Wednesday, October 7, 2015

Syria: The One Loser Seems Certain -- President Obama -- October 7, 2015

I think I've mentioned this once before: the Los Angeles Times is more pro-Obama than The New York Times. This is the lead story in LA Times right now:
The outcome of Vladimir Putin's bold military gamble in Syria is far from clear, but in the short term, one loser seems certain: President Obama.
The Kremlin raised the stakes Wednesday by firing cruise missiles into Syria from warships nearly 1,000 miles away as Obama's critics at home and abroad said Putin's escalating attempt to bolster Syrian President Bashar Assad already has made the White House look weak and wavering.
The White House has been poised for weeks to quietly shift more U.S. military support to seasoned Kurdish militias and other rebel fighters in northern Syria. But at this point, any change in policy will appear to be in response to Putin's muscular moves, not a new initiative to help solve the multi-sided conflict.
Middle Eastern allies who have chafed at Washington's reluctance to plunge into the 4-year-old civil war have been impressed by how the Russian president has come to an ally's defense, even if they don't like his goals or his ally, Arab officials say.
In Washington, political leaders, from former Secretary of State Hillary Rodham Clinton, now the Democratic presidential front-runner, to Sen. John McCain (R-Ariz.), the 2008 GOP presidential candidate, are criticizing Obama for not doing more to stop a war that has killed more than 200,000 people, fueled Islamic State and sent hundreds of thousands of refugees fleeing to Europe.
And it gets worse as it goes on. 

I don't think President Obama has addressed the hospital bombing yet, even though he was lecturing America on gun control within hours after the Oregon shooting.

And speaking of not addressing issues on his watch, to the best of my knowledge President Obama has not visited, flown over, or said anything about the catastrophe unfolding in South Carolina even as we "speak." Fourteen dams have failed and many more fail. And nothing said from the White House.

And bombing the hospital in Afghanistan is clearly a war crime.

Doubling Down -- October 7, 2015

"Doubling down" seems to be the phrase of the day -- for this election cycle. For this story, it fits. Bakken Magazine is reporting:
The Obama administration today signaled it won’t support bipartisan legislation making its way through Congress that would lift the U.S. ban on crude exports
At a White House briefing, administration spokesperson Josh Earnest said Obama opposed the legislation and instead suggested that Congress end tax breaks to the oil industry and invest the money in wind and solar projects.
The real question is whether Hillary Clinton, most likely the next president, will support lifting the ban. 

I believe the oil and gas industry has the same tax breaks that all corporations get. Meanwhile, many solar / wind projects won't get started without special tax breaks. Midwest Energy News is reporting that many intermittent projects in Iowa are not being pursued because tax credits have not yet been granted, and for some reason, even those who qualified for the credits have not moved forward. (Gee, I wonder why?)
Production tax credits for privately developed renewable energy projects have been snapped up in Iowa – but that hasn't always translated into actual renewable energy production.
The reason: many of the tax incentives have been claimed by developers who, even years after they were granted the credits, haven't built wind farms or solar arrays. And with the entire pool of credits now allocated, developers who might actually bring some renewable energy to market are left to wait until credits become available.
“That doesn't meet the overall goal of getting more renewable energy projects built,” said Nathaniel Baer, energy program director for the Iowa Environmental Council. “The goal of this policy is to get more renewable energy built."
As of August 19, according to the Iowa Utilities Board, 113 proposed wind projects had qualified for the credits but were not operating. Of those, 37 were approved for the incentive in 2009 but had been granted a series of 12-month extensions of the deadline for becoming operational.
At the same time, 19 proposed wind projects were on the waiting list for the production tax credit.

