Tuesday, June 9, 2015

Nineteen (19) New Permits -- North Dakota, June 9, 2015

Yesterday, twelve (12) new permits; today nineteen (19) new permits. Carpe diem!

Active rigs:

Active Rigs82192189213169

Nineteen (19) new permits --
  • Operators: EOG (15),  XTO (3), Denbury
  • Fields: Clarks Creek (McKenzie), Grinnell (Williams), Cedar Hills (Bowman)
  • Comments: EOG's 15 permits are for 15 wells in Clarks Creek, section 1-151-95 (see below)
Five (5) producing wells completed:
  • 28771, 2,503, XTO, Ranger 21X-18E, Tobacco Garden, t5/15; cum --
  • 28770, 977, Whiting, Uran Federal 21-24H, Sanish, t5/15; cum --
  • 29177, 1,209, XTO, Moses 21X-9B, Garden, one section, t4/15; cum 14K 4/15;
  • 29178, 1,132, XTO, Moses 21X-9A, Garden, one section, t4/15; cum 11K 4/15;
  • 29017, 1,187, XTO, Johnson Federal 11X-5F, Siverston, t5/15; cum --
Several well name changes suggesting different formation targets.

No permits canceled.

Three (3) wells coming off the confidential list Wednesday:
  • 27457, 1,870, HRC, Fort Berthold 148-95-26B-35-9H, Eagle Nest, 47 stages, 4.7 million lbs, t1/15; cum 65K 41/5; choked way back; and still flaring
  • 27852, 1,544, EOG, Parshall 36-0806H, Parshall, ICO (1920 acres), 55 stages; 15 million lbs, t12/14; cum 87K 41/5; choked back; no flaring
  • 29430, SI/NC, BR, Teton 6-8-10TFSH, Camel Butte, no production data, 

I often make mistakes on these graphics; they are intended for my use only. Do what you want with them but don't quote me on them. If this information is important, go to the source.

Electricity Costs Will By Higher This Summer -- June 9, 2015

EIA Short-Term Outlook. Source here Coal and natural gas are at record low prices. Note that electricity costs will be higher this summer. Yup. The price we pay for feeling good: wind and solar. Oil, natural gas, coal are all mentioned. Even biofuel/diesel is mentioned. But solar and wind are not mentioned in the summary provided by EIA. Solar supplies 0% of the electricity consumed by the US when rounded to the nearest whole number.

Global oil supply is forecast to continue to exceed demand through the end of next year, boosting global oil inventories.
Crude Oil:
U.S. oil production since mid-2014 has been more resilient to lower crude prices than many had expected, as reflected in modest upward revisions in fourth quarter 2014 and first quarter 2015 data.
Despite the large decline in crude oil prices since June 2014, this May’s estimated oil output in the United States is the highest for any month since 1972, but production still is expected to decline in the second half of this year.
Even with slower oil production growth, U.S. net oil imports in 2016 are expected to meet the smallest share of domestic petroleum and other liquid fuels demand since 1969.
The United States will likely produce and import more biomass-based diesel fuel over the next two years if newly proposed federal renewable fuel standard targets are issued as final rules.
U.S. monthly average pump prices are expected to decline from their May level through the rest of this year.
Despite increases in vehicle fuel efficiency, U.S. gasoline consumption is up because more people are working and gasoline prices are low.
Natural Gas:
U.S. natural gas production is expected to reach a record in July.
Consumers will pay higher power bills to stay cool this summer because temperatures are forecast to be warmer than last year and retail electricity prices will be up in most areas of the country.
The typical household will pay $412 for electricity this summer, which is 4.8% more than last summer.
Coal consumption by the U.S. electric power sector is expected to decline 7% this year as lower natural gas prices make gas a more attractive fuel for generating electricity.

This Side Of Paradise, Part III -- June 9, 2015

Pardon the interruption: the wells coming off the confidential list have finally been posted. NDIC posted them early this morning, but I was delayed due to so many other things to do, this side of paradise.


I am posting this link now so it's not lost. I will come back to it later. StandardSpeaker is reporting this about Hazelton, PA:
According to the U.S. Census, Hispanics made up 5 percent of Hazleton’s population in 2000. By 2010, that number increased to 37 percent. 
Hazelton appears to be sort of out in the middle of nowhere, southeast of where Steve Carell used to call home.
Hazelton is 130 miles west of New York City.

