Thursday, December 3, 2015

What Storage Constraints? -- December 3, 2015

Crude oil storage and capacity has increased at Cushing, OK, and along the Gulf Coast.

Three New Permits -- December 3, 2015

Active rigs:

Active Rigs64189193182199

Three (3) new permits --
  • Operators: QEP (2), Oasis
  • Fields: Grail, Siverston
  • Comments:
One well coming off confidential list Friday:
  • 28256, 1,804, XTO, Nelson Federal 41X-5H, Antelope, a Sanish pool well, permit for a Three Forks B1 well, 4-section spacing, t10/15; cum 5K 9/15 after 6 days
Producing wells completed:
  • 28068, 1,519, Oasis, Helling Trust Federal 5494 44-22 5B, Alkali Creek, t11/15; cum --
  • 28080, 1,587, Oasis, Helling Trust Federal 5494 42-22 3B, Alkali Creek, t10/15; cum 4K 9/15 after 2 days;
  • 28854, 1,575, Oasis, Helling Trust Federal 5494 41-22 14T3, Alkali Creek, t10/15; cum 5K 9/15 after 6 days;
  • 28855, 2,190, Oasis, Helling Trust Federal 5494 41-22 8T, Alkali Creek, t10/15; cum --,
  • 31622, 902, Whiting, Julia TTT 34-22H, Sanish, t11/15; cum --
Five wells temporarily abandoned, including two Denbury Onhore wells in Bowman County and Three Triangle Petroleum J Garvin Jacobson wells in McKenzie County.

Connecting The Dots In The War On Coal -- December 3, 2015


December 4, 2015: I don't understand anything about coal leasing and I have no plans to get into that arena. However, a very knowledgeable reader has sent me a long note explaining that a single bidder in a coal basin is not necessarily nefarious. It may simply mean good management. That's extremely important. The writer in the New Yorker article below certainly implied that a single bidder represented something that might be considered nefarious. That may not be accurate at all. 
Original Post
I don't agree with the editorializing, but, assuming the facts are facts as stated in the op-ed, this helps me understand the Power River Basin a whole lot better. What confuses me: how and by whom was the winner (Wyoming) picked and the loser (West Virginia) picked?  From The New Yorker, December 7, 2015:
Consider, for instance, the Powder River Basin—an immense area of northeastern Wyoming and southeastern Montana, which contains the richest coal deposits in the U.S.
In the past few decades, Powder River has become our most important coal-producing region. More than forty per cent of the coal we burn is mined there—nearly five hundred million tons every year.
Unlike the Appalachian coal fields back East, almost the entire basin belongs to the government, which leases the coal rights to mining companies. You might think that regulators would manage this land with an eye toward the coal’s impact on the environment in the U.S., or at least would insure that the government was getting a fair price for its assets. But you’d be wrong.
Back in 1990, the Bureau of Land Management declared that the Powder River Basin was not a “federal coal-production region.” That decertification meant that, instead of the government’s picking which tracts of land it would lease and then putting them up for bid, coal companies could effectively do the picking themselves.
As Mark Squillace, a professor of natural-resources law at the University of Colorado, told me, “This turned a program that was supposed to be proactively managed by the government into one that is entirely reactive to the demands of the coal industry.”
And while the law stipulates that all mining leases are subject to competitive bidding, the Center for American Progress found that, since 1990, nearly ninety per cent of federal coal leases have had just one bidder. That’s held down the price of leases, in effect handing the coal industry a giant subsidy. A study released in September by a coalition of research groups found that production subsidies in the basin amount to nearly three billion dollars a year.
One bidder? Peabody Energy? One bidder on anything starts to suggest a monopoly of sorts. And who knows best how to take advantage of a monopoly? GS. No, not Goldman Sachs, but George Soros. Soros is now called the "new" king of coal with his financial interest in Peabody. I was aware of two of the three dots. The New Yorker connected the third dot. I find it interesting that James Surowiecki, the writer of that New Yorker op-ed did not mention the third dot. But if one connects the fourth dot, it all makes sense.

