Saturday, July 18, 2015

Off The Net For Awhile

USA Today has a fluff piece today; it must be a slow news day:  the 10 most oil-rich US states. Had they run the list based on a) amount of oil /size of state; or b) amount of oil per capita, North Dakota would have led the list by a huge margin. As it is, North Dakota came in 2nd to Texas.

Based on proven reserves (some numbers rounded):
  • Texas: 10.5 billion (a population of 30 million  = 350 bbls/person)
  • North Dakota: 5.7 billion (a population of 750,000 = 7,600 bbls/person)
  • Alaska 2.9 billion (a population of 750,000 = 3,800 bbls/person)
  • California 2.9 billion (a population of 40 million = 75 bbls/person)
  • New Mexico: 1.2 billion (a population of 2 million = 600 bbls/person
  • Oklahoma: 1 billion (a population of 4 million = 250 bbls/person)
  • Colorado: 900 million
  • Wyoming: 700 million
  • Utah: 600 million
  • Louisiana 500 million
There's another data point that jumped out at me. To date, this is how much oil selected states have produced, in total (some numbers rounded), this tells me how important the oil and gas industry has been for the state of North Dakota:
  • North Dakota: 400 million (500 bbls/person; not 10x but 100x that of California)
  • California: 200 million (5 bbls/person)
  • Alaska: 180 million (250 bbls/person)
This is what they had to say about North Dakota:
Home to the Bakken shale formation, North Dakota is the archetype of the recent U.S. oil boom. From 2000 through 2013, proven oil reserves increased by more than 2,000%, from 270 million barrels to 5.7 billion barrels. And while only four new oil fields discovered in 2013, compared to the 29 fields discovered in 2010, the state still had the highest number of new field discoveries in the country. New oil discoveries have also helped create jobs in the state. Since 2001, North Dakota’s unemployment rate has risen above 4% only once, and the share of the labor force employed in mining and logging has grown from roughly 1% to 6.5%. Additionally, the state had the country’s highest GDP growth rate of 6.3%, of which 2.5 percentage points came from the mining industry.  
California has two realities to face:
  • California’s proven oil reserves fell by nearly 25% from 2000 through 2013, one of only two of the most oil-rich states that did not increase its proven reserves over that period
  • proven reserves mean nothing if the state citizens won't let them drill 
  • like California, proven oil reserves in Alaska are declining, falling 40.4% from 2000 through 2013, including a 13.1% decline in 2012
  • RBN update here  
Dinosaurs: Note To The Granddaughters

I finally understand (or at least have a better understanding, superficial though it may be) of the taxonomy of dinosaurs. It is amazing how far "we've come" over the past fifty years with regard to this taxonomy. 
Up until recently, the book I enjoyed most on this subject was The Mistaken Extinction: Dinosaur Evolution and the Origin of Birds, Lowell Dingus and Timothy Rowe, c. 1998. In June (last month) I picked up the newest such book on dinosaurs: The Princeton Field Guide to Dinosaurs, Gregory S. Paul, c. 2010.

It's the reptiles that have caused taxonomists problems all these years. It's very possible that like Pluto in my lifetime which lost its status as a planet, the term "reptiles" will be replaced by a new biologic term by the time the youngest granddaughter graduates from high school.


It Still Rounds To Zero When Rounded To The First Whole Number -- July 18, 2015

Being tweeted now by the EIA:

It says that 3% of 13% rounds to zero when rounded to the first whole number. 

(0.03*.13 = 0.0039).

Wind, at 0.34 * 0.13 = 4.4%.

And this is after a gazillion dollars in tax credits and subsidies for wind and solar energy; years of huge government and private investment in advocacy; years of state and federal regulations mandating renewable energy for ill-advised reasons; and, a highly successful war on coal by the president and the EPA.

Even with all that, the tea leaves now suggest that the public is souring on the idea of increased solar and wind farms in their backyards. But Florida, Minnesota, and Massachusetts residents love to see their electricity, like their corn and wheat, come from farms in North Dakota.

Update On Recent Oil Spill In Northeastern Montana; 5-Million-Fluid-Ounce Bakken Oil Spill -- July 18, 2015


Later, 4:47 p.m.: the tracks are now re-open. Nothing to see here, folks. No fire, no explosion, no injuries. No runs, no hits, no errors. Just an ankle-biter.
Original Post
I can't remember if I posted the story when the derailment was first reported; the story didn't interest me all that much, but I thought I posted it, but can't find it, so maybe I didn't.

