Alaska Finalizes Deal To Buyout TransCanada's Share In Proposed Alaska LNG Export Project -- November 25, 2015

From Seeking Alpha:

• Alaska finalizes its deal to buy out TransCanada's share in the proposed Alaska LNG export project for $64.6M, giving the state direct ownership in the project along with partners BP, ConocoPhillips,  and Exxon Mobil.
• The $45B-$65B project would transport natural gas from the North Slope fields, then liquefy the fuel at a facility on Cook Inlet for shipment to markets in Asia; it has not yet been approved for construction and would not start commercial shipments before 2023.

Random Thoughts -- Nothing To Do With The Bakken -- At Least Not Directly -- November 25, 2015

Updates

November 27, 2015: my hunch is that when (if) the facts all come out, it will be shown that Turkey miscalculated when shooting down that Russian fighter. Publicly, NATO backed Turkey immediately, but behind closed doors, my hunch is that NATO demanded more military intelligence on the shootdown than Turkey was willing to provide.

Russian is reporting: Russian military says Turkey made no offer to help rescue crew of downed warplane, has made 'confusing' statements about what it knew
Russia is also reporting: Russian military commander details findings of probe into Turkish shootdown of warplane, says monitoring data 'proves' Turkish F-16 was in Syrian airspace 

November 26, 2015: immediately after Turkey shot down a Russian fighter jet, Turkey asked for emergency NATO meeting. First comments from NATO: they support Turkey's version. Now, today, Turkey is saying they did not know it was a Russian a/c. Something tells me Turkey got a pretty good tongue-lashing in Brussels, and Turkey is now trying to find some excuse to get out of this debacle. No one in the world believes Turkey did not know it was a Russian jet. 

Original Post

 

Note: the following is my worldview of the situation as it stands today.

When it comes to foreign affairs, President Obama listens to his political advisers, and in general, does not attend security briefings in person, preferring to read the briefing papers. He drops warning leaflets prior to dropping bombs.

When it comes to foreign affairs, President Putin listens to his military advisers and attends security briefings in person. He drops warning bombs before dropping bigger bombs.

When an event concerning US security occurs, President Obama draws red signs in the sand, blue lines in the water.

When an event concerning Russian security occurs, the world waits for the second shoe to drop.

A couple of days ago, Turkey shot down a Russian fighter which Putin believes was flying over Syrian airspace. That occurred soon after ISIS brought down a Russian commercial aircraft killing all on board.

This past week power lines in the Ukraine were destroyed, shutting down power to the Crimean.

Today, Russian announced it has suspended coal shipments to the Ukraine in response to the Ukraine's failure to restore power to the Crimean.

That was reported sixteen hours ago.

Eight hours ago, it was reported that the Ukraine has suspended natural gas purchases from Russia, and has closed its airspace to Russian aircraft.

Now Russia has moved S-400 missiles to a Russian air base in Syria:

The S-400 missile systems, which will be sent to the Hemeimeem air base in Latakia, are capable of targeting Turkish jets with deadly precision. If Russia shot down a Turkish plane, NATO would be required to intervene.

This tells me Russia is soon to announce a no-fly zone over Syria which it will enforce with airborne assets. Certainly Turkey will be told to stay out of Syria. But someone else will have to tell them; Russian military has cut off contact with the Turkish military.

Tomorrow is Thanksgiving and the US government will have the day off.

SecState John Kerry, who served in Vietnam, having killed the Keystone XL, is now focused on the upcoming global warming conference in Paris.

None of this gives me a warm fuzzy.

In the good old days, when I was in the US Air Force, we talked a lot about the East-West axis.

It looks like the axis has shifted 90 degrees, and we now have the North-South axis as in the graphic below:

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Speaking of Which

SecState John Kerry, in preparation for the upcoming global warming conference in Paris, is probably working on inserting NASA's Antarctic data as reported by the [London] Express:

In the last few weeks NASA has revealed the overall amount of ice has increased at the Antarctic and the amount of sea ice has also extended.

