Thursday, January 21, 2016

Oil, Wheat, Honey, ... Diamonds? Oh, This Is Going To Be Great -- January 21, 2016


January 30, 2016: headline --
Officials raise ‘deep concern’ that proposed drilling project near Rugby could lead to nuclear waste disposal in N.D. 
I thought that was the purpose all along. By pointing this out early, the governor will not be nominated for the Geico Rock Award based on this story.
Original Post
I've been busy with the granddaughters the past few days which means I'm way behind in my blogging. I've seen a lot of headlines, folks have sent me a lot of stories, but I just haven't had time to post them. Sorry.

I saw the headline for this story some days ago and my first thought was "no nuclear waste in North Dakota." When it comes to nuclear waste, NIMBY, or what used to be my backyard.

But reading this story puts a different perspective on the whole thing. A big "thank you" to a second reader for sending me this. The Bismarck Tribune is reporting that the state is looking at drilling a really, really deep hole near Rugby, North Dakota.

Maybe it's not going to be the deepest hole ever, but .... see for yourself:
Scientists want to go to the middle of the continent near Rugby to peer deep where few have looked before.
The Energy and Environmental Research Center in Grand Forks will approach the state to drill down more than 16,000 feet into the oldest rock on the planet to conduct a rare geological science experiment.
The State Land Board will hear plans to use 20 acres of state-owned land near Balta in Pierce County for a Department of Energy project to test whether crystalline rock is suitable for storing spent nuclear waste capsules.
The article continues:
The EERC would have the drilling contract and the opportunity to study rock that’s 4 million and 6 million years old, the building block of the continent, says John Harju, associate research director.
“This is a big-time science project. There might be a handful of penetrations into deep crystalline rock, but none to this kind of depth — very rarely has a bore hole been attempted at these depths,” Harju said.
The core samples from the boring would be a valuable addition to the state’s core library and studied by geologists for decades to come, according to Harju.
“There could be diamonds. We don’t know what these rocks look like. The sheer exploration opportunity this affords is astounding,” Harju said.
Already #1 or #2  or #3 in oil, wheat, honey, what a hoot to think we might find diamonds. If they are industrial grade diamonds, I know about fifteen oil operators that would love to have them for their rigs. If they're even better than that, I know a jewelry store in Williston that might be interested.

As far as storing nuclear capsules in this rock? We can cross that bridge when we get to it.

Deep Holes And Old Posts

Whether that will be the deepest hole drilled in North Dakota or not, I don't know, but I do have a link at the very bottom of the sidebar, "Deepest Well Drilled In North Dakota." That was posted back on June 28, 2011.

Be very, very careful. There is a difference between total depth (TD) and TVD (true vertical depth) when talking about oil wells. Total depth for a horizontal well is the total distance the roughnecks drill -- if it's a horizontal well that goes down 10,000 feet vertically and then horizontally 10,000 feet, the TD (total depth) is 20,000 feet. The true vertical depth is only 10,000 feet.

The post at the link above was written a long, long time ago. There may be more errors in it than usual; I was just starting to learn about the Bakken and did not understand much of what was going on. In addition, a lot of the links are now broken.

By the way, if you went to the sidebar at the right, and scrolled all the way to the bottom to find the "deepest well drilled in North Dakota" you might have also stumbled on another post, "North Dakota is home to first US mosque."

It's hard to believe that link still works. That voanews story was last updated October 30, 2009:
Islam is the fastest-growing religion in the United States, and there are more than 1,200 mosques around the country, with at least one in every state. The vast majority are in major metropolitan areas, especially in New York and California, but America's first mosque was built in one of the least populous states - North Dakota.

Like many immigrants, the Lebanese who arrived on the flat plains of North Dakota in the early years of the 20th century came in search of economic opportunity. Hassan Abdallah says his parents didn't plan to stay.
"They always talked about how they came to the United States. They were going to get rich and go back to Lebanon. It didn't work out that way. Nobody got rich."

The Abdallahs weren't the only ones who came here from Lebanon hoping to make their fortune and go back home. "There was a bunch of them (who) came," Mr. Abdallah says, "not at once, but they kept coming, helped each other out. There were quite a few here years ago."

And sometime around 1929 or 1930, when they realized they would be staying in North Dakota, working as farmers and raising their families here, the Lebanese community decided to build a mosque: Ross, North Dakota.

According to documentary filmmaker Joan Mandell, the second mosque in the United States was built five years after the one in Ross, North Dakota, by immigrants to Rapid City, Iowa (sic; no doubt they meant, Cedar Rapids, Iowa, a huge Lebanese magnet). The simple, white-framed building with a green dome is still standing in the middle of a residential community.
Learning To Play Yahtzee

It was too cold (global warming? LOL) to go to the park this afternoon so we stayed indoors and played games. Here is 18-month-old Sophia learning to play Yahtzee:

 The Roll

And the score.

