Thursday, November 19, 2015

MDU's Dickinson Refinery Down For Repairs -- November 19, 2015;

The Bismarck Tribune is reporting that the Dickinson refinery is "down" for repairs:
North Dakota’s newest refinery is down for repairs after trouble with the unit that produces hydrogen.
Dakota Prairie Refining, near Dickinson, which processes Bakken crude into diesel, has been down since Thursday and will be off line until sometime next week, says MDU Resources spokesman Rick Matteson.
The original project took longer than expected, came in over budget, and is now down for repairs, about six months after it came on line.

"There are always issues with a new plant; it’s a normal part of the operation,” Matteson said.
Or as we all used to say in North Dakota: "Stuff happens."

Another update at The Dickinson Press.

Blue, LeAnn Rimes

Five (5) New Permits -- November 19, 2015

Active rigs:

Active Rigs65185184185204

One well coming off the confidential list Friday:
  • 30944, SI/NC, Statoil, Richard 8-5 XE 1H, Banks, no production data,
Five (5) new permits --
  • Operators: Whiting (2), XTO (2), Statoil
  • Fields: Poe (McKenzie), Park (McKenzie), Heart Butte (Dunn), Banks (McKenzie)
  • Comments: 
Oasis renewed four permits, the Lars wells in Mountrail County.

EOG cancelled three permits, all Austin wells in Mountrail County.

One producing well completed:
  • 30701, 1,761, Statoil, Irgens 27-34 8H, East Fork, t10/15; cum --

EPA Ready To Announce New Ethanol-Gasoline Blend Rules -- November 19, 2015

Americans are paying attention but can't do anything about it. This is downright scary. Oil & Gas Journal reports that EPA is ready to announce new ethanol-gasoline blend rules despite overwhelming concern that such a blend will damage almost every conventional internal combustion gasoline engine.
Growing numbers of US voters are concerned about possible adverse impacts as the US Environmental Protection Agency prepares to issue new ethanol quotas under the federal Renewable Fuel Standard, the American Petroleum Institute said.

It cited a Harris Poll telephone survey it commissioned of 1,021 registered voters nationwide Nov. 5-8 in which 78% said they were concerned that new ethanol quotas could breach the so-called blend wall, the point at which the mandate exceeds the level of ethanol in the nation’s fuel supply.

By party, API said that concern was expressed by 91% of respondents identified themselves as Republicans, 80% of independents, and 73% of Democrats.

“The results are telling,” API Downstream Group Director Bob Greco told reporters in a Nov. 19 teleconference. “Across the political spectrum, voters are concerned about the significant damage the RFS-mandated higher ethanol blends could cause to automobiles, motorcycles, and almost every type of gasoline powered engine.

“We would not be surprised if the rule came out next week, and will operate under that assumption,” Greco said. “EPA continues to insist it will be out by Nov. 30 despite the Thanksgiving holiday and Paris climate talks. We’ve heard from EPA that there’s interest in bumping the mandate up and testing the blend wall. We think that’s a bad idea.”
The government is running amok.

Summary Of North Dakota Lease Sales For November, 2015


November 23, 2015: a reader sent the following question to the state regarding the land lease sale below. The question:
Regarding three leases
  • OG1500749 - Dunn County, section 30-150-92, 3 acres (rounded);
  • OG1500750 - Dunn County, section 30-150-92, 107 acres (rounded);
  • OG1500751 - Dunn County, section 30-150-92, 133 acres (rounded);
  • OG1500782 - Mountrail County, section 26-150-92, 80 acres;
  • OG1500783 - Mountrail County, section 27-150-92, 160 acres;
  • OG1500784 - Mountrail County, section 28-150-92, 60 acres;
  • OG1500785 - Mountrail County, section 28-150-92, 40 acres;
These leases are listed in the same township/range but in different sections.
The reply from the state:
The county line runs between sections 30 and 28. The leases in Section 30 are in Dunn County and are river leases. The leases in Sections 26, 27, and 28 are in Mountrail County even though they are all in Township 150 North and Range 92 West. The State tracts are leased by quarter section (160 acres) so unless they are river tracts most of regular tracts are 160 acres each.
Original Post
Link here. Disclaimer: there may be typographical and factual errors on this page. If this information is important to you, go to the source.