Coupled with the latest announcement of slight cooling in the area, it has fuelled claims from climate change deniers that human industrialization is not having the huge impact on global tenperature as often is claimed.

October, 2015, Bakken Oil Production Remains Flat Month-Over-Month -- November 25, 2015

The Director's Cut comes out about the middle of the month. When it comes out, the data is for the month prior to the previous month (even I don't understand that); in other words, the "November 15th" Director's Cut was for September data.

So this caught me by surprise. Platts Bentek reported today that October production from both the Eagle Ford and the Bakken remained flat. October production.

Oil production from key shale formations in North Dakota and Texas remained relatively flat in October versus September, according to Platts Bentek.

For the Eagle Ford:

Oil production from the Eagle Ford shale basin in Texas continued flat streak in October, increasing only 6000 barrels per day (b/d), or less than 1%, versus the previous month, the latest analysis showed. 

The average oil production from the South Texas, Eagle Ford basin in October was 1.5 million barrels per day. On a year-over-year basis, that is up close to 65,000 incremental barrels per day, or about 5% higher than October 2014.  

For the Bakken:

The average crude oil production from the North Dakota section of the Bakken in October was 1.2 million b/d, or about 13,000 b/d from year ago levels.

"Much like the Eagle Ford, producers in the Bakken shale are also consistently looking to reduce costs to hold production steady," said Yahya. "In September 2014, 77% of the total wells drilled in the basin were drilled in the core counties (McKenzie, Dunn, Williams and Mountrail) and that metric has since risen to 92% in October 2015. 

Beginning in September 2015, producers have taken this process a step further and are migrating within the core. The number of wells drilled in Dunn and McKenzie counties rose 20% for the same time period. Conversely, the number of wells drilled in Mountrail and Williams counties declined 20%."

Pricing:

The price of oil out of the Bakken formation at Williston, North Dakota, was up 11% between January and October, with an average price of $46.85/b for the first 10 months of 2015, according to the Platts Bakken assessment.

Platts Bakken, however, is down 40% when compared to last year's corresponding month. The wellhead assessment has ranged between $33.35/b and $59.32/b since the beginning of January.

The Platts Bakken, introduced April 22, 2014, is a daily assessment of price for oil closest to the wellhead prior to determination of transportation by rail or pipe. The assessment reflects a sulfur content of 0.2% or less and an American Petroleum Institute (API)** gravity of 42 or less, similar to the nature of North Dakota Light Sweet crude. 

Meanwhile, back to the Director's Cut. The November 13, 2015, Director's Cut reported data for September, 2015:

• 1,162,253 (preliminary)

That compares to Bentek's assessment that:

• the average crude oil production from the North Dakota section of the Bakken in October was 1.2 million b/d.

The NDIC Director's Cut data is for all North Dakota oil production; Bentek characterized this was "Bakken oil production." That needs to be sorted out.

But if accurate (and we will know on/about December 15, 2015, when the next Director's cut comes out) Bentek suggests that there was an increase from 1.16 million bopd in September to 1.2 million bopd in October.

My hunch is that the "1.2 million" figure is a "rounded number."

A Thanksgiving Story For True Environmentalists: In Your Thanksgiving Prayers Tomorrow, Remember To Thank God For John D. -- November 25, 2015

There's a nice article in this month's issue of The Smithsonian: "Quakers With A Vengeance: How Nantucket Came To Be The Whaling Capital of America" by a most famous authority on the subject and best-selling author, Nathaniel Philbrick. It's a great article. If there was a shortcoming in the article, it was Philbrick's failure to give credit to the man who "saved the whale." John D. Rockefeller was singularly responsible for saving multiple whale species, maybe all whale species, from extinction.

