Monday, May 18, 2015

Williston, Heart Of The Bakken, Ties A Previous Record -- Ties Record Set In 1933 For Record Low -- May 18, 2015

Talk about mixed emotions.

Regular readers know my thoughts about global warming.

Having said that, I wish I did not have to use my home town as an example of data suggesting quite the opposite, but it is what it is (I assume this is a dynamic link): 
Williston set a record low of 29 this morning, tying a previous record low set in 1993.
On another note, closer to my current home, here in Grapevine, Texas, a suburb of Fort Worth, TX. Remember that drought in north Texas. One word: over.

The huge Grapevine Lake is 12 feet over "normal," whatever is meant by "normal." All I know is that the picnic areas are flooded, and today I heard the soccer coaches say the soccer fields are flooded. 

A Reader Asks Why Newfield Appears To Have Taken Three Wells Off-Line -- May 18, 2015

Over at the Discussion Group a reader asks a question about Newfield's three (3) wells, #28765 - 28767: the wells were completed in initial runs in December and Janaury, but then they appear to have been taken out of production in February. Does anyone know why?

There may be specific reasons peculiar to these three wells why Newfield may have taken them out of production, but the three likely reasons:
  • hold back production until prices recover
  • required to choke back due to NDIC flaring rules
  • required to bring in equipment to "condition" the oil before it can be shipped by rail
My money would be reason #1 -- holding back production until prices recover. It's possible there are operational reasons, so we'll see.

Production profiles:

28765, 2,190, Newfield, Sand Creek Federal 153-96-21-28-3H, t1/15; cum 29K 3/15:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

28766, 1,562, Newfield, Sand Creek Federal 153-96-21-28-10h, t1/15; cum 25K 3/15:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

28767, 970, Newfield, Sand Creek Federal 153-96-21-28-2H, t1/15; cum 29K 3/15:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

 Note that production for all three wells was identical in the month of March, 2015: 12 barrels of oil from each well. This is a great example of how operators can control very precisely how much oil they will produce from each well.

Thirteen (13) New Permits; EOG Proposes 12-Well Pad In Clarks Creek; 6/6 Wells Go To DRL/SI/NC Status -- May 18, 2015

Active rigs:

Active Rigs82190189209175

Thirteen (13) new permits --
  • Operators: EOG (12), BR
  • Fields: Clarks Creek (McKenzie), Sand Creek (McKenzie)
  • Comments: see EOG's proposed 12-well pad in Clarks Creek below
Four (4) producing wells completed:
  • 29648, 429, SM Energy, Beverly 2-16HN, West Ambrose, t4/15; cum --
  • 29646, 794, WM Energy, Virgil 2B-16HN, West Ambrose, t41/5; cum --
  • 29645, 367, SM Energy, Riley 2B-16HS, West Ambrose, t4/15; cum --
  • 29647, 624, SM Energy, Fay 2-16HS, West Ambrose, t5/15; cum -- 
Two (2) permits were cancelled, both in Williams County: a CLR Everly well and a Hunt Scorio well.

Wells coming off the confidential list Tuesday:
  • 28711, SI/NC, BR, Harley 21-2TFH-R, Blue Buttes, no production data,
  • 29211, drl, MRO, Doll USA 12-14H, Reunion Bay, no production data,
  • 29249, drl, Zavanna, Sigurd 5-8 3H, Crazy Man Creek, no production data,
  • 29258, drl, Newfield, Rolla Federal 153-96-29-12H, Sand Creek, no production data,
  • 29287, drl, Hunt, Austin 154-90-27-22H-1, Parshall, no production data,
  • 29738, drl, SM Energy, Karlberg 14-12HN, Garnet, no production data,
Completed -- But There Could Be Factual, Typographical Errors
Some Assumptions May Be Incorrect

This is what it appears to me now. Do not make any decisions based on what you read here. I often make factual and typographical errors. If this information is important to you, go to the source.

The location of EOG's proposed 12-well pad, multiple pay zones, including multiple zones in the Three Forks. Note the area in purple is 960-acre spacing:

29679, loc, EOG, West Clark 06-01M, Clarks Creek, 1-151-95, a monitoring well; from a sundry form: the subject well is a strategraphic test well to seismically monitor fractures in the laterals of the adjacent West Clark 103-, 104-, 105-, 106-, 107-, 114-, 115-, and 116-0136H wells. Well will not be produced from any formation.

EOG's "100-series" wells are three Forks wells.

