Wednesday, June 17, 2015

Reason #34,738 Why I Love To Blog -- June 17, 2015

If I were not blogging, I would not have known this. I find this very, very interesting. I never quite understood Putin's interest in a EU Grexit. The (London) Telegraph is reporting:
Tsipras is due to meet with Russian president Putin on Friday - the day after one of the last possible moments for a deal to be struck.
Bloomberg has suggested that one reason for Tsipras to be courting Putin is that Greece would veto an extension of EU sanctions in exchange for Russian largesse, and to gain leverage over its creditors.
EU sanctions require a unanimous vote by the 28 governments, and opponents will have one more chance to block them before the decision becomes final.
EU officials, led by EU President Donald Tusk, today agreed a preliminary accord to continue the sanctions for six months until the end of January.
The chess game continues.

National Oilwell Varco To Cut 1,500 Jobs In Norway -- June 17, 2015

Reuters at Rigzone is reporting:
National Oilwell Varco Inc , the largest U.S. oilfield equipment maker, said it will cut its Norwegian workforce by 1,500 by the end of this year as low oil prices have reduced investments.
It plans to cut 900 permanent jobs and 600 contractors.
Norway's Statoil said on Tuesday it will cut up to 7 percent of its workforce and a third of its consultants by the end of 2016, adding to staff cuts already implemented as it battles low oil prices and shrinking margins.
The big question: is the Bakken a core holding for Statoil?

For Newbies, Something Fun To Watch -- June 17, 2015


July 16, 2016: screenshot taken today --

Original Post
For background, see these posts:
Graphic of these wells proximity to each other:

So, in the big scheme of things, where are these wells located in North Dakota? Seventeen (17) miles northeast of Watford City:

For newbies (and the rest of us), these five wells should be really interesting to follow (see first screen shot):
  • 30688, loc, Whiting, Flatland Federal 11-4-2TFH,
  • 30687, loc, Whiting, Flatland Federal 11-4-2H,
  • 30776, loc, Whiting, Flatland Federal 11-4-3TFH,
  • 30775, ros, Whiting, Flatland Federal 11-4-4TFH,
  • 30774, loc, Whiting, Flatland Federal 11-4-5TFH,
In addition to IPs and production profiles, completion techniques should be very, very interesting.

I can hardly wait. 

OPEC Revenue Plunges; Falls Below $1 Trillion Annually -- Not Seen Since 2010 -- June 17, 2015

Rigzone is reporting: mid-year survey suggest much improved E & P outlook in 2016.
Capital expenditures (CAPEX) for global exploration and production (E&P) spending are expected to fall by 20.2 percent this year to approximately $590 billion – the first time that spending has dipped below $600 billion since 2011 – but is poised to rise in 2016 if oil prices stabilize at or above the $65 to $70/bbl threshold, according to the majority of companies surveyed in Evercore ISI’s 2015 Mid-Year Global E&P Spending Outlook.
The spending outlook reflects a significant decline relative to the 5 percent decline from the firm’s initial January survey, and follows five consecutive years of gains and a 12 percent compound annual growth rate since 2009.
The decline in oil prices that began last year has prompted companies throughout the oil and gas industry not only to slash spending and operational plans, but to lay off thousands of workers as well. Oil prices fell after OPEC – the Organization of Petroleum Exporting Countries – made the decision not to cut output, trying to defend market share against U.S. shale production. At its recent meeting, OPEC members refused to cut the production ceiling.
Which Leads Us To This --

Bloomberg over at Rigzone reports: OPEC revenue slumps below $1 trillion for the first time since 2010.
OPEC nations’ revenue from petroleum exports plunged below $1 trillion last year for the first time since 2010, highlighting how slumping crude prices hurt countries reliant on oil sales to fund their economies. The group’s 12 members earned $993.3 billion in 2014, a decrease of 11 percent from a year earlier.
Their combined current account balance slumped by 35 percent to $273.6 billion as the drop in exports was accompanied by an increase in imports.
The revenue drop shows the strain on the group’s members as they increase pumping at a time of oversupply, following a Saudi Arabia-led strategy of defending market share instead of prices. OPEC nations agreed on June 5 to keep a production limit of 30 million barrels a day, a level they have exceeded every month since June last year, according to data compiled by Bloomberg
Revenue will probably be below $1 trillion again in 2015 based on a very, very miserable first half. 

Return To Sender, Send It Special Delivery -- June 17, 2015

I'm not sure about all the facts, but I bet I'm pretty close.