One Has To Ask The Question

Why Baltimore? Why Ferguson? Why NYC? Why Irving?

I'll get back to this later.

This Side Of Paradise

My reading is back on track. I've "finished" the Theory of Everything, the memoir written by Jane Hawking. I haven't really finished reading it all and haven't decided whether I want to. I have come to that part of the book when Jane has just begun the separation process from Steven. It is a most pleasant moment, it seems, in the book, and I'm not sure I want to spoil the "feeling" I have for her, for Steven, for the book. So, we'll see. I suppose I will eventually finish it.

I finished the biography of Joseph Duveen by Meryle Secrest; Duveen was perhaps the most influential art dealer in history; his collection was eventually bought by Norton Simon, Pasadena. An excellent book. Unfortunately it ended without an epilogue. I was hoping there would have been an epilogue describing the sale to Norton Simon.

I finished Oscar Wilde's The Picture of Dorian Gray. I never thought I would read this book; indeed, I did not even know it existed until a few years ago, that's how "sheltered" I have been. It is really a very, very good book. Not one for high school students. I've talked about that before.

I began reading F. Scott Fitzgerald's This Side of Paradise at the very same time I started reading Dorian Gray. I enjoyed the latter much more and that's why I finished it first. I went back to Paradise and find it interesting enough to complete, but it's nothing special. I understand why it is important and why it is ranked so high by critics, but halfway through I don't find the book particularly special. I know I am wrong, and by the time I finish the book, I'm sure my feelings for the book will change.

The interesting thing is that I am eager to re-read (for the third time) Catcher in the Rye because of Paradise. For some reason, This Side of Paradise makes me think of Catcher in the Rye, and my hunch is that the latter will leave me more emotionally drained even after a third reading.

I'm also reading The Supreme City, a biography of New York City between 1926 and 1932. It's an incredible book for those interested in the history of New York City, but it seems a a bit dry. I can't decide if I like it or not. The nice thing, after reading the introduction and the first chapter, one can sort of skip around and read the chapters that one might be interested in.

Finally, my "serious" book for the next few weeks is Armand Marie Leroi's The Lagoon: How Aristotle Invented Science. I started it some time ago and then set it down, but am starting over; my mind is prepared to read it this time. I have finished the first two chapters and find it delightful. Incredible. Awesome.

I am in Dubai this week. Not THE Dubai. More like Dubai-Lite, or perhaps, even better, Dubai-Like. It came as a complete (and wonderful) surprise. Our son-in-law signed our granddaughters up for a one-week "computer camp" at the beginning of a very, very busy summer.

Yesterday, was the first day of computer camp. My daughter drove; I tagged along so that I could help with taking them and picking them up during the week. It was a quick drive despite very, very heavy traffic around DFW on 360, 161, 183 and then Northgate Drive south of the airport in Irving, Texas.

We found the address with no difficulty, a somewhat large, somewhat non-descript white building on the edge of a residential development with a nice shopping mall on the south side. As my daughter pulled into the driveway she said it looked like a church. I said, "No, a mosque." I didn't really consciously think a "mosque" but with loose association that's how my mind works, I guess. The doors were locked; no one was there; we were twenty minutes early.

About ten minutes later a late-model SUV pulls up and out pile three women and a child. The three women appeared to have come directly out of Hollywood casting for a Mideast production.

It turns out the "school" is a STEM -- science, technology, engineering, math -- school run by and founded by a Muslim woman. Her staff appears to be entirely Muslim women except for the teachers which appear to have whatever background is necessary for a successful STEM school.

The staff was incredibly friendly and welcoming. I spent just a few minutes with them yesterday but had more time today. I drove the girls myself while their mother stayed home with the baby and studied on-line. (She is enrolled in an advanced nursing degree program out of Chicago, IL.)

The STEM school was founded one year ago. They had hoped for 25 students. I assumed the school was oversubscribed and I was correct. This past year, the first year, they had 76 students at the beginning and by the end, about 118. They are expanding and will have upwards of 125 or so next year; their capacity is limited by facility space. In a metroplex like DFW, I'm sure there is no difficulty finding capable staff for STEM.