The permits, all for Lot 4, 1-151-95, Clarks Creek, McKenzie County:
  • 31246, West Clark 8-0136H, Bakken, 960-acre, 250 FSL, 685 FWL; 2418 FSL, 842 FWL
  • 31247, West Clark 103-0136H, Bakken, 960-acre, 250 FSL, 785 FWL; 2420 FSL, 1492 FWL
  • 31248, West Clark 104-0136H, Bakken, 960-acre, 250 FSL, 835 FWL; 2423 FSL, 1805 FWL
  • 31249, West Clark 105-0136H, Bakken, 960-acre, 250 FSL, 885 FWL; 2358 FSL, 2096 FWL
  • 31250, West Clark 106-0136H, Bakken, 960-acre, 250 FSL, 935 FWL; 2255 FSL, 2350 FEL
  • 31251, West Clark 107-0136H, Bakken, 960-acre, 250 FSL, 985 FWL; 2255 FSL, 2039 FEL
  • 31252, West Clark 116-0136H, Bakken, 960-acre, 250 FSL, 1035 FWL; 278 FSL, 1705 FEL
  • 31253, West Clark 126-0136H, Three Forks B3, 960 acre, 200 FSL, 845 FWL; 2424 FSL, 620 FWL
  • 31254, West Clark 127-0136H, Three Forks B2, 960 acre, 200 FSL, 895 FWL; 2420 FSL, 1016 FWL
  • 31255, West Clark 134-0136H, Three Forks B3, 960 acre, 200 FSL, 945 FWL; 2426 FSL, 1166 FWL
  • 31256, West Clark 128-0136H, Three Forks B1, 960 acre, 200 FSL, 995 FWL; 2421 FSL, 1316 FWL
  • 31257, West Clark 129-0136H, Three Forks B2, 960 acre, 200 FSL, 1045 FWL; 2425 FSL, 1618 FWL
The target zone is as listed on the permit. My hunch is that some things may change. I would bet that in general:
  • "100 - 119-series" wells target the upper Three Forks (TF1)
  • "120-series" wells target the second bench
  • "130-series" wells target the third bench
Obviously it does not hold in all cases based on the data above. There are some exceptions in the data above including several "100-series" wells targeting the "Bakken," not otherwise specified.

Artist's schematic (first draft):

Saudi Setting "Us" Up For $200 Oil? -- May 18, 2015

From Seeking Alpha:
  • More than $100B of spending on at least 26 major projects by the world’s energy companies has been slowed, postponed or canceled in the wake of plunging oil prices, including Royal Dutch Shell, BP, ConocoPhillips, and Statoi, according to a Financial Times analysis.
  • One of the biggest developments to be shelved, Shell’s Arrow liquefied natural gas plant in Australia, accounted for almost a quarter of the planned spending reduction.
  • Western Canada is suffering the most from the retrenchment, with nine Canadian oil sands projects pulled back, each ranging from $1B-$10B in planned expenditure, the analysis says.
  • According to Morgan Stanley, which looked at capex guidance for 2015 from more than 120 companies, investment is expected to drop by a quarter this year to $389B from $520B.
ObamaCare to the States: Gotcha!

This story started as a small story posted at a nondescript site either yesterday or early today. I don't recall how I came across. I elected not to post it simply for that reason: it was hardly news and it was posted at a nondescript site.

However, the story is now being picked up by some major outlets, and will grow legs through the 2016 presidential race. One party will use the Iraq implosion to try to take our minds off the implosion of ObamaCare.

Politico is reporting:
Medicaid enrollment under Obamacare is skyrocketing past expectations, giving some GOP governors who oppose the program’s expansion under the health law an “I told you so” moment.
More than 12 million people have signed up for Medicaid under the Affordable Care Act since January 2014, and in some states that embraced that piece of the law, enrollment is hundreds of thousands beyond initial projections. Seven states have seen particularly big surges, with their overruns totaling nearly 1.4 million low-income adults.
The federal government is picking up 100 percent of the expansion costs through 2016, and then will gradually cut back to 90 percent. But some conservatives say the costs that will fall on the states are just too big a burden, and they see vindication in the signup numbers, proof that costs will be more than projected as they have warned all along.
Obamacare originally expanded Medicaid — which traditionally served poor children, pregnant women and the disabled — to all childless low-income adults with incomes up to 138 percent of the federal poverty level (about $16,250 for an individual) across the country. But the Supreme Court made expansion optional in 2012. And 21 states, mostly with GOP governors, have resisted.
“The expansion of Obamacare will cost our state taxpayers $5 billion,” Florida Gov. Rick Scott said in an interview with POLITICO last week, referring to the 10-year cost. “Name the health care program — I think the only one is Medicare Part D — that cost less than what they initially anticipated…Historically, if you look at the numbers, with the growth in Medicare costs, Medicaid costs, it’s always multiples.” A bitter critic of Obamacare, Scott at one point surprisingly backed expansion, but withdrew his support earlier this year. His state legislature is deeply split on Medicaid policy.
You simply wonder what Florida's Governor Rick Scott was ever thinking. 
The White House provides us the list of the 22 states that resisted this scam. According to the White House, North Dakota supported the president on this one, along with Minnesota and Iowa, and the entire west coast (Washington, Oregon, and California).

