tract of land near his grain elevator to house the pipe for the Dakota Access Pipeline, a yet-to-be-approved project that would cut through 272 miles in South Dakota, including parts of McPherson, Edmunds and Faulk counties.

Dozens of miles of pipe have been arriving by rail to Ochsner’s land for several weeks, and the process will continue until up to 300 miles of pipe are stacked up at the property located about 6 miles west of Aberdeen and just north of U.S. Highway 12.

“I’m a farmer first — this is something that worked because I have this land,” Ochsner told the Aberdeen American News. “From what I hear, there’s going to be a lot more pipe coming.”

The state’s Public Utilities Commission has until Dec. 15 to rule on a construction application submitted by Dakota Access, a subsidiary of Texas-based Energy Transfer Partners.

PUC spokeswoman Sigrid Wald said the movement of pipe into South Dakota won’t influence the commission’s decision-making process regarding the $3.8 billion project.

Lisa Dillinger, a spokeswoman for Dakota Access, said pipe that will be used in the construction of the line will continue to be shipped into the “region.”

About 270 miles of the 1,134-mile pipeline would be in eastern South Dakota. The 30-inch underground pipeline would transfer 450,000 barrels of crude oil a day.

Energy Transfer Partners wants to have the pipeline built and working by the end of 2016.

Growing Antarctic Sea Ice Could Force Research Stations To Move -- May 13, 2015

Algore needs to update his PowerPoint slide presentation. Discovery is reporting:

Growing sea ice surrounding Antarctica could prompt scientists to consider relocating research stations on the continent, according to the operations manager of the Australian Antarctic Division.

Rob Wooding said that resupplying Australia's Mawson Station -- the longest continuously operated outpost in Antarctica -- relied on access to a bay, a task increasingly complicated by sea ice blocking the way.

"We are noticing that the sea ice situation is becoming more difficult," Wooding told a media briefing.

Wooding said that at Mawson, the ice typically only breaks up for one or two months of the summer, but in the last four to six years this has not happened every year, and some years only partially.

"In the 2013-4 season we couldn't get anywhere near Mawson due to the sea ice and we had to get fuel in there by helicopter which is inadequate for the long-term sustainability of the station," he said, adding that the French and Japanese had similar problems.

Wooding said Australia had not yet come close to shutting down a base because of sea ice, but had to look at "unusual measures" to keep operating.

But flat earthers are still alarmed by global warming. 

By the way, atmospheric CO2 must be well above 420 by now since no one mentions it any more.