Bottineau County
  • two tracts, each $2/acre
Bowman County
  • thirteen tracts, none greater than 160 acres/tract
  • lease sale: $1 - $4 / acre
Burke County
  • thirteen tracts, most 80-acre tracts; a couple of 160-acre tracts
  • mostly $50 / acre; a couple for $300 / acre
Divide County
  • nine tracts; most 160-acre tracts
  • $250 - $310 / acre
Dunn County
  • three tracts; 3 acres, 160 acres, 130 acres (all rounded)
  • winning bidder: Energy Land Services, LLC
  • each tract went for $9400 / acre
  • Golden Valley
  • sixteen tracts, mostly 160-acre tracts
  • winning bidder: Petro-Sentinel and Northern Energy
  • $10 - $17 / acre
McKenzie County
  • fourteen tracts
  • odd lots; several 160-acre units
  • some as high as $8200 / acre
  • winning bidder for the $8200 / acre -- Diamond Resources
Mountrail County
  • four tracts
  • 40-, 60, 80-, and 160-acre tract
  • $11,110; $11,110; $10,200; and, $10,800 respectively
  • winning bidder: QEP
Sioux County (going back to February, 2011, this is the first time Sioux County has been on the list) -- Sioux County is to the west of Emmons County, center of the "Sleeping Giant"
  • 20 tracts, mostly 160-acre tracs
  • all for $1 / acre, except for three at $2 / acre
  • winning bidders, all individual names -- Jeffrey Kendall Veigel, Ronald Hettich, and John T Wicks

Putting A Smile On Henry David Thoreau's Dour Face -- November 19, 2015

My wife it out of town visiting our younger daughter in Portland, Oregon, for a couple of weeks. This will give me a chance to start (and hopefully finish) a project that I've been thinking about for quite some time.

I am going to throw out upwards of 75% of my library, all the books I've collected over the years. (I won't literally throw them away; they will be donated to public and school libraries.) My daughters certainly won't want them and it's unlikely my granddaughters will want them. Had we retired in a 5,000 square-foot McMansion it would not have come to this, but we live in a 651 square foot one-bedroom apartment (I thought it was 740 square feet, but that's what the website shows, 651 square feet, slightly larger than Algore's walk-in closet in his master bedroom).

I will keep the best of the best books, but that's all. It will be difficult to determine the 25% of the library that will be kept.

I have a copy of Henry David Thoreau's Cape Cod which is a "keeper."  On the other hand, I don't know whether I will keep my copy of Walden or Life in the Woods. It's easily available; in fact I think it's available on-line in its entirety, one example here.

In the October 19, 2015, issue of The New Yorker, Kathryn Schulz had a great essay on Thoreau: "Pond Scum: the uncool Henry David Thoreau."

From the article:
Why, given Thoreau's hypocrisy, his sanctimony, his dour asceticism, and his scorn, do we continue to cherish Walden? One answer is that we read him early. Walden is a staple of the high school curriculum, and you could scarcely write a book more appealing to teenagers: Thoreau endorses rebellion against societal norms, champions idleness over work, and gives his readers permission to ignore their elders.
I bring this up because the news coming out of Massachusetts this week reminded me of Henry David Thoreau. Henry David Thoreau helps explain why the attorney general of Massachusetts has taken the stand she has: no more. Or for those who speak Spanish, "no mas." No additional electricity. New England has enough electricity, at least "enough electricity to keep the lights on."

She was asked to weigh in on whether it made sense for Massachusetts to invest in more electricity. She pulled out her yellow legal pad on the right side, she labeled "Cost For More Electricity." She drew a long line down the center of that yellow legal pad and labeled the top of the left column, "Potential Savings."  She wrote the single figure taking the state through 2030 on an annual basis. In the right column, $133 million. In the left column, $146 million.
The study was commissioned by Healey’s office, but financed by two national foundations that have contributed to environmental causes.
In its report, the Boston consulting firm Analysis Group Inc. concluded that increasing energy efficiency and encouraging electricity users to scale back their use when demand and prices are high would keep the lights on and save consumers $146 million per year through 2030.
Savings from increasing the supply of natural gas — the main fuel used to generate electricity here — through expanded pipelines would save $133 million a year, the study estimated.
In other words, living like Henry David Thoreau would have advocated, the state could save $146 million per year. Putting in natural gas lines and encouraging residents to live to their full potential in the pursuit of happiness would only save $133 million per year.
The decision was simple: live like Henry David Thoreau when the electricity becomes tight.

The attorney general felt that when push came to shove, if energy efficiency and conservatism were not adequate, there would at least be enough electricity to keep the lights on.

This pretty much tells me the attorney general sees her state as a "no-growth state." Not that there is anything wrong with that.

The attorney general's opinion would put a smile on Henry's dour face.

