Tuesday, December 29, 2015

No New Permits -- North Dakota -- December 29, 2015; Record Snowfall Across Parts Of The US This Past Week

And then there with twelve (or thereabouts): former NY governor George Pataki is "out" as a contender for the GOP nomination.  Lindsay Graham dropped out December 21, 2015.

Active rigs:

Active Rigs60172187187196

No new permits. I'm sure it's occurred before during the Bakken boom but I do not recall two consecutive days in which there were no new permits.

There were three (3) permits renewed, two by EOG (both Parshall permits in Mountrail County) and one by HRC, a Storhaug permit in Williams County.

Operator transfer, from American Eagle to Resource Energy Can-Am, LLC: about 87 wells.
  • permits: oldest, #21735; most recent, #30458
  • all in Divide County, it appears
  • American Eagle assets to Resource Energy Can-Am: asset purchase agreement: $36,750,000
Another day with no producing wells reported as completed.

Six (6) wells come off the confidential list Wednesday:
  • 28652, 1,917, Oasis, Kline Federal 5300 41-18 10B, Baker, t9/15; cum 54K 10/15;
  • 29265, 2,116, Oasis, Harrier 5401 44-23 3B, Todd, t8/15; cum 55K 10/15;
  • 29266, 1,625, Oasis, Harrier 5401 44-23 4T, Todd, t7/15; cum 54K 10/15;
  • 29267, 1,435, Oasis, Harrier 5401 44-23 5B, Todd, t7/15; cum 71K 10/15;
  • 30666, SI/NC, WPX. Emma Owner 23-14HA,  Spotted Horn, no production data,
  • 30866, SI/NC, Enerplus, Barn 147-94-13A-24H, McGregory Buttes, no production data,
29267, see above, Oasis, Harrier 5401 44-23 5B, Todd:

DateOil RunsMCF Sold

29266, see above, Oasis, Harrier 5401 44-23 4T, Todd:

DateOil RunsMCF Sold

29265, see above, Oasis, Harrier 5401 44-23 3B, Todd:

DateOil RunsMCF Sold

28652, see above, Oasis, Kline Federal 5300 41-18 10B, Baker:

DateOil RunsMCF Sold

And To Think We Were Once Told 
Our Grandchildren Might Never See Snow 

I can't verify it but I'm being told one of the Kennedy grandsons from the Massachusetts clan is driving the road grader in the photo below.

Random Update Of Wells Being Transferred -- North Dakota -- December 29, 2015


March 29, 2016: in today's daily activity report, about 65 wells were transferred from Whiting to NP Resources.
Original Post
Probably before the end of January, 2016, but certainly before the end of 1Q16 we should finally see who bought MDU/Fidelity assets in the Bakken. Transfer of well ownership / operator is recorded in the daily activity reports. One of the longest list of transfers was when "Hess" transferred it's Bakken operations to its subsidiary "Hess Bakken" some time ago. I forget when that was, but it was a long list. [Update: it was reported January 2, 2014; here is the link -- 28 pages of wells transferred.]

I track "Bakken Deals" at the sidebar at the right. Deals prior to 2015 are noted here.

The Bismarck Tribune has a story on this issue today. Apparently the number of wells that are being transferred has grown to more than 1,000, and more requests are coming in daily. Another link. And another link.

Some data points:
  • OXY USA: selling 346 wells, more than any other company; Lime Rock Resources acquired the wells; previously reported
  • Whiting: selling 331 wells to five companies; no further information; not previously reported on the blog
  • Fidelity: selling 162 wells; a sale previously announced to five different companies, but not the specifics
  • Corinthian Exploration: selling 92 wells; not previously reported on the blog
  • American Eagle: selling 87 wells; not previously reported on the blog
American Eagle assets to Resource Energy Can-Am
New Operators

Also in The Bismarck Tribune article is the list of seven new operators in North Dakota in 2015:
  • Swanson Oilfield Services; Clarinda, IA -- not previously reported on the blog
  • Prairie Hills Oil and Gas; Big Lake, MN
  • Resource Energy Can-Am, Highlands Ranch, CO -- not previously reported on the blog
  • Cobra Oil & Gas; Wichita Falls, TX -- not previously reported on the blog
  • Foundation Energy Management; Dallas, TX -- not previously reported on the blog
  • Scout Energy Management; Dallas, TX -- not previously reported on the blog
  • White Rock Oil & Gas; Dallas, TX 
Back in 2014 (list not complete):
  • Missouri River Resources, ND
Back in 2013 (list not complete):
  • Stephens Production
I track Bakken operators here

Again, the daily activity reports will record wells that are transferred.

