Thursday, November 12, 2015

I'll Finish This Post Over The Weekend, But See If You See What I'm Seeing -- November 12, 2015

29054, fracked 6/6//15 - 7/29/15;

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

17613, 690, fracked/tested 7/10/2009 (6 years ago):

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

24667, 1,779, fracked/tested 7/15/2004 (last year):

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Reason #4 Why I Love To Blog-- November 12, 2015


November 16, 2015: a reader responded to my thoughts on CBR to the west coast, below:

I'll bet $10 against your penny that except for other than minor expansions at existing ports nothing will be built in the next 10 years. This is a report from Paso Robles, CA, central coast California:
In the town south here, Templeton, CA, the train goes right along side the school. No one ever thought that was bad place for the school...until they heard about CBR. It is absolutely positively the hottest discussion topic here in Paso..."we can't allow THAT."
There's a small refinery about 30 miles southwest of here that exports all of it's product to the far east...."we don't get ANY benefit from it."
A few miles farther south is the deeply liberal college town San Luis Obispo home of Cal-Poly, the tracks goes right through the heart of the city.
This is the land of fruit and nuts, and Oregon and Washington are fruit-and-nut wanna-be's. With the newly-elected liberal government in Canada crude oil exports from British Columbia are out of the question.
My understanding is that most of the crude into California is via tankers, mostly from Alaska...which will soon be a thing of the past. We'll just have to ship it in from Mexico and South America...probably add $1.00 a gallon, so we pay $2.00 more per gallon than the rest of USA...not a problem.
Morro Bay is 25 miles west of here - where a huge, maybe 500 MW gas-fired, power station sits it has for many years. Meanwhile, this past week, plans were announced to build a wind farm 50 miles offshore from Morro Bay.
(Trump thinks people in Iowa are stupid...wait until he checks out California).
Original Post
On November 7, 2015, once the Keystone XL was officially dead, I posted this:
Commentators are looking east when they should be looking west. The tea leaves tell me that California is in a world of pain when it comes to oil. The Bakken contributes a small amount, but a significant amount of oil, to California, but with the loss of the Keystone, and the likely loss (and definite delay) of the Sandpiper and the Dakota Access, this is an incredible opportunity for Enbridge CBR and Warren Buffett CBR to start looking at increased shipments to the Far West. Again, all things being equal, California is going to need more Bakken oil.
At the time I wrote it, I was aware that CBR destined for California would go through the Pacific Northwest.

A reader sent me this story this evening, in which Puget Sound Business Journal is reporting just that:
A new report from research group Oil Change International, commissioned by Seattle-based nonprofit think tank the Sightline Institute, found that in Keystone's absence, the oil industry will now likely turn to massive oil-by-rail terminals proposed across the Pacific Northwest as a second-best alternative for transporting the commodity.
Much more at the link, but the point is made.

A Day Late, And A Dollar Short

I guess it was "Back To The Future" day a few days ago; I missed it -- "a day late, and a dollar short." But I went out and bought the entire trilogy in a metal case at Target a week ago, and finally got around to watching it this week. I watched it over the course of three evenings, and finally finished it tonight. I had forgotten how really good it was. (I'm not sure if I will watch the two sequels; I generally don't care for sequels). I am quite impressed how well the movie holds up over the years. I haven't watched the extras yet; it will be interesting to watch some of the extras.

Eighteen (18) New Permits -- November 12, 2015

Active rigs:

