Musings While Touring The Bakken -- And Driving 1,400 Miles Each Way To Get There -- September 30, 2016

Back in September I drove up to the Bakken from north Texas, almost a 3,000-mile round trip. Along the way, I kept a journal, quickly jotting some notes while driving. I was on-the-road again, in a great mood, the radio blaring loudly, and I had hoped to write an essay on each of those thoughts, but then simply ran out of energy or interest. But one never knows, I could come back to them some day.

These were some of the random thoughts I had while driving, posted, so that if I ever want to write about the trip, I have some ideas.

**********************************

Random Thoughts While Driving To The Bakken From North Texas

American workers work hard and party hearty.

Lots of construction. All that talk about infrastructure.

The presidential campaign.

The Bakken: Williston "back to normal." Or perhaps, better said, "back to a new normal."

Americans worry too much about making money. Life is more about the journey than the destination.

Restaurants in Williston.

Leaves changing color in the ND Badlands vs New England. Yellow vs yellow and red.

Driverless technology. Low hanging fruit: commuter trains, farm equipment, long haul freight, railroad.

Cattle, China.

Sweet spot: the price of oil.

Reading.

TrumpNever: USA Today, Dallas Morning News, UN, others -- polls overwhelming support for Trump; official count to Hillary.

Finally, A Williston City Administrator -- September 30, 2016

Finally, a city administrator:

Tuan’s military experience guided him towards a career in engineering. Following the completion of his degree from UND in Grand Forks, he came to Williston six years ago.

“I want to this to be the best little city in America,” Tuan said at the meet and greet with the final candidates held in August. “We currently have a pretty strong engine that drives the economy. The growth so far has been healthy. Quality of life is coming along right behind it.”

The position was posted in May by a city-selected consulting firm, Strategic Government Solutions.The city received 23 applicants from 13 states and varying backgrounds to during its  nationwide search for candidates who would reflect the needs and vision of the Williston community.

My note from September 2, 2016.  

Readers:

• David Tuan: 45%
• Troy Anderson: 45%
• Zeke Jackson: 10% 

An earlier story from The Williston Herald with a bit more background of each. 

North Dakotan Sinks Ryder Cup Putt -- September 30, 2016

Story here at Fox News.

US Oil Rig Count Rises Due To Increase In Permian, Williston Basins -- IBD -- September 30, 2016

From Investor's Business Daily: US oil rig count rises again on Permian, Williston gains! Data points:

• US oil rig count rose by seven this past week to 425
• oil rigs have risen in the past 13 out of 14 weeks
• most recently: Williston Basin rose by two to 30; Cana-Woodford rose by two to 35; Eagle Ford steady at 33

Active rigs:

	9/30/2016	09/30/2015	09/30/2014	09/30/2013	09/30/2012
Active Rigs	33	68	190	184	190

Three (3) new permits:

• Operator: Oasis
• Field: Siverston (McKenzie)
• Comments:

No producing wells reported as being completed (DUCs): none.

Two permits canceled:

• 26697, PNC, HRC, Hagbos 2-25-36H, Standahl, 
• 29380, PNC, MRO, Tucker 44-20TFH, Bailey,

Seven permits renewed:

• EOG (3): three Austin permits, Mountrail County
• HRC (2): two Borrud permits, Williams County
• Hunt: an Oakland permit, Mountrail County
• Petro-Hunt: a Jorgenson permit, Burke County

Canadian Prime Minister To Decide Fate Of Several Major Pipeline Projects By End Of Year -- September 30, 2016

USC - LA Times presidential poll (link here, dynamic):

Active rigs:

	9/30/2016	09/30/2015	09/30/2014	09/30/2013	09/30/2012
Active Rigs	34	68	190	184	190

RBN Energy: sending western Canadian natural gas east for export as LNG.

For some time now, discussions about the possible development of Canadian liquefaction/LNG export terminals have focused on the Western Canadian coast in British Columbia––partly because most of Canada’s natural gas reserves are nearby in northeastern BC and in Alberta, and partly due to Asia being a primary LNG target market.

But it could be that liquefaction/LNG export projects in Eastern Canada may make more sense. In today’s blog, “So Far Away –Sending Western Canadian Natural Gas East for Export as LNG,” LNG Ltd.’s Greg M. Vesey considers the rationale for piping Western Canadian natural gas long distances to Quebec and the Canadian Maritimes for export as LNG.

Western Canada has vast reserves of natural gas that would be cost-competitive to drill for, produce and transport to market if only there was a new, incremental market for large natural gas volumes. This conundrum has been a frequent topic in the RBN blogosphere, and has been looked at from several angles. 

Most recently, we discussed the facts that natural gas producers in Alberta and BC have been struggling to replace markets in Ontario and the U.S. Midwest that they’ve been losing to Marcellus/Utica producers in recent years, and that––thanks mostly to the current-and-growing glut of worldwide liquefaction capacity –– no liquefaction/LNG export projects along the BC coast have advanced to Final Investment Decisions (FIDs) and construction. 

Getting approval for big new gas pipelines from BC and Alberta gas production areas to the BC coast has been another challenge. RBN blogs have also handicapped the leading BC projects and at the possibility of moving Marcellus/Utica gas through New York and New England to Canada’s New Brunswick and Nova Scotia provinces not only to meet in-province needs but to export as LNG.

Canadian pipeline. Link here.

• Canadian Prime Minister Trudeau says he will decide by end of year on fate of proposed Enbridge Northern Gateway oil pipeline
• Trudeau must also decide fate of Kinder Morgan Inc.'s Trans Mountain pipeline expansion by end of year
• Trudeau has said he will approve at least one big oil project
• sources say he favors Kinder Morgan over Enbridge

Jobs Report -- September 29, 2016

Claims rose to 254,000. And here. Well below the 260,000 forecast. Four-week moving average, down from 258,500 previously, at 256,000.

****************************

Individual Health Insurance Premiums Soar -- Duluth News Tribune

Link here.  Data points:

• Minnesota: private health care insurance premiums to rise 67% next year
• follows BC/BS announcement earlier this summer it was eliminating all but one of its individual health policies
• insurance regulators: "premium increases are unacceptable but nothing they can do"

 

*********************************

Consumer Spending Drops; "Clouds" Federal Reserve Rate Hike Decision --  Reuters

Link here.  Data points:

• US consumer spending fell in August for the first time in seven months
• inflation showed "cautious signs of accelerating"
• US consumer spending accounts for more than two-thirds of US economic activity
• spending fell 0.1% (after accounting for inflation); analysts had expected a 0.1% gain

Not to worry: once higher gasoline prices kick in, consumer spending will increase. 

North Fork Oil Field

North Fork oil field is literally in the heart of the Bakken, about 10 miles southeast of Watford City. It is the most irregularly shaped oil field I have "reviewed" to date. It is about 40 sections -- squeezed in between Croff, Bear Den, Haystack Butte, Pembroke, Siverston, and Pershing -- all very good fields, and just south of the heart of the Bakken, the northeast corner of McKenzie County.

Permits

2016
32634, PNC, Abraxas, Yellowstone Boxer 1H, North Fork,
32633, conf, Abraxas, Yellowstone 2H, North Fork,
32632, conf, Abraxas, Yellowstone 3H, North Fork,
32631, conf, Abraxas, Yellowstone 4H, North Fork,