Some time ago, the Minnesota legislature mandated that a certain percentage of electricity be produced by renewable, non-conventional sources, such as, let's say solar and/or wind.

So, the Minnesota utilities started putting in those solar farms and/or wind farms.

Of course, someone has to pay for feeling good.

Obviously, Minnesotans would help pay for those solar farms and/or wind farms. It would make them feel good.

Maybe that was enough. Maybe not. Or maybe if the utilities found someone else to help pay, utility rates would be lower for Minnesotans. That would make them feel good, too.

So, the Minnesota utilities decided to see if North Dakotans would like to help pay for their expensive solar energy and/or wind energy.

The story will finish with the help of The Bismarck Tribune:

Northern States Power Company, a subsidiary of Minneapolis-based Xcel Energy submitted an application to the North Dakota Public Service Commission (ND PSC) requesting that North Dakota consumers help pay for the cost of feeling good solar energy projects planned in Minnesota.

The ND PSC rejected the application, not because the commission is anti-solar (we all love solar energy; we all want to feel good), but solar energy from Minnesota is:
a) not "least-cost planning"; and,
b) not needed
I love that last part, "not needed." Northern States Power noted that it would have excess capacity in its energy generation through 2023 without the solar projects. In other words, "not needed."

The three solar projects were going to be located at three sites in Minnesota. The solar energy sites Northern States Power wanted North Dakota consumers to help fund:
  • North Branch, MN (100 MW)
  • Marshall, MN (62 MW)
  • Tracy, MN (25 MW)
With regard to "least-cost planning," this is a method first utilized by the electric utility industry to find the most cost-effective means of address growing needs in demand for electricity.

Apparently "least-cost planning" does not include the Algore "feel good" clause commonly found in federal accounting methods.

And so it goes.

I don't think I know any of the members on the ND PSC but if we ever cross paths, I will buy each of them a steak dinner. I'm no longer a North Dakota resident so I don't think that would be a conflict of interest. In lieu of a steak dinner, a gift of sun tan lotion might be appropriate.

Return To Sender, Elvis Presley

Speaking Of Solar 

Apparently Arizona is experiencing a near-Minnesota experience. The Phoenix Business Journal is reporting:
Arizona fell out of the top five in overall solar installations during the first quarter, in large part because local utilities didn't have any projects. [In a few minutes, you will see why.]
GTM Research recently released its U.S. Solar Market Insight report, and Arizona placed eighth in the U.S. for installations. For the quarter, the state saw 32 megawatts of installation.
It's likely those numbers will drop in the future as local utilities look to increase what solar customers are charged, according to the report. [Well, duh.]
Arizona Public Service must meet standards dictated by the Arizona Corporation Commission to get 15 percent of its power from renewable sources by 2025.

ASP's Salt River Project adopted new rates for solar customers in December that has drastically reduced the number of systems being installed within the utility's territory. 
An APS move to request a tripling of the charges solar customers pay per month could be another factor in slowing residential solar in the state. [Well, duh, Sherlock.]
Then this last paragraph:
"With that in mind, Arizona's residential market is still expected to grow 27 percent year-over-year, but [solar?] demand is expected to dip in 2016 and then flat line as the market adjusts to nearly all utility service territories rolling out or considering new solar-specific charges for residential solar customers," the report said. 
Maybe readers will understand that article better than I but I'm having trouble understanding two of the paragraphs.

The first paragraph that perplexes me: "An APS move to request a tripling of the charges solar customers pay per month could be another factor in slowing residential solar in the state." Well, duh. If your rates are going to triple to feel good (to pay for solar energy) ... well, duh....

The second paragraph that perplexes me: "With that in mind, Arizona's residential market is still expected to grow 27 percent year-over-year, but demand is expected to dip in 2016 and then flat line as the market adjusts to nearly all utility service territories rolling out or considering new solar-specific charges for residential solar customers."

If I'm reading that correctly it states that despite increasing energy needs in the state of Arizona, less will come from solar energy because it's too damn expensive.

I bet if I want, I can find a gazillion articles telling me that solar energy is as cheap as conventional energy if I do a google search. Of course, all those articles will come from the following websites:
It looks like the Arizona utilities aren't going to have any luck with "solar-specific charges for residential solar customers." It looks like the utilities will have to a) market their expensive solar electricity to commercial users; and/or, b) market their expensive solar electricity to state agencies.