For The Archives

From 1Derrick.com, back on September 21, 2015:
Energy 11 LP has entered into an Interest Purchase Agreement ... for the potential purchase of certain of the limited liability company interests in Kaiser-Whiting, resulting in an 11.5% working interest in approximately 215 existing producing wells and approximately 262 future development locations in the Sanish field located in Mountrail County, North Dakota.
On the closing of the agreement, Energy 11 LP will be a non-operator of the field, with Whiting acting as operator. The anticipated drilling capital expenditure requirements for the Sanish field assets is estimated to be $75 million through 2020. 
Pursuant to the agreement, the cash purchase price for the transferred interests consists of (i) an initial $160 million payable at closing subject to customary adjustments, (ii) an aggregate of $2 million, payable in equal amounts on 31-Dec-2016 and 31-Dec-2017 and (iii) a contingent payment of up to $95 million to be paid on 1-Jan-2018.

Mountrail-Williams Electric Cooperative Becomes Part Of The Southwest Power Pool -- December 29, 2015

From The Williston Herald:
A Williams County power company has just taken a big leap that positions it to to make a bigger mark on the nation’s energy map.
Mountrail Williams Electric Cooperative, on the eve of celebrating its 25th anniversary, was recently welcomed as the newest member of the Southwest Power Pool, a nonprofit Regional Transmission Organization that manages the electric grid and the wholesale energy market in the Central United States.
The SPP blueprint now stretches across 14 states from North Dakota to Texas in the south.
The move will allow Mountrail Williams to finally export power to other regions, something it has been unable to do before.
Under the new arrangement, Basin Electric, which has also joined the same pool, still supplies power to Mountrail Williams. But both entities will now have instantaneous access to the wider energy market to sell excess power from the region.
SPP is a nonprofit Regional Transmission Organization. It expanded from eight states to 14 in June, with North Dakota among the new territories. The other new states included South Dakota, Montana, Wyoming, Minnesota and Iowa.
And more:
“They’re going to look at that whole map from North Dakota all the way to Texas,” Haugen says.
”It will enhance our transmission grid by being able to drive power in and out. We were only able to drive in before. It’s not going to be one way any more, and that could mean a big future cycle combined power plant. We’re not an island any more. This is huge. Huge.”
That type of expansion could someday mean that natural gas, which is presently being flared, could instead become cheap power for areas that need it throughout the Central U.S.

While that particular development may be some distance away in the future, wind farms are already in the works, and that will be something the region’s power companies, including Mountrail Williams, hope to capitalize on in the wider energy markets. The wider benefit of that, Haugen suggested, is a continued downward pressure on regional power prices.

The Ports Of Los Angeles, Long Beach -- Megaships Arriving -- December 29, 2015

From The Los Angeles Times:
The largest container ship ever to arrive at a North American port is now docked at the southern tip of Los Angeles, a sign of the rapid changes underway in the global shipping industry.
The CMA CGM Benjamin Franklin, which arrived Saturday at the Port of Los Angeles on a maiden voyage from China and South Korea, can carry nearly a third more cargo than the largest ships that currently call at the San Pedro Bay ports. 
In an effort to move more cargo on less fuel, ocean freight carriers are in a race to build megaships with much larger capacities than the typical ships calling at U.S. ports. The average container ship being built now is nearly three times the size of the average a decade ago.
The rapid increase in vessel size has posed challenges for ports around the world, which now must contend with enormous volumes of cargo arriving at once. The ports of Los Angeles and Long Beach, the nation's two busiest seaports, have been among the first in the United States to deal with the advent of larger ships.
Both ports are in the midst of hundreds of millions of dollars' worth of projects to deepen channels and expand terminals to adapt to the changing world of shipping. 
Despite the slow start to the year, cargo volume at both ports has picked up significantly. Through November, the Port of Long Beach increased container volume by 5.5% this year compared with the same period last year. The Port of Los Angeles is down just slightly -- 1.9% -- through the same period last year.
The ports are right next to each other in San Pedro Harbor.