Liberty Resources Reports Three (3) Nice Wells; Four More DUCs; Nine (9) New Permits -- October 7, 2015; QEP's KDM Pad

Active rigs:

Active Rigs67192182190194

Wells coming off confidential list Thursday:
  • 29307, 501, Liberty Resources, ND State 158-95-16-9-1TFH, McGregor, 35 stages, 4 million lbs, t4/15; cum 27K 8/15;
  • 29308, 924, Liberty Resources, ND State 158-95-16-9-2MBH, McGregor, t41/5; cum 44K 8/15;
  • 29309, 1,149, Liberty Resources, ND State 158-95-16-9-2TFH, McGregor, t4/15; cum 66K 8/15;
  • 29585, SI/NC, Hess, EN-Kiesel-155-94-1918H-1, Manitou, no production data,
  • 29805, SI/NC, BR, Morgan 14-21TFH ULW, Pershing, no production data,
  • 30713, SI/NC, XTO, State 11X-16MB5, Charlson, no production data,
  • 30778, SI/NC, BR, CCU Red River 8-2-15MBH, Corral Creek, no production data,
Nine (9) new permits --
  • Operators: QEP (8), Whiting
  • Fields: Grail (McKenzie), Sanish (Mountrail)
    Comments: the QEP permits are for 8 wells on one pad, SWSW 7-149-95; there are already 8 horizontal wells in that drilling unit; 
Slawson renews four permits -- Rebel Federal (2), Voyager, and Lunker Federal, all in Mountrail County.

QEP's KDM Wells


October 13, 2015: QEP has permits for eight (8) more KDM wells in section 7-149-95, in the SWSE quadrant.  

Original Post
The eight QEP permits noted above are for an 8-well KDM pad in SWSW 7-149-95. There are already several wells in this drilling unit. Note that one of the older wells in this section has already produced almost one-half--million bbls of oil.

The four-well pad to the north:
  • 25567, 2,307, QEP, Dodge 4-6-7BH, t11/13; cum 187K 8/15; only 5 days of production 8/15; 19 days 7/15;
  • 18361, 2,465, QEP, Dodge 4-6/7 HR, 24 stages, ~ 3.6 million lbs, Three Forks, t7/10; cum 447K 8/15;
  • 25568, 2,130, QEP, Dodge 3-6-7BH, t11/13; cum 184K 8/15;
  • 25569, 2,642, QEP, Dodge 2-6-7TH, t11/13; cum 187K 8/15;
The four well pad to the east of that pad:
  • 25442, 1,581, QEP, Kummer 2-6-7BH, t10/13; cum 198K 8/15;
  • 22193, 2,367, QEP, Kummer 1-6/7H, t10/12; cum 343K 8/15;
  • 25441, 2,988, QEP, Kummer 1-6-7BH, t10/13; cum 225K 8/15;
  • 25440, 2.661, QEP, Kummer 6-7-5-8LL, t11/13; cum 169K 8/15;
There is also a singleton in the southwestion corner of section 7 where the new 8-well pad will be located:
  • 304040, conf, QEP, Kirkland 6-7-1-12T2HD, producing (34K in first full month)

By the way, that #16689, now permanently abandoned, was a stacked dual lateral, targeting both the upper Three Forks and the middle Bakken. Maybe I will come back to this one later. Apparently the upper Three Forks went well, but they had problems with the middle Bakken lateral and it was never (or minimally) productive. I did not see any evidence that this stacked dual lateral was ever fracked.

Bakken Economy Drives $326 Million BNSF Capital Projects In Minnesota -- October 7, 2015

The StarTribune is reporting:
The number of trains carrying oil from North Dakota and traveling through the west metro and downtown Minneapolis has temporarily been increased. More Bakken oil trains are entering the Twin Cities via the western suburbs, a route that sends an increasing amount of the hazardous cargo through downtown Minneapolis.
BNSF Railway, in reports filed with state officials, said the number of trains carrying at least 1 million gallons of crude oil is increasing through this rail corridor, starting with a modest gain in July followed by a larger bump in September.
Now, 11 to 23 oil trains each week pass through the western suburbs of Wayzata and St. Louis Park on their way to Minneapolis, up from a nominal number a year ago, according to BNSF reports obtained by the Star Tribune.

This route takes trains past Target Field, through the North Loop and across the Mississippi River at Nicollet Island. The oil trains are destined for eastern refineries.
Meanwhile, the Sandpiper (which would relieve some of this rail congestion) has been keystoned.

The good news: this is all temporary:
BNSF spokeswoman Amy McBeth said the rerouting of oil trains on the Willmar-to-Minneapolis corridor is a temporary change related to the company’s $326 million in capital projects in Minnesota this year. Upgrades are being made to rail lines across the state, but that work ends with winter’s arrival. 
Of course, if the Sandpiper had been in place, this would not have been an issue in the first place.