2015 (list is complete)
32100, conf, Abraxas, Stenehjem 9H, North Fork,
32099, conf, Abraxas, Stenehjem 8H, North Fork,
32098, conf, Abraxas, Stenehjem 7H, North Fork,
32097, conf, Abraxas, Stenehjem 6H, North Fork,
32071, EXP, XTO, Maddy Federal 24X-34AXD, North Fork,
32070, EXP, XTO, Maddy Federal 24X-34D, North Fork,
32069, EXP, XTO, Maddy Federal 24X-34A, North Fork,
32068, EXP, XTO, Maddy Federal 24X-34H, North Fork,
32067, EXP, XTO, Maddy Federal 24X-34F, North Fork,
32066, EXP, XTO, Maddy Federal 24X-34C, North Fork,
32065, EXP, XTO, Maddy Federal 24X-34B, North Fork,
32064, EXP, XTO, Maddy Federal 24X-34G, North Fork,
31524, SI/NC, Abraxas, Stenehjem 31X-28DXA, North Fork,
31392, PNC, Slawson, Mauser Federal 2-18-17H, North Fork,
31168, PNC, Slawson, Mauser Federal 3-18-17H, North Fork,
31167, SI/NC, Abraxas, Stenehjem 15H, North Fork, did produce 11K bbls over first 17 days;
31166, SI/NC, Abraxas, Stenehjem 14H, North Fork, did produce 11K bbls over first 16 days;
31165, SI/NC, Abraxas, Stenehjem 13H, North Fork, did produce 11K bbls over first 15 days;
31164, SI/NC, Abraxas, Stenehjem 12H, North Fork, did produce 6K bbls over first 12 days;
31163, SI/NC, Abraxas, Stenehjem 11H, North Fork, did produce 6K bbls over first 8 days;
31162, SI/NC, Abraxas, Stenehjem 10H, North Fork, did produce 6K bbls over first 9 days;
30925, conf, BR, Saddle Butte 44-9 TFH, North Fork,
30922, conf, BR, Saddle Butte 44-9 MBH, North Fork,
30911, conf, BR, Saddle Butte 24-9 TFH, North Fork,
30870, conf, BR, Saddle Butte 21-16 TFH-2SH, North Fork,
30872, conf, BR, Saddle Butte 21-16 MBH-3SH, North Fork,
31020, conf, BR, Saddle Butte 14-9MTFH-ULW, North Fork,
30924, conf, BR, Curtis 44-9 MBH, North Fork,
30923, conf, BR, Curtis 44-9 TFH, North Fork,
30916, conf, BR, Saddle Butte 14-9 MBH-ULW, North Fork,
30915, conf, BR, Saddle Butte 14-9 TFH, North Fork,
30914, conf, BR, Curtis 14-9 MBH, North Fork,
30910, conf, BR, Curtis 24-9 MBH, North Fork,
30871, conf, BR, Curtis 21-16 TFH-3NH, North Fork,
30869, conf, BR, Curtis 21-16 MBH-2NH, North Fork,
30487, conf, BR, Merton 14010TFH, North Fork,
30486, conf, BR, Merton 14-10MBH, North Fork,
30485, conf, BR, Jerome 14-10MBH, North Fork,

2014 (list is complete)
30282, 2,806, BR, Jerome 21-15MBH, North Fork, 27 stages; 5 million lbs; t9/16; cum 71K 2/17;
30281, 3,487, BR, Merton 21-15MBH, North Fork, 26 stages, 5.2 million bls, did produce 2K bbls over first 13 days; t9/16; cum 86K 2/17;
30280, 3,327, BR, Merton 21-15TFH, North Fork, 4 sections, 26 stages; 11.7 million lbs, t9/16; cum 93K 2/17;
30223, conf, BR, Jerome 41-15TFH, North Fork,
30222, conf, BR, Jerome 41-15MBH, North Fork,
30221, conf, BR, Merton 41-15MBH, North Fork,
29990, 686, Abraxas, Stenehjem 5H, North Fork, t11/15; cum 84K 7/16; only 9 days in 7/16;
29780, 745, Abraxas, Ravin 8H, North Fork, t11/15; cum 103K 8/16;
29779, 833, Abraxas, Sten-Rav 1H, North Fork, t11/15; cum 96K 7/16;
28794, 922, Abraxas, Jore Federal 2-11-5H, North Fork, t4/15; cum 128K 7/16;
28793, 890, Abraxas, Jore Federal 2-11-6H, North Fork, t6/15; cum 118K 7/16;
28792, 993, Abraxas, Jore Federal 2-11-7H, North Fork, t6/15; cum 12K 7/16;
28791, 923, Abraxas, Jore Federal 2-11-8H, North Fork, t6/15; cum 118K 7/16;
28393, 1,328, XTO, Lundin Federal 31X-9G, North Fork, t4/15; cum 80K 7/16;
28392, 1,705, XTO, Lundin Federal 31X-9D, North Fork, t4/15; cum 104K 7/16;
28391, 1,163, XTO, Lundin Federal 31X-9H, North Fork, t4/15; cum 96K 7/16;
28323, 917, Abraxas, Stenehjem 27-34-4H, North Fork, t12/14; cum 132K 7/16; off-line as of 6/16;
28322, 950, Abraxas, Stenehjem 27-34-3H, North Fork, t12/14; cum 143K 7/16; off-line as of 6/16;
28321, 788, Abraxas, Stenehjem 27-34-2H, North Fork, t12/14; cum 96K 7/16; off-line as of 7/16;

2013 (list is complete)
26885, 1,141, Abraxas, Ravin 26-35-4H, North Fork, t10/14; cum 66K 12/14;
26884, 1,395, Abraxas, Ravin 26-35-5H, North Fork, t8/14; cum 85K 12/14;
26883, 1,594, Abraxas, Ravin 26-35-6H, North Fork, t9/14; cum 88K 12/14;
26882, 1,473, Abraxas, Ravin 26-35-7H, North Fork, t9/14; cum 75K 12/14;
26639, EXP, XTO, Badlands Federal 21X-13E, North Fork
25433, 783, Slawson, Mauser Federal 7-18-17H, North Fork, t11/13; cum 135K 7/16; 0 days in 7/16; 23 days in 6/16;
25432, 720, Slawson, Mauser Federal 4-18-17TFH, North Fork, t11/13; cum 144K 7/16; only 5 days in 7/16;
25202, SI/NC, BR, Jerome 21-15TFH 3SH, 4 sections, North Fork, produced 7K bbls over first 19 days;
25201, 3,360, BR, Merton 21-15TFH 3NH, 4 sections, North Fork, t8/16; cum 11K over first 25 days;
25200, 1,776, BR, Jerome 21-15MBH 2SH, 4 sections, North Fork, 24 stages; 4.7 million lbs, t8/16; cum --
25199, 2,928, BR, Merton 21-15mBH 2NH, 4 sections, North Fork, 30 stages; 5.7 million lbs, t8/16; cum --

2012 (list is complete)
23893, 859, Slawson, Mauser Federal 1-18-17TFH, North Fork, t11/13; cum 123K 7/16; only 7 days in 7/16; 13 days in 6/16; 25 days in 5/16;
23266, 1,849, XTO, Mariana Trust 12X-20H, North Fork, t3/13; cum 146K 7/16; only 3 days 6/16; 14 days 5/15; back on line 7/16;
22996, 761, Abraxas, Jore Federal 2-11-3H, North Fork, t10/12; cum 132K 12/14;
22995, 1,160, Abraxas, Jore Federal 2-11-1H, North Fork, t6/14; cum 94K 12/14;
22994, 1,049, Abraxas, Jore Federal 2-11-4H, North Fork, t5/14; cum 105K 12/14;
22993, 790, Abraxas, Jore Federal 2-11-2H, North Fork, t6/14; cum 89K 12/14;

2011 (list is complete)
21995, 706, Abraxas, Ravin 26-35-3H, North Fork, t2/13; cum 76K 12/14;
21994, 658, Abraxas, Ravin 26-35-2H, North Fork, t2/13; cum 55K 12/14;
20767, PNC, XTO, Arlene Federal 44X-11,
20725, PNC, XTO, Cherry Creek Federal 11X-15B,
20724, PNC, XTO, Johnson Federal 11X-15B,
20706, PNC, BR, Jerome 31-15TFH-2SH, 
20705, PNC, BR, Merton 31-15TFH-3NH, 
20704, PNC, BR, Jerome 31-15MBH-3SH, 
20703, PNC, BR, Merton 31-15MBH-2NH, 
20501, 1,801, XTO, Wolff 13-24ENH, t8/11; cum 194K 7/16; only 17 days 6/16;  

Earlier:
19331, PNC, Bakken, North Fork,
19237, 862, Abraxas, Stenehjem 27-34-1H, Bakken, North Fork, t7/11; cum 130K 8/16; pretty much off-line since 4/16; no production all of 7/16 - 8/16;
19054, 1,008, Abraxas, Ravin 26-35-1H, North Fork, t1/11; cum 194K 8/16;

BR With Four New Veeder Permits -- September 29, 2016

Active rigs:

	9/29/2016	09/29/2015	09/29/2014	09/29/2013	09/29/2012
Active Rigs	34	69	186	184	190

Wells coming off confidential list Friday:
32472, SI/NC, XTO, FBIR Blackmedicine 24X-21D, Heart Butte, no production data,

Wells coming off confidential list today:

• 32282, SI/NC, XTO, FBIR Blackmedicine 24X-21CXD, Heart Butte, no production data,

One producing well reported at completed (DUC):

• 25200, 1,776, BR, Jerome 21-15MBH 2SH, 4 sections, North Fork, t8/16; cum --

Four new permits:

• Operator: BR
• Field: Blue Buttes (McKenzie)
• Comments:

***********************

DUCs

Over at the Discussion Group, a reader had a question about DUCs. I provided my 2-cents worth. Feel free to tell me I'm wrong. 

Saudi Arabia, OPEC Announce Cut; Two Hotels In Williston To Close -- September 29, 2016

Minimal blogging through the weekend; traveling. 