CMA-CGM is an oceanic shipping company, founded in Marseille, France, in 1978. In 1978 it started with one ship; today it is the third-largest container company in the world.

The Brits Continue To Follow The Bakken -- December 29, 2015

The [London] Guardian reports:
Mining layoffs hit the self-styled “legendary” state, with about 10,000 total jobs lost over the past 12 months ending in October, but the total unemployment rate in North Dakota is 2.8%, far below the 5% average nationwide.

Home to a large part of the Bakken oil field – one of the largest contiguous deposits of oil and natural gas in the United States – North Dakota is still riding the wave of the biggest oil boom in a generation.

Infrastructure construction for both the oil industry and for town improvements continues in south-west North Dakota where the Bakken oil field is located as projects that were fully funded before oil prices tanked are still being completed.

But if oil prices remain at the current six-year low of around $35 a barrel, 2016 could bring some pain. Low oil prices led Moody’s Analytics to forecast that North Dakota “will underperform the nation for the next several years [and] will flirt with recession through early 2016.”

The impact of low oil prices on the state is starting to trickle in. News reports citing North Dakota’s budget director said as of November, state tax revenues since July are $152m below forecast, with sales tax collections and corporate income tax collections down.
Slightly offsetting that are stronger-than-expected individual income tax collections.
Again, no denominator when citing the state tax revenues $152 million below forecast.

Scottish Lunch

That's an old photo of one of my favorite snacks: herring. Actually I'm having tuna fish on toast and non-caffeinated, diet Coke, otherwise known as colored water with artificial sweetner.  The [London] Guardian story reminded me of the photo.

Another Diesel Topping Refinery Proposed For Southwestern North Dakota -- December 29, 2015

The Dickinson Press is reporting that California-based Meridian Energy Group, Inc., plans to build a new refinery west of Belfield, in southwestern North Dakota:
The Davis Refinery, if built, would be the nation’s second greenfield refinery constructed in the county — and the United States — since 1976 following the opening of the Dakota Prairie Refinery outside of Dickinson, which began operating in April after a March 2013 groundbreaking.
According to an article released Wednesday by the Oil & Gas Journal, the Davis Refinery would begin with a 20,000 barrel a day processing plant and eventually convert around 55,000 barrels per stream day into refined products. By comparison, Dakota Prairie Refining refines an estimated 20,000 barrels a day into diesel fuel, naphtha and other products.  
This link will take you to the Meridian Energy press release earlier this year. At the link there are two nice graphics.

What the area looks like today (clicking on the image will enlarge it):

By the way, if regulators approve the deal, Tesoro will be owners of the Fryburg CBR terminal. If that link is broken, you can read about the details here.

Oil Prices Trend Higher With Prospect Of Exporting US Crude Oil

The Wall Street Journal is reporting:
Crude prices were up Tuesday with the U.S. benchmark West Texas Intermediate moving higher than its global counterpart Brent because of the prospect of the first shipment of crude being exported from the Gulf Coast in January.
Brent was up 0.38% at $36.76 a barrel on London’s ICE Futures Europe while WTI jumped 0.41% at $36.96 for February deliveries.
Switzerland is expected to be the first destination for a shipment of U.S. crude oil from the Eagle Ford shale oil formation in Texas. Geneva-based oil trader Vitol is the customer for the cargo, and the swift resumption of U.S. oil exports after the lifting of a 40-year ban is the reason for WTI’s recent rally.
Brent is still skirting close to 11-year lows with several bearish factors weighing heavily on the benchmark.
Regular readers are aware of the Vitol story.

And The Kennedy Clan Is Off To New Mexico


December 30, 2015: New Mexico begins to dig out of record snowfall.
Crews worked to clear snow-covered roads Tuesday after a record winter storm trapped a New Mexico couple in a 12-foot snow drift for almost 20 hours, forced four newspapers to suspend publication and prompted authorities to deliver a baby in a snowbound Texas home.

