Tuesday, September 15, 2015

The Storm We Call Hillary Dissipates, Saturday's Note, Part I -- August 29, 2015


September 15, 2015: at the very bottom of the original post (below), GE snookering Connecticut was mentioned. GE said it was looking at moving headquarters to Texas (because of high Connecticut taxes) but changed its mind because the Texas Senators were "against" the Export-Import Bank. GE now says it will move 500 jobs overseas because the Export-Import Bank remains "closed."
Original Post

This is likely to be a meandering note that will go nowhere, almost none of it about the Bakken directly but years from now some of this, hopefully, will put the Bakken into perspective. Some of it, but not very much.

The Obama administration did all it could to keep the dream alive, but the fact is, it has still been a decade since we've had any hurricanes in the Gulf of Mexico. The warmists really, really needed Erika to turn into something, but it never did. Even the Weather Channel hung on long as it could, trying to keep the dream alive, but even now the Weather Channel concedes Erika has dissipated, though they hold out some hope it could re-form yet as it heads toward Florida. (I don't know if that's a dynamic link or not.)

After this last week, one could say the storm we call "Hillary" is much like Erika. First, they both have unusual names, barely feminine, and both roll off the tongue. It's very possible Hillary herself will become a tropical depression before the Florida primary some months from now, but my hunch is she will get the DNC nomination, regardless. If not, it's Joe Biden and some of the best one-on-one presidential debates we will ever see. I think folks will be surprised how well Joe will banter with the Donald. It looks like Jeb Bush will dissipate faster than Erika at this point. I've never really paid much attention to good ol' Jeb, but now that I've seen some Vanity Fair photos of him, he appears to be the quintessential definition of a "suit."

Suit, slang: a business executive or white-collar manager. 

Another storm that dissipated almost as fast as Erika this past week was the Chinese storm. That storm may not be over, but at least no one can say they weren't warned. The US stock market crashes, oil drops below $39 but then the market comes up a bit and finishes the week a lot lower than it started, but certainly, back in territory that provides a sense of relief, warranted or not. Oil surged 10% and finished the week well above $40.

I'm inappropriately bullish on oil and not a bit concerned. The tea leaves suggest folks will still be using oil and natural gas and gasoline and jet fuel (made from crude oil) and coal five years from now. It looks like Warren Buffett thinks the same. I don't know if folks remember, but Warren really got burned in energy a few years ago when he bought COP "high" and ended up selling it "low." At the time he joked about what a bad decision that was and vowed never to repeat it. I had the feeling he was going to stay away from the majors. But then it turns out, he has a huge stake in COP refining, now called Phillips 66. Warren owns 10% of PSX at a current value of $4.5 billion. That speaks volumes. Let me count the ways:
  • first, as mentioned earlier, he got burned in COP and probably thought long and hard about PSX before buying, holding, and accumulating;
  • second, Warren says he's a warmist, believes strongly in global warming, and here he is, buying an oil refiner;
  • third, if the government okays oil exports, the refiners aren't going to look quite as good as they do now;
  • fourth, unless Warren has turned into a trader at age 85, he is a value investor, a long term investor, someone who holds stocks for a very, very long time, suggesting he sees refiners as a good long-term investor.
Of the four, point #3 is most interesting -- something tells me Warren took out a yellow legal pad and summarized the pros and cons of the US sanctioning crude oil imports -- just kidding, too much work; he simply phoned the president and they had a friendly little chat. Then, after promising her a few dollars for her presidential campaign, he had the same chat with Hillary. Both reassured him there was no way that the US would "across-the-board" okay oil exports.

Meanwhile, in other areas there was also some big energy news. Schlumberger will buy Cameron for almost $15 billion, assuming the regulators and the EU okay the deal. I think SLB is still a French company so they have that on their side. HAL and BHI are American companies. The EU pretty much killed the HAL-BHI merger.

GE snookered Connecticut. Of course, we don't know the sweetheart deal got from Connecticut but there was no chance GE was leaving Connecticut for Dallas. Too many reasons. Not enough time to elaborate. GE simply used the Dallas threat to get some tax breaks. 