Active Rigs64188181191201

Eighteen (18) new permits --
  • Operators: Oasis (12), CLR (5), Statoil
    • 32238, loc, Statoil, Mark 4-9F XE 1H, Williston
    • 32239, loc, Oasis, Rolfson S 5198 41-33 14BX, Siverston,
    • 32240, loc, Oasis, Forland 5198 41-33 2TX, Siverston,
    • 32241, loc, Oasis, Forland 5198 41-33 3B, Siverston,
    • 32242, loc, Oasis, Forland 5198 41-33 4T, Siverston,
    • 32243, loc, Oasis, Forland 5198 41-33 5B, Siverston,
    • 32244, loc, Oasis, Forland 5198 41-33 6T, Siverston,
    • 32245, loc, Oasis, Forland 5198 31-4 7B, Siverston,
    • 32246, loc, Oasis, Forland 5098 13-4 8T, Siverston,
    • 32247, loc, Oasis, Forland 5098 31-4 9B, Siverston,
    • 32248, loc, Oasis, Forland 5098 13-4 10T, Siverston,
    • 32249, loc, CLR, Jack 9-9H, Murphy Creek,
    • 32250, loc, CLR, Jack 8-9H, Murphy Creek,
    • 32251, loc, CLR, Jack 7-9H1, Murphy Creek,
    • 32252, loc, CLR, Jack 6-9H, Murphy Creek,
    • 32253, loc, CLR, Jack 5-9H1, Murphy Creek,
    • 32254, loc, Oasis, Forland 5198 44-33 11T, Siverston,
    • 32255,  loc, Oasis, Forland 5198 44-33 12B, Siverston,  
  • Fields: Siverston, Murphy Creek, Williston
  • Comments:
Renewals: there was a correction to the 11/10/15 daily activity report. the following renewals should have been reported:
  • Whiting, 3, all 3 permits for McDonald wells in Billings County
  • CLR, 8, the 8 permits were for Hartford/Dover wells in Williams County
  • Murex, 4, the four permits were for Skari wells in McKenzie County
  • Petro-Hunt had one renewal, a Sabrosky well in Dunn County
  • Triangle Petroleum had one renewal, a Novak well in McKenzie County
Three more renewals today:
  • American Eagle had two permits renewed, an Armstrong well and a Border Ranch well in Divide County
  • Petro-Hunt had one renewal, a Kostelnak well in Dunn County

Legos Won't Have Enough Bricks For Everyone This Year -- November 12, 2015


September 7, 2016: in The Washington Post, why Lego wanted people to stop buy its toys. They simply could not keep up.
Original Post
This was from a post about eighteen (18) months ago:
There were two LEGO stories in the WSJ yesterday and today. The first story: Lego will boost capacity at Mexican factory. Quick: what is the world's #2 toy maker by revenue? Lego. Behind Mattel. #2 toy maker and they only make one product: little plastic bricks. I think I've blogged about Lego's incredibly successful turnaround several times over the years. The second Lego story was posted on-line yesterday, not sure if it was in Friday's paper or today's paper: Lego's evolution will be digitized.
My younger daughter and I spent hours working on Lego projects when we were living overseas. We had one small room turned over completely to Lego projects in our small apartment. Now twenty or thirty years later, she is still enjoying Lego and I enjoy remembering the stories.

In today's WSJ there is a story suggesting that Lego cannot keep up with demand.
Lego A/S has spent years overhauling its supply chain to keep up with surging demand for its colorful plastic bricks, but a likely product shortfall in Europe for the coming holiday season shows it still has more work to do. The toy giant’s plant here is running at full capacity, churning out 72 million bricks a day, and one in the Hungarian city of Nyíregyháza is blasting away as well. 
Nevertheless, Lego said last month it expects it will be unable to deliver new orders coming from European toy stores in the run-up to the holidays. It said the U.S., which is served by a plant in Monterrey, Mexico, should be fully supplied. 
The European shortfall is emblematic of the challenges Lego faces as it vies with U.S. rival Mattel Inc. for the position of the world’s largest toy maker, selling to about 85 million children across 144 countries. The Danish company in September said first-half revenue jumped 23% to 14.12 billion kroner ($2.03 billion), buoyed by product lines like the Lego Ninjago and Lego Elves sets.
CNN says right out that Lego won't have enough bricks for everyone.

One of several large ships made of Lego bricks that our younger daughter has put together over the years. This particular one I gave her about two years ago and she recently completed it after moving into a house big enough for her Lego sets.

I've posted several times on Lego. It's a very, very interesting turn-around story. I always thought it was Star Wars that accounted for its stunning turn-around, but a Lego employee once told me it was a different move. I forget which one, and I may have the story completely wrong.