The cleanup continued throughout southeastern New Mexico two days after the region saw more than a foot of snow.
 Global warming in action.
Original Post
According to IceAgeNow:
Parts of Texas, Oklahoma and New Mexico could expect 8-20 inches (20-50 cm) of snow.
Snow and ice brought whiteout conditions in New Mexico, where the “dire situation” prompted Gov. Susana Martinez to declare a state of emergency.
Roswell, NM, picked up 12.4 inches (31 cm) of snow on Sunday, it’s snowiest day ever recorded.
Boy Scout Motto: Be Prepared

New Year's Eve is less than five martinis away, for those who drink a daily martini. I had never had a martini in my life until 2011 or thereabouts. I forget the exact date. But I do remember the location. The Mews in Provincetown, tip of Cape Cod, Massachusetts. Or was it Bayside Betsy's? It was one or the other. No, it was Bayside Betsy's.

Since then I might have a martini perhaps once every two months when we go out for sushi at Kabeya, Southlake, TX. I would have to say the martini is the perfect drink with sushi -- excepting sake perhaps at Cow Town Sushi, also in Southlake. [I watched Lost In Translation for the 100th time last night and was reminded that scotch and sushi are perhaps a perfect match when having sushi at home. I never order scotch at a restaurant.]

It is amazing that so much can be written about something so incredibly simple as a martini. And yet, I've found it difficult to replicate a great martini at home. It is very interesting, but I think I'm starting to sort it out. [There is certainly a snobbish side to martinis with all the inside jargon (as bad as the oil and gas industry) and emphasis on all the "tools" needed to prepare a martini.]

There are three things one needs to remember when making a martini:
  • it is a very cold drink, a very cold drink; lots of ice; chilled stem-glass;
  • the ratio; and, 
  • dilution.
I'm reminded of all this because in today's WSJ there is yet another article on how to perfect your martini. I haven't read it yet, so let's read it together.

Data points:
  • the revived interest in martinis stems from the hundreds of new gins that have entered the market
  • new pairings; bartenders rushing to try new pairings of gin and vermouth
  • the ratio varies from 3.7:1 to 2:1 and even, if you can believe this, 1:1
  • the 1:1 suggestion comes from Washington, DC, Columbia Room (soon to re-open) with Plymouth gin and Dolin dry vermouth
  • there's a lot of talk about olive juice (the dirty martini) and with olive juice/onion (the dirty Gibson); olives may be classic, but lemon twists are refreshing
  • then a paragraph on such craziness I'm not going to go there (oyster shells, and such)
  • it ends with the classic: Beefeater and Noilly Prat
  • it appears of all the gins, I see Plymouth Gin pop up most often
  • I can't believe they included vodka choices
  • among the vermouths (fortified wine), Dolin Dry has become a standard; Noilly Prat Extra Dry remains the old standby
  • I can't believe they make a big deal out of a lemon twist; takes 30 seconds
  • no "teardrop barspoon"? I use a long chopstick
  • strainer? I use a sink strainer. Seriously.
  • mixing glass? now the article is getting crazy
I never make a martini in the classic V-shaped stem glass. I prefer something similar to a Anchor Hocking (I have no idea where the "thing" I use came from). Many professionals prefer a champagne coupe.

But after all is said and done, it's all about a) lots of ice; b) the ratio; and, c) dilution.

It turns out the third component, dilution, is too-often over-looked. All things being equal, dilution may be the most important factor. Water is the third ingredient of a martini.

Tuesday, December 29, 2015

Active rigs:

Active Rigs62172187187196

RBN Energy: playing games on the Colonial.

Back and forth: yes, they will; no, they won't. Now, today Reuters is tweeting that Russia is "unlikely" to participate in the 2016 summer Olympics in Rio according to European athletics chief. I had forgotten all about the "scandal." I'm waiting to see who makes the decision: the Russians or the Olympics committee.  