Disclaimer: I had trouble understanding that whole article. Either I'm more dense than the average Arizonian or there was a bit of obfuscation in that article. If I have misread it, I apologize to all Arizonians.


A big thank you to readers for sending me links to these articles. 

Sam Kinison would have had fun with the Arizona story.

I Don't Have Any Answers For You, Sam Kinison

Thirteen (13) New Permits, North Dakota; Devils Lake Refinery Proposal Approved; $15-Million UND Engineering College Construction To Begin -- June 17, 2015

Active rigs:

Active Rigs79187184214173

Five (5) wells coming off the confidential list Thursday:
  • 26855, 1,655, Whiting, Finsaas 34-9-4H, Hay Creek, t1/15; cum 39K 4/15;
  • 28335, drl/NC, CLR, Salers Federal 6-27H1, Antelope, no production data,
  • 28861, drl/NC, Hess, EN-Hermanson-LE-155-93-3501H-7, Robinson Lake, no production data,
  • 29927, SI/NC, Statoil, Palson 36-1 6H, Briar Creek, no production data,
  • 30065, drl/NC, SM Energy, Bud 1-26HS, West Ambrose, no production data,
Thirteen (13) new permits:
  • Operators: Hess (10), Whiting (3)
  • Fields: Alkali Creek (Mountrail), Antelope (McKenzie), Moccasin Creek (Dunn), Sanish (Mountrail), 
  • Comments: Hess has permits for a 6-well pad in Alkali Creek;
Two (2) producing wells completed:
  • 28986, 534, CLR, Bismarck 6-9H1, Brooklyn, t6/15; cum --
  • 28985, 700, CLR, Bismarck 7-9H, Brooklyn, t6/15; cum --
CLR plugged / abandoned one producer: Traxel 1-31, in Mercer County (#17877)

Diesel Topping Refinery Proposal Approved For Devils Lake is reporting:
A development agreement has been made between the Devils Lake City Commission and Eagles Ledge Energy, clearing a path for the construction of a 20,000 barrel-per-day refinery. After approval of the agreement, City Commissioner Rick Morse said, “I think this is one of the best things that’s ever happened to this community.”
The FNS reports that city officials worked with Eagles Ledge for over six months on the details of the agreement. The new refinery, located west of the city, will create roughly 100 jobs and will generate the city an annual revenue of $1.75 million.

UND Energy Complex

The Grand Forks Herald:  construction to being July 6, 2015. Data points:
  • 30,000-square-foot building to bridge several existing UND buildings
  • will create a large energy complex on southeast side of campus
  • to help meet growing program; from 2003 to 2014, enrollment at tUND's College of Engineering and Mines has increased by 130 percent to 1,765 students 
  • fundraising goal: $15.5 million; currently has $14 million, enough to begin construction
  • Hess: $5 million donation
  • Hess donation matched by an additional $2.5 million from the North Dakota Higher Education 
  • Challenge Fund
  • Dean: Hesham El-Rewini

Procrastinating -- Nothing About The Bakken -- June 17, 2015

I'm procrastinating. I should be reading, not blogging or surfing the net. I have no family commitments until 8:30 a.m. tomorrow morning. I am free for the rest of the day (it's 3:00 p.m. CT). It would be a perfect day for a long bike ride, but the rain from Tropical Storm Bill still threatens. The storm has moved through, and there is nothing on the radar scope but yet additional rain is predicted through midnight tonight, and the skies are pretty dark. Not sure what to do.

While procrastinating, I happened to catch the headline that Musk/Tesla borrowed $750 million (announced earlier this week). My first thought: that's a strange figure. For all intents and purposes, that's $1 billion. My hunch is that realistically, Musk would have liked $1 billion but that would been quite a headline for the pundits: "Tesla Borrows $1 Billion." So, for PR reasons, perhaps he went with $750 million rather than $1 billion.

It's also possible he went to the banks seeking $1 billion, but they balked, reluctantly settling for $750 million. Supporting that is the fact that Musk had to get the loans from multiple banks, not just one (Deutsche Bank, Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and Credit Suisse) -- seven big name banks in all. And the loan needs to be paid back in less than five years.

One wonders if we might not be witnessing the Greek problem: "If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy."

Some time ago, I read somewhere that AAPL was one of the most "shorted" stocks. Today, according to Yahoo!Finance, the number of APPL shares shorted represent 1% of total shares outstanding. TSLA? 25% of outstanding shares are shorted.