End of Part I. 

Ports-To-Plains Conference In Williston For First Time Ever -- September 15, 2015

With regard to the Ports-to-Plains conference to be held in Williston, ND, October 6 - 8, 2015, here are two links:
Ports-To-Plains Conference
October 6 - 8, 2015 

Folks have been pushing for a four-lane divided US Highway 85 from Canada to Mexico ever since my dad was Williams County Commissioner. I was unaware that the organization has been meeting annually for almost 20 years. For the first time in its history, the conference will be outside of Texas, and will be held in Williston this year.
The Ports-To-Plains Alliance has a grand vision: A four-lane divided highway, or better, from the border of Canada all the way to the border of Mexico using U.S. Highway 85 as the backbone. The principals are a nine-state coalition, along with additional U.S. states and communities from Canada and Mexico, who are also supporters. The group has had an annual conference for the past 18 years with showcase cities along the route, to share ideas and continue lobbying efforts across the corridor. This time, Williston's has been chosen as the host of the gathering - a feather in the cap of the city's economic development efforts.
And note this:
The 2015 Ports-to-Plains Alliance annual conference will be in North Dakota for the very first time before returning to Texas in 2016. San Angelo will host the 19th Annual Ports-to-Plains Alliance Conference in September 2016.
"Ports-to-Plains was in San Angelo for its 14th Annual Conference in 2011, and it was a well-attended, informative and fun-filled event," said Duffy Hinkle, vice president of membership and marketing for the Ports-to-Plains Alliance in a news release from the city of San Angelo. "I expect the 2016 conference will be just as good, if not better.
I wonder if anyone has considered a "bullet train" from Williston to Houston, built by the Chinese?

Williston's Budget

The Williston City Commission has passed a budget of about $212 million for 2016 - $38 million or so less than the previous year - but $65 million less than anticipated revenues.  

City Commissioners unanimously approved a budget projecting $150,875,164 in revenue with a proposed $211,483,987 in appropriations at their Sept. 8 meeting. 

The difference between those two figures is for municipal highway projects, City Commissioner Brad Bekkedahl explained. "We don't have the total funding package to facilitate that at this time," he said. 

"We do have some money to draw from if the oil and gas tax comes in as expected. And there are dollars not spent this construction year that can be carried over. It may not materialize, so while it has been budgeted for expenses, they are cash-dependent at the time of bid-letting."

Thirteen (13) New Permits -- September 15, 2015

Active rigs:

Active Rigs71199178193200
Thirteen (13) new permits --
  • Operators: Statoil (9), EOG (3), Denbury
  • Fields: Todd (Williams), Parshall (Mountrail) Cedar Hills (Bowman)
  • Comments:
Wells coming off the confidential list Wednesday:
  • 28253, 1,372, Emerald, Excalibur 7-25-36H, Boxcar Butte, 25 stages, 3.9 million lbs sand, t3/15; cum 51K 7/15;
  • 30099, 1,431, Hess, BB-Ole Anderson-151-95-3130H-6, Blue Buttes, t8/15 cum -- 
  • 30670, SI/NC, XTO, Odegaard State 21X-16A, Midway, no production data,
  • 30699, SI/NC, Statoil, Hospital 31-36 8TFH, Alger, no production data,
  • 30754, 709, SM Energy, Fossum 15-35HR, Indian Hill, t8/15; cum --
Producing wells completed:
  • 30048, 2,483, XTO, Marlene 42X-20F2, Blue Buttes, background gas generally low to moderate, but connection gases as high as 3,500 units; t8/15; cum 9K first 8 days;
  • 30049, 1,457, XTO, Marlene 42X-20C, Blue Buttes, t8/15; cum --
  • 30517, 695, Missouri River Resources, Squaw Creek, t7/15; cum --
  • 30518, 392, Missouri River Resources, Squaw Creek, t7/15; cum --

28253, see above, Emerald, Excalibur 7-25-36H, Boxcar Butte:

DateOil RunsMCF Sold

Whiting Can Survive On $50-Oil -- Richard Zeits, Seeking Alpha -- September 15, 2015

Link here. Archived.