A BNSF train de-railed near Culbertson earlier this week: no fire, no explosion. I assume no injuries.

Today, a follow up from the Billings Gazette: 35,000 gallons of oil spills after derailment near Culbertson; cars hit power pole.

That was the headline.

Four cars off the track.

Then the second paragraph: The spill marked the latest in a series of wrecks across the U.S. and Canada that have highlighted the safety risks of moving crude by rail.

Quick: name the last crude oil spill in the US prior to this one. 

Talk about hyping an issue.

What caught my eye most was the headline. We've talked about it before. When crude oil is produced or shipped it is generally reported "in barrels." But when there's a spill, to increase the "headline number" 42x, the AP and others will report the spill in gallons. Sure, this was a derailment and a spill, and there will be some work involved to make things right, but 35,000 gallons is not much more than 800 bbls.

But "35,000 gallons" certainly catches an uninformed reader's attention.

But a 5 million fluid ounce spill is even more impressive.

Drought Update

As everyone knows, the drought in Texas -- all of Texas -- is over. Yes, it's cyclic.

Now we get a report that the drought in Colorado is also over:
Rain has pulled Colorado out of its drought, for now.
Rains since last fall have brought Colorado out of a drought and returned the state to a condition that the National Weather Service says it hasn't seen since August 2009.
Colorado State Climatologist Nolan Doesken says even though the wet weather probably won't stick around, it's worth celebrating. He said El Nino could be a factor in helping end drought conditions.
Meanwhile, the Casper Tribune has a nice update on the Colorado River system and the California drought.

Doing My Part To Promote Tolerance

I normally don't post this sort of stuff -- but at least two of my readers are getting just a bit upset with what's being asked of many Americans with regard to tolerance. This comes in the wake of the news that the five active duty male -- a US sailor -- has died following a mass execution of US military recruiters in Tennessee by Mohammad Youssuf Abdulazeez. The five victims were unarmed and in a gun-free zone established by the federal government.
McDonald, NHL Hall of Fame broadcaster speaking in Ontario, says: "I am truly perplexed that so many of my friends are against another mosque being built in Toronto. I think it should be the goal of every Canadian to be tolerant regardless of their religious beliefs. Thus the mosque should be allowed, in an effort to promote tolerance."
"That is why I also propose that two nightclubs be opened next door to the mosque; thereby promoting tolerance from within the mosque.
We could call one of the clubs, which would be gay, "The Turban Cowboy," and the other, a topless bar, would be called "You Mecca Me Hot."
"Next door should be a butcher shop that specializes in pork, and adjacent to that an open-pit barbecue pork restaurant, called " Iraq of Ribs."
"Across the street there could be a lingerie store called "Victoria Keeps Nothing Secret," with sexy mannequins in the window modeling the goods", and on the other side a liquor store called "Morehammered."
"All of this would encourage Muslims to demonstrate the tolerance they demand of us."
Yes we should promote tolerance, and you can do your part by passing this on. And if you are not laughing or smiling at this point... It is either past your bedtime, or its midnight at the oasis and time to put your camel to bed.

Something called is reporting:10 Images Show What Coastal Cities Will Look Like After Sea-Levels Rise.

This is the only image I need to make me a believer:

By they way, all those photos of "what the coasts will look like," are computer generated. GIGO.

Perhaps the most disturbing one is the computer-generated "photograph" of North Dakota's Devils Lake extending into eastern Montana and south to Rapid City, completely inundating the Bakken and turning the Black Hills into series of pseudo islands sticking above the inland "ocean."

Week 28: July 12, 2015 -- July 18, 2015

The big story remains the slump in oil prices; active rigs in North Dakota are currently around 75. Some argue that the US is more resilient than most other non-OPEC countries. In my mind there is no question about that. As a country, the US will do best among the oil-producing countries because we have such a diversified and vibrant economy.

I don't think anyone else caught this: operators in North Dakota are cutting back; 925 wells are waiting to be fracked; stringent new rules are affecting North Dakota production -- all that and more and yet, North Dakota's oil production rose almost 3% month-over-month. Meanwhile, several years into its 5-year, $35 billion program to increase oil production has netted Saudi Arabia barely 1% increase in oil production, month-over month.

The US oil and gas industry is getting hammered, and it could get much worse before it gets better, but the US as a country is going to do very, very well with inexpensive energy. By the way, inexpensive oil is leading to new gasoline demand records. EIA is reporting that propane stocks rose to a new record and refinery runs hit a record this past week.

Along that line, the Utica is much, much bigger than originally assessed.