Active rigs:

	9/29/2016	09/29/2015	09/29/2014	09/29/2013	09/29/2012
Active Rigs	34	69	186	184	190

RBN Energy: US DUCs.

At long last, the Energy Information Administration (EIA) has reported an “official” estimate of the U.S. drilled-and-uncompleted well (DUC) inventory as part of its monthly Drilling Productivity Report.  DUCs are a critical factor in forecasting production trends, as many of these wells are likely to be some of the first to come online as soon as prices move higher and thus have the potential to boost production quicker and easier than would otherwise be the case. However, the number of DUCs has been a difficult thing to measure, though not for lack of trying. There are, in fact, widely varying counts from many different sources circulating in the industry. Today, we begin a short series on these latest DUC counts and their potential implications.

Drilled-and-uncompleted wells, or DUCs, aren’t a new phenomenon. In fact, producers have always carried an inventory of DUCs. But in the environment of low prices and slashed capital budgets the market has been experiencing for the past 20 months or so, DUCs have taken on new relevance, not only as a tool for producers to manage their lease agreements and rig activity, but also as a control valve for production volumes, whether it is to defer supply to a future date or to quickly and economically turn on new production as prices rebound and/or as pipeline capacity is built. You can imagine, then, how without an accurate estimate of DUCs and the rate of actual completions, the current market is ripe for underestimating future production volumes that solely rely on existing and newly drilled wells.

Saudi Arabia's trillion dollar mistake. CNBC.  From WSJ.

Sources told Reuters that OPEC hammered out a deal on Wednesday to reduce the cartel's production to 32.5 million barrels per day from around 33.24 million, with output levels for each member to be determined in November.

*****************************

Hoboken Commuter Train Crash

Updates

October 1, 2016: I remember when this story first broke. Every update in the first 12 hours said that the engineer was cooperating with law enforcement. Now, we learn that as of today, investigators have still not talked with the engineer, and that asbestos concerns in the terminal has slowed down the investigation. The investigation is expected to last a full year. 

Original Post 

At least one dead; 70+ injured; in commuter train accident, Hoboken, NJ. Thank goodness it did not involve Bakken crude oil. I wonder if NY/NJ governors will ban commuter trains which have now killed more Americans than CBR carrying Bakken oil. Or any oil for that matter. All that technology being spent on "driverless cars" seems to be a solution for a problem that doesn't exist. Maybe they should be working on "driveless" technology for killer kommuter trains. Latest: the killer kommuter konductor had "health problems." (TV report, McDonald's, crawler, 12:16 p.m. Central Time.)

By the way, FWIW, another Tesla "on auto-pilot" crashes -- this one on German autobahn. 

************************

Bakken Economy

Two Williston Hotels Closing

The Dickinson Press:

The Missouri Flats Inn, once featured on a TV reality show “Hotel Impossible,” and the Marquis Plaza and Suites will be closing their doors this week.

In addition, it appears that man-camps in the Williston area, including the large one near Tioga, have closes. I can't say for sure, but I saw no vehicles parked at any man-camps in the Williston area (there may have some minor exceptions). The man-camp on the Alexander bypass appeared closed (hard to say) but "rooms" were advertised at $24.99/ night. My understanding is that man-camps in Williston were to be closed by September 1, 2016, but there was some question regarding compliance. In flux. Perhaps a local newspaper will provide updates.

It appear the El Rancho Motel is closed pending a sale (again, I do not know for sure). The co-located restaurant remains open.

For some notes and photos of the hotel boom in North Dakota at the height of the boom:

• photos of several hotels, motels in Williston

******************* 

The Market

Mid-day trading: Dow 30 down 162 points. Oil up the past two days on OPEC's announcement: up to $47.69 (which is no better than $40 for Saudi Arabia).

BR WIth Another Huge Merton Well -- September 27, 2016

Updates

September 29, 2016: see comments below. A reader has provided an excellent comment that helps explain what another reader noted. Comment brought up here for easier googling:

Rig counts are a little "dicey". Todays report shows Nabors X10 and Nabors X-10. I believe this one and the same rig. The White Mt. 252 is a "spuder" rig just drilling and setting 2000 ft surface casing. 

The OneOK gas plant is likely a factor in Dunn County. Also some of the more difficult Badlands locations are drilled in summer and fall when road conditions are better. Come winter and early spring, rigs are more common in more accessible locations in Mountrail, Williams and McKenzie Counties. It appears to me the actual deep-drilling rig count is 30. There is also a Key Drilling rig (146-100) in McKenzie County which might be drilling a vertical Madison formation test in the Rough Rider Field (or drilling surface hole only?)

Later, 9:47 p.m. Central Time: a reader noted there are 12 rigs in Dunn County an 10 rigs in McKenzie -- wondering why more rigs in Dunn County -- if it had anything to do with new ONEOK gas processing plant coming on-line soon? See first comment. 

Original Post

Wells coming off confidential list Wednesday:

• 31359, SI/NC, Statoil, Samson 29-32 1H-R, Banks, no production data,
• 32281, SI/NC, XTO, FBIR Blackmedicine 24X-21H, Heart Butte, no production data

One new permit:

• Operator: North Range Resources, LLC
• Field: Rough Rider (McKenzie)
• Comment:

Four permits renewed:

• Newfield (3): three Sturgeon permits in McKenzie County
• EOG: a Mandaree permit in McKenzie County

Four permits canceled:

• Resource Energy Can-Am (3): a Blanca State, a Jim, and an Ekness permit, all in Divide County
• Slawson: a Pike Federal permit in Mountrail County

Producing wells completed:

• 30280, 3,327, BR, Merton 21-15TFH, North Fork, 4 sections, t9/16; cum --
• 30435, 174, SM Energy, Anne 13B-19HS, Ambrose, t9/16; cum -- 
• 31009, 828, EOG, Shell 44-3229H, Parshall, t9/16; cum --
• 31010, 1,344, EOG, Shell 46-3229H, Parshall, t9/16; cum --
• 31018, 973, EOG, Shell 40-3229H, Parshall, t9/16; cum --
• 31019, 835, EOG, Shell 42-3229H, Parshall, t9/16; cum -- 

Active rigs:

	9/27/2016	09/28/2015	09/28/2014	09/28/2013	09/28/2012
Active Rigs	32	70	190	184	190

US Shale Gas Reaches Britain -- First Time -- Wednesday, September 28, 2016

Presidential poll:

******************************************
Completing The Deal

TransCanada to buy Columbia Pipeline Partners for nearly $1 billion. Link here. From an earlier post:

Kinder Morgan Inc., with 32,000 miles of large-diameter pipeline, has more than double the mileage of TransCanada Corporation, which acquired Columbia Pipeline Group in July 2015. 

Also, back on March 17, 2016:

The deal is announced -- TransCanada will buy Columbia for $10.2 billion. It looks like Warren Buffett missed a deal.

From today's link:

Calgary, Alberta-based TransCanada Corp. TRP announced that it has offered $848 million to buy Columbia Pipeline Partners LP (CPPL), the master limited partnership affiliate of its newly acquired Columbia Pipeline Group Inc. unit. 

The Canadian oil company also announced its intention to take control of the other 53.8 million outstanding units in Columbia Pipeline Partners for $15.75 per common unit. The offer signifies a premium of about 3% over the limited partnership closing price of $15.30 on Sep 23, 2016. 

Active rigs in North Dakota:

	9/28/2016	09/28/2015	09/28/2014	09/28/2013	09/28/2012
Active Rigs	32	70	190	184	190

RBN Energy: estimating rates for a new pipeline.

Video of the day: Carson Wentz paper toss trick shots -- five-time world champion.


Two days ago it was reported that the first ethane shipment from US Gulf of Mexico arrived in Europe. Today, it is being reported that the first shale gas from the US has now reached Britain for the first time:

Chemicals giant Ineos shipped in Britain's first shale gas from the United States on Tuesday, sparking debate on the country's manufacturing future and Scotland's opposition to shale gas fracking.

Ineos is importing ethane, obtained from rocks fractured at high pressure -- or "fracking", in a foretaste of larger deliveries of liquefied natural gas (LNG) from shale set to reach Europe in 2018.

Chairman Jim Ratcliffe, one of Britain's richest men, argues that as the North Sea is unable to keep supplying the base ingredients to make chemicals, shale gas will be an important future energy resource.

"There simply is insufficient raw material (oil and gas) coming out of the North Sea to run Grangemouth so we're talking about 10,000 jobs in total that depend on that facility," Ratcliffe told BBC Radio Scotland.

"So were it not for the shale gas that we're bringing in from the U.S., Grangemouth would have closed three years ago," he said referring to the petrochemicals hub to the west of Edinburgh.