I am learning my Muslim headwear. Most of the women had simple (and colorful) hijabs. It is the most common headscarf seen in the UK and probably in the US. It covers the head and neck but leaves the face clear. I saw one woman in a niqab: this covers the woman's entire face except for her eyes. I saw no one wearing a burqa. It turns out that in the UK, the terms burqa and niqab are often incorrectly used interchangeably. The niqab covers the face while the burqa covers the whole body from the top of the head to the ground. It is the most concealing of all Islamic veils, covering the entire face, including the eyes (with a mesh cloth to see through) and the body. Source here.

All the women on staff wore abayas or dresses commonly associated with Islamic women.

I spoke with one of the woman on staff; middle-aged, and by her diction, vocabulary, and subject matter, was obviously very, very well educated, very worldly, and very, very well-off, but probably living an upper-middle class lifestyle. When I mentioned my time in Turkey, eastern Turkey to be exact, she said that she had been in Turkey once, enjoyed it, but really enjoyed Spain. Southern Spain was what she enjoyed most in her travels.

It turns out she is a "trivia" nut, loves to play "trivia games." That is also true of my wife; I told her I would bring my wife to introduce the two of them tomorrow. Hopefully that works out.

I would have loved to have continued the discussion but she had work to do.

At a linked article at the top of the page, there is a story about the demographics of Hazelton, PA, reporting a huge shift in ethnicity. It's a challenge to find statistics on religion but one source suggests that of the 230,000 people living in Irving, TX, up to 40,000 are Muslim (17%). Of "notable" mosques in the US, only three are listed for the state of Texas; one of them --- and it is huge and growing -- is located in Irving. In the 2010 census, about 40% of Irving residents were Hispanic.

My hunch is that the demographics will change significantly by the 2020 census, just as the demographics shifted significantly for Hazelton, PA.

OXY USA Is The Anti-Statoil; EOG Reports Almost 20 Million Lbs Sand In A Typical Long Lateral -- June 9, 2015

This goes back to the very early days in the Bakken. Long-time readers will know "where I'm coming from."

Statoil consistently reports outlandish IPs, exceeding 3,000 bbls of oil and then quickly "regressing" to the mean.

Meanwhile, OXY USA consistently reports outlandish IPs, often less than a couple of hundred bbls of oil, and then over time come up with average to good wells. Today is another OXY USA example:
  • 26782, 53, OXY USA, Shuck 3-33-28H-144-97, Little Knife, t12/14; cum 35K 4/15;
It would be interesting to know OXY USA's "parameters" when testing / reporting IPs.

I track OXY USA wells here.

I guess when frack sand is dirt cheap and you own your own sand pits and your own rail support, you can use as much sand as you want:
  • 27854, 1,433, EOG, Parshall 37-0806H, Parshall, ICO (1920), 50 stages, 12 million lbs,, t12/14; cum 147K 4/15;
  • 27859, 823, EOG, Parshall 57-0806H, Parshall, ICO (1920), total depth 22,647 feet, 55 stages; 18.4 million lbs,  t12/14; cum 159K 4/15;  
For newbies: when the Bakken boom began in North Dakota, a million lbs of sand seemed to be thte norm. Statoil seemed to be going out on a limb when they used as much as 4 million lbs. Then others raised the ante, but EOG said they would use upwards of 10 million lbs in a long lateral. Even though these are proposed 1920-acre drilling units (ICO), they are still typical long laterals with total depth not all that "deep." Total depth has to get more than 25,000 feet before I get excited about a super long lateral in the Bakken.

This Side Of Paradise, Part II -- Tuesday, June 2, 2015

EIA "energy cookie":
While total U.S. crude oil production increased by nearly 3.2 million barrels per day (b/d) from 2010 to 2014, production in the West Coast region (PADD 5) decreased by 0.1 million b/d, continuing a long-term decline.
With no major crude oil pipelines connecting the West Coast to other parts of the country, refineries on the West Coast adjusted to the declining in-region production by increasing imports of foreign crude oil, reaching an average of 1.1 million b/d over the past five years.
Shipments of domestic crude by rail (CBR) to the West Coast have also increased, from an average of 23,000 b/d in 2012 to 157,000 b/d in 2014. In the first quarter of 2015, West Coast CBR movements averaged 191,000 b/d. --- EIA
This is so cool. I just wrote about this the other day. California is "broken" when it comes to oil. Exxon is looking at trucking oil in convoys -- even war-torn Iraq and Syria have pipelines. Trucks are so yesterday.

