Saturday, August 29, 2015

US Ceding The Arctic To The Russians -- New York Times -- August 29, 2015

This was my "headline" back on May 11, 2013, more than two years ago: "Gold Rush" In The Arctic; US Unlikely To Participate; US Will Let The Russians, Canadians, Norwegians, Danes Take The Lead; Heaven Forbid The President Could Make A Decision That Fast.

I posted that little nugget on May 11, 2013. Today, more than two years later, the New York Times finally gets it: US Is Seen As Laggard As Russia Asserts Itself In Warming Arctic. Well, at least part of that statement is correct.  

Russia talks exploration, exploitation.

President Obama talks global warming. I can only imagine what he will suggest for the Arctic. 

Top Oil-Producing Counties In The US -- August 29, 2015

A reader sent me the top ten list. This is the new list for July, 2015. These are the top oil-producing counties in the US. Note that Williams County, on last month's top-ten list has dropped off the list this last month.

The dynamic link is here

Current rank (last month's rank), county, state
1 (2) McKenzie County, North Dakota
2 (3) Karnes County, Texas (Eagle Ford)
3 (5) DeWitt County, Texas (Eagle Ford)
4 ( - ) Weld County, Colorado (the Niobrara)
5 (1) Midland County, Texas (Permian)
6 (10) Dunn County, North Dakota
7 (8) Reeves County, Texas (Permian)
8 ( - ) Lea County, New Mexico (Permian Basin)
9 (6) La Salle County, Texas (Eagle Ford)
10 (7) Mountrail County, North Dakota
It surprised me to see Weld County on the list. 

North Dakota Continues To Be In The News, Saturday's Notes Continued, Part II -- August 29, 2015


September 2, 2015: we can close the poll in which we asked whether Ms Heitkamp will back Obama or back the Bakken. It is now moot. Her vote does not count. Obama has his 34th vote to block any attempt to scuttle his Iran plan.

Results of the poll:
  • she will support Obama, as a loyal Democrat, that supersedes her NoDak roots: 55%
  • she will support the Bakken: 23%
  • she will vote "present": 19%
  • won't vote: 3% 
Original Post
I'm paging through this weekend's edition of BloombergBusiness. I assume it's the last issue I will get for my introductory subscription, $10 for the year. BB has sent me several notices telling me my subscription ended some weeks ago, but someone keeps dropping off the current edition at my front door every Saturday morning. Almost tempted to renew at full subscription price. The key word is "almost."

As I was saying, I was paging through this weekend's issue of BB. There, on page 27, a full-page story (almost full page, about 5/6 of the page) is the story about the pressure on Heidi Heitkamp, the Democratic Senator from North Dakota to vote against the Iran nuclear plan. I always said it was a mistake for North Dakotans to vote a Democrat senator into office and now we will find out. It would be ironic if the Senate fails by one vote to override the Obama veto to save his Iran nuclear deal. When Iran dumps 1 - 3 million bopd on the global market, it's nothing but bad news for the Bakken.

I haven't done a poll in a long time. This is a great poll. Will Ms Heitkamp support Barack or will she support the Bakken? The poll is at the sidebar at the right; it's been such a long time, I almost forgot how to put up a poll. I'm betting she will not support the GOP on this one.

Speaking of North Dakota, the state is on a roll.

First, with the president's Clean Power initiative, North Dakota is going to have an entire new industry converting coal plants to natural gas plants. This will result in a gazillion investment dollars and a lot more jobs. And there will no longer be any worry about all that natural gas ONEOK is gathering, processing, and transporting.

Second, there is still some discussion on pros and cons regarding wind energy, but at the end of the day, there will be additional wind farms going up in North Dakota. As long as they put the farms up near Bismarck, Dickinson, and Fargo, it's fine with me, just NIMBY.

Third, I see Bobcats wherever I go when traveling cross-country. And now I read that Bobcat in North Dakota is expanding. Do you remember all those dire predictions and all that hand-wringing when a South Dakota Korean company bought the Bobcat company? Widely read Farm Equipment
is reporting the story:
Bobcat Co. and parent organization Doosan have broken ground on a $9.5 million company headquarters expansion in West Fargo, N.D.
The current headquarters — built in 2000 — houses individuals within several departments of business administration, as well as product development and marketing communications for Bobcat Co. and Doosan, a heavy equipment brand.
The expansion will double square footage and employee capacity, and Bobcat and Doosan will pursue LEED certification for the facility in both design and construction.
Last year, Bobcat and Doosan opened the exciting new Acceleration Center in Bismarck, N.D., a facility focused on engineering, R&D, training and product testing. Other North Dakota Bobcat and Doosan facilities have undergone renovations over the last two years.
That's in West Fargo. Fargo/West Fargo is one of the fastest growing smallish communities in the US. Despite the winters. By the way, my hunch is that a lot of that growth is coming from Minnesotans moving across the state line to escape taxes.