More evidence that if it takes 6 - 7 years to get off-short projects up and running, we are being set up for $200 oil. COP terminates contract for drilling in the Gulf of Mexico.

And it's official: natural gas has now replaced coal as the biggest US electric power generation source.

There is an interesting observation comparing number of active rigs and production in Texas with North Dakota. Note "top story of the week" below.

Top stories of the week
Bakken is #1 in US for increased productivity per rig 
MRO reports great success in re-fracking a stripper well
All four top Bakken counties in the top ten oil producing counties in the US 

Update on permitting in North Dakota
NDIC issues seventeen permits on one day
The Bakken is still the gold standard
Oasis reporting incredible wells 

Random note on Oasis completion techniques

Setting new records in the Rocky Mountain region (PADD 4)

Crude-by-barge continues to grow on the mid-continent rivers

Bakken economy
New clinic opens in Watford City 
Jamestown $3 billion fertilizer plant on hold
Williston's new workforce training center has been completed

Evidence of new floor for refinery runs? 

Minor notes
Federal lease sales in North Dakota nets less than $40K 
WPX buys into the Permian

Black Hills Corp looks to increase its customer base by more than half

Follow-Up On Two Articles On Same Issue: New-Home Construction -- July 18, 2015


Later, 12:22 p.m.: a reader who retired from the manufacturing business many years ago had this to say about the housing industry discussed below:
20-35 yrs ago when we were manufacturing fireplaces we planned on having to find new ("replacement") fireplace builders every seven (7) years. There were many reasons why individuals did not stay longer, some good reasons, some bad reasons.
A fair number of them were fantastic stone/brick masons, but were terrible business men. The Crash in Housing started in late 2007,  8 yrs ago -- similar to the 7-year period noted above. 
When these crashes/downdrafts occur, it is similar to oil well companies: the price of the job gets cut, so the profit factors get squeezed. Also, many builders, after they hit 50 years of age, cut back from a 6-day a week work schedule to 3 days a week. Some go to an ALL cash and the home owner furnishes all the material and a helper.
This residential building industry is the last major bastion of unregulated labor. When you get into motels, business centers/hospitals/schools the labor is more regulated because of unions, and the shear size scale of the project. 
My hunch is that the residential building industry represents a major portion of, what I call, the "US Greek underground economy."

Like blogging about the Bakken, I learn something new every day.

Original Post
I wonder if anyone else noticed this: two completely different stories following the release of the June housing data.

CNBC: housing industry hammered by lack of skilled labor.

Bloomberg: new-home construction climbed to second-highest level since November, 2007

After going back and re-reading the stories, looking at the data, and then reading the comments at the CNBC story, just as I expected. The CNBC story was all about undocumented workers.

Debate With Krugman

I finally got around to reading this article, the link sent to me by a reader. If you haven't read it, it's a must-read.

Back on July 10, 2015, I wrote:
Even Paul Krugman agrees: more money should have been sent to Greece, and it should have been sent much earlier, and all of this could have been avoided.

After all, the EU has not run out of money for the Greeks to spend.

(By the way, the linked Krugman opinion piece is one of the most poorly argued / most poorly written pieces I've seen by him -- I guess both he and I are getting tired.) 
I feel much better. I thought the Krugman opinion piece on Greece was one of his most poorly argued / most poorly written pieces I've seen by him, but I thought I might be missing something. 

After reading the article linked above about the Krugman debate and then re-reading Krugman's own op-ed piece on Greece, it is very, very clear he is completely wrong on this one.

Random Note On Rig Count, Production In North Dakota, Texas -- July 18, 2015

I'm not familiar with this site: the Energent Group. It appears there is a fair amount of data available without a subscription. Note the well rig count links at the site, on the right, near the top.

Texas is producing about 70 - 80 million bbls of crude oil per month. North Dakota is producing about 35 million bbls of crude oil per month.

At least I think I am reading those links correctly.

Now go back to that Energent Group link above and then click on rig count.  If I am reading the graphic correctly, there appears to be around 400 rigs in the state of Texas. In North Dakota, we are running around 75 rigs. Baker Hughes says there were 366 rigs in Texas this past week, or thereabouts. It's hard to believe that there were 825 rigs in Texas in January of this year.

But I digress.

Maybe I'm misreading something or maybe I'm confusing something or counting "apples and oranges" but I see Texas producing about 80 million bbls of crude oil/month, and North Dakota is producing about 35 million bbls of crude oil/month.

Maybe folks are seeing where I'm going with this.