Montana and Texas voted for sovereignty, as did Warren Buffett's state of Nebraska.

New EIA Energy Link -- May 18, 2015

Today, the U.S. Energy Information Administration (EIA) launched a redesigned International Energy Portal to improve access to international energy data and trends in global energy markets. The portal can be viewed at:
With most of the future growth in energy consumption expected to occur outside of the United States and with increasingly interconnected world energy markets, a clear perspective on the international energy landscape is critically important, and EIA’s redesigned International Energy Portal makes it easier to gain insight into global energy developments,” said EIA Administrator Adam Sieminski. 
This is all very interesting. I have opined for quite some time that global energy would be the big story of the 21st century. Along with water.

I'll Gladly Pay You Thursday For A Hamburger Today

This is almost hilarious. Just after Greece used its IMF reserves to pay back the debt it owed the International Money Fund (that's how the story read), Greece now wants to take maturing Greek bonds held by the European Central Bank to pay the European Stability Mechanism, and then Greece would pay back the ECB over the "long term."
"We are proposing, in the last period, what many specialists are proposing internationally: for the ESM to intermediate, to pay the ECB and then the Greek state can repay the ESM over the long term after an agreement with our lenders," he said.
And that's probably exactly what will happen. If you buy me a hamburger today, I'll gladly you pay you Thursday.

Hemingway While Yahoo!Mail Is Down

Link here to a most interesting essay (2011) on A Moveable Feast: The Restored Edition, edited by Sean Hemingway, c. 2009. 

It begins:
Fifty years ago, Ernest Hemingway died by his own hand. The quintessentially American writer—and poster bear for burly masculinity—is undergoing one of his periodic revivals, spurred not only by the anniversary of his suicide but by Woody Allen’s Midnight in Paris, set in the 1920s Left Bank of Hemingway’s heavily fictionalized memoir A Moveable Feast, and The Paris Wife, Paula McLain’s novel about Hadley, the writer’s wife during the period chronicled in Feast.
And that dot will lead you to an interesting essay on Marilyn Monroe

Freudenshade Defined -- May 18, 2015; Minnesota To Okay A Monster Of A Transmission Line Simply To Back-Up A Redundant Wind Farm In North Dakota


August 23, 2016: Don sent me an update from today's StarTribune. Some data points:
  • Great North Transmission Line
  • $560 million to $710 million
  • three years to build
  • one of several that will cross the US-Canadian border
  • will help address the intermittent nature of wind power for the majority owner, Duluth-based Minnesota Power
  • with wind power on the increase, stable sources of electricity like hydro are needed to fill in production gaps
  • Manitoba Hydro is a partner with Great Northern  
  • earlier this year, Minnesota regulators approved a new route
  • 225-mile-long high-voltage line
  • will cross five northern counties through pristine 10,000 lakes boundary wilderness -- not so wild any more
January 12, 2016: Today the Hibbing Daily Tribune is reporting that the project has received a recommendation from an administrative law judge to proceed with the transmission line. Consideration for final approval is slated for March, 2016.