More news from North Dakota, previously reported: the FAA gave the state final approval to test drones at night. Of the six drone-testing sites in the US, only North Dakota got the nod. Some other dots to connect.
  • Amazon uses drones
  • Amazon has a customer-services center in Grand Forks, ND (one of the very few nationwide)
  • Amazon now delivers alcohol and promises one-hour delivery
  • North Dakota leads the nation in beer consumption on a per-capita basis
  • most people drink beer at night
  • folks in Fargo are upset about the "Fighting Sioux" thing and have a reason to drink
  • winter is coming; it starts getting dark about 2:30 p.m. in West Fargo, about an hour earlier than in Fargo
I'm not sure about the complete accuracy of those four five six seven bullets, but I do believe they are "almost" correct. This is not a beer-drinking recommending site. Do not make any beer drinking decisions based on what you read here. If this information is important to you, have another beer, and look up the source next week on your company's computer.

Incidentally, rumors that Amazon will ship the first month's delivery free of charge, through a grant from the North Dakota Women's Temperance Society is just that, simply a rumor. 

For the moment that taps out (pun intended) the news from North Dakota.

Saturday Notes Continued, Part IV -- August 29, 2015

See "continued notes, Part III" to explain this note.

I skimmed through this article over at Seeking Alpha on the break-even prices in the Bakken, but articles like this don't interest me a whole lot -- at least not any more. I'm not sure why. They may have interested me at one time. What does interest me is the comments on articles like these, and in this case, no different. Some of the comments are priceless. My pet peeve is when anyone asks how long a typical Bakken well will last when trying to sort out the economics. We've discussed that so many times; so irrelevant.

By the way, that MacKenzie graph from Seeking Alpha was posted on the blog (or if not posted, linked) back in October, 2014. I had not seen that graph in a long, long time, but it is way out of date, at least for the Bakken.

On another note, the Casper Star Tribune is reporting that an ethanol plant in Torrington, Wyoming, is closing down. The article talks about how efficient this ethanol plant was (at least compared to others), but one needs to get deep into the article to learn that the plant was no longer financially viable when the state ended the 40-cent per gallon tax credit for ethanol this past June.

A spokesman said the tax credit's expiration came as crude prices fell, driving down what the plant could fetch for its ethanol. The combination proved fatal. There are many, many story lines but it is not worth the effort. I am just amazed that an ethanol plant as efficient as this one could not survive without a 40-cent/gallon tax credit. Holy husks of corn. This is a credit we're talking about, not a deduction. A full-fledged tax credit. For every dollar the company owes in taxes, they send the state only 60 cents; what a great deal. If I had been asked what the credit had been without knowing, I might have guessed three to five  cents, certainly not 40 cents.

The other story line, of course, is how many more such plants will announce closure over the next 24 months. One wonders about the new Spiritwood ethanol plant in Jamestown, ND.

I assume as more ethanol plants get shut down, we will see a rise in wind / solar energy projects where there are still tax incentives to build those. Here's another example of these intermittent energy projects being financed simply for the tax credits. The Casper Tribune reports that a New York-based hedge fund is trying to kick-start a wind farm project that was dying on the vine.

Saturday Notes Continued, Part III -- August 29, 2015

I've really covered most of the news in Part I and Part II, but my contract requires a certain amount of blogging each week. To meet contract obligations, the notes continue. That does not mean you have to read them. I only have to post them. The contract only says I have to mention the Bakken; the contract does not say I have to blog about the Bakken.

The definition of "is," is?

I've mentioned the Bakken (three times now) but I doubt there will be anything in this post about the Bakken (ka-ching, #4). If you came here looking for the Bakken (ka-ching, #5), I apologize. Scroll up or down, or go to the sidebar and you will come across sme Bakken (ka-ching, #6).

My favorite: William Herbert Hunt is a billionaire once again. Hunt became a billionaire by selling some of his Bakken (ka-ching, #7) acreage to Halcon back in 2012. The story begs the question: could William Herbert Hunt buy back his acres from Halcon?