The oldest granddaughter is preparing to play the bass flute as part of an upcoming ensemble competition. To reach the really, really low notes, she needed a little help from Sophia to push the buttons at the very bottom of the flute:

Thursday, January 21, 2016

Reporting Friday:
Global Warming
Climate Change
Extreme Weather

From elsewhere:
After arriving by private jet, DiCaprio tells Davos we must ‘leave fossil fuels in the ground.'
Based on the most recent "gasoline-demand" data it appears Americans are starting to do just that, leaving fossil fuels in the ground. Having heard that 2015 was the hottest year on record (LOL -- all the way back to 1880's), Americans are saying "no" to gasoline. Whatever. I assume DiCaprio's jet is solar-powered. LOL.

From elsewhere:
Snow is so scarce today that most Virginia children probably don’t own a sled.
-- Robert F. Kennedy, Jr., September 24, 2008
I'll bet they all wish they had a sled this weekend. LOL. 

Active Rigs Hit New Post-Boom Low: 47; No New Permits -- January 21, 2016

Active rigs:

Active Rigs47160190186203

Wells coming off confidential list Friday:
  • 30405, SI/NC, SM Energy, Alvin 4B-15HS, West Ambrose, no production data,
  • 30988, SI/NC, EOG, Van Hook 74-14H, Parshall, no production data,
  • 31220, SI/NC, XTO, FBIR Reese 43X-33G, Heart Butte, no production data,
No new permits.

Thirteen (13) permits renewed, all by CLR, permits for Blaine, Burr Federal wells in Mountrail County. See below.

XTO canceled six (6) permits, all on the reservation: Yellowwoof (3), Ironwoman (3).

Statoil canceled one (1) permit, a Greenstein permit in McKenzie County.

A Busy Section In The Bakken

Among the thirteen (13) permits that CLR renewed (see above), nine of them were Burr Federal wells in section 25-153-93, Sanish oil field. In the graphic below, one can see the activity in that section. Zooming in, the second graphic below, one can see the number of wells that will be sited on these pads:

It appears there will be 35 wells sited in this section. That does not mean all 35 wells are in the same drilling unit / same spacing unit; it simply means they are all "sited" in the same section. Part of this has to do with the fact that this section is along the river.

... And The Point About Saudi's Production Would Be? -- January 21, 2016

Tweeting now: Saudi Arabia tells OPEC it pumped 10.144 mil b/d of crude oil in Dec, down 42,000 b/d on month. This is a rounding error. Means nothing. North Dakota alone produces 1.2 million bopd.

Breaking news:  American Express shares drop in extended session after credit-card company posts 4th-quarter earnings fell to $899 million, or 89 cents a share, from $1.45 billion. 

A Most Worrisome Graphic -- January 21, 2016

Gasoline demand ...

John Kemp's Weekly Energy Tweets

It was not worth the time to post the graphs; they look very similar to the graphs from last week

As staggering as the graph was last week, it's even more staggering this week: US refineries processed a seasonal record of 16.2 million bopd, up almost 1.3 million bopd from a year ago.

US distillate consumption (mostly diesel, I assume) is at 10-year record lows. Diesel consumption corresponds directly with economic activity in the United States. Combine this with the gasoline demand story and it's not a pretty picture.

Although distillate stocks had a big draw last week, distillate stocks (mostly diesel, I assume) are at a 10-year high.

As staggering as the graph was last week, it's even more staggering this week: US gasoline stockpiles continue to increase dramatically, well above a 10-year high. Gasoline consumption is below the 10-year median despite the fact that gasoline is as cheap as it's ever been. The amount of gasoline stored in this country will last more than a day longer than at this time a year ago.

The US commercial crude stocks graph is so staggering it begs description. The range for the US at this time of the year, for the previous ten years: 290- to 375 million bbls. Right now, US commercial crude stocks are at a staggering 480 million bbls. In a 30-second soundbite, one could almost say doubled.

US natural gas stocks remain well above the 10-year maximum. I doubt the "historic storm" predicted for this weekend will change this graph very much next week.

Peak oil, anyone?

Thursday, January 21, 2016

Reuters spin on the jobs report today: I don't recall ever seeing this from Reuters in the past six years -- a concern about the jobs numbers. Today Reuters writes:
At a six-month high, unemployment claims suggest some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff.
US consumer prices fall 0.1% in December; no inflation on the horizon. 
Remember that Wal-Mart story of a just a few days ago when Wal-Mart said it scuttled plans to build Wal-Mart stores in Washington, DC, due to new minimum wage rules in the District. Something doesn't ring true. Look at today's story in the Wall Street Journal: Wal-Mart to Boost Wages for Most U.S. Store Workers. Retailer broadens pay increase as it tries to counter tight labor market and stem turnover:
With the raises planned for February, average hourly earnings will be $13.38 for Wal-Mart’s full-time store employees and $10.58 for part-time workers, the company said.
I have no doubt the Wal-Mart folks told DC that it was the minimum wage rules but the existing DC minimum wage and the likely increase were not all that extreme, it appears. It might have been the family benefits but my hunch is that Baltimore/Ferguson were fresh in their minds. Anyway, it is what it is.