*********************************

The Market

Wednesday

 Futures: up 11 points.

Nice Update On Where Saudi Arabia And Iran Stand With Regard To Crude Oil -- Rigzone -- September 27, 2016

Rigzone link here. Some data points:

To "square the books":

• Saudi Arabia needs $67 oil
• Iran needs $61.50 oil
• currently: about $45

Fiscal deficit:

• Saudi Arabia: fiscal deficit equal to 13.5% GDP
• Iran: compare at 2.5% GDP
• Saudi Arabia: facing double-digit deficit this year
• Iran: nearly balanced its budget this year after economic reforms in 2012/2013 following sanctions 
• Saudi Arabia, 2015, drew down $115 billion last year; 1H16, drew down $52 billion

Economic growth:

• Saudi Arabia: slowly sharply; about 1%
• Iran: accelerating toward 4%

Production:

• Saudi Arabia: around 10 million bopd
• Iran: about 3.4 million bopd; target 4 million bopd

*********************************

Bakken Revolution

From The Wall Street Journal today: two years into oil slump, US shale firms are ready to pump more:

Few predicted that in the fall of 2014, when Saudi Arabia signaled that it wouldn’t curb its output to put a floor under crude prices. Oil pundits concluded that a brutal culling would force higher-cost players known as marginal producers—a group that includes shale drillers—out of the market.

But the greatest consequence of the Saudi decision and subsequent price drop is that it has delayed costly oil megaprojects, from deep-water platforms off Angola to oil-sands mines in Canada.

“The U.S. isn’t the marginal barrel but the most flexible,” said R.T. Dukes, an analyst at Wood Mackenzie. “We’ll be the fastest to snap back.”

More than 100 North American energy producers have declared bankruptcy during this downturn, but even companies working through chapter 11 keep pumping oil and gas. Many exit bankruptcy stronger thanks to a balance sheet that has been wiped clean. SandRidge Energy Inc., which filed in May, will exit next month after erasing nearly $3.7 billion in debt.

Many shale operators are still struggling at current prices, drilling at a loss and tapping Wall Street for new infusions of cash. But the strongest producers, including EOG Resources Inc. and Continental Resources Inc., soon will be able to generate enough money to pay for new investments and dividends—as well as boost production—even at low prices, analysts say.

U.S. production began inching up in July, shortly after oil prices rebounded to $50-a-barrel territory. Producers quickly put 100 rigs back to work this summer.

*********************************

The Political Page

I did not watch "the debate" last night. Based on how little reporting I see this morning regarding "the debate" it appears I did not miss anything.

This is the USC-LA Times poll from this morning (it is a poll released every day; 3,000 likely voters nationwide). I assume the poll is too early to reflect the sentiments of last night's debate. Red is Trump, blue is Hillary:

Drudge Report poll shows Mr Trump beat Ms Clinton by about 94% to 6%.

************************************
The Market

Close: up 133 points. NYSE --

• new highs: 78 -- FedEx
• new lows: 21 --

***********************

The Apple Page

Problems with math?

Earlier this month, Apple unveiled the new (and slightly improved) Apple Watch. The Apple Watch has a battery life of about 18 hours, meaning that most people tend to leave their watches charging on their nightstand overnight. Given that the Apple Watch doesn’t last through the night, and also is considerably bulkier than the average FitBit or Jawbone tracker (and probably uncomfortable to sleep in), it’s not entirely clear how Apple intends to leverage the existing watch into something that could track sleep. 

I don't know about you, but if my watch battery lasts 18 hours, that will get me through the night.

Oh, I see. You mean if I get up at 6:00 a.m. and then go to bed at 11:00 p.m. the battery will die at midnight -- 18 hours.

Yes.

Oh, I see.  I guess that's why my wife has two Apple watches. I don't think Apple has a problem.

Help Me Make It Through The Night, Norah Jones

Bakken Losing East Coast Market To Rising Imports -- RBN Energy -- September 27, 2016

Active rigs:

	9/27/2016	09/27/2015	09/27/2014	09/27/2013	09/27/2012
Active Rigs	34	71	190	184	189

RBN Energy: Bakken producers losing the East Coast market to rising imports.

The prospects for sellers of Williston Basin/Bakken crude oil in what once was a prime growth market—the U.S. East Coast—have been dwindling fast, as have the volumes of Bakken crude being railed and barged to refineries along the Mid-Atlantic coast and the Canadian Maritimes. Today we look at how a combination of weak crude oil prices, declining production, high relative freight costs, and the lifting of the U.S. crude oil export ban have opened the door to more imports from West Africa, and left Bakken producers out in the cold.

The Bakken remains an American success story, but the play’s star has certainly faded along with declining crude prices. As North Dakota oil production ramped up in 2013 and 2014 (peaking at 1.3 MMb/d in December 2014), shipments of Bakken crude to the U.S. East Coast via rail rose in tandem.  From only 10 Mb/d in 2011, Bakken barrels railed to the East Coast ultimately reached 431 Mb/d in May 2015.

In the early days of CBR, midstream companies, marketers and refiners rushed to develop the infrastructure (rail terminals, rail fleets, etc.) to serve refineries in the Mid-Atlantic states and Maritime Canada. But unfortunately, about the time all that infrastructure was in place, crude prices started to decline, the number of active drilling rigs in the Bakken plummeted, and crude oil production there fell to less than 1.0 MMb/d. 

The decline in production continues today; Energy Information Administration’s (EIA’s) Drilling Productivity Report projects that Bakken crude production now (as of September 2016) languishes at only 875 Mb/d. Rail shipments to the East Coast in June 2016 averaged only 132 Mb/d, a decline of 69% since the peak in May 2015.

Statoil Reports Two Huge Bakken Wells; Twenty (20) Permits Renewed -- September 26, 2016

Active rigs:

	9/26/2016	09/26/2015	09/26/2014	09/26/2013	09/26/2012
Active Rigs	34	71	190	184	187

Wells coming off confidential list Tuesday:

• 31360, SI/NC, Statoil, Samson 29-32 8TFH, Banks, no production data,

Four new permits:

• Operator: Oasis
• Field: Siverston (McKenzie)
• Comments:

Five (5) producing wells completed:

• 30434, 451, SM Energy, Anne 13B-19HN, West Ambrose, t9/16; cum --
• 30436, 285, SM Energy, Anne 13-19HS, Ambrose, t9/16; cum --
• 30437, 353, SM Energy, Anne 13-19HN, West Ambrose, t9/16; cum --
• 30944, 4,040, Statoil, Richard 8-5 XE 1H, Banks, 4 sections, t8/16; cum --
• 31140, 4,290, Statoil, Cheryl 17-20 XE 1H, Banks, 4 sections, t8/16; cum --

Wells released from tight hole status:

• 21535, EXP, Cornerstone, Tafelmeyer C-3625-6490, Customs,
• 26563, EXP, Resource Energy Can-Am, Blanca State 14-36-164-101, Colgan,
• 29380, EXP, MRO, Tucker 44-20TFH, Bailey,
• 29402, EXP, SM Energy, Seattle Federal 14X-35H, Camp,
• 29403, EXP, SM Energy, Seattle Federal 14-35H, Camp,
• 29404, EXP, SM Energy, Seattle 14X-35H, Camp,
• 29408, EXP, Resource Energy Can-Am, Jim 16-35-164-102, Skjermo,
• 29456, EXP, Enduro Operating, NSCU J-717-H2, Newburg,
• 29458, EXP, Enduro Operating, NGMU 13-H1, North Grano
• 29479, EXP, Resource Energy Can-Am, Ekness 4-5N-163-102, Skjermo,
• 31361, SI/NC, Statoil, Topaz 20-17 8TFH, Banks, no production data,
• 31985, EXP, Slawson, Pike Federal 9 SLTF2H, Big Bend,
• 32024, EXP, MRO, Ness USA 31-17H, Reunion Bay,
• 32025, EXP, MRO, Becky USA 31-17TFH-2B, Reunion Bay,
• 23026, EXP, MRO, Hans USA 31-17TFH, Reunion Bay,
• 32027, EXP, MRO, Post USA 41-17TFH-2B, Reunion Bay,
• 32028, EXP, MRO, Ballmeyer USA 41-17TFH, Reunion Bay,
• 32171, SI/NC, Petro-Hunt, Dolezal 146-97-31D-30-2H, Little Knife, no production data,
• 32280, SI/NC, XTO, FBIR Blackmedicine 24X-21C, no production data,

Twenty (20) permits renewed:

• XTO (10), six Cindy Blikre permits, two Lyla permits, and two Roberta permits, in Williams County
• Newfield (3), three Schneiderman permits in McKenzie County 
• MRO (3), an Archie, an Erbie, and an Arnew permit, all in Dunn County
• MRO (2), a Dragswold USA and a Shirley Doll USA permit, both in McKenzie County 
• MRO, an Eagle USA permit in Dunn County
• Slawson, a Pike Federal permit in Mountrail

Update On Oasis; Update On Permian Natural Gas -- September 26, 2016

Monday afternoon: 104 degrees in Los Angeles. 