Original Post

SeeNews Renewables is reporting:
Minnesota Power has secured a key approval for its plan to build a 500-kV transmission line that will facilitate the delivery of renewable and carbon-free hydropower from the Canadian province of Manitoba to the US state of Minnesota.
The Minnesota Public Utilities Commission has cleared a request for a Certificate of Need for the Great Northern transmission line, according to Allete Inc.
The transmission project will require an investment of [about $750 million]. Minnesota Power will own a majority stake in the system, which will help it deliver at least 383 MW of energy to its clients by June 1, 2020 under power purchase agreements with Manitoba Hydro.
The planned transmission system will allow Minnesota Power to use Manitoba Hydro’s hydroelectric system to store electricity generated by the Bison wind power center in North Dakota. The company commissioned the 205-MW fourth phase of the particular wind project in January 2015, bringing the complex’s total capacity to nearly 500 MW.
As I wrote the reader who sent me the link:
This is really quite a story, thank you.
It is amazing how fast the Minnesota PUC can approve any project with the phrase "renewable energy" in it.
It's interesting that the transmission line is needed to provide back up power for the wind farm in North Dakota. If I read this correctly (and I know I am), Allete has a wind farm in North Dakota. We all know that a) wind doesn't blow at the right speeds all the time; b) the wind farm has a limited life span; and, c) one can't economically store electricity yet. So, the utility needed a back-up plan -- electricity from another source.
So, now, environmentalists can cut the ribbon on a new huge transmission line that will cut through the pristine land of 10,000 lakes.
Wind turbines are depreciated over 7 years; turbines have an expected lifespan of less than 12 years. It appears that the wind farm in North Dakota was used as a cover to get a 500-kV transmission line approved, something that would not have happened had it been for a coal plant out of South Dakota. I hate wind power, but when used as a cover for a huge transmission line, one can't but feel a bit of freudenshade for the Minnesotans.

Meanwhile, a pipeline that no one will see once it is buried, is sandbagged by "environmental groups."

Meanwhile, by law, the utility will be allowed to pass on costs of this new (unneeded) transmission line to its customers. All things being equal, electricity bills will increase in Minnesota once this transmission line is given the final go-ahead.

The likely route for this billion-dollar transmission line, simply required to back up a wind farm in North Dakota:

A lot of folks better pray they approve that transmission line:

Taking Another Approach 

LowellSun is reporting:
Faced with some of the highest energy prices in the country, Massachusetts utilities regulators are considering a controversial proposal that would allow electric companies to sign contracts subsidizing pipeline construction and pass the cost onto ratepayers.
Electric companies cannot currently charge customers to recover the cost of contracts with natural gas pipelines, giving them little incentive to sign onto the projects. But if the Department of Public Utilities approves the proposal, it would pave the way for electric utilities to purchase capacity on pipelines, creating a coveted new group of partners for companies like Kinder Morgan and Spectra Energy, both of which need to secure buyers in order to build pipelines in the state.
State officials and many analysts say the measure would benefit consumers, because the increased natural-gas supply will drive electricity and gas prices down, offsetting any costs associated with the contracts that ratepayers must shoulder. 
This, too, will be sandbagged by environmentalists. 

A Note To The Granddaughters

When we were "living in Boston," one of our favorite places to visit on a Sunday morning was the John F. Kennedy Library overlooking the harbor. We visited it several times, and even now, I wish I could visit it again.

Hemingway was among the American artists, writers, and musicians invited by President and Mrs. Kennedy to attend the 1961 inauguration, but the author was too ill to travel.
In a statement released by the White House when Hemingway died, President Kennedy noted: "Few Americans have had a greater impact on the emotions and attitudes of the American people than Ernest Hemingway.... He almost single-handedly transformed the literature and the ways of thought of men and women in every country in the world."
When Ernest Hemingway died in 1961, a large portion of his literary and personal estate remained at his Cuban home, the Finca Vigia, which he had left during Fidel Castro’s revolution. Despite a U.S. ban on travel to Cuba – the result of high tensions between the two countries following the Bay of Pigs incident – President Kennedy made arrangements for Mary Hemingway, Ernest’s widow, to enter Cuba to claim family documents and belongings.

While in Cuba, Mrs. Hemingway met with Fidel Castro who allowed her to take her husband’s papers and the artwork he collected in exchange for the donation of their Finca Vigia home and its remaining belongings to the Cuban people. With Fidel Castro’s personal approval she was able to ship crates of papers and paintings on a shrimp boat from Havana to Tampa.
Mrs. Hemingway was later the guest of President and Mrs. Kennedy at the White House dinner for the Nobel Prize winners in April, 1962 where Ernest Hemingway was honored as one of America’s distinguished Nobel laureates.
In 1964, at the suggestion of journalist and writer William Walton, a friend of both the Kennedys and Hemingways, Mary Hemingway contacted Jacqueline Kennedy and offered her husband’s collection to the John F. Kennedy Presidential Library and Museum, which was then being planned as a national memorial to the 35th President.
I find it amazing how things sometimes turn out.

I was reminded of that again in A Moveable Feast: The Restored Edition, Ernest Hemingway, with a personal foreword by Patrick Hemingway and introduced and edited by Sean Hemingway, c. 2009).