If not enough bricks, I guess some kids will have to settle for briquettes. 

Update On The MDU-Calument Diesel Topping Refinery West of Dickinson, ND -- November 12, 2015

Argus Media has an update on the MDU-Calumet refinery west of Dickinson:
Struggling Bakken crude producers have at least one refiner sharing their pain.
Dakota Prairie, a 20,000 b/d refining joint venture of MDU Resources and Calumet Specialty Products Partners that began operating in April, posted a $19.1mn loss in the third quarter.
At full rates, Dakota Prairie produces 7,000 b/d of diesel, 6,500 b/d of naphtha shipped to Canada for diluent and 6,000 b/d of atmospheric bottoms shipped to a Calumet refinery in Montana for processing through a hydrocracker. MDU Resources anticipated gross earnings of $60mn to $80mn at the facility, and considered a second refinery at similar scale as an April startup approached last year.
MDU Resources still expects the refinery to become profitable. Dakota Prairie has begun making a winter-grade diesel that MDU Resources expects could earn a 10¢/USG to 20¢/USG premium to other diesel. Contractor expenses will drop off next year as the facility gains more operating experience and needs fewer start up personnel.
Much, much more at the link.

Meanwhile, MDU appears to be having more success with its wind energy partner. RENews is reporting that its dicing and slicing project code-named Thunder Spirit is producing electricity:
Allete has announced that the first of 43 Nordex N100 turbines at the 107MW Thunder Spirit wind farm in North Dakota, USA has started to generate electricity.
The first turbine went online on October 21, rapidly followed by four more at the renewable energy farm which is being built about 100 miles southwest of Bismarck.
It is expected to be completed by December and the energy produced will be sold to Montana Dakota Utilities.
I don't know what happened to the rest of the turbines. Back in 2013, it was reported there would be 75 turbines (vs the 43 reported above) at a cost of $300 million. On August 11, 2015, it was reported that there would be only 43 turbines, 107.5 MW, but the cost not provided. $300 million / 107.5 MW  = $2.8 million / MW, but perhaps with 43 turbines, the price has come down.

From Outrun Change:
Some other info on the Thunder Spirit slice-and-dice farm near Hettinger, North Dakota:
  • Allete Clean Energy – the shell company that owns the wind farm, in turn a subsidiary of Allete.
  • 43 – number of turbines
  • 10,000 acres – footprint of wind farm
  • 2.7 – turbines per square mile
  • 2.5 MW – rated capacity of each turbine
  • 426,000 mWh – expected output per year for 43 turbines
  • 9,907 mWh – Expected annual output per turbine (calculated as 426,000 mWh divided by 43)
  • 10.86 hours – expected time each day that each turbine will be operating at capacity (calculated as 9907 mWh each turbine divided by 2.5 MW theoretical capacity divided by 365)
  • 45% – percent of theoretical capacity that is expected to actually be delivered. From what I have read, this would be an extraordinarily efficient wind farm. I expect the actual capacity to be below 45%.
The expected utilization is that the wind farm will deliver 45% of the theoretical capacity.
A google search results in numerous articles with differing number of turbines, different costs, etc, etc. The Bismark Tribune reported it was a $350 million project for 150 MW back in 2013 when it was just getting approved, or about $2.3 million / MW. Whatever the actual number, it seems to be running about what onshore wind farms are going for in the US.

At the end of the day, about 100 MW, about $2.5 million / MW, and smack dab in the center of one of North America's busiest flyways.

Weekly Energy Data Points -- November 12, 2015; Glut Of Oil And Refined Products Staggering, Breathtaking

Natural gas fill rate (dynamic link): 54. (We have new regions as of November 16, 2015.)
  • East: 13
Gasoline demand (dynamic link): continues its upward trend, still well ahead of last year at this time. Four-week average last one year ago, 8.968 million bopd; this year, 9.268 million bopd; delta of 300,000 bopd.

McDonald's raises quarterly dividend from 85 cents to 89 cents.