Oasis: according to Emergent Group --

• about 485,000 net acres in the Bakken (compare with around 100,000 for CLR)
• production: about 50,000 boepd (an increase from previous guidance)
• completed 16 wells of the 53 expected; all in McKenzie County
• cut capital expenditures for drilling and completion by just over half for 2016
• capital expenditures for drilling and completion for 2016: $200 million
• total budget: about $400 million
• to date, 2016: spent about 55% of total budget (includes about $90 million in D&C capital)
• about 83 DUCs in "Bakken core counties"; with 83 DUCs, ranks among the top five operators in the Bakken with DUCs
• about 45% of DUCs are located in Wild Basin (just east of Indian Hill); others located in Indian Hills and Alger (35% of inventory); Red Bank and Montana (20% of inventory) 
• spud to rig release has decreased another 2.1 days this year; now down to 13.5 days; was 22 days in 2014
• but: negative cash flow for first six months of 2016 -- almost $600 million negative cash flow; for all of 2015 and YTD, had cash flow of $46 million (positive)
• rig history: 16 (4Q14); 5 (1Q15); 3 (2Q15 - 4Q15); since then, down to 2. 
• my notes show that in 1Q14 earnings report: 505,960 net acres; 16 rigs; 44,000 boepd

Norwegian Tesla owners sue:

• PennEnergy link
• more than 100 owners sue (specifically, 126)
• horsepower dispute
• Model S P85D said to deliver only 469 hp, versus promised 700 hp

Active rigs in North Dakota:

	9/26/2016	09/26/2015	09/26/2014	09/26/2013	09/26/2012
Active Rigs	33	71	190	184	187

RBN Energy: Update on the Permian -- natural gas output remains high; processing capacity being added.

Natural gas production volumes in the Permian Basin are very near the all-time record of 6.9 Bcf/d set last September, and crude oil and gas producers alike see nothing but blue skies for the highly prolific West Texas/Southeast New Mexico play. The Permian already has a lot of gas processing capacity, but a good bit of it is older, and parts of the region—especially the super-hot Delaware Basin—need more of the big, efficient cryogenic plants that can process 100 to 200 MMcf/d. Today, we continue our review of gas production and processing in the biggest U.S. gas-producing region that is not named Marcellus.

The past two years have been a challenging time for crude oil and natural gas producers in most of the U.S., but much less so for exploration and production companies in the 75,000-square-mile Permian Basin. In rock ‘n’ roll terms, the Permian is a lot like Bruce Springsteen––it’s been a consistent producer (of both gas and oil) for decades, and it has more respect today than ever. (You might even call the Permian “The Boss” of hydrocarbon output.)

Thanks to favorable production economics and multiple pay zones, output levels in the Permian dipped only slightly as oil and gas prices tumbled, and have since rebounded. Crude oil has always been the big draw for Permian producers, but most of the wells there also produce large volumes of liquids-rich or “wet” natural gas that needs to be processed to extract natural gas liquids (NGLs). In its latest Drilling Productivity Report, the Energy Information Administration  projected that the Permian would produce an average of nearly 6.9 Bcf/d in October, 2016, only 30 MMcf/d less than it did at its peak a year ago.

Gas production in the Eagle Ford in South Texas, meanwhile, is projected to fall below 5.6 Bcf/d in October—a 25% drop from its all-time  high in February 2015. (Of course, Appalachia, with the prolific Marcellus and Utica plays, still reigns supreme as far as gas is concerned, with almost 25 Bcf/d now being produced in the region based on RBN production numbers).

Richard Zeits on global oil glut: over at SeekingAlpha. According to the Venezuelan oil minister,

"Global production is at 94 million barrels per day, of which we need to go down 9 million barrels per day to sustain the level of consumption."

He knows a lot more than I do about this, but I think his numbers are a bit off. 

*******************************

First Ethane Shipment From Gulf Of Mexico Arrives In Europe (Norway)

From Fuelfix. Data points:

• Enterprise Products Partners press release
• Enterprise Products Partners opened the country's second ethane export terminal on the Houston Ship Channel earlier this year
• delivered its first shipment to Norway
• the first US ethane export terminal: 230 miles southwest of Philadelphia -- capacity of 35,000 bbls/day began shipping overseas in March
• Enterprise's export terminal, Morgan's Point: capacity of 200,000 bbls/day

*********************************
Spin

Even The Wall Street Journal has its spin: US new home sales down but "broader trend" still positive. I guess that's why the market (Dow 30) is in free fall, down 136 points at the moment -- mid-day trading. Data points:

• August's 7.6% drop is largest since September, 2015
• but here's the good news: analysts had expected an 8% drop
• and more broadly, through the first eight months of 2016, new-home sales were up 13.3% compared with the same period in 2015

Analysts use the word "volatile" when reporting this. 

********************************

Sports 

NFL

Carson Wentz

• Cleveland Browns "passed" on Carson Wentz in the NFL draft earlier this year
• Philadelphia Eagles under Wentz: 3 - 0; no fumbles, no interceptions; demolished the Pittsburgh Steelers 34-3 yesterday, and Steelers starting quarterback played the entire game, I believe
• Wentz: 23/31 passes; 301 yards; two TDs
• last week he set record for rookies; this week he may have set record for all NFL quarterbacks with regard to three-game start
• NFL director of football communications: Wentz is first player in NFL history with at least 100 attempts, 60 completions, five TDs, no interceptions in first three career games
• Wentz: NDSU phenomenon (Fargo, North Dakota)

Vikings: huge win

Dallas: huge win 

Golf

Arnold Palmer dies

Phil whines

Saudi Arabia Injects $5.3 Billion To Stabilize Banking Amid Crunch -- September 25, 2016

Washington Post article here.

Same story at Arabian Business.

Same story at NASDAQ.

At Bloomberg:

The announcement comes as the world’s biggest oil exporter prepares to sell its first international bonds to finance a budget deficit that the International Monetary Fund expects to reach about 13 percent of economic output this year. The economy will likely expand 1.1 percent in 2016, according to a Bloomberg survey, the slowest pace since 2009.

The Saudi index for banking shares has declined 17.6 percent this year, compared with a 14.4 percent drop for the benchmark Tadawul All Share Index.

Saudi Arabia's Oil Stocks -- September 25, 2016

Updates

Later, 4:05 p.m. Central Time: it appears Bloomberg already reported this story -- back in June, 2016. 
 

Original Post

 

I guess I will file this under "for what it's worth" -- something over at SeekingAlpha today on Saudi Arabia's oil stocks. It reminds me of the old apocryphal Winston Churchill quote:

"I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest."

I'm mostly posting this to let folks know I'm still up and around. 

RockPile Gets Bought Out; Expands -- September 24, 2016

Headline from today's Williston Herald: "Bill promoting tourism in Native American communities on President Obama's desk." Senator Heidi Heitkamp said she expects the bill to be signed soon.

It looks like North Dakota is ahead of the curve already, like it so often is. We have hundreds of visitors from all over the world already at the Standing Rock Reservation, no doubt in anticipation of the bill being signed.

Key officers of the companies involved in the Dakota Access Pipeline will probably not attend the bill-signing ceremony.

By the way, the DAPL developer bought the land being contested north of the Standing Rock Reservation. Another story for another day. Google it. It's worth the read. I drove through that area seven months ago: the land is filled with ravines ("badland") and cannot be farmed. It is mostly brush land and can't support many head of cattle. It's the kind of land that the "white man" gave back to the Native Americans during the 19th century. 

************************************

RockPile Gets Bought Out, Expands

Also from The Williston Herald today:

• Houston-based White Deer Energy buys RockPile
• White Deer: a private equity firm focused on oil and gas
• acquisition puts RockPile in a debt-free situation
• RockPile: 400 employees nationwide with more than half in North Dakota
• RockPile was previously a subsidiary of Triangle Petroleum Corp
• RockPile will expand
• one week after the announcement, RockPile acquired American Well Service, Kenmare, ND
• American Well Service: a workover rig company

The RockPile has been one of my favorite companies to follow. I track it here. Now that it's become part of a private equity firm much less information will be available. But just imagine -- a company that did not exist five years ago now has a "nationwide footprint" with more than 400 employees, more than half in North Dakota. By the way, a company like RockPile then becomes a toehold for an equity firm like White Deer to expand in the Bakken.