Tuesday, December 29, 2015; The Beginning Of The End Of "Free Money" In Saudi Arabia

January 1, 2016: from a couple of days ago in Financial Times (if you hit a paywall google saudis face fuel price jump under):
Saudi Arabia, which spent around $107bn, or 13.2 per cent of gross domestic product, on energy subsidies in 2014, is one of the world’s biggest consumers of energy, with rock-bottom prices fostering excessive consumption.
Later, 9:53 a.m. Central Time: from the AP:
Saudi Arabia on Monday said this year's budget deficit amounted to $98 billion (367 billion riyals) as lower oil prices cut into the government's main source of revenue, prompting the kingdom to scale back spending for the coming year and hike up petrol prices.
A royal decree announced that petrol prices would go up by 50 percent effective Tuesday. Even with that jump, Saudis will pay just 24 cents (0.90 riyals) for a liter of 95 octane gasoline, less than a dollar per gallon. The Saudi-based Jadwa Investment estimates the government spends around $61 billion on energy subsidies annually, almost $11 billion of that on gasoline alone.
For two consecutive years the kingdom has posted a deficit, and it is planning for another budget shortfall next year, projected at $87 billion (326 billion riyals).
It's hard to believe it won't be worse in 2016: low oil prices could get lower, and that pesky war in Yemen, President Obama's "poster-child" success story in the Mideast.

Original Post
From Bloomberg/Rigzone:
Confronting a drop in oil prices and mounting regional turmoil, Saudi Arabia reduced energy subsidies and allocated the biggest part of government spending in next year’s budget to defense and security.

Authorities announced increases to the prices of fuel, electricity and water as part of a plan to restructure subsidies within five years. The government intends to cut spending next year and gradually privatize some state-owned entities and introduce value-added-taxation as well as a levy on tobacco.

The biggest shake-up of Saudi economic policy in recent history coincides with growing regional unrest, including a war in Yemen, where a Saudi-led coalition is battling pro-Iranian Shiite rebels.
In attempting to reduce its reliance on oil, the kingdom is seeking to put an end to the population’s dependence on government handouts, a move that political analysts had considered risky after the 2011 revolts that swept parts of the Middle East.

“This is the beginning of the end of the era of free money,” said Ghanem Nuseibeh, founder of London-based consulting firm Cornerstone Global Associates. “Saudi society will have to get used to a new way of working with the government. This is a wake-up call for both Saudi society and the government that things are changing.
Having said that, it's going to be a rough, rough year for American drillers, as well. Also from Bloomberg/Rigzone:
The Energy Information Administration now predicts that companies operating in U.S. shale formations will cut production by a record 570,000 barrels a day in 2016.

That’s precisely the kind of capitulation that OPEC is seeking as it floods the world with oil, depressing prices and pressuring the world’s high-cost producers.

It’s a high-risk strategy, one whose success will ultimately hinge on whether shale drillers drop out before the financial pain within OPEC nations themselves becomes too great.

Drillers including Samson Resources Corp. and Magnum Hunter Resources Corp. have already filed for bankruptcy. About $99 billion in face value of high-yield energy bonds are trading at distressed prices. The BofA Merrill Lynch U.S. High Yield Energy Index has given up almost all of its outperformance since 2001, with the yield reaching its highest level relative to the broader market in at least 10 years.

“You are going to see a pickup in bankruptcy filings, a pickup in distressed asset sales and a pickup in distressed debt exchanges,” said Jeff Jones, managing director at Blackhill Partners, a Dallas-based investment banking firm. “And $35 oil will clearly accelerate the distress.”

Shale drillers aren’t the only ones hurting. OPEC’s strategy is causing pain for its members. Saudi Arabia is said to be considering selling stakes in state-owned companies to help stem a budget deficit that reached 20 percent of its economy.
Venezuelan Oil Minister Eulogio Del Pino said the industry is “at the door of a catastrophe” if crude production outstrips storage capacity.
Note To The Granddaughters

Everyone got back from the ski trip in great shape -- including 17-month-old Sophia. Apparently in the past few days she has really been learning and saying new words. One of the new words is "cheese" because she hears "Say 'cheese'" whenever photographs are being taken and folks are being reminded to smile.

She now carries "old-fashioned" receivers around (see photos below) and constantly repeating "cheese." Apparently she thinks that all phones/receivers are cameras. She was born in the iPhone / camera era.

So, she walks around hotel rooms carrying disconnected receivers, taking selfies. (Photographs below have been previously posted.)