MDU increases its dividend for the 25th consecutive year; the quarterly dividend is being raised from 18.25 cents to 18.75 cents, or one-half penny per quarter, one penny per year.

John Kemp's Weekly Energy Tweets

If you want to see why oil is nearing $40, just check out the graphs at John Kemp's tweets. Breathtaking, staggering. 

Holy hydrocarbons, Batman! US commercial crude stocks rose 4.2 million bbls; the trend continues to grow, trending up, and it's already so far above the 10-year range, the graph will have to be re-set.

Ditto for US crude and product stocks which rose 2.6 million bbls last week; trend reversing after slight downtrend last two weeks; the stocks are so far above the 10-year range, the graph will have to be re-set. 

Propane stocks continue counter-seasonal build and hit new record of 104 million bbls 9nex y-axis needed on chart)

US residual fuel oil stocks climb for 9th straight week by 1 million bbls and now at highest seasonal level for over ten (10) years

US distillate stocks basically flat after seven consecutive weekly declines.

US gasoline stocks adjusted for increased consumption now exactly in line with long-term average.

US gasoline stocks fell 2.1 million bbl last week taking total draw over last 5 weeks to almost 11 million bbls; but the number remains slightly above the 10-year range.

US gasoline consumption averaged 9.3 million bopd over last four weeks; +300,000 bopd above prior year and near the 10-year high.

US crude oil imports have held broadly steady during maintenance which explains the build up in crude stocks.

US refineries are gradually coming back from maintenance with processing up +302,000 bopd last week to 15.9 million bopd.

US refined product stocks fell another 1.7 million bbls, making total draw of almost 27 million bbls over last 8 weeks, but still way, way above the 10-year range.

The Big Story This Week? WTI Nears The $40 Mark -- November 12, 2015

Jobs: Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 276,000 for the week ended Nov. 7, the Labor Department said on Thursday. The prior week's claims were unrevised.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 5,000 to 267,750 last week, still close to a 42-year low.
The Gift That Keeps On Giving


November 16, 2015: The New York Times is reporting what we've talked about for months (years?) -- high deductibles make health insurance all but useless --
Obama administration officials, urging people to sign up for health insurance under the Affordable Care Act, have trumpeted the low premiums available on the law’s new marketplaces.
In many states, more than half the plans offered for sale through, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found.
Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.
This is what happens when people don't pay attention.... "causing concern among Democrats -- and some Republican detractors of the health law ..." My hunch is that most Americans confronted with these high deductibles are not making this a political issue -- it is simply something ruining their lives.

Original Post

Headline from today's Fiscal Times: millions Face Premium and Deductible Sticker Shock under Obamacare.
Millions of Americans who recently began shopping for new health insurance coverage under Obamacare may be suffering from sticker shock.

Increases in 2016 premiums for health insurance coverage -- ranging from basic to top-flight policies -- will be in the double digits and easily eclipse premium hikes recorded between 2014 and 2015, according to a new analysis from consulting firm McKinsey & Co.

The median cost of the Bronze plans, one of the most popular offerings because of its relatively low premiums, will rise by 13 percent in 2016, compared to the 7 percent increase in this year’s premium. As for the high-end health insurance coverage for wealthier consumers, Gold’s median premium rate will jump 15 percent compared to 8 percent last year while Platinum’s rate will rise by 12 percent, compared to 10 percent this year.

For the least expensive bronze plans, the average deductible for individuals is $5,731—and 11 percent increase.
Notes for the Granddaughters

I hope you get the chance some day to read Edmund Wilson, either his biography or some of his works. If you read his biography you will be drawn to read some of what he wrote. I am nearing the end of reading his favorite book he wrote, The Memoirs of Hecate County. I can only read a few pages at a time. I can't imagine (m)any people enjoying this book today; even when it was published in 1946 (or thereabouts) it was a huge commercial failure.

Edmund Wilson was in the very center of American literature in the first half of the 20th century. He personally met most American authors alive at that time.