Peak Oil In Saudi Arabia? -- Platts - November 19, 2015

Platts is reporting:
Arab oil producers will need about $700 billion in financing for petroleum sector projects over the next 10 years to assure the sustainability of the Middle East and North Africa region's key industrial sector, Saudi Arabia's oil minister said Thursday.

Forecasting a continued rising trend in global oil demand to the tune of about 1 million b/d, despite the current market oversupply and sluggish world economic growth, Ali al-Naimi said annual depletion from producing fields was running at about 4 million b/d. He calculated that the petroleum industry would need to add 5 million b/d of new production every year to satisfy future demand.

"This needs financial solutions at the Arab and international level. Investment should include all the phases of production and manufacturing," he said during a keynote speech at the Apicorp Energy Forum in Bahrain.

In the context of the sustained slump in oil prices since mid-2014, which officials addressing the forum described as a financial and economic crisis for Arab countries, petroleum sector sustainability in the Middle East and North Africa region emerged as a key concern during a ministerial panel session.
Remember: Saudi Arabia's $35 billion, 5-year program announced in 2012 to raise crude oil production was a bust. Now we have another leaf in the twirling tea leaves suggesting Saudi Arabia is concerned about "sustainability." And yet, they continue to give their oil away at $50/bbl.

The Apple Page

I have no idea what this story was about but the story had nothing to do with Apple Corp. But accompanying the story was this photo:

Just saying.
A Note to the Granddaughters

From last night's District Band concert.

From four middle schools of seventh and eighth graders, one hundred musicians were selected to become the "District Band."  Of the one hundred musicians, 80 were eighth graders, 20 were seventh graders. Our own Arianna was one of the twenty. She is one of 12 flutists, sitting in the 10th chair, meaning she is ahead of at least one eighth grader (and, of course, one of 12 selected from scores of competitors).

The District Band had a one-day clinic yesterday, from 7:00 a.m. to 4:00 p.m. under the direction of two Texan accomplished conductors. After the clinic, at 7:30 p.m., the District Band then had a concert. Midway through the concert was this percussion ensemble. I was impressed.

Percussion Ensemble, District Band, Grapevine High School, November 18, 2015

Completely Unexpected (Nothing About The Bakken) -- November 19, 2015


January 19, 2016: UnitedHealth posts 4th-quarter earnings of $1.22 billion, beating analysts' expectations. UnitedHealth Group's 4th quarter profit drops 19%, still tops forecasts due to growth in its pharmacy benefits management business.

December 1, 2015: UnitedHealth Group/CEO regrets "getting into" Obamacare.
The CEO of UnitedHealthCare on Tuesday said he regretted the decision to enter the ObamaCare marketplace last year, which the company says has resulted in millions of dollars in losses.
“It was for us a bad decision,” UnitedHealth CEO Stephen Hemsley said at an investor’s meeting in New York.
UnitedHealth, the country’s largest insurer, announced last month that it would no longer advertise its ObamaCare plans over the next year and may pull out completely in 2016 — a move that sent shockwaves across the healthcare sector.
Hemsley’s remarks double down on his earlier warning that the ObamaCare exchanges remain weaker than expected after two years and that it will take far longer for insurers to profit from the millions of new enrollees. 
The company had already eyed ObamaCare’s federal marketplace cautiously since it launched in 2013. UnitedHealth only began selling plans on the exchanges last year.
Now, UnitedHealth officials have said that move will result in a half-billion dollars in losses over two years.
November 20, 2015: wow, this is really getting bad. Over at Bloomberg:
This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.
It now looks pretty clear that insurers are having a very bad experience in these markets. The sizeable premium increases would have been even higher if insurers had not stepped up the deductibles and clamped down on provider networks. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.
Original Post
This is completely unexpected. I had expected all the small players, all the under-capitalized insurers, all the co-ops to drop out and leave ObamaCare to three or four national insurers, moving closer to a single company (or two or three companies) transferring all of America's health care dollars between consumer and provider, a "one-payer" system as it were. But apparently that may not happen. One of those three or four largest health insurers may drop out of ObamaCare. Bloomberg is reporting:
The U.S.’s biggest health insurer is considering pulling out of Obamacare, a month after saying it would expand its presence in the program.
UnitedHealth Group Inc. is scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because it has proven to be more costly than expected. It’s an abrupt shift from October, when the health insurer said it was planning to sell coverage in 11 new markets next year, bringing its total to 34. The company also cut its 2015 earnings forecast.
A pull-back would deal a significant blow to President Barack Obama’s signature domestic policy achievement. While UnitedHealth has been slower than some of its rivals to sell Obamacare policies since new government-run marketplaces for the plans opened in late 2013, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.
“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said
UnitedHealth said it suspended marketing its individual exchange plans and is cutting or eliminating commissions for brokers who sell the coverage.
If UnitedHeath Group pulls out this will be a game changer. The article may or may not explain why the insurers "are struggling" -- I didn't read the entire article -- but I have my hunches. But my opinions and a $1.98 will get you a tall (small) cup of coffee at Starbucks.

