XTO Reports Several Nice Wells --August 18, 2015; Gasoline Prices Skyrocket In Great Lakes States Region Due To Refinery Outage

Tweeting now: CDU outage at BP's 413,000 b/d Whiting refinery -- at Platts (CDU - crude oil distillation unit). Later, 8:40 p.m. CT: this is the BP/Whiting refinery story being reported by UPI:

An outage at BP's refinery in Whiting, Ind., pushed retail gasoline prices up for nearly a week straight, snapping a 27-day streak of declines.

Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.66 for Tuesday, down a fraction of a cent from Monday but up 8 cents from one week ago. Prices in three Great Lakes states skyrocketed overnight last week after BP reported an outage at its Whiting refinery, one of the largest in the nation.

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Back To The Bakken

Active rigs:

	8/18/2015	08/18/2014	08/18/2013	08/18/2012	08/18/2011
Active Rigs	74	193	183	199	193

Wells coming off the confidential list Wednesday:

• 29390, SI/NC, XTO, Johnsrud Federal 34X-14C,  Bear Den, no production data,
• 30377, SI/NC, Statoil, East Fork 32-29 2TFH, East Fork, no production data,

No new permits --
 
Six (6) producing wells completed:

• 29582, 1,598, XTO, Satter 21X-1C, Siverston, t8/15; cum --
• 29583, 316, XTO, Satter 21X-1F, Siverston, t8/15; cum --
• 29584, 2,057, XTO, Satter 21X-1B, Siverston, t7/15; cum --
• 29668, 1,122, CLR, Thronson Federal 8-21H1, Alkali Creek, 4 sections, t8/15; cum --
• 29669, 962, CLR, Sorenson 6-16H2, Alkali Creek, 4 sections, t815; cum --
• 30214, 1,712, XTO, Marlene 42X-20CXD, Blue Buttes, t7/15; cum --

An interesting permit renewal:
16373, loc, Texakota, H. Borstad 34-1A,

Not surprising, temporarily abandoned:

• 27235, TA, Strata-X, Rohweder 1-11,

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Fast Food -- For The Granddaughters

I'm finally learning a bit of history about the fast food industry. I assume many folks my age grew up with the industry and did not really notice what was going on. Growing up in Williston, we had a Dairy Queen (we never called it "DQ") close enough to bicycle to, but we never had enough money to go anyway, so it didn't matter. I can probably count the number of times I went to Dairy Queen each summer during my high school summers on my two thumbs. But the highlight of every summer was when Dad took us to the A & W Root Beer "stand" about a mile north of Williston on "the Million Dollar Way" (US 2 & 85 north of Williston). He probably took the family once each summer, twice if he was having a particularly good summer.

For those who have forgotten or never knew, from Stephen Fried's Appetite for America:

By the 1920s, however, Americans were seeing the first wave of sit-down fast-food shops featuring signature hamburgers and frankfurters, sodas and ice cream. The first major hamburger chain was White Castle, which began in 1921 with four locations in Wichita, Kansas -- where it competed with Harvey House -- and then spread into other other Fred Harvey strongholds, Kansas City and St Louis, before expanding into Minneapolis and many other Midwestern cities....

White Castle and the A&W Root Beer drive-ins (which started in Sacramento at around the same time) were among the first of the classic American fast-food franchise operations. It was a new and exciting business model that Fred Harvey had eschewed -- although Ford (Harvey, his son) was constantly getting offers to try it...

Some people bought multiple franchises; others used one to learn the business and then went out on their own. (The Marriott hotel chain, for example, had its origins in an A&W Root Beer stand that J. Willard Marriott and his wife started in Washington, DC, in the 1920s, leading them to create their own drive-in company, The Hot Shoppes, and then hotels.)

I first heard of White Castle, I believe, when I visited Minneapolis in the summer between my junior and senior years in high school, although I can't say for sure. I do know that I was familiar with White Castle by the time I was in college in Sioux Falls, SD, in the early 1970s.

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Lookin' Out My Back Door

Lookin' Out My Back Door, Creedence Clearwater Revival

When "Free" Isn't Free -- August 18, 2015; Update On Bakken Economy -- Rural Electricity, Mandan Low-Income Housing

This might be the biggest intermittent energy news story I will see all week. I followed this Northwood, Iowa, school district wind turbine story from the beginning, thinking how foolish it was when I first saw it many, many years ago.

This is really quite amazing. This school district is considering selling its wind turbine after 13 years because it is generating less profit than they thought it would. I honestly don't get it. One would think that after 13 years, the turbine would have been paid for (perhaps twice) and all that free wind energy would have meant no electric bills.

And I certainly didn't think school districts were into making profits on wind. One would think that school districts would simply want to pay the least possible for electricity. I would assume that ditching "free wind" now and starting to pay for conventional electricity would be more expensive, so there must be more to the story. And there is. Paragraph four in the AP story below:

The Northwood-Kensett school district is considering selling its wind turbine that officials say has generated smaller profits than initially projected.