16 Tons, Tennessee Ernie Ford

Time To Check What Condition One's Condition Is In; Ford Has Quietly Activated Siri's Eyes Free On Five Million Vehicles Dating Back To 2011 -- December 3, 2015

On a day like today, one might want to drop in to see what condition one's condition might be in:  
  • the market plunges 300 points based on talk of maybe, just possibly, a very, very small rate increase because the economy is getting too "hot" and needs to be slowed down a bit;
  • 14 people are killed and scores injured by a Saudi mom-and-pop team in full-body battle armor, armed to the teeth with thousands of rounds of ammunition with a small IED arsenal, and the FBI is hesitant to call it an act of terrorism (at least we know why there's a shortage of ammunition; California Saudis have bought it all);
  • we have a meteorological ideologue for president, who no longer wants to be briefed on terrorism; because a) he gets it; and b) there is no credible evidence of imminent danger;
  • people get excited about saving a buck a month on their utility bills by locking in a 25-year solar energy contract in a state that has six months of darkness (some call it winter); based on rates going up 4% a year for the next 25 years; and, 
  • Saudi thinks it's great to see Venezuela implode. 

Just Dropped In, Kenny Rogers

FBI: Terrorism = Fanatic Islam And Nothing Else?
Syed Rizwan Farook and his wife, Tashfeen Malik — the couple who stormed a county social services office in San Bernardino, CA yesterday morning killing 14 at an office gathering, before dying hours later in a shootout with police — had an ample arsenal of high-power weapons, ammo and explosive devices, in addition to running an 'IED factory' out of their home. The FBI still is not ready to call them terrorists, as it examines computer and cell phone equipment taken from the couple's home.
Correct me if I'm wrong (that's rhetorical; please don't comment) but it appears that to be labeled "terrorism" in this country, it has to be radicalized Islam. If not, then it's not going to be labeled "terrorism." Workplace violence? Hate crime? PTSD? A bad day at the office?

On another note, California has some of the strongest gun-control laws on the books. If all those high-power weapons were legally purchased and bought by the same person, wouldn't that warrant a second or third or fourth look? And then the purchaser travels to Saudi Arabia? Something tells me the government is doing a lousy job of integrating databases. Maybe "they" need to integrate computer data identifying folks returning from overseas with high-power weapon purchases. I'm beginning to wonder what customs/passport control really accomplish at US points of entry.

Solar Will (Maybe) Save You $1/Month Over 25 Years
But If Solar Works In Minnesota, It Can Work Anywhere

I can't remember if I posted this before. I think I did, but if not, from Midwest Energy News:
After speaking to several solar developers earlier this year, a Minnesota town decided last month to subscribe to a community solar garden that will be operated by Sunshare.
Jordan, a community of 6,148 residents southwest of Minneapolis, became the largest and one of the first cities in Minnesota to announce it would be offsetting its electric use through community solar.
That short but growing list of cities subscribing to gardens includes, for now, just the nearby community of Cologne, which signed a contract with Sunshare earlier this year.
Jordan's power would come from a 5 megawatt community garden proposed for Blakely Township in Scott County. The garden could also serve nearby Savage, where city council members in October heard about the benefits of community solar from a Sunshare representative.
Under the 25-year contract Jordan could save as much as $1.6 million by 2040, according to Tom Nikunen, city administrator. That is based on the assumption that Xcel Energy, which serves Jordan, will increase costs on average of four percent a year over the length of the contract.
Disclaimer: I often make simple arithmetic errors. $1.6 million savings / 25 years = $64,000 / year divided by 6,000 residents = $10 saving / year or less than a dollar a month. Just to have a huge solar farm in your backyard, land that can no longer be used for anything else. 

At Her Own Peril

Ms Yellen knows that she may end up putting the country into recession. Today, "just" the talk of a paltry rate hike causes the market to plunge 300 points -- at least that's what folks smarter than I are blaming the market's reaction on today.

The Apple Page

Yesterday I mentioned that every car in the universe coming out in 2016 will have Apple's CarPlay installed (okay, that's not quite accurate, but it's close), today we learn that Ford is taking it a step further. Ford will activate Apple's Siri on five million automobiles dating back to 2011. Macrumors is reporting:
While many carmakers are starting to roll out support for Apple's CarPlay in-vehicle functionality, an older Siri Eyes Free feature is also designed to help minimize driver distraction by using Siri voice recognition and spoken responses to allow drivers to interact with an iPhone without needing to look at the screen.