From the linked article:

By 1760, the Nantucketers had virtually exterminated the local whale population. By that time, however, they had enlarged their whaling sloops and outfitted them with brick tryworks capable of processing the oil on the open ocean. Now, since it was no longer necessary to return to port as often to deliver bulky blubber, their fleet had a far greater range. By the advent of the American Revolution, Nantucketers had reached the verge of the Arctic Circle, the west coast of Africa, the east coast of South America and the Falkland Islands to the south.

In a speech before Parliament in 1775, the British statesman Edmund Burke cited the island’s inhabitants as the leaders of a new American breed—a “recent people” whose success in whaling had exceeded the collective might of all of Europe. Living on an island nearly the same distance from the mainland as England was from France, Nantucketers developed a British sense of themselves as a distinct and exceptional people, privileged citizens of what Ralph Waldo Emerson called the “Nation of Nantucket.”

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A Note For The Granddaughters

One of the best experiences during our four-year "tour" of Boston, were our multiple trips to New Bedford, Massachusetts, "The Whaling City." It was because of those trips that I finally understood the whaling industry of the 18th century, and the joy of reading Moby-Dick. I've read it at least twice and parts of it multiple times, and have recently "outlined" it. We visited the church Herman Melville attended, and got a feeling for the whaling culture at that time. The New Bedford Whaling Museum is a must-stop-to-see if driving anywhere in the area. The one thing we did not do was participate in the annual Moby-Dick marathon in which the novel is read from start to finish in one sitting,

... a 25-hour nonstop public reading of the book during a weekend of activities and events. Our annual event started in 1997 and is now considered one of the world’s best known readathons.

And yes, I did tear up a bit when I read this, again:

From the moment those words are uttered to approximately 25 hours later when Ishmael is rescued from the Pacific by the Rachel, more than 150 readers each read a short passage from this novel. Some read in Portuguese, Japanese, Italian, Danish, Spanish, Hebrew, Russian and/or French, followed by that same passage in English. One passage is read from Braille.

Eleven (11) New Permits -- November 25, 2015

Active rigs:

	11/25/2015	11/25/2014	11/25/2013	11/25/2012	11/25/2011
Active Rigs	65	185	187	183	201

Eleven (11) new permits --

• Operators: EOG (5), XTO (5), BR
• Fields: Parshall (Mountrail), Hofflund (Williams), Murphy Creek (Dunn)
• Comments:

Two producing wells completed:

• 28016, 912, Petro-Hunt, USA 153-95-22D-15-1HS, Charlson, t11/15; cum --
• 29278, 945, Hess, BL-Iverson C-155-96-1423H, Beaver Lodge, t11/15; cum 2K on one day of production;

Wells coming off the confidential list Thursday, Friday:
Thursday, November 26, 2015

• 27808, 2,705, BR, CCU Olympian 31-2MBH, Corral Creek, gas readings peaked at 2,994 units; t9/15; cum 9K 9/15;
• 28947, 1,500, Newfield, Johnsrud 151-98-30-31-5H, Siverston, 78.4% drilling 15' target zone, t9/15; cum 11K 9/15;
• 30163, SI/NC, Hess, AN-Prosser-152-95-1102H-6, Antelope, no production data,
• 30427, SI/NC, Statoil, Ruth 28-33 4TFH, East Fork, no production data,
• 31176, dry/surface casing failed at 2,136 feet; plugged; will move to new location - Jefferson 9X-17H, CLR, Jefferson 9-17H, Crazy Man Creek, no production data,

Friday, November 27, 2015

• 30162, drl/NC, Hess, An-Prosser-152-95-1102H-5, Antelope, no production data,
• 30813, SI/NC, XTO, Klamm 34X-9G, Siverston, no production data,

Christmas Gifts -- 2015

My family always asks me to share my Christmas list. In fact, all of us do that and it really helps.
My 2015 Christmas list is still in progress but will be updated here, and will be linked at my "Top 10 Lists" page.