*****************************

North Dakota Tax Collections Continue To Fall Below Forecast

Also from The Williston Herald today. August tax revenues for the state:
forecast: #139.3 million

• $9.2 million less than forecast
• it does not say when this forecast was made; if made in 2014, that would be quite a difference than a forecast made in early 2016; I assume the forecast was made shortly before the tax revenues were tallied

Week 38: September 18, 2016 -- September 24, 2016

I've been traveling since Tuesday this past week, cross-country, and haven't done much with the blog. This will continue for the next week. Bear with me.

For me, I think the big story was the Lynn Helms update. Three new numbers got my attention. "New" Bakken wells compared with "old" Bakken wells:

• IPs up from 1,100 bopd to 1,500 bopd
• Bakken wells to produce five years longer than "old"Bakken wells (from 30 years to 35 years)
• "new" Bakken wells to have EURs 25% greater than "old" Bakken wells

Internationally, all eyes are on the upcoming OPEC non-meeting. It looks more and more like the Saudis and the Iranians are coming closer together on a deal. They will agree to disagree, and then have a non-meeting to prepare for a meeting to discuss the agenda for a real meeting at which they will make a lot of proclamations, and life will go on. You know, as I write that, OPEC is beginning to "feel" a lot like the Federal Reserve. The analysts "hang on" every word, every rumor, and talking heads (which I never see) all provide their own opinions, saying in three minute interviews that:

• the price of oil might go up (Goldman Sachs on Tuesdays and Fridays)
• the price of oil might go down (Godman Sachs on Monday, Wednesdays, and Thursdays)
• OPEC is irrelevant (Cramer)
• OPEC is relevant but not like "before" (Cramer)
• Saudi Arabia controls the price of oil, but the Bakken is the swing "state" (Pickens)
• the Bakken is dead (everyone)
• oil will be in a trading range of $40 to $50 unless it breaks out to spike, or slumps on bad economic news and goes back to $30 (The MillionDollarWay)

And, meanwhile, we will spend another two to three months talking about whether the Fed will raise rates a quarter of a percent which will impact the market for two weeks, and then be forgotten.

Operations
Richard Zeits' update; and, here

CBR
RBN Energy had a great update on CBR
Statoil with 55 "pooling" cases in Williams County on the agenda for October
BR reported some incredibly nice Veeder wells; more to come

Pipelines
Dakota Access Pipeline issue which I pretty much ignore
Obama approves natural gas pipelines to provide energy for US companies moving to Mexico; kills pipelines that would benefit America's midcontinent
Warren Buffett owns 7th largest natural gas pipeline in the US

Bakken Economy
Air park east of Williston moves forward 
North Dakota's Legacy Fund: $3.6 billion; more than enough to cover law enforcement at Standing Rock

Miscellaneous
Alaska: LNG by rail 
The Encana update
Just how big is the Bakken?

Slowly Getting Back To The Blog -- September 24, 2016

It looks like I missed almost 18 hours of the Bakken. Sorry. And it won't be much better today. Lots of family commitments.

I have a lot of e-mail to catch up on and notes from readers. And then the "top stories" of the week.

Blog Hits 9 Million Page Views -- September 23, 2016

Sometime in the last 24 hours, probably early Thursday morning, September 22, 2016, the blog hit a page view count of 9 million page views.

During the boom, the blog was getting about 6,000 hits/day. The number of hits has dropped way off and was around 2,600 when I last checked, some months ago.

Page count moments ago: 9,002,667.

Three Wells Coming Off Confidential Status; To Be Reported Monday; Most Likely All Three Will Be DUCs -- September 23, 2016

Wells coming off the confidential list over the weekend to be reported Monday:

Monday, September 26, 2016:

• 32280, SI/NC, XTO, FBIR Blackmedicine 24X-21C, Heart Butte, no production data,

Sunday, September 25, 2016:

• 31361, SI/NC, Statoil, Topaz 20-17 8TFH, Banks, no production data,
• 32171, SI/NC, Petro-Hunt, Dolezal 146-97-31D-30-2H, Little Knife, no production data,

Saturday, September 24, 2016:

• None. 

Update On The Bakken -- Lynn Helms -- September 23, 2016

There may be factual and typographical errors on this page. Some of this is my own opinion. If this information is important to you, to go the source. 

Do not rely on the MillionDollarWay blog for accurate information about the Bakken. The website's author is inappropriately exuberant about the Bakken. 

Data points from The Williston Herald and a radio interview, September 23, 2016:

• North Dakota production will likely dip below 1 million bopd but not below 900,000 bopd
• wells continue to get better and better
• Bakken is 94% oil (important fact to remember when comparing the Bakken with the Permian and the Eagle Ford)
• if IPs used to average 1,100, now they are averaging 1,500
• at the beginning of the boom, Bakken wells were estimated to continue producing for 30 years; now it is estimated that Bakken wells will produce for 35 years
• Bakken wells EURs have increased 25%
• 8,000 to 8,500 wells drilled using old technology might be good refrack candidates
• high point for the Bakken: 2023
• based on $50 to $60 oil
• 65,000 wells
• peak rig count of 150
• in a slow year (current year, for example), "we" won't reach 2,500 wells drilled/year
• in one scenario, those additional wells won't be drilled until 2035, but with a spike in oil prices, they could be drilled in 2017
• forecasting important: it affects issues such as crew camps
• oil in the $50 to $60 range: 900 DUCs highly economical
• frack crews now average in the range of five to eleven (5 - 11)
• at peak prices, there were 50 frack crews operating in the Bakken
• at $60 oil, the Bakken is superior to the Permian and the Eagle Ford
• today's rigs average 25 wells/year vs 8 or 9 wells in 2009
• multi-well pads, new bit technology, new motor technology, new mud technology
• recently an operator drilled a 3-mile lateral with one bit and one motor (previously reported at the blog); typically, an operator would require three bits/well
• Lynn Helms does not sound optimistic about the DAPL

A reminder: tight oil plays in the US -- EIA -- annual energy outlook (2016) -- out to 2040: graphic here.

*******************************

Air Park East Of Williston

Red Mike golf course east of Williston; air park moving along. Opportunity for individuals to build homes next to runway for private airplanes. Approval to close a section line road to the lake was approved. There are two access points to the lake in the immediate area: one access point one mile to the east, and one access point one mile west.

*******************************

A Note For The Granddaughters 

For a great book on "Helen of Troy" this may be one of the best: Helen of Troy: The Story Behind the Most Beautiful Woman in the World, Bettany Hughes, c. 2005.

Six pages of maps.

Timeline: 7 pages

Dramatis Personae, Greek gods, family trees: 3 pages

Text: 343 pages

Notes: 67 pages

Bibliography: 5 pages

Other works: 25 pages

Index: 14 pages

Update On Bakken CBR And Why DAPL Is Not Needed -- RBN Energy -- September 23, 2016

Active rigs:

	9/23/2016	09/23/2015	09/23/2014	09/23/2013	09/23/2012
Active Rigs	33	69	193	187	185

RBN Energy: an update on Bakken CBR and why the DAPL doesn't matter.

For the first time since the start of the crude-by-rail (CBR) boom a few years ago, just as much crude oil is being transported by rail to PADD 5—that is, to states in the western U.S.—as to the Eastern Seaboard states in PADD 1. This primarily reflects the facts that 1) CBR deliveries from the Williston Basin/Bakken to PADD 1 continue to plummet and 2) refineries in the West remain reliable buyers of railed-in crude from the Bakken and Western Canada. Will CBR shipments to the East Coast continue to fall, or have we seen the worst of the decline? Today we take a look at recent trends in crude movements by tank car, and a look ahead.

As we’ve discussed often in the RBN blogosphere, the volumes of U.S. and Western Canadian crude oil moving out of production areas in tank cars via railroads rose sharply in 2011-12, maintained high levels through 2013-14, and declined through most of 2015 and year-to-date 2016. There are a number of reasons for both the rise and fall of crude-by-rail (CBR).

The rise was spurred in large part by the lack of sufficient pipeline infrastructure, primarily out of the Williston Basin/Bakken, and to some extent in the Permian Basin, the Denver-Julesburg and other tight-oil and shale plays where crude production was soaring. Building rail-loading terminals represented a logical, near-term fix—they could be constructed quickly and at relatively modest cost (filling a transportation-capacity gap until pipelines were developed), and using the rails gave shippers destination flexibility (allowing oil to be moved to wherever the netbacks were highest).

Railed shipments of crude within the U.S. averaged only 55 Mb/d in 2010 and 121 Mb/d in 2011, but rose to an average of 394 Mb/d in 2012, 709 Mb/d in 2013, and 867 Mb/d in 2014 before falling back to 754 Mb/d in 2015.  U.S. CBR averaged only 439 Mb/d (on average) in the first six months of 2016 and had declined to only 363 Mb/d by June 2016.