Siri Eyes Free is generally activated through a hardware button on the vehicle's steering wheel and is available in a number of makes and models, and Ford today is officially announcing the launch of Eyes Free support for over five million vehicles dating back to the 2011 model year via a software update to Ford's second-generation SYNC infotainment system.
If you go to the linked article at Macrumors, be sure to read the comments. Readers confirm this is actually accurate and Ford "pushed" the update to their older model Fords. One reader noted that this is virtually unheard of in the automotive world, getting something like this for free. Updating other mapping systems will cost you upwards of $200 according to one reader. 

Minneapolis Airport Solar Project Twice The Quoted Rate For Solar Energy Projects At $7 Million / MW; No Problem -- Increase Landing Fees -- No One Will Notice -- December 3, 2015

A solar energy project at the Minneapolis airport came in at twice the going rate for solar energy projects. 

The solar energy project came in at almost $7 million / MW compared to the usual price of $3.5 million / MW and compared to $2 million / MW for wind, and significantly less for natural gas and coal.

From the Minneapolis StarTrib:
Minnesota’s largest solar power project is now generating electricity atop two parking ramps at the Minneapolis-St. Paul International Airport.

The 3 million-watt system containing 8,705 solar panels went online Tuesday, and is expected to supply 20 percent of the electricity used in Terminal 1 and to cut carbon emissions by nearly 7,000 tons per year, airport officials said. [It would be interesting to know how much carbon is emitted by a/c flying into this airport in one day.]

“It is a big deal for us,” said Dennis Probst, executive vice president for the Metropolitan Airports Commission. [At $7 million / MW -- it is a big deal.]

The $20 million solar project is the first of two at the airport. The commission recently approved a plan to install a 1.3 million-watt solar array atop a parking ramp at Terminal 2, at a cost of $8.5 million. Construction is expected to begin next year.

Both solar arrays are expected to make money immediately for the airport — with 30-year savings of $10 million on the first project, and about half that on the second, smaller project.
The $20 million project for 3 MW = almost $7 million / MW.

The smaller project comes in about the same price / MW. At $8.5 million / 1.3 MW = $6.5 million / MW.

Interestingly enough, the $7 million / MW price tag is similar to the $6 million / MW price tag at a Milwaukee, WI, airport. Something about airports? Not a problem: simply increase the landing fees which will then be passed on to fliers (compare your airline tickets into Minneapolis vs DFW).

Disclaimer: I often make simple arithmetic errors. If this information is important to you, go to the source, and use a reliable calculator. These numbers are so off the scale, I'm sure I made a mistake somewhere. If indeed the numbers are accurate ($7 million/MW), I would think the state's attorney general might want to have an independent auditor / inspector check into the bidding process.

From an August 25, 2014, post, this is 30-second sound bite for "cost of renewable megawatt":
  • Solar: $3 million / MW
  • Wind: $2.5 million / MW
  • Natural gas: $865,000 / MW

Cattle Trivia -- December 3, 2015

Yesterday it was noted CLR canceled the Buelingo permits.

According to wiki:
The BueLingo breed of beef cattle was developed in Ransom County, North Dakota, on the Bueling Ranch, by Russell Bueling and R. B. Danielson of the Animal Science Department of the North Dakota State University at Fargo. It is similar in appearance to the Dutch Belted breed of dairy cattle. BueLingo cattle usually have a white belt around the stomach area.
See this post for more. And also this post.

Buelingo Livestock Auction
Note the graphics on the sweatshirts. Too cool.

I remember my dad taking me to a livestock auction just west of Williston (now inside city limits) when I was probably about ten years old. I don't think I understood what was going on. Raymond Lee was one of the area auctioneers I knew very, very well as a family friend; I don't recall if he was the auctioneer at the auction my dad took me to.