Tesla's debt is $2.65 billion according to Yahoo!Finance. I doubt that includes the $750 million announced today. And Tesla is burning through cash. Operating cash flow is an astounding negative $250 million and levered cash flow is a phenomenal negative $1.1 billion. (Some numbers rounded.)The rest of the "key statistics" for Tesla look just as bleak.

Apple? Operating cash flow is an astounding $75 billion, and levered cash flow is $45 (numbers rounded).

So, the "$750 million" number is strange:
  • it isn't quite $1 billion but "really" it is
  • as fast as the company is burning through cash, another $750 million hardly seems enough especially in a capital intensive industry
  • it took seven banks to agree to this loan
  • 25% of outstanding shares are shorted (watch out for a "short squeeze")
Another troubling development: Musk is reaching out for help on his battery (announced in today's WSJ). I thought Tesla/Musk had "all" the answers with regard to battery power. Apparently not; he's hiring an outside expert from Nova Scotia, a province well known for its technology breakthroughs, especially in the area of battery technology. Something smells. 

Random Look At Petrogulf Antelope Drilling Unit That Could Get 16 Wells -- June 17, 2015

From the January, 2015, dockets:
  • Case 23580, Petrogulf, Antelope-Sanish, 16 wells on an existing 1280-acre unit, 25/36-151-94; McKenzie, 
So, what does that drilling unit looks like today:

From 20,000 feet:

From 5,000 feet:

From 500 feet:

The wells currently on the pad:
  • 25948, 2,088, Petrogulf, Sandstrom 151-94-1H, 30 stages, 2.8 million lbs, t12/13; cum 232K 4/15; still flaring,
  • 25949, 1,367, Petrogulf, Sandstrom 151-94-2HTF, t12/13; cum 285K 4/15; still flaring,
  • 28522, 2,106, Petrogulf, Three Tribes 151-94-3H, ICO, t12/14; cum 120K 7/15; still flaring some,
  • 28523, 1,572, Petrogulf, Three Tribes 151-94-4HTF, t12/14; cum 81K 4/15; still flaring,

Random Update On The Monster ERF Well In The Sanish -- June 17, 2015


Later, 2:05 p.m. CT: about an hour after posting the original post below, I noted that Zacks  had a piece on Enerplus. Note: this is not an investment site. Do not make any investment or financial decisions based on anything you read or think you might have possibly read at this site. ERF is one of the few Bakken operators paying a dividend; it currently pays 5%.  

Original Post

For background to this update, see an earlier post.

What caught my eye today regarding this well -- after all this time, it's still flowing without a pump. Yes, it's possible a pump has been placed but the paperwork has not been filed with the NDIC. But for now, the NDIC shows this well is not on a pump.

Not that in October, the company placed temporary NGL units on the pad to reduce flaring. 
  • 26737, 3,374, Enerplus, Ribbon 152-94-18B-19H, Sanish, again, much of the paperwork says "Bakken," and the target was clearly the middle Bakken (middle Bakken "C") but the scout ticket says the Sanish pool; 42 days (316 hours) of drilling; 42 stages; 10.0 million lbs sand; t4/14; cum 377K 4/15;
One wonders to what extent this well is being choked back. 

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

How Do You Like Me Now? -- June 17, 2015

This is really quite incredible. Starbucks buys a bakery chain, most of which is located in San Francisco, and then closes all its cafes. Bloomberg is reporting:
Starbucks Corp. will close all 23 La Boulange bakery cafes by the end of September, even as it continues to use the brand to sell food at its coffee shops.
“Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth,” the Seattle-based company said in a statement on Tuesday. “The La Boulange brand will continue to play a significant role in the future of Starbucks food in stores.”
Starbucks agreed to buy the San Francisco-based Bay Bread and its La Boulange brand in 2012 for $100 million. The French-themed bakery sold homemade granola, flank steak sandwiches and organic bread.
Homemade granola ... homemade ... homemade in San Francisco ... .. I wonder what Starbucks found in that homemade granola -- inquiring minds want to know...

How Do You Like Me Now, Toby Keith

Back to La Boulange -- it looks like the owners got a good deal; the employees are looking for new jobs. How do you like Starbucks now?