The school district bought the 250-kilowatt turbine about 13 years ago for an estimated $68,000, the Mason City Globe Gazette reported. Officials had planned for the equipment to be moved to the Northwood-Kensett school campus in Northwood, but it never happened.

The turbine remains at a wind farm, where it generates electricity that the district sells to Alliant Energy.

Superintendent Mike Crozier said the turbine has produced about $4,050 in total profits for the district over the past five years. Officials estimate that the equipment should generate between $12,000 and $14,000 annually, but has earned far less due to mechanical breakdowns.

Crozier said that if there's a "market out there, we'll go ahead and sell it."

One wonders how many years they've been operating in the red, when all costs are taken into account. It's interesting that they don't provide a better figure on how much income is actually being generated. Again, if there was even a $100/year profit, why would they get rid of it?

Probably because the intermittent hassle is becoming less intermittent and more continuous.

Maybe they plan to buy a new wind turbine.

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Bakken Economy

KXNET is reporting that Minot-based Central Power Electric Cooperative is getting a $46 million federal loan for infrastructure improvements.

The money is through the U.S. Department of Agriculture's Rural Utilities Service. The Minot-based co-op will use it to build 51 miles of transmission line and make improvements to its distribution system.

This comes on top of a loan guarantee of more than $29 million the co-op received last year.

KNXET is also reporting that the Mandan (ND) Junior High building will be converted to low-income housing, a project spearheaded by the Spirit of Life Catholic Church.

"The list for low-income housing is so long that they've stopped adding names to the list because they're just so far behind being able to meet the need," says Gion.

Mother Teresa Outreach, an organization formed through the church, is the new owner of this building.

Their plan is to convert it into 62 low-income family apartments.

It will be called Sagrada Familia Apartments or in English - Holy Family Apartments.
"From my understanding, it is needed in Bismarck and Mandan and Spirit of Life is doing a wonderful job. I can feel so many people come for food and shelterless and they are below poverty line. They need our help," Sister Mary Michael, Congregation of Teresian Carmelites.

Gion says this will be more permanent housing, with no cap on how long families stay.
"The goal is stability, a place that's safe and where families can be at peace and so I would hope that that would be a part of what the whole neighborhood experiences," says Gion.

Tuesday, August 18, 2015

EIA "energy cookie:

The increase in spot prices has led to higher retail gasoline prices throughout the region. On August 17, regular retail gasoline prices in the Midwest (PADD 2) increased 32¢/gal from the previous week to $2.79/gal, the largest weekly increase for Midwest gasoline prices since the aftermath of Hurricane Katrina in 2005. Average retail prices for regular gasoline in Chicago and in Cleveland, Ohio increased 68¢/gal and 43¢/gal, respectively, from the previous week to $3.37/gal and $2.83/gal, respectively. --- EIA

What? The "increase in spot prices has led to higher retail gasoline throughout the region." It was widely reported that the sudden jump in the price of gasoline was due to unexpected refinery maintenance. The IEA is never wrong, so I must be mis-reading something.

Active rigs:

	8/18/2015	08/18/2014	08/18/2013	08/18/2012	08/18/2011
Active Rigs	73	193	183	199	193

RBN Energy: the Mexican crude oil swap; new route opens up for US crude exports.

We should note that the swap exception in the BIS regulations is a “License” rule – meaning that exporters need to apply to BIS for a non-transferable license for each crude swap. That means that the BIS licenses that have been approved will be non-transferable and specific to both PEMEX (assuming they will import Mexican crude) and the exporter – presumably a U.S. producer or midstream company. Every would-be swap partner/light crude exporter is required to apply separately for approval. That doesn’t mean it would be difficult – the BIS routinely approves licensed exports to Canada – but it adds a layer of red tape compared to the processed condensate rulings last year that certify the product and process rather than individual transactions.

One big question is whether other swaps will follow these approvals? Apparently the BIS denied several applications for swaps with other countries in Asia and Europe. This indicates that Mexico – part of the North American Free Trade Agreement (NAFTA) - is being given preferential treatment  - although our neighbors to the south are well below Canada when it comes to crude exports. BIS Licensed U.S. exporters shipped an average of nearly 460 Mb/d of crude to Canada between January and May 2015 – up tenfold since 2011 – all without any “swap” requirement to import Canadian crude in return.  Aside from Mexico – a friendly neighbor – other heavy crude producers in Latin America are the most likely candidates actually requiring light crude exports from the U.S. that they could exchange for heavy crude - including Venezuela, Columbia and Ecuador. These three are known to be importing light crude and naphtha (a refined product) for use as a diluent to blend with their heavy crude to allow it to flow in pipelines for export. But it is likely to be a bit more difficult for these countries (especially Venezuela) to secure a BIS crude swap license.