The list for my immediate family members:

• Moleskin cahiers, legendary notebooks; shrink-wrapped packages of 3, each with 80 squared pages, 13 x 21 cm, black ISBN: 978-88-8370-496-3
• Precise rolling ball pens, fine, black ink
• a bottle of Edradour scotch, aged 10 years is fine (least expensive of the various ages)
• LED flashlights (I can never have too many)
• Fawlty Towers: The Complete Collection Remastered
• packs of AA and AAA batteries (brand names only, please)
• bike lights, front/rear; Walmart special
• reflective tape for bikes
• Western shirt, Hawaiian shirt (size: medium)
• beige socks, Hanes underwear (my thoughts on underwear have evolved) 
• 100 shares of Halcon common stock (ticker symbol HK) (please do not substitute MDU for HK)
• Matchbox Tesla 
• Gift cards, McDonalds
• no books, please

The list for rich, distant relatives, who I've not seen in ages and may not even know exist, and for those immediate family members who win the lottery between now and December 23, 2015:

• Tesla (any model) 
• VPI - Classic Signature Turntable
• the Beatles stereo vinyl box set, 14 albums, 
• iPhone (any model) 
• Apple Watch (any model -- preferably one of the more expensive options, excludes the Sports Watch)
• a set of Cubelets
• 30-speed, carbon-frame bike, racing/touring (any brand name, preferably with a French-sounding name)
• bike lights, front/read; NiteRider Lumina, max lumens one can afford, example here
• ten Bakken mineral acres anywhere in the area of Watford City, or 1,000 Bakken mineral acres formerly owned by OXY USA 
• 100 shares of Apple stock (ticker symbol: AAPL)

#BakkenLivesMatter

To the best of my knowledge this hashtag was available as of 1:00 p.m. central time, November 25, 2015. See Twitter.

It will be interesting to follow the number of hits over time. Currently the number of hits is ... drum roll ... 1.  

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Defense Authorization Bill Signed

Breaking news: President Obama signs defense authorization bill even though the bill contains language making it harder for him to close GITMO, over which he threatened a veto. 

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Before I Forget

A Note For The Granddaughters

More on this later, perhaps, but I don't want to forget -- this is the perfect gift for your budding engineer .... Cubelets.  

Cubelets are recommended for children ages 4 and above. At $500 for 20 blocks, I'm in good shape. I can start saving money now to buy the first set in three years for our youngest granddaughter.  

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Amazon: Password Resets

I still haven't seen this at my Amazon account but it appears to be important information.

"My" bank in Grand Forks, North Dakota, has had this "two-factor authentification" security feature for about two years now. I thought it was a bit of a hassle, but it appears to be hack-proof for accessing on-line accounts.

"My" California bank does not yet use the two-factor authentification security process which amazes me. In a negative way. I use the "California" bank as a "holding area" to pay bills.

I've had my "North Dakota bank account" since 1980 or thereabouts. I make a personal phone call to the bank in Grand Forks maybe once every two years just to hear the "Fargo accent." It's great to talk to a live person who really lives in the Grand Forks area. We generally update each other on our personal lives. Neither of us makes the social faux pas of mentioning the word "Minnesota." Sort of like the annual Christmas card, but in this case a short telephone call every two years just to make sure Grand Forks is still there.

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A Note To The Granddaughters

I joined my daughter and granddaughters for a short afternoon of shopping at Barnes and Noble -- maybe more on that later. Getting there, we saw something we had never seen before in Southlake, TX. Off in the distant, we could see police vehicle lights. The Southlake police have a reputation for stopping anyone for the smallest offense and we assumed they had caught another speeder (going 31 mph in a 30-mph zone, or executing a California red light right turn) -- but when we got there, there was a police vehicle (huge SUV) with lights on, and a Southlake policeman directing traffic in and out of the Central Market / HEB parking lot. For those who have not heard of Central Market / HEB, it's the grocery store for "foodies." It is the most incredible grocery store; we love it. Think of it as Harrods of London.  This is the day before Thanksgiving.