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 -- May 18, 2015

I missed this last Friday. Apparently the S&P 500 eked out a record on Friday for the second day in a row, while the other major indices advanced towards recent highs.

GS Downgrades Chevron; Sticks With Exxon
From Goldman Sachs:
We recommend investors buy Exxon as the company represents the only US or European major that can generate sufficient free cash flow to cover its dividend near $60/bbl in 2016-2017.
While other majors will be struggling to keep the dividend flat, we believe Exxon will actually be in a position to increase the dividend for the next several years…
We downgrade Chevron Corporation from Neutral to Sell – and lower our 12-month, multiples-based price target from $111 to $99 (5% total return downside vs. average Super Major total return of +4%) on lower earnings estimates.
Three factors underpin our negative view on Chevron: (1) the company will struggle to generate free cash flow after the dividend under our new oil price forecast, limiting capital allocation potential; (2) we see downside risk to the Chevron’s 2017 production guidance; and (3) after multiple years of outperformance, Chevron’s relative P/E multiple to Buy-rated ExxonMobil appears stretched.
Barron's says
Don’t tell that to Wells Fargo chairman and Chevron board member John Stumpf, who made the largest insider purchase of Chevron’s shares since 2001 on May 11.
  • 2016  - 2017 is a long way off in the investing world
  • 2016 - 2017 is an eternity away in the oil and gas industry
  • companies have been known to maintain dividends in adverse times
  • Chevron (actually Texaco) has been through much worse
  • does anyone really think oil will still be below $60 through 2017?
A Note To The Granddaughters

I finally "know" what is meant by "moveable feast." I've heard that phrase a million times, and have read the Ernest Hemingway book by the same name but even after reading the book, never understood what it meant. I figured I was the only one who did not understand what was meant by it, but I asked another well-read friend if she knew the meaning, and she sort of thought she did but could not articulate it, and in the end, she, too, admitted she did not really know what it meant.

After all these years, I finally know. It was explained by Ernest Hemingway's grandson Sean who provides a lengthy introduction to the "restored edition" of A Moveable Feast which he edited, c. 2009. The new book was released in 2009 to celebrate the 50th anniversary of the first draft of the book; in November, 1959, Hemingway had completed and delivered to Scribner's a draft of a manuscript that lacked only an introduction and a final chapter. The book was published posthumously with heavy editing by his fourth wife.

For Hemingway, according to his grandson, a moveable feast is a "memory or even a state of being that had become a part of you, a thing that you could have always with you, no matter where you went or how you lived forever after, that you could never lose. An experience first fixed in time and space or a condition like happiness or love could be afterward moved or carried with you wherever you went in space and time," page xiv, A Moveable Feast: The Restored Edition, Ernest Hemingway, with a personal foreword by Patrick Hemingway and introduced and edited by Sean Hemingway, c. 2009).

Hemingway had many moveable feasts besides Paris.

My wife's eyes lit up when I had her read that Hemingway passage. She said her moveable feast would have been when she was with her family as a child in Japan. Her dad, US Army enlisted, was assigned to Japan when my wife was eight years old; they were there for two years at a small Army camp. My wife remembers that as the happiest time in her mother's life. Her mother, Japanese, was a war bride after WWII, during the Korean War, when she married my wife's Hispanic father. She was Buddhist; he was Catholic.

While in Japan, they lived in the nicest house they had ever lived in (one needs to remember my father-in-law's enlisted rank in the US Army at that time) -- a two-story duplex. Her mother would take the both of them to get their hair and nails done at the local beauty shop. They had a maid, Todosan who always burned the pancakes which my mother loved: crispy, "burned" pancakes. My wife remembers taking walks along the "water" which she thinks was the ocean (or more accurately the harbor), because of the cliffs, and not a river.

The general area of Kure, southeast of Hiroshima:

My wife remembers Camp Kure being in the Japanese town of Nijimura but yet one cannot find it on the map. In addition, there are very few google hits regarding the city of Nijimura, but it does exist.  It appears to have been swallowed up by Kure.

At wiki: Kure was the home base of the largest battleship ever built, the Yamato. One of the bases of the Japan Maritime Self-Defense Force (JMSDF) is still located there, its former center became the JMSDF Regional Kure District. While there is a hospital as a building of the Marine Self Defense Force, there are Escort Flotilla (Destroyers), Submarine Flotilla and the Training Squadron in the Kure District. A museum with a 1:10 scale model of the Yamato is located in the city.