Regardless: $326 million in capital projects in Minnesota driven by the Bakken economy.

Risks Exaggerated?

Oil & Gas Journal is reporting:
The high-growth business models of US independent operators are being tested by low oil prices and tougher access to capital. But two recent Wood Mackenzie Ltd. reports concluded that concerns surrounding October reserves-based lending (RBL) redeterminations have been exaggerated.

The reports appeared as Moody’s Investors Service predicted banks will lower their 2015 fall price decks by 15-25% from their spring 2015 assumptions, “significantly reducing RBL borrowing bases for some E&P companies.”

WoodMac’s Corporate Service Insight, “US Independents: How strong, for how long?”, examines the financial health of 26 independents, concluding that the larger producers have the required flexibility to tide them through the near term at the very least.

Fraser McKay, WoodMac corporate analysis research director, said, “Most companies in the peer group have rising absolute debt levels, and October’s RBL redeterminations have been latched onto as a potential catalyst for sector implosion. But at least two thirds of Lower 48 production is attributable to companies with no RBL exposure at all, or have no redeterminations until 2016.”

Of those larger producers with near-term debt redeterminations, WoodMac estimates most can accommodate a borrowing-base cut of over 50% before their situation becomes imminently critical.
Much more at the link.

See also this Wood Mackenzie on break-even prices. (I continue to link stories on break-even prices for crude oil, but I seldom read them and pay attention to them even less often. There are too many variables, and too much apples-to-oranges comparison.)

Global Warming Scam

Link here. Another story we won't see on CBS/NBC/ABC Evening News.

So, What Happens When Your Energy Source Unexpectedly Dies? -- October 7, 2015; If You're An Environmentalist, Sue

AP/Penn Energy is reporting:
BILLINGS, Mont. (AP) — NorthWestern Energy makes its case to state regulators Tuesday in a dispute over at least $8.5 million that the utility collected from Montana customers after a 2013 power plant outage forced it to buy electricity on the open market.
The South Dakota-based utility said in filings with the state Public Service Commission that the charges offset costs for the replacement power it bought. That happened after the Colstrip coal plant was partially idled for more than six months for repairs beginning in July 2013.
The Montana Consumer Counsel and environmental groups want the money returned to customers. They argue that NorthWestern should have taken out insurance against a possible Colstrip outage, or sued plant operator PPL Montana to recover the cost of getting power elsewhere.
The case comes down to whether the utility acted prudently as required under state law when it passed the replacement power costs along to its customers.
NorthWestern spokesman Butch Larcombe said that's just what the company did.
"Most people don't understand this, but with any sort of (power) generation facility, you're going to have time when it's not operating. That's true for wind turbines or natural gas or a coal plant. You have to go get electricity somewhere else," Larcombe said. "That's what the laws and regulations provide."
The Montana Environmental Information Center and Sierra Club also filed challenges to a petition from NorthWestern to the Public Service Commission that would allow its previous charges to customers in the case to stand.
350,000 customers. $8.5 million.  $8.5 million / 350,000 = $24 for six months = $4 / month. Are you kidding me? I must have done the math wrong.

Clearly Northwestern Energy should have gone to regulators immediately when they first became aware of an impending Colstrip outage. 

Joke Of The Day

Politico is reporting:
Over a 72-hour-period beginning Saturday evening, the Democratic front-runner showed up in rapid-fire succession on four NBC-related properties — “Saturday Night Live,” “Politics Nation with Al Sharpton” on MSNBC, a “Today Show” hosted town hall and an interview on Telemundo – a feat that’s left media consultants, competitors at rival networks and even some at NBC itself wondering how she got so much quality air time.
"Quality Air Time?" Al Sharpton -- he's relegated to the 8:00 a.m. Sunday morning time slot, I thought. "SNL" -- watched by ... whom? Telemundo? Okay, I'll give you the "Today Show." I assume she was on the food segment, showing how she bakes cookies.
 On the other hand, she did "cover" all the demographics:
  • Sharpton: inner city Obamaphone users
  • Telemundo: undocumented Spanish-speakers
  • SNL: pot users in Colorado, Oregon
  • Today Show: English-speaking soccer moms
I assume this weekend:
  • Al-Jazeera
  • OWN
  • Current TV 
Stand By Your Man, Tammy Wynette

Jack Kemp's Weekly Data Points -- October 7, 2015

U.S. commercial crude oil inventories week ending 10/2/2015 UP 3.1 MMbbl, refinery utilization = 87.5%

US commercial crude stocks rose +3.1 million bbl last week, up +10.2 million bbl in last 6 weeks

Price of WTI is still holding, at least for the moment; flirting with $50/bbl threshold.