*************************

Saudi Arabia Blinks

Saudis offer oil cut for OPEC deal if Iran freezes output. Political theater. Won't amount to a hill of beans.

Former OPEC president optimistic there will be deal in Algiers -- Bloomberg. Why would we want things to change. I think Americans like $2.00 gasoline and they also like to see Saudi struggling. But just the fact that "folks are talking" tells me how badly Saudi is being affected.

Rigzone: production freeze never likely to happen. If so, Saudi apparently doesn't mind giving away their only asset for $50/bbl.

Kingdom comedown: falling oil prices shock Saudi middle class -- WSJ. Let them eat cake.

To boost state finances, Saudi Arabia cut fuel, electricity and water subsidies in December, after posting a record budget deficit last year. It also plans to cut the amount of money it spends on public wages and raise more nonoil revenue by introducing taxes.
But in response to these moves, inflation more than doubled from last year to about 4% now, crimping consumers even more.

The government doesn’t have much choice. Saudi Arabia’s real growth in gross domestic product slowed to 1.5% in the first quarter from the year-earlier period, according to its statistics office, and Capital Economics says data suggest it may have contracted by more than 2% in the second quarter. Much of that slowdown is related to consumer-facing sectors, which have struggled since the start of 2016 as rising inflation has eroded household incomes.

The political stakes for managing this slowdown are high. Saudi Arabia survived the Arab Spring unrest that toppled several autocratic leaders across the region and forced some others to change, largely by offering cash handouts and more government jobs to placate its people. About two thirds of Saudi workers are employed by government related entities.

*************************

The Apple Page

Yahoo says 500 million accounts were hacked back in 2014. Remember all the grief Apple got with regard to its cybersecurity -- the FBI wanting Apple's system access during the San Bernardino terrorism story?

Apple says it is stepping up plans for an Amazon Echo-style device. Looks like Apple is again playing catch-up. Amazon is very, very impressive.

*************************

Miscellaneous

Harvard MBAs? Harvard Endowment reports a loss.

Samsung rushed to replace batteries: complaints arise over replacement batteries for Samsung Galaxy Note 7 -- overheating and quickly losing batter power.

Petrobras will sell 90% of its natural gas pipeline unit to Brookfield Asset Management.

Clinton wants estate tax increased. Any surprise here? Proposes top rate of 65% for death tax.

**************************

The Market

Open: Dow 30 down 21 points at the open. 

Futures: down about 30 points. WTI about $46. At the bottom of the sweet spot.

Yesterday's close: up 98 points, to 18,392. Ah, yes, Bob Pisani: the real reason for the rally yesterday. LOL. It's all about the Fed. Another non-story. See graphic at this post.

October, 2016, NDIC Hearing Docket Agenda Posted

Link here for index.

I track NDIC hearing dockets here. 

Wednesday, October 19, 2016.

Thursday, October, 20, 2016.


Wednesday, October 19, 2016. Three pages.

25304, Jordan Exploration Co., LLC, Larson-Gunton Pool, redefine field limits; note to continue, Burke County
25305, QEP, Grail-Bakken, reduce setback rules; McKenzie County
25306, Petro Harvester Operating Co., LLC: Portal-Madison, extend boundaries; establish two 560-acre units; and two 640-acre units; 2 wells on each unit; Burke County
25307, Petro Harvester Operating Co., LLC, Customs-Midale/Nesson and Stony Run-Madison; establish two 640-acre units; 2 wells each; Burke County
25308, Petro Harvester Operating Co., LLC, Lignite-Madison, establish two 640-acre units, 2 wells each, Burke County
25309, Whiting, Mandaree-Bakken establish two overlapping 2560-acre units, 1 well each, Dunn
25310, Whiting, Twin Buttes-Bakken, establish a 1920-acre unit, 1 well, Dunn
25311, NDIC, review a treating plant permit in McKenzie County
25312, Hess, commingling
25313, Hess, commingling


Thursday, October 20, 2016. Fifteen (15) pages.

25314, Peregrine Petroleum Partners, Ltd, Flat Top Butte-Bakken, establish an overlapping 1280-acre unit; 6 wells, McKenzie
25315, WPX, Reunion Bay-Bakken, establish two overlapping 2560-acre units; 1 well on section lines, Mountrail
25316, CLR, Sanish-Bakken, one well, exception to rule, McKenzie, Mountrail
25317, NDIC, review a treating plant permit in Mountrail County
25318, NDIC, review a treating plant permit in Williams County
25319, NDIC, review a treating plant permit in Williams County
25320, NDIC, review a treating plant permit in Williams County
25321, SHD Oil and Gas and Spotted Hawk Development, LLC, risk penalty legalese involving WPX, McLean
25322, Peregrine Petroleum Partners, Ltd, pooling, Flat Top Butte-Bakken, McKenzie
25323, Peregrine Petroleum Partners, Ltd, pooling, Flat Top Butte-Bakken, McKenzie
25324, Peregrine Petroleum Partners, Ltd, Flat Top Butte-Bakken, 4 wells on an existing 128-acre unit
25325, Newfield, pooling, Sand Creek-Bakken, McKenzie
25326, CLR, pooling, Oakdale-Bakken, Dunn
25327, CLR, flaring, Long Creek-Bakken, Williams
25328, CLR, flaring, Crazy Man Creek-Bakken, Williams
25329, EOG, risk penalty legalese
25330, EOG, risk penalty legalese
25331, EOG, risk penalty legalese
25332, EOG, risk penalty legalese
25333, EOG, risk penalty legalese
25334, EOG, risk penalty legalese
25335, EOG, risk penalty legalese
25336, EOG, commingling
25337, EOG, commingling
25338, Statoil, pooling, Bull Butte-Bakken, Williams
25339, Statoil, pooling, Bull Butte-Bakken, Williams
25340, Statoil, pooling, Bull Butte-Bakken, Williams
25341, Statoil, pooling, Bull Butte-Bakken, Williams
25342, Statoil, pooling, Bull Butte-Bakken, Williams
25343, Statoil, pooling, Bull Butte-Bakken, Williams
25344, Statoil, pooling, Bull Butte-Bakken, Williams
25345, Statoil, pooling, Bull Butte-Bakken, Williams
25346, Statoil, pooling, Bull Butte-Bakken, Williams
25347, Statoil, pooling, Bull Butte-Bakken, Williams
25348, Statoil, pooling, Hebron and/or Squires-Bakken, Williams
25349, Statoil, pooling, Squires-Bakken, Williams
25350, Statoil, pooling, Squires-Bakken, Williams
25351, Statoil, pooling, Squires-Bakken, Williams
25352, Statoil, pooling, Squires-Bakken, Williams
25353, Statoil, pooling, Squires-Bakken, Williams
25354, Statoil, pooling, Squires-Bakken, Williams
25355, Statoil, pooling, Squires-Bakken, Williams
25356, Statoil, pooling, Squires-Bakken, Williams 
25357, Statoil, pooling, Squires-Bakken, Williams
25358, Statoil, pooling, Squires-Bakken, Williams
25359, Statoil, pooling, Squires-Bakken, Williams
25360, Statoil, pooling, Squires-Bakken, Williams
25361, Statoil, pooling, Squires-Bakken, Williams 
25362, Statoil, pooling, Squires-Bakken, Williams
25363, Statoil, pooling, Squires-Bakken, Williams
25364, Statoil, pooling, Squires and/or Painted Woods-Bakken, Williams
25365, Statoil, pooling, Painted Woods-Bakken, Williams
25366, Statoil, pooling, Painted Woods-Bakken, Williams
25367, Statoil, pooling, Painted Woods-Bakken, Williams
25368, Statoil, pooling, Painted Woods-Bakken, Williams
25369, Statoil, pooling, Painted Woods-Bakken, Williams
25370, Statoil, pooling, Painted Woods-Bakken, Williams
25371, Statoil, pooling, Painted Woods-Bakken, Williams
25372, Statoil, pooling, Painted Woods-Bakken, Williams
25373, Statoil, pooling, Painted Woods-Bakken, Williams
25374, Statoil, pooling, Painted Woods-Bakken, Williams
25375, Statoil, pooling, Painted Woods-Bakken, Williams
25376, Statoil, pooling, Painted Woods-Bakken, Williams
25377, Statoil, pooling, Painted Woods-Bakken, Williams
25378, Statoil, pooling, Painted Woods-Bakken, Williams
25379, Statoil, pooling, Painted Woods-Bakken, Williams
25380, Statoil, pooling, Painted Woods-Bakken, Williams
25381, Statoil, pooling, Painted Woods-Bakken, Williams
25382, Statoil, pooling, Painted Woods-Bakken, Williams
25383, Statoil, pooling, Painted Woods-Bakken, Williams
25384, Statoil, pooling, Painted Woods-Bakken, Williams
25385, Statoil, pooling, Painted Woods and/or Round Prairie-Bakken, Williams
25386, Statoil, pooling, Painted Woods and/or Tood-Bakken, Williams
25387, Statoil, pooling, Painted Woods and/or Rosebud-Bakken, Williams
25388, Statoil, pooling, Painted Woods and/or Rosebud-Bakken, Williams
25389, Statoil, pooling, Painted Woods and/or Rosebud-Bakken, Williams
25390, Statoil, pooling, Rosebud-Bakken, Williams
25391, Statoil, pooling, Rosebud-Bakken, Williams
25392, Statoil, pooling, Lake Trenton-Bakken, Williams
25393, Enduro, flaring, McGregor-Winnipegosis, Williams
25394, Enduor, flaring, North Tioga-Stonewall, Burke
25395, Enduro, flaring, Stoneview-Stonewall, Divide
25396, Enduro, flaring, Temple-Duperow, Williams
25397, Enduro, flaring, Temple-Winnipegosis, Williams
25398, Enduro, flaring, Stoneview-Madison, Divide
25399, Enduro, flaring, Moraine-Winnipegosis, Divide
25400, Enduro, flaring, Temple-Ratcliffe, Williams
25401, Enduro, flaring, North Tioga-Winnipegosis, Burke
25402, Enduro, flaring, Stoneview-Birdbear, Divide
25403, Enduro, flaring, Temple-Madison, Williams
25404, Enduro, flaring, North Tioga-Madison, Burke
25405, Ballard, SWD conversion, Bottineau