Another 550,000 people could all of a sudden find themselves having to scramble once again looking for health insurance.

I track the ObamaCare debacle here

Weekly Natural Gas Fill Rate, Gasoline Demand, Other Data -- November 19, 2015

Natural gas fill rate (dynamic link):  15. The east: 5. Remember: the US is now divided into five natural gas storage regions.

Gasoline demand (dynamic link): gasoline demand surprisingly dips. Still above last year's demand, but dipped for first time in about 5 weeks.

Jack Kemp's tweets
US natural gas stocks continued to rise (+15 bcf) to record 4,000 bcf in unusual late season build; now above the 10-year record;

Reuters is reporting:
Initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 271,000 for the week ended November 14, 2015.
Last week's drop in claims was in line with economists' expectations.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 3,000 to 270,750 last week, still close to a 42-year low.
Future Music Producer

Sophia, age 16 months, November 18, 2015

As Predicted, Canadian Oil Sands Being Hit Harder Than US Shale Counterparts -- November 19, 2015; Permian Doing Well

Bloomberg/Reuters is reporting:
Threatened by surging production from North America, the Organization of Petroleum Exporting Countries has been pumping above its quota for 17 months as it seeks to take market share from higher-cost regions. The resulting 60 percent price crash is hitting Alberta harder than Texas.

Canadian producers are struggling to cut the cost of extracting bitumen from the oil sands, and their other wells are failing to match the efficiency gains of U.S. rivals.
While output keeps rising in the Permian Basin, the largest U.S. shale play, companies are slowing output from wells in Alberta and have shelved 18 oil- sands projects during the downturn.

“OPEC wants to hinder shale from its strong growth trajectory but there are higher-cost producers, such as in the oil sands of Canada, that are in the line of fire,” said Peter Pulikkan, an analyst at BI in New York. “Shale will eventually be impacted but it’s not the first on the list.”

In a policy shift a year ago, the 12-nation cartel decided against propping up oil prices, keeping its output target at 30 million barrels a day even as the supply glut worsened. It has exceeded that ceiling since June 2014 and pumped 32.2 million barrels a day in October.

In Alberta, high extraction costs and oil price discounts relative to global benchmarks are poised to continue crimping output.
Production, excluding bitumen extraction, dropped about 13 percent this year through July, That compares with a roughly 19 percent increase in output from Permian wells over the same period.

Richard Zeits On Newfield, STACK, SCOOP In The Anadarko -- November 19, 2015

Richard Zeits has a nice contribution over on Seeking Alpha on Newfield, STACK and SCOOP. This is a great reference article; archived.

  • the STACK and SCOOP assets have prove to be Newfield’s core growth engines
  • the plays are still very early in their life cycles, with potential for significant performance gains
  • strong balance sheet enables an active drilling program in 2016 
From Zeits:
The key factor contributing to Newfield's strong recent stock performance has been the emergence of the company's SCOOP and STACK assets as differentiated return leaders within its portfolio. After several years of strategic repositioning and search for a competitive growth engine, Newfield finally has "a horse to ride."
Tighter frack clusters in the STACK
  • oil EUR for a 30-year well is ~ 400,000 bo (950,000 boe)
  • 60% produced in first five years
  • 80% produced in first 10 years
  • STACK type curve wells estimated to "payout" in ~ 2 years ... tighter frack cluster wells sooner 
Zeits compares STACK/SCOOP with the Bakken:
In the Bakken's core areas, several operators report exceptionally strong early-time performance from enhanced completions. To illustrate, I have included below two such examples, from QEP Resources at South Antelope and Halc√≥n Resources at FBIR. In both examples, the wells appear to be on track to produce 200,000 barrels of oil on average - even more, in QEP's case - in the first year on production. 

ISIS Bringing Down Russian Passenger Plan; Seven Coordinated Paris Attack Is Just A "Setback" -- President Obama

Russian plane brought down by ISIS bomb on plane; seven coordinated simultaneous attacks in Paris with 129 killed; scores injured, and President Obama calls it a "set-back" and SecState Kerry says ISIS has a "rationale" for what they are doing.