Frack Sand Site In Wisconsin "Idled" -- September 15, 2015


September 22, 2015: BloombergBusiness with human interest story on spectacular fall of the fracking sand industry.  
In New Auburn, Wisconsin, a desolate, little outpost carved from the rolling pine-tree forests that run into Lake Superior, the collapse in oil is wreaking havoc on every aspect of the economy.
It’s not that there’s any oil here. None in fact for hundreds of miles around. What they’ve got is sand. Real good sand, piled high in giant mounds. And in what is a little-known offshoot of the shale oil revolution that swept across America over the past decade, the market for sand -- the grit that props open the rocks and makes fracking possible -- exploded too, transforming almost overnight what had been a sleepy industry that sold primarily to the likes of glass makers and golf courses. So when the shale boom went bust, it took down the sand industry with it. Prices have sunk almost a third to under $40 per ton.
Cheap sand makes for less expensive wells in the Bakken.

Remember when Mike Filloon said prices for fracking sand would go parabolic?

Original Post
Link here:
MARSHFIELD — The plunging price of oil is forcing a Texas-based company to idle its frack sand processing plant in the city. Completion Industrial Minerals CEO Tom Giordana contacted Mayor Chris Meyer earlier this week to inform him the company is laying off about 15 of its employees.
The company normally has a significant reduction in production during the winter months when it can't wash the sand because of winter weather. However, the company normally continues to dry and ship sand during the winter months.
This should please the environmentalists who will now contribute toward these employees' unemployment claims, food stamps, etc.

Bakken Economy

Update: see first comment -- a reader noted that Amazon will open a fulfillment center in the Minneapolis area.

Original post: Meanwhile in Grand Forks, North Dakota, Amazon is hiring:
Internet retail giant Amazon is hoping to fill 30 new full-time positions to its customer service center in Grand Forks, the Seattle-based company said Monday.
Amazon said the hiring boost is meant to "support continued growth throughout the company's U.S. fulfillment network." The job entails communicating with customers via phone, email and online chats, according to a press release.
Amazon currently has 150 customer service associates in Grand Forks.
Remember, this is just across the river from the high-tax state of Minnesota. Also, Grand Forks is "ground zero" for the US drone research and testing program, and when it comes to drones, Jeff Bezos is all in.

Vying For #2 Spot

Bloomberg/Rigzone is reporting:
In the race to supply crude to the world’s biggest energy user, it’s the tussle for second place that’s too close to call.
Russia, Angola and Iran are vying to be runner-up to Saudi Arabia as the top seller to China. The contest is set to intensify as Iran seeks to recover market share lost because of sanctions and the U.S. Congress debates a nuclear deal that’ll allow the Persian Gulf state to boost shipments.
China overtook the U.S. as the biggest importer of crude most recently in June, taking advantage of a 50 percent slump in benchmark prices over the past year to boost strategic reserves. With the Asian nation forecast to account for more than a quarter of global demand growth in 2016, the prize of becoming a top supplier will bolster the economic health of national producers that depend on energy exports for most of their budget revenue.
“Whether you’re number 2 or number 3, the numbers are very close,” Victor Shum, a vice president at IHS Inc., an Englewood, Colorado-based industry consultant, said by phone from Singapore. “In a globally oversupplied market, there is more competition for the growing Chinese pie.”
China is the biggest oil buyer in Asia, a region that the International Energy Agency estimates will use 23.4 million barrels a day in 2015, or about 25 percent of worldwide consumption. The Paris-based IEA predicts China will consume 10.9 million barrels a day this year.
Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries before its nuclear program prompted the European Union to ban purchases of its crude in 2012, will boost production “at any cost” to reclaim market share, Oil Minister Bijan Namdar Zanganeh said Aug. 23. China is the Islamic Republic’s biggest customer, and Zanganeh has signaled it’ll target Asia for sales. Iran currently lags behind its rivals in shipments to China.
It should be remembered that President Barack Obama helped orchestrate Iran's oil exports to China at the same time the President a) killed the Keystone XL; and, b) continues to ban US crude oil exports. President Obama has also ceded the Arctic to Russia and others. 