Guess where that imported crude oil is coming from. As my dad used to say, you get three guesses, and the first two don't count.

Back To The Future

This is so cool. I just posted this past week that the Greek debt problem will be solved by extending the "drop dead date" by three months. There are two crises the G-7 is dealing with: the Ukraine and Greece. They have just solved the Greek debt problem. They will extend the deadline for nine months, until March, 2016. The Wall Street Journal is reporting.

And it's obvious what they plan to do. Look at the graphic at this link, and you, too, can quickly see the solution.

The only other crisis for the G-7 to solve is the Ukraine crisis, and that one will probably solve itself.

Brazil, Turkey No Longer Make The "A" List


Later, 2:36 p.m. CT: at the time of the original post, the linked article said 25,000 staff would be let go; now it turns out that the total number is 50,000 with 25,000 of the cut coming from Turkey and Brazil. Reuters is reporting:
In the bank's second big overhaul since the financial crisis, it will speed up a cull of unprofitable units and countries by cutting almost 50,000 jobs - half of them from selling businesses in Brazil and Turkey.
Maybe a first cut of 25,000 was announced some time ago; I don't know, but it really doesn't matter. The point is made. Lots of cuts. And Brazil and Turkey are no longer on the "A" list among global economies.
Original Post

CNBC is reporting:
HSBC will cut costs by as much as $5 billion within two years, laying off as many as 25,000 staff, the banking behemoth told investors Tuesday in a much-anticipated update.
Europe's largest bank by assets also revealed plans to streamline its 260,000 strong workforce and trim its branch numbers by around 12 percent.
The bank said it intended to sell its Turkish and Brazilian operations -- although it will maintain a presence in Brazil to serve large clients -- in what the it called a "significant reshaping of its business portfolio".
Speaks volumes. Not about HSBC but about Brazil and Turkey.

Crying Uncle

The Fiscal Times is reporting:
President Obama on Monday confirmed the bad news for up to 5 million illegal immigrants in this country: He has called a halt to Department of Homeland Security preparations to shield them from the threat of deportation because his executive orders have become seriously bogged down in a court challenge.
Speaking during a news conference at the conclusion of the G7 Summit in the Bavarian town of Kruen, Germany, Obama said that his executive orders will require an elaborate “administrative apparatus” in order to be carried out. But a series of legal setbacks in the federal courts have stymied the government’s intention to move ahead with the program.
Damn darn GOP.

Crying Uncle

Brian Williams is out. That's the word on the street.

Meanwhile, ABC's World News Tonight is #1, overtaking NBC's Nightly News.

Educated Readers

It's amazing how fast readers can see through bullshit. The AP is reporting a great jobs market in the US. Readers note that the jobs are all low-paying, minimum wage service jobs -- hotel maids, fast food restaurants, driving season is here and gasoline is (sort of) cheap.

This Side Of Paradise; Producers Paying To Have Their Propane Taken Away, Part I -- Tuesday, June 9, 2015

For those who may have missed it, the EPA says fracking has no widespread effect on drinking water. None. Nada. Nil. Zilch.  Varney and Company over at Fox Business News is apparently going to do a piece on this "ruling" in each of the three hours this morning. I don't know the specifics of Varney and Company, time slot, network, etc. I may be way off, but I know the "Varney" part is correct. Don told me. Fox News video here.

No matter how you spin it, the Obama administration supports fracking. If the administration did not support fracking, the administration could have easily delayed the EPA report, saying the study needed more time and more research or more study or whatever language they wanted to do. They only had to run out the clock, less than two years of delaying a report. Shoot, they've delayed action on the Keystone XL North for six years and counting. The fact that the EPA report was released  on President Obama's watch speaks volumes. Either he personally supports fracking, or he is disengaged going into his last two years and is focused on foreign relations issues. Like Iran.