He was a contemporary of Ernest Hemingway, born 1899; and F. Scott Fitzergerald, born 1896. Wilson was born in 1895. My grandmother, Reka Flessner, was born the same year as Hemingway.

Wilson writes very, very well about prohibition, the repeal of prohibition,  and the changing reading habits of Americans as the movie industry begins to take hold. 

In Memoirs of Hecate County, Wilson recalls some of the personalities he was most intimate from the late 1920s to the late 1930s. There is no plot, but the writing is of the "old" style when describing the setting and describing personalities was most important. His ability to describe people was uncanny.

Near the end of the book he is describing a woman brought to a small party. It is not quite clear why she is there but she was most likely part of the literary circle to which Wilson and his publishers belonged. Wilson writes two or three pages of her monologue, likely enhanced by her use of Benzedrine. Wilson writes: "As I looked at her, I saw that she herself was desexed in the way that the insane sometimes are, so that her feminine features were shrunk to an unfeminine pinchedness and dryness. She was holding us, I realize, by the spell that the lunatic is able to impose, sweeping one along with a furious force that has no natural origin or object."

And I thought of Hillary.

Keystone? What Me Worry? -- November 12, 2015; Bodycams? President Obama Says No

The EIA is reporting that even as crude oil imports into the US are falling, more Canadian oil is coming in to the US.
Although overall U.S. crude oil imports have been declining since 2005, crude oil imports from Canada have been increasing. As of August, Canada provided 45% of all crude oil imports to the United States, almost three times as much as all Persian Gulf countries combined.

The fake green victory in Nebraska.

An example of a syllogism:
  • Nebraskans love CBR.
  • Warren Buffett lives in Nebraska.
  • Warren Buffett loves CBR. 
Do As I Say, Not As I Do

President Obama wants local police departments to adopt body cameras, saying "they are an important tool to improve transparency and trust between officers and citizens."

However, President Obama does not want that transparency extended to the federal police force. He has said "no" to federal police body cams.

The WSJ reports.
U.S. urges bodycams for local police, but nixes them on federal teams The discrepancy is a headache for U.S. Marshals, who now aren’t allowed to have officers wearing body cameras on their task forces.

November 12, 2015

350 miles of I-80 shut down due to massive winter storm, between Cheyenne and Evanston; reported by LIveTrucking. That's practically the entire state of Wyoming along I-80; Evanston is not all that far from Salt Lake City, and, of course, Cheyenne is at the other end of the state.

Active rigs:

Active Rigs64188181191201

RBN Energy: The Strange Magic of Turning BTUs into Kilowatt-Hours, part 1 of a 3-part series.
It used to be the case that if natural gas even came up in power-industry discussions of generation, it  happened at the end of a meeting—“Well, we’re done with our nuclear and coal plans, anyone have anything else to discuss before we go to dinner?  Oh, that’s right—anything happening with gas?”  Now it’s the other way around.  It seems like every discussion starts with gas, whether it’s about the plants being low-cost and easy to site, about concerns around reliability and price volatility, or around the impact of the gas market on coal investments.  And power is clearly the fastest growing segment of the U.S. natural gas market.  But does all this attention from the power market mean that the natural gas industry really understands the power side?  Perhaps not.  In fact, we’ve found that frequently, as soon as we get beyond the marketers and analysts who deal specifically with supplying gas-fired power generation, there’s a lot the natural gas industry (and the energy markets in general) can learn about power plants, electricity markets, and how natural gas fits in.  So for that reason, we’ve concluded that now is a good time for a primer on how gas-fired generation works, how it fits together with energy markets and how it might be affected by national policy changes.   Today we take on this challenge with the first installment of a three-part series.
There are, of course, a lot of ways to make power.  The most popular for a long time has been to burn coal to generate steam, and run the steam through a turbine.  You can also burn other things—oil, natural gas, different kinds of waste—as long as you can produce enough steam.  Second most popular, especially over the last 20 years has been to run natural gas through a combustion turbine, basically a jet engine that uses its power to turn a shaft, instead of firing out the back and sailing off into the wild blue yonder.  Neither of these methods on its own has been very efficient.  In both cases, steam and combustion turbines, for every three units of energy you put in you only get one out, at least that’s the way it used to work historically.  But today power generators are combining these technologies in a way that is much more efficient.
Russia, Saudi Arabia, Iran, And Europe
Russia: Between Iran and A Hard Place