US refineries cut throughput -403,000 b/d, exactly in line with 2014, but fuel consumption higher so tighter overall

US crude oil imports eased down to 7.1 million b/d, from 7.6 million b/d the prior week, slightly below avg for 2015

US gasoline consumption averaged +350,000 b/d above 2014 in last four weeks, tracking normal post-summer slowdow

US gasoline stockpiles continued to rise (+1.9 million bbl) and seasonal stocks are now the highest for over 10 yrs -- what peak oil?

US gasoline stocks stand at 24.76 days of current consumption, up from 23.99 days this time in 2014

US distallate stocks fall for 3rd consecutive week, down -2.5 million bbl, but still +23.0 million above prior-year

California gasoline emergency is over with West Coast stocks now well above average (same tweet as last week) -- Governor Jerry Brown sensibly waited this one out

Indonesia's Middle Class

The Indonesian energy story gets a lot of press over at Platts.

This is another example of the Pacific rim and the Indian subcontinent population moving toward a more vibrant middle class.

Tweeting now: Indonesia's total primary energy consumption grew by 43% between 2003 and 2013.

Something tells me intermittent energy is not the answer.

Bucket List: Normandy

I've visited Normandy; I've spent several days in the area. At the time, I read a number of books on the story of D-Day. That was many years ago. I hadn't thought about it much until I happened to see D-Day by Stephen Ambrose and started reading it.

I've read much of the Ambrose history. The book is very well organized and lends itself to reading chapters of interest in any order one chooses, although there are bits of information in earlier chapters that precedes later chapters.

As I noted earlier -- not too many years ago -- I don't have a bucket list. But if I did have a bucket list this would be on it: to spend several weeks in northern France, in a small pension, eating moules et frite, and exploring the area with a significant other, while reading, and re-reading Ambrose.

Wednesday, October 7, 2015; Bakken Economy Marches Along

Bakken briefs -- The Bismarck Tribune:
  • Williston -- Final hurdle passed; Williston airport relocation approved; $27 million federal funding.
  • Crosby -- building surge planned this year; 2016 "will be a construction year unlike any Crosby has seen in 50 years."
  • Ray -- new clinic will open soon.
  • Stanley -- $11.5 million elementary school construction begins.
Active rigs:

Active Rigs67192182190194

RBN Energy: ninth in a series, propane.
U.S. propane production growth in the shale era and the addition of new domestic and export terminal infrastructure has resulted in a radical transformation of the U.S. propane market. But even as the market responds to these positive developments, the memory of shortages and price spikes during the Polar Vortex winter of 2013-14 lingers. The market response since that crisis, and what further actions the industry might take to be better prepared for future market disruptions are the subjects of RBN’s latest Drill Down report reviewed in today’s blog.
Top story over at Yahoo!Finance right now, from WSJ: Tesla's Model X mystery.
Analysts at Morgan Stanley, who have been bullish on the stock, lowered their delivery forecasts in a note Tuesday, due to average transaction prices that are “easily $10,000-$15,000 higher” than previously expected. Morgan Stanley now expects 20,000 deliveries of Model X in 2016, down from 25,000.
Writing on his personal Twitter account Friday night, Tesla chief Elon Musk said a version of the company’s Model X car running on a 70 kilowatt-hour battery will be available in “about 12 months.” The smaller battery, as compared with a 90 kilowatt-hour battery in the recently unveiled model, could help lower the vehicle’s price point.
While Tesla hasn’t previously given a time frame for a Model X with a smaller battery, the time frame stated by Mr. Musk wouldn’t appear to help the company’s 2016 delivery prospects. And that tweet apparently has since been deleted.
US EIA sees tighter 2016 oil market as demand accelerates -- Reuters/Rigzone.

Oil jumps $2, breaking range as supply seen ebbing -- Reuters/Rigzone.