Thursday, December 3, 2015 -- Rigs At Post-Boom Low

Active rigs:

Active Rigs63189193182

RBN Energy: how increasing natural gas output defies price signals.
The natural gas market just managed to dodge a collision this summer between excess gas supply and available storage capacity. Now about a month into the gas winter season, storage inventories are still near record levels after topping 4.0 Tcf just two weeks ago. The Henry Hub CME/NYMEX January contract price closed yesterday (December 2, 2015) at $2.165/MMBtu, historically low even as we head into the highest demand months of the year. It’s now clear that 2016 will inherit this bearish market unless there is a Polar Vortex Tsunami in January and February. But what does this mean for producers, and how much will demand respond? In today’s blog, we begin a series on potential scenarios for the 2016 gas market balance.
Before we get to 2016, first let’s recap what has been throwing the market out of balance and how it righted itself this year – sort of.
Earlier we explained how excess supply this summer led storage inventories to record highs despite higher power burn demand. As the injection season started in April, the market was already strapped with a 600-Bcf storage overhang from last winter and debate and speculation swirled around whether production would decline with falling rig counts and how demand would respond to lower prices. Hindsight tells us now that the market was unable to work off the year-over-year storage overhang since inventories surpassed all time record levels by the end of November.
Of course, the culprit behind that overhang and the ongoing surplus is production. Lower 48 output averaged about 66 Bcf/d in 2013 then ramped up to 72 Bcf/d in 2014.  This year, even in the midst of extremely low spot prices, gas production climbed to a record 74 Bcf/d in the summer before dropping back to 72 Bcf/d recently. So we are still pretty close to record production even though the price in 2015 so far has averaged only $2.70, 40% below 2014 levels.   
But it could have been worse. Two factors helped keep a lid on the surplus this year:  power generation and exports to Mexico. With prices that low, power burn has been up about 4.0 Bcf/d versus last year, with demand posting at record levels in many months. Weather helped a little. Power burn is usually a summer phenomenon (for air conditioning demand) and this summer was slightly hotter than last year.
But fuel economics also played a huge role in boosting gas demand outside summer months. With gas prices at historic lows, gas-fired power generators jumped on the bandwagon and utilized their plants at higher utilization rates year round. Structural changes, such as coal plant retirements and the addition of new gas plant capacity helped support power burn growth. And the U.S.’s neighbors south of the border have helped, taking another 0.7 Bcf/d or so out of the market.

At the on-line edition of The Los Angeles Times it is very difficult to find the San Bernardino story. It is buried deep in the on-line newspaper. That was earlier this morning on my iPad, a very, very old version, so it's probably a function of the Los Angeles Times application. On the laptop, the San Bernardino story is the lead story at the full Los Angeles Times web page. The dead couple traveled to Saudi Arabia earlier this year but officials did not connect the dots. Neighbors were aware of suspicious activity at the Redlands house but did not report anything to the police for fear of being accused of racial profiling. Whatever. Syed Rizwan Farook was a health inspector for the county: he inspected swimming pools regulated by the county. His salary was in the range of $70,000. Not bad for a job requiring a high school diploma.

California Dreaming, The Mamas and The Papas

For the archives: it should be noted that less than a month ago, following the Paris terrorism event(s), President Obama reassured the folks of San Bernardino that there was no imminent threat; continue working and don't be worried (or observant).

Typical comment at the LA Times story:
He must have been one of those "moderate" muslims. So somehow in a state where guns are nearly impossible to get legally he had multiple weapons? Funny how that works. You know what REALLY doesnt work? Gun control, it simply makes for easier target rich environments. So keep banning guns California and you will see these things happen more and more. 
Someone else tends to agree? CBS is reporting that the Detroit police chief has said that armed citizens have prevented terrorists from attacking his city:
More guns, fewer problems. That, at least, is Detroit Police Chief’s James Craig’s view of Detroit and fears about a possible terrorist attack.

While cities around the world are on heightened alert following a devastating ISIS attack in Paris, Detroit’s police chief says he believes the fear that armed citizens would return fire serves as a deterrent for a potential terrorist attack in the rust belt city.

Craig called more officers to duty and moved some to locations deemed higher priorities following the attacks in Paris. But he also noted “a lot of Detroiters” have concealed pistol licenses and “the same rules apply to terrorists as they do to some gun-toting thug.”

Linda Ellerbee to retire after 44 years in journalism.