November 16, 2015: Saudi Arabia will wage war of attrition on Russia. OilPrice is reporting:
Russia’s central bank recently warned about the growing financial risks to the Russian economy from Saudi Arabia encroaching upon its traditional export market for crude oil. Russia sends 70 percent of its oil to Europe, but Saudi Arabia has been making inroads in the European market amid the oil price downturn.
The result is a heavier discount for Russia’s crude oil, the so-called Urals blend. Bloomberg reported that the Urals typically lands in Rotterdam, a major European destination, at a discount to Brent of around $2 or less. But the discount has widened to $3.50 lately due to increased competition from Saudi Arabia. “Oil supplies to Europe from Saudi Arabia are probably adversely affecting Urals prices,” the Russian central bank warned in a recent report.
Russian officials have accused Saudi Arabia of “dumping” its oil in Europe, a move that Rosneft chief Igor Sechin said would “backfire.”
Russia’s economy has been battered by the collapse in crude prices, compounded by the screws of western sanctions. The Russian economy could shrink by 3.2 percent this year.
Much, much more at the link. For Saudi Arabia, Russia, and Venezuela, oil is an existential issue. This is not going to look pretty, or end pretty. Russia has moved into the void in the Mideast which developed when the US, under President Obama, withdrew from the Mideast and told Saudi Arabia, in no uncertain terms, Saudi was on its own.

Original Post

Bloomberg/Rigzone is reporting:
Competition is growing in Russia’s biggest oil market. While Saudi Arabia’s encroachment in Europe is getting all the attention, the biggest threat comes from another part of the Middle East -- Iran.
The world’s largest oil exporter has started shipping crude to traditional Russian markets like Poland and Sweden, but Saudi supplies to Europe won’t increase by enough to reduce prices.
In contrast, a surge in Iranian exports after the lifting of sanctions could erode the value of Russian shipments to the region as soon as next year.
Tougher competition in Europe, the destination for almost 70 percent of Russia’s oil exports, comes as the country is already battling recession. Oil and gas sales account for about half of government revenues and the commodity-price slump has amplified the economic blow from international sanctions over Ukraine. An increase in Iranian exports following a nuclear deal with world powers could make matters worse.
Eastern European refineries are geared to process Russian crude, the Urals blend, and the closest sort to it would be Iranian oil,” said Michael Nayebi-Oskoui, senior energy analyst for Middle East and South Asia at Stratfor.
For Saudi shipments to push prices down “they would have to be significantly rerouted from Asia towards Europe, and we don’t see that happening,” he said.

Bloomberg/Rigzone is reporting that Columbia's oil production will drop below 1 million bopd next year as exploration collapses and major fields age. Columbia's oil exports to the US have remained steady and probably increased over the past few years. Total Columbian exports to the US are minimal, about 300,000 bopd.

Louisville Business First is reporting: undocumented immigrants lose Humana/ObamaCare health insurance.

Global warming science website, Alan Cheetham. Liar, lair, pants on fire. Meanwhile, Tiny Tim saw this coming decades ago. One wonders if Algore was in the audience.

Lots of stories across the nation today regarding huge snow storms, some setting records: everything is blinding white; Sierra storms setting records.

Posted earlier: Saudi Arabia risks destroying OPEC and feeding the ISIS monster, in The [London] Telegraph.

The new "big" Apple iPad: many reviewers elsewhere suggest the new Apple iPad could come close to replacing the laptop computer. Here is the WSJ story. If you hit a paywall, google Tim Cook has big ambitions for his big new iPad.

Daily newspaper circulation: has fallen below 15% per capita.

Are people paying attention: last night six aircraft were hit by lasers in NYC and Dallas; obviously not a coincidence.