The White House was on the defense Wednesday morning for statements made by President Obama -- who labeled Friday's Paris massacre that left 129 dead a "setback" -- and Secretary of State John Kerry's claim that the terrorists who in January attacked Charlie Hebdo had a "rationale."
White House spokesman says we are paying too much attention to officials' words.

Thursday, November 19, 2015

Active rigs:

Active Rigs65185184185204

RBN Energy: Mexico's reforms aim to boost oil, gas sectors.

Green Energy
Buyer's Remorse

The Register-Guard out of western Oregon is reporting that the Eugene Water & Electric Board made a mistake when it signed a long-term contract to buy power from a wood-burning electricity plant. I'm shocked! Shocked!
Signing the contract “was a mistake,” Mital wrote. “Management has looked into legal off-ramps. None can be found. We are stuck with it. I’d like to think that I would have voted against it had I been on the board ... But that’s a bit of a cheap shot. It may have seemed like a good bet at the time.” It is the sharpest public criticism an EWEB official has leveled against the secret contract that EWEB signed in 2010 to buy the Seneca plant’s power for 15 years.
In his comments, Mital also praised The Register-Guard for trying to force EWEB to disclose the utility’s contract with Seneca. Both EWEB and Seneca have refused to reveal even a single page of the contract and have fought the newspaper for five years in court over the matter. Mital made his remarks in the form of comments that he added to an opinion piece he wrote in The Register-Guard about an electricity rate increase EWEB is proposing.
With the signed 2010 contract with EWEB in hand, Seneca proceeded to build the plant. The federal and state governments awarded Seneca an estimated $28.8 million in grants and other subsidies for the project, court records show. Seneca opened the plant — which it says cost $61 million — in 2011.
Mital is the latest but not the first critic of the Seneca/EWEB deal. Detractors assert that the Seneca deal has driven up EWEB’s electricity rates, and say that burning wood waste harms the environment by releasing greenhouse gases.
EWEB says the contract is secret and can be withheld from the public under Oregon’s public records laws. It won’t disclose how much is it paying for the Seneca power. EWEB’s records show the plant is the second-largest source of power that EWEB buys, after power purchased from the Bonneville Power Administration. EWEB also generates power from facilities it owns, mostly dams.
Fathomless Ignorance

The Boston Globe is reporting that the Massachusetts Attorney General sees no need for more gas pipelines. I'm shocked! Shocked.
Attorney General Maura Healey, who by law represents consumers in utility cases, said Wednesday that the state can meet its energy needs and lower costs without building new natural gas pipelines, citing a study that calls instead for improving energy efficiency and management.
The study was commissioned by Healey’s office, but financed by two national foundations that have contributed to environmental causes. In its report, the Boston consulting firm Analysis Group Inc. concluded that increasing energy efficiency and encouraging electricity users to scale back their use when demand and prices are high would keep the lights on and save consumers $146 million per year through 2030.
Savings from increasing the supply of natural gas — the main fuel used to generate electricity here — through expanded pipelines would save $133 million a year, the study estimated.
“This study demonstrates that we do not need increased gas capacity to meet electric reliability needs, and that electric ratepayers shouldn’t foot the bill for additional pipelines,” Healey said in a statement. “A much more cost-effective solution is to embrace energy efficiency and demand response programs that protect ratepayers and significantly reduce greenhouse gas emissions.” 
The attorney general apparently feels that the bar has been set: we only need enough electricity to keep the lights on; we don't need new jobs, new computer server farms, new start-ups, new manufacturing. We simply need to dial back our current use of electricity and increase rates on folks to make sure folks reduce their use of electricity. We only need enough electricity to keep the lights on.

We Won't Know What's In It Until We Pass It

The Wall Street Journal reports the story that we've been reporting for some years now -- rising rates pose challenge to ObamaCare.
Many people signing up for 2016 health policies under the Affordable Care Act face higher premiums, fewer doctors and skimpier coverage, which threatens the appeal of the program for the healthy customers it needs.
Insurers have raised premiums steeply for the most popular plans at the same time they have boosted out-of-pocket costs such as deductibles, copays and coinsurance in many of their offerings. The companies attribute the moves in part to the high cost of some customers they are gaining under the law, which doesn’t allow them to bar clients with existing health conditions.
The result is that many people can’t avoid paying more for insurance in 2016 simply by shopping around—and those who try risk landing in a plan with fewer doctors and skimpier coverage.
Most people signing up for ObamaCare now realize that it's high-cost catastrophic health insurance. With the high deductibles, most people who qualify for subsidies realize they can't afford the "free" health care.