Not unexpected: United Continental airline profit rises on lower fuel costs. I assume the airline is cutting fares in light of all the money it is saving on fuel. I wonder if they ever eliminated the fuel surcharge? Oh, that's right. With the merger, minimal competition to encourage any price cuts.

Also from today's Journal: schools in Detroit, Chicago seek state help.
Widespread teacher “sickouts” all but closed Detroit’s public schools Wednesday and Republican legislators in Illinois called for a state takeover of Chicago’s district, as two of the nation’s largest systems face financial strain.
Detroit teachers have staged several sickouts to protest class sizes that have swelled to over 40 students, as well as mold and other hazards in schools. Wednesday’s protest, timed to coincide with President Barack Obama visit to the Detroit auto show, was the largest.
The closures come amid calls for Michigan to help the city’s shrinking school system contend with a financial crisis that hit a year after Detroit emerged from the nation’s biggest municipal bankruptcy. The Detroit Public Schools, whose finances are separate from the city’s, could run out of money by April.

Thursday, January 21, 2016; Jobs With Huge Miss -- Forecast For A 9,000 Decline; In Fact, Up 10,000 -- Almost A 20K Swing And A Miss

Tweeting now: OPEC emergency meeting? Iraq apparently supports an emergency meeting with some caveats. 

Active rigs:

Active Rigs48160190186203

RBN Energy: Gulf of Mexico Production Buoyant Despite Crashing Oil Prices.
Work continues on several major deep- and shallow-water crude oil production projects in the U.S. Gulf of Mexico (GOM), despite the fact that oil prices are far lower than they were when the commitments to develop these projects were made. U.S. benchmark West Texas Intermediate (WTI) crude for prompt delivery closed yesterday on the CME/NYMEX futures market at $26.55/Bbl – its lowest level since May 2003 – threatening to strangle resilient domestic onshore shale production. Yet GOM production levels will rise again this year--and likely for at least another couple of years—offsetting some of the expected decline in onshore U.S. crude output.  Today, we continue our examination of steadily rising crude output in the GOM with a look at projects coming online in 2016 and beyond.
Unemployment claims report: forecast for claims to be down 9,000 to 275,000.
  • new claims: 293K
  • prior revised: 283K
  • change: up 10K --- "much higher-than-expected"
  • 4-week average: 285K -- also up from prior revised of 278,500 
  • Reuters spin here; I don't recall ever seeing this -- Reuters actually expressing concern
Reporting today: tracked here.
  • UNP: missed by 11 cents; the biggest miss in at least 10 years; shares slump;  The weakness in rail cargo probably will last this year as coal demand continues to drop and U.S. production lags. CSX Corp. Chief Executive Officer Mike Ward said last week that the industry was in a “freight recession” and his railroad’s earnings are expected to decline. CSX is the largest railroad in the eastern U.S. while Union Pacific operates in the West.
  • Verizon comes in stronger than expected.
  • Schlumberger reports earnings of $0.65 a share vs. estimates of $0.63 ; revenues of $7.74 billion vs. estimates of $7.78 billion.Schlumberger's fourth-quarter results were hurt by a 39 percent drop in revenue and huge accounting charges. It posted a loss of $1.02 billion, or 81 cents per share. Earnings, adjusted for non-recurring items and asset impairment costs, came to 65 cents per share.
    The results still topped Wall Street expectations. The average estimate of 18 analysts surveyed by Zacks Investment Research was for adjusted earnings of 63 cents per share.
    Schlumberger posted revenue of $7.74 billion in the period, which fell short of Street forecasts. Twelve analysts surveyed by Zacks expected $7.79 billion. A year earlier its revenue totaled $12.64 billion.
    Schlumberger's shares are down 25 percent in the past year, and the company said its board authorized the repurchase of up to $10 billion in stock. In after-hours trading, the stock added 37 cents to $61.80
  • Bank of New York Mellon: profit jumps;
Overall, Bank of New York reported a profit of $693 million, up from $233 million a year earlier. Per-share earnings rose to 57 cents from 18 cents. The year-earlier period included 53 cents in litigation and restructuring charges, partially offset by a tax benefit.
Excluding a previously disclosed charge stemming from a recent court decision, among other items, earnings per share increased to 68 cents from 58 cents. Revenue inched up 1.5% to $3.72 billion. Analysts predicted 64 cents in adjusted earnings per share on $3.75 billion in revenue.

After working on this for the past month, I have finally "perfected" the pancake. LOL.