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 GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 1.9 percent on June 16, unchanged from June 11. The nowcast for real GDP growth ticked up to 2.0 percent after yesterday morning's industrial production release from the Federal Reserve boosted the forecasts of real investment in petroleum and natural gas well structures and motor vehicle and parts dealer inventories. The GDP nowcast moved back down to 1.9 percent after this morning's housing starts release from the U.S. Census Bureau reduced the forecast for real residential investment growth from 8.8 percent to 6.8 percent.
The Fed, today:
Federal Reserve policymakers on Wednesday kept the central bank’s benchmark short-term interest rate near zero, opting against the first increase since 2006 after determining the economy still isn’t strong enough to handle it.
Fed officials sharply downgraded their economic forecast for this year. They projected the economy would grow between 1.8% and 2% this year, well below the range of 2.3% to 2.7% in its last forecast in March.
If they’re correct, annual growth would be the worst since 2011 and would be far from the breakout performance some economists had hoped for this year.

The reaction was a bit delayed, but finally investors noted it. SRE is up toay, slightly over 1%.

Well, That Was Easy

More love lost. Former Nokia CEO leaving Microsoft.

Dance Me To The End of Love, Leonard Cohen

That Glow Didn't Last Long

There are five sports stories on the front-page of the internet edition of The Wall Street Journal today; none of them are on the new NBA champions.

Best Non-Bakken Story Of The Day

Treehouse for corporate meetings, with non-stop beer

Whisky For My Men, Beer For My Horses, Toby Keith, Willie Nelson

Speaking of which, how do you remember whether to spell it "whiskey" or "whisky"? It's easy. If the origin is a country with no "e" in it, it's "whisky" without the "e" (Japan, Scotland, Canada). If it's from a country with an "e" in it, it's "whiskey" with an "e" in is (United States, Ireland). There is at least one exception to the rule: George Dickel Tennessee Whisky.


I slogged through and finally finished This Side of Paradise. It was not a pretty sight. Wow, what a pain. But I'm glad I finished it. The novel will haunt me for quite some time, and that's how I judge fiction.

At the end of this particular copy, were the contemporary book reviews. Perhaps the most interesting part of the book. I will have to read parts of Fitzgerald's book again. But I am eager now to re-read Catcher in the Rye.

Wednesday, June 17, 2015 -- Tropical Storm Bill Hits DFW Metroplex; Reuters Reporting Strong Demand For Oil

Strong demand: Reuters is reporting crude oil up more than a dollar, over $65 for Brent, $60 for WTI, on strong US demand. Forecasts are all over the map: some say going higher; some say going lower. But this graphic, posted earlier -- I think, last week -- tells the story:

Never mind: oil fell back almost 2% in early afternoon trading after "speculators" took their profits and got out.

Active rigs:

Active Rigs78187184214173

RBN Energy: Gulf Coast condensate splitter economics update.

Weather in north Texas: the "eye" of the storm is on the south side of Dallas (at 7:30 a.m.) and moving ever so slightly to the west of due north. If it stays on that track, the "eye" of the storm will move through the corridor west of the airport and east of Ft Worth -- exactly over Grapevine / Southlake. Right now in our immediate area, very wet but the rain is not coming down very hard.

Folks have asked about increased energy consumption in the Mideast. See this post.


The Bismarck Tribune is reporting the approval of a 150,000-bbl crude oil storage depot in Watford City
Dakota Access Pipeline went to the McKenzie County Commission for authority to locate a massive crude oil terminal on the south edge of the Watford City limits.
The request was narrowly approved and moves forward the company’s plans to build a 1,100-mile pipeline from the Bakken into Illinois to supply Midwest and Gulf coast refiners with the North Dakota product by the end of next year.
Cushing: approximately 50 million bbls of storage capacity, I believe.

My hunch: about 1 million bbls of storage capacity in the Bakken.

EIA "Energy Cookie"

EIA is reporting:
First-quarter 2015 financial results for globally integrated oil companies—ones that focus on both the exploration and production of crude oil (upstream) and the refining of crude oil into petroleum products (downstream)—show that total earnings were $22 billion (54%) lower than in first-quarter 2014.
Lower crude oil prices contributed to a decline in profits in the upstream sector of $28 billion (80%) compared to first-quarter 2014.
Profits in the downstream sector, however, were the largest for any quarter since third-quarter 2012, almost $6 billion (95%) higher than in first-quarter 2014, which offset some of the decline from the upstream segment. --- EIA
Talk About Buying Influence
#1 On The List Led The Anti-Keystone Fight
Note Delta Between #1 and #2

Remember: it's Steyer's party and Bloomberg's party that want campaign finance reform. LOL.

Numbers rounded in some cases:
  • Steyer: $75 million
  • Bloomberg: $30 million 
  • Koch: $5 million