Number Of Active Rigs Bounces Off Low -- September 15, 2015

Active rigs:

Active Rigs70199178193200

RBN Energy: isn't this interesting?
Only a few months ago, it seemed likely that Hawaii’s electric and gas utilities would wean themselves off crude oil and naphtha-based gas in favor of liquefied natural gas (LNG). Now though, with oil prices low—and expected by many to stay low—the Aloha State’s governor says that he thinks the planned shift to LNG would be too costly and that he’ll fight it.
The utilities still see LNG as the way to go, pointing to falling LNG prices and natural gas’s environmental benefits over oil. Today, we consider how lower prices for crude oil and LNG are affecting the debate about Hawaii’s energy future.
As anyone who’s had the pleasure of visiting the Hawaiian islands knows, the last state to join the U.S. is unique, not only for its fantastic weather, lush landscape and friendly people, but for its location in the middle of the Pacific Ocean, almost as far from Los Angeles as Los Angeles is from New York City.
Because of that isolation—and Hawaii’s lack of any native oil, natural gas or coal reserves—all of the state’s fossil-fuel requirements need to be floated in by ship; most of its power plants run on oil, and its synthetic version of natural gas (SNG) is made from naphtha, a by-product of the state’s two oil refineries. As we said in the Episode 1 of our Blue Hawaii series last year, Hawaii’s heavy dependence on imported oil makes it an unusually expensive place to live—its electricity and gas rates are the highest in the country, and its gasoline and diesel are very costly too. In Episode 2 we discussed Hawaii Electric’s plan (unveiled in August 2014) to switch most of its oil-fired units to LNG-based gas by 2017-18 (using LNG shipped in ISO containers) and to switch the rest to LNG in the 2020s (when bulk shipment of LNG kicked in).
To underpin that plan, Hawaiian Electric reached a deal with FortisBC to lock in up to 0.8 million metric tons per year (0.8 MTPA) of LNG production capacity at a planned expansion of FortisBC’s Tilbury Island liquefaction facility near Vancouver, BC, for 15 years starting in 2017. (That much LNG would provide an average of 107 MMcf/d of natural gas). In Episode 3 we focused on Hawaii Gas: how it currently makes SNG from refinery-supplied naphtha on Oahu and distributes SNG to customers on the island by pipeline and distributes propane to customers--some on Oahu and some on other Hawaiian islands—that are not connected by pipe. We also discussed how since March 2014 Hawaii Gas has been receiving one ISO container of LNG a month from Clean Energy Fuels’ 160 Mgal/d liquefaction plant in Boron, CA; once on Oahu, the LNG is re-gasified and fed (along with SNG) into Hawaii Gas’s distribution system. Finally, in a follow-up blog, we discussed the gas utility’s October 2014 proposal to ramp up its use of LNG, initially by replacing 30% of its SNG with a steadier flow of LNG-filled ISOs, and then by working with Hawaiian Electric to develop bulk-delivery terminal for LNG to facilitate a 100% switch to LNG at both utilities.
If solar is so cheap, plentiful, and wonderful, why doesn't Hawaii just switch to solar for all energy needs?

Well, This Is Profound

EIA "energy cookie":
U.S. motor gasoline product supplied, a proxy for gasoline use in the United States, has been rising after reaching an 11-year low in 2012. Although lower gasoline prices have been an important factor in the increase in gasoline use so far in 2015, changes in the labor market and in the vehicle sales mix over the past few years also have contributed to the rise in gasoline use. --- EIA
I have no idea what might be meant by "changes in labor market." The number of Americans not in the labor force has reached an all-time high, and unemployment/employment numbers haven't changed all that much once the data related to the record recession is taken out. 

Worth A Thousand Words -- September 15, 2015