Active rigs:

Active Rigs82192189213169

EIA "energy cookie":
While total U.S. crude oil production increased by nearly 3.2 million barrels per day (b/d) from 2010 to 2014, production in the West Coast region (PADD 5) decreased by 0.1 million b/d, continuing a long-term decline.
With no major crude oil pipelines connecting the West Coast to other parts of the country, refineries on the West Coast adjusted to the declining in-region production by increasing imports of foreign crude oil, reaching an average of 1.1 million b/d over the past five years.
Shipments of domestic crude by rail (CBR) to the West Coast have also increased, from an average of 23,000 b/d in 2012 to 157,000 b/d in 2014. In the first quarter of 2015, West Coast CBR movements averaged 191,000 b/d. --- EIA
RBN Energy: producers paying to have their propane taken away
Prices for non-TET propane at Mont Belvieu yesterday fell to their lowest level in 13 years at 31.0 cnts/Gal (source: OPIS). A big part of the recent price decline is to do with surging propane storage inventory. Last Wednesday’s data from the Energy Information Administration (EIA) showed U.S. propane inventory levels increased by 3.8 MMBbl to 77MMBbl during the last week of May 2015. If storage injections increase at that rate for another couple of weeks then levels will surpass the record of 81.6 MMBbl set in October 2014. The trouble is – that record was set at the start of winter – traditionally the end of propane storage build season - but we are still only in June – with several months of storage build left. Today we discuss the growing propane surplus.
We began this series last week by looking at the Edmonton propane market where prices dropped into negative territory in the face of unprecedented oversupply.
The western Canadian surplus follows lower seasonal crop drying and home heating demand than usual for propane in their traditional markets in the U.S. Midwest and Northeast.
That lack of demand was compounded by the reversal of the Cochin pipeline in 2014 that previously shipped up to 50 Mb/d of Canadian propane to the Midwest. Until new rail terminals and storage capacity are built in the Edmonton region, natural gas liquid (NGL) producers are stuck scrambling to find local storage capacity or paying additional rail freight charges to ship their propane to U.S. storage hubs around the country at spots like Hattiesburg, Mississippi, Arizona, at Conway, KS in the Midwest,  Mont Belvieu on the Gulf Coast or just about any location that will take the stuff. The trouble is that supplies are just as abundant in the U.S. as they are in Edmonton this year and so there is no “room at the inn” for much of the surplus Canadian propane in the Lower 48. This time we turn our focus to the worsening U.S. propane supply glut.

US shale oil boom grinding to a halt, one percent / month. Bloomberg is reporting:
The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt.
Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January.
Since January. Six months ago. So yesterday.

I cannot, for the life of me, see how MDU could screw up as badly as they did in the Bakken. Here's another story. Remember that MDU-Calumet Dickinson refinery: delayed and over -budget, coming in at over $400 million, if I recall correctly.

Devils Lake wants to build an almost identical refinery for .... drum roll ... $200 million. I believe $200 million was the original cost estimate for the Dickinson refinery; if not $200 million, at least in that ballpark. [I was off a bit, here's the estimate and "final" cost -- MDU says the cost of the plant, initially pegged at $300M, now has been revised to $425M-$435M.]

Of course, if the Devils Lake refinery is built, it, too, will come in over budget -- all big projects seem to come in over budget, but I doubt to the tune of $400 million.

The Dickinson Press is reporting:
The Devils Lake City Commission will review a development agreement next week with the company that plans to build a $200 million, 20,000-barrel-per-day oil refinery on the west edge of Devils Lake.
The refinery, similar to one that just opened in Dickinson, would process oil from the Bakken Formation of western North Dakota, converting it to low-sulfur diesel fuel, which would be marketed in the region for use in agriculture and construction equipment.
The things that stand out for me with regard to MDU:
  • headquartered in the backyard of the Bakken
  • a company from Oklahoma quietly buys up the mineral acreage in MDU's back yard
  • MDU finds a good field; turns it into a mediocre field; sells it to Oasis who turns it into an outstanding field, and makes Oasis what it is today
  • the $435 million MDU-Calumet Dickinson refinery, delayed and way over budget
  • puts Fidelity on the market the very month the price of crude oil plummets (Saudi's revenge)
  • takes Fidelity off the market; then puts it back on the market two months later