After the Bakken (ka-ching, #8) and energy related issues, my favorite subject is ObamaCare. So many stories came out this past week about ObamaCare co-ops failing (and being compared to Solyndra) and ObamaCare premiums increasing 20, 30, 40 and dare we say 50%? Probably not 50%. CNBC reported this story Friday afternoon when most reporters had already called it a week, and had already left for the bars, so none of you probably saw it until now (send a thank you note to Don):
Bigger might be better, but it can also be pricier—at least when it comes to Obamacare.
A new analysis found that the largest insurer in each of the states served by raised their prices in 2015 much more sharply—by an average of 10 full percentage points—than smaller competitors on that federal Obamacare marketplace.
Those steeper price hikes for monthly premiums didn't seem warranted by the level of health claims made by customers of those bigger plan.
They also stand in contrast to the belief that economies of scale will result in lower prices.
"On average, the largest issuers raised rates by 23.9 percent, while the other issuers only raised rates by 13.7 percent," the authors wrote.
That means the largest issuer in each state had, on average, a 75 percent higher premium increase compared to other insurers in the same state, the report found. 
It's a pretty lame story, but it sort of rounds out a sort of lousy week.

The unemployed in St Louis are about to welcome some new members. KMOV is reporting:
St. Louis' governing board has approved a compromise measure that raises the city's minimum wage to $11 by 2018. 
Every study in the history of the world says raising the minimum wage in St Louis will result in more unemployment. I guess that's why the call-sign for that particular news station is "KMOV" -- folks are MOVing out as fast as they can. Especially after Ferguson. My hunch is that the discussion to raise the minimum wage revolved around Ferguson to a great extent. A lot of guilt assuaged. (That's the first time I've ever used that word on this blog.)

By the way, speaking of which, I mentioned the other day I was reading a very, very long article on a failed high school in Queens, NYC. I was hoping to come away from that article with some pithy comments on what it all meant, but all I came away with was a real feeling of depression. I guess I can say this: money is not the answer. Nor are Harvard-trained social scientists who thought up the whole busing thing.

Quick! What city is the most segregated school system in the US?
  • Birmingham, AL
  • Montgomery, AL
  • Selma, Al
  • Jackson, MS
That was a trick question. Actually the question was not a trick. The given answers were a trick. The answer was not given. From the linked article in The New Yorker:
Last year (2014), a study by the Civil Rights Project at UCLA found that New York City has the most segregated school system in the country, a reflection of the persistence of the housing patterns that Arthur Levitt talked about in 1954 but also of the failure of the integrationist ideal that was intended to address it.
So there you have it. And I thought it was Montgomery, AL, all these years. 

Week 34: August 23, 2015 -- August 29, 2015

The big story, of course, was the market meltdown due to concerns about China, and the accompanying decline of the price of WTI oil to well below $40. By the end of the week, things had quieted down, the market bounced back a bit, but oil surged 10%, closing well above $40/bbl. While China implodes, the US reports 2Q15 GDP of 3.7%. Whether anyone "believes" that number is another story, but all agree that the number for 2Q15 is unlikely to presage the 3Q15 number.

Gasoline demand this past week was particularly interesting to follow: are California refineries having a tough time meeting demand?

Some things are happening in the Mideast. McDermott, an oil services company, received a record contract and record lump sump from Saudi Aramco for work in fields offshore Saudi Arabia.

There are rumors that President Obama will officially announce he is denying the Keystone XL pipeline a permit. 

Schlumberger will buy Cameron for almost $15 billion.

Utility rates may be up as much as 88% along the US East Coast.

Update on the Whiting Obrigewitch wells in Stark County
Excess crude oil storage along the Gulf Coast?
Missouri River Resources is on the board
Zavanna, seeming to be on a roll lately, has seven (7) more permits in Foreman Butte oil field
Zavanna, reporting some nice wells
Random look at Zavanna's "old Nelson" well after gas life
What do you get when you cross a great operator (Whiting) with great sites (KOG)? Huge wells
NDIC's September, 2015, hearing docket agenda posted

East coast refinery no longer taking Bakken CBR

Bakken 101
NDIC's "break-even" points for the Bakken
Rig productivity
The Bakken is changing

North Dakota gets FAA approval to test night-flights for drones
Hess now deducts a transportation fee from royalty checks

There are indications this is close to the "end" for Halcon in its present form 

Family Commitments -- August 29, 2015

I apologize for not posting much in the past 24 hours. I had family commitments last night and then again this morning, taking me through much of the day, into the afternoon.

I also felt I needed to take a bit of a break from the internet. 

But I will be back to "normal" by this evening, hopefully.

What fascinates me most today? Hurricane Erika. This site now doesn't even show a hurricane, simply calling it "remnants of Erika." And the winds in the Caribbean don't seem all that much stronger than what blows through North Dakota on a typical day. But wow, look at those winds in the north Atlantic, especially the whirling dervish smack dab right in the middle between Iceland and Ireland. And on the west side of Greenland, it ain't a whole lot better. There's another whirling dervish off the northeast coast of Alaska. One wonders what this is doing to the ice pack?