Huge Drop In First Time Unemployment Claims -- September 22, 2016

Due to family commitments, I am way behind in my blogging and won't catch up for several days. My replies to e-mail delayed. I will eventually get to everything readers send me.

Active rigs:

	9/22/2016	09/22/2015	09/22/2014	09/22/2013	09/22/2012
Active Rigs	33	68	196	185	185

RBN Energy: update on Alberta midstream projects. Projects continue despite upstream challenges.

More midstream projects than you might expect are “goin’ on” in the Western Canadian province of Alberta, considering the challenges that bitumen/crude oil and natural gas producers there continue to face. There are several drivers behind the relatively long list of oil and diluent pipelines; gas processing plants and fractionators; and oil/NGL storage facilities being built in Canada’s Energy Province, but much of the work is being done to meet the expected needs of oil-sands expansion projects approved during better times and set to come online soon. Today we begin a blog series on Alberta midstream projects with an overview of where the province’s energy sector stands today.

Producers in Alberta—the heart and soul of Canada’s energy sector—have had a rough go of it lately. In May, wildfires swept through parts of the oil sands region, forcing temporary shutdowns at several production sites that initially reduced the oil sands’ output by more than 1 MMb/d—or about one-third the area’s pre-fire production level. Output wasn’t back to near-normal until mid-summer, and surely the dislocations and damage caused by the fires (which scorched more than 1 million acres) have had more lasting personal (and business) effects.

Oil sands producers already had been dealing with low oil prices, which have hit them harder than most because their hydrocarbon-extraction processes more complicated and costly than their shale-play counterparts. Also, the Alberta oil sands are further away from most major refinery centers, particularly the U.S. Gulf Coast, and bitumen producers need to either add “diluent” (usually field condensate or natural gasoline, a.k.a. plant condensate or pentane plus) to their bitumen to allow it to flow through pipelines, or transport low-viscosity bitumen in special “coil” rail cars that can be heated before unloading—added costs that make $41/bbl oil an even more bitter pill to swallow.

Dakota Acccess Pipeline:

• things may come to a head a lot more quickly than some suspect; it will be interesting who blinks first
• North Dakotans are a conservative lot; they don't like spending money on "Ferguson follies"
• any problems in the Bakken are seen by most North Dakotans as a "western side of the state" problem
• as long as "western side of the state" problems did not affect Fargo, most North Dakotans did not care much what was happening out west
• that all changed with a $6 million bill to be paid by the state for "Ferguson follies"; and that's just a first downpayment
• Standing Rock is wearing out its welcome
• throw that in with the "politically correct" decision on the "Fighting Sioux" decision and it all gets pretty nasty pretty quickly

Saudi Arabia update. Data points from Forbes:

• exports surge month-over-month in July, 2016
• exports in July: 7.622 million bopd
• increased by 166,000 bopd (2.2%) 
• 7,622,000 - 166,000 =  7,456,000. Then, 166,000/7.456 million = 2.2%
• Saudi cuts domestic use by 7,000 bopd to 697,000 bopd (1%) -- inconsequential
• you decide: Forbes call a 2%increase in exports: a "surge" 
• color me unimporessed
• but if they want to give their oil away for $40/bbl, that's fine with China
• meanwhile, it is being reported elsewhere that Saudi Arabia is meeting with Iran prior to the Opec meeting later this month in Algiers, Algeria, September 27, 2016

Natural gas prices surge. Data points from The Salt Lake Tribune:

• pricing now more than $3/million BTU (reported by RBN Energy, also)
• first time in 16 months price is over $3/million BTU
• due to hot weather / air conditioning
• nuclear plants shut down for seasonal refueling and maintenance
• US shale producers have cut back on production
• natural gas deliveries up 28 percent from same time last year
• 23 US nuclear plants (23% of total capacity) slated to shut down for refueling in the three months through November

Abrams M1 tanks:

• manufactured by Chrysler Defense (now General Dynamics Land Systems)
• unit cost: $9 million
• From wiki: 

General Dynamics Land Systems operates the Lima Army Tank Plant and GDAO (General Dynamics Anniston Operations) in Anniston, Alabama along with smaller operations in Tallahassee, FL and Scranton, PA. The headquarters are located in Sterling Heights, MI.

General Dynamics Land Systems (GDLS) Canada, a London, Ontario-based defense subsidiary to General Dynamics has a 14-year $15-billion deal to supply light armoured vehicles to Saudi Arabia.

*****************************
Ballad of the Thin Man

Something is happening, and you don't know what it is.

Rush Limbaugh had an incredibly good program yesterday (September 21, 2016); he may have been the first to see the legacy of the thin man; at least the first to report it -- 

Something is happening but you don't know what it is.

Charlotte. Baltimore. Ferguson. DAPL, NYC/NJ.

Riots new normal under second black president. 

Congress impotent. Supreme Court quiet. 

Mainstream media not paying attention.

Ballad of a Thin Man, Bob Dylan

***************************

Job Watch

Did Janet Yellen do the right thing: no rate increase?

• new claims: 252K; a huge drop from the consensus
• consensus was for 261K  
• prior: 260K
• first time claims plummet by 8,000
• four-week moving average: down to 258,500 from 260,750

Yellen should have raised rates. Initial jobless claims match lowest level since April.

****************************

The Market

Mid-day: Dow 30 up 124 points. NYSE:

• new highs: 127, including Apache (APA); MDU;
• new lows: 0

Open: pops. Up 136 points. WTI up $1.13.

Futures: Dow 30 up 70 points. WTI back in the sweet spot at $46.20. The sweet spot is $46 - $52.

***************************

Please, Mr Jailer, Won't You Let My Man Go Free

Please, Mr Jailer, from "Cry Baby"

**************************

Darwinian

Idiots

The 3.5 MM Headphone Jack Non-Story

Anyone paying attention knows why Apple removed the 3.5 mm headphone jack from their new iPhone.

And anyone paying attention knows that every pair of existing headphones still works with the new iPhone.

Assuming you don't throw out the cord.

From Finance!Yahoo:

The problem for me? I accidentally threw it out with the paper packaging the adapter came with. Based on sheer principle, I refuse to fork over $9 for something I’ve taken for granted on every single iPhone I’ve owned since 2007. But now I have 4 pairs of “old school” EarPods lying around that are semi-obsolete. 

I can't make this stuff up. Why would anyone actually admit this?
 
In the military we called this a personal problem. This idiot has a $700 iPhone with a chip inside that is faster than the chip in the $6,500 MacBook Pro and he won't spend $9 on a cord. To replace the cord he threw out. How in the world does anyone throw out a cord? Something tells me this whole story is bogus. Or we're dealing with an idiot. 

************************

The Political Page

At least one media outlet is now going to report live poll results -- perhaps based on exit surveys as soon as results become available even if polls have not closed on the west coast.

We all know California will vote for Hillary.

If it's reported before the polls close in California that Trump has taken Pennsylvania, Ohio, and Florida, will that affect the turnout in California?