Last Saturday, we stopped by Central Market / HEB deli to ask about traditional turkey stuffing. I asked one of the women working there if Wednesday is a busy day for Central Market / HEB? She was a long-term employee -- perhaps 20 years of experience. She says she does not know because she always asks for that day off -- not to work on the day before Thanksgiving.  Employees, apparently, are given the option of working that day; pay is increased significantly to ensure adequate staff.

No, we did not drive into the Central Market / HEB parking lot.

Tipping Point -- The Northeast Becomes A Net Gas Supplier To The Rest Of The US -- November 25, 2015

Active rigs:

	11/25/2015	11/25/2014	11/25/2013	11/25/2012	11/25/2011
Active Rigs	65	185	187	183	201

RBN Energy: can the Northeast become a net gas supplier to the US in 2015?

A highly anticipated event in the U.S. natural gas market is when the Northeast region crosses the line from being a net gas taker from, to becoming a net gas supplier to, the rest of the country.

Ever since the Marcellus and Utica shale began ramping up, Northeast production has been on a course to eclipse regional demand. RBN predicted 2015 would be the tipping point when the supply-demand balance would finally reverse on an annual average basis, marking a new phase for Northeast prices and for the U.S. gas market as a whole.

We’ve seen that despite capitulating oil prices, capital budget cuts and lower rig counts, Northeast production has continued to reach new highs in 2015 – beating the record again this past Sunday (November 22,2015) at 20.3 Bcf/d according to Genscape. But regional demand also has been at record high levels. Today with less than two months left in the year, we determine whether the Northeast region will – or already has - crossed the threshold to net supplier in 2015.

Recap

Before the advent of shale gas the Northeast was a major net demand center with relatively small amounts of local supply. In Living in the Fast Forward Curves Part 2 and Part 3, we traced the region’s path to becoming a net supplier of gas to the U.S., triggered by massive growth in regional production from the Marcellus/Utica shales. As local production grew it gradually pushed out inbound flows from other regions, with more of the displacement occurring in the summer when Northeast gas demand is lower.

Over the last couple of years we’ve seen Northeast gas seeping out of the region for a few months of the year, mostly via backhaul capacity on pipelines that used to bring gas in. The ability to serve local demand by displacing external supply sources and the availability of some backhaul capacity to facilitate outflows provided a cushion for production to grow while the region awaited increased takeaway capacity to send more gas out of the region. Starting this year, we expected production to outstrip both local demand and takeaway capacity, not just for a few months but for most of the year, leading to the lowest prices yet for the region. That marks the beginning of a new, extremely constrained phase in the Northeast’s transformation in which excess supply is trapped in the region, presenting all sorts of challenges for midstream operators and market prices.

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Jobs

Bloomberg Business is reporting:

• first-time claims dropped 12,000 to 260,000
• much better than forecast of 270,000
• previous reporting period revised upward to 272,000
• the record low since 1973 was 255,000 in mid-July
• four-week average held at 271,000

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EIA Daily Energy Cookie

Energy "cookie":

U.S. retail regular-grade gasoline prices continue to decline, averaging $2.09 per gallon as of November 23, 73 cents lower than this time last year and the lowest heading into a Thanksgiving holiday weekend since 2008. --- EIA 

It would be interesting what the average price would be if one took out California, Alaska, and Hawaii.  Here in Texas, if one can't find gasoline for less than $1.90/gallon, one isn't looking.

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Weekly Natural Gas Fill Rate / Gasoline Demand

Natural gas fill rate (dynamic link): 9

Stocks were 554 Bcf higher than last year at this time and 252 Bcf above the five-year average of 3,757 Bcf. At 4,009 Bcf, total working gas is above the five-year historical range.

Gasoline demand (dynamic link): dropped slightly; very surprising; gap between this year/last year narrows significantly; not expected when jobless claims plummeted, price of gasoline really, really cheap, etc. See graph: