Friday, March 11, 2016

Woodrow Star "A" 1 Well Updated -- March 11, 2016

A reader recently sent me some photographs of a well drilled back in 1958 and still producing after all these years. The well has an interesting story. The update and photographs are at the original post.  For the archives.

Four New Permits; New Post-Boom Low For Active Rigs In The Bakken: 32 -- March 11, 2016

Active rigs: the week finishes with another record post-boom low for the number of active rigs:

Active Rigs32112192187206

Four (4) new permits --
  • Operators: Oasis (3), SM Energy
  • Fields: North Tobacco Garden (McKenzie), Ambrose (Divide)
  • Comments:
Eight (8) permits were renewed --
  • BR, 4, Curtis (2) and Saddle Butte (2), all four in McKenzie County
  • Whiting, 4, permits for four Charging Eagle wells, Dunn County

Might Volkswagen Leave The "Mass" Market In The US? -- March 11, 2016

As crazy as it sounds, Volkswagen may be seriously considering abandoning the "mass" US automobile market and sell only high-end vehicles in the US. Bloomberg is reporting:
The suggestion was startling: Maybe VW should give up on selling cars to America’s masses.
It was late January, at the Detroit auto show, and Herbert Diess, the global chief of Volkswagen AG’s namesake brand, was sounding out U.S. dealers as the company grappled with the biggest crisis in its modern history.
Perhaps, Diess wondered aloud, VW should stop trying to compete with the likes of Toyota Motor Corp. in America and go back to focusing on higher-end models.
After stunned silence came anger. He and 11 other dealers are heading to company headquarters in Wolfsburg, Germany, next week to tell executives they fervently oppose throwing in the towel on the mass market. They want the company to stick to the commitments it has made for new models and keep U.S. prices where they are now.
Maybe Volkswagen will just leave altogether. 

TransCanada To Buy Another Pipeline Company (NY To Mexico Route); China To Corner Supertanker-Iron Ore Market -- March 11, 2016


November 20, 2017: FERC approves Columbia pipeline in West Virginia / Virginia.

March 17, 2016: the deal is announced -- TransCanada will buy Columbia for $10.2 billion. It looks like Warren Buffett missed a deal.

March 12, 2016: from The New York Times --
Like many American peers, Columbia has been under pressure as investors worry about whether the companies that produce the gas that goes into its pipes will stay afloat. Even if it has to renegotiate some contracts, though, its financial position looks sound. Columbia ended 2015 with $2.9 billion of liquidity after tapping investors for $1.4 billion of equity in December. Shares of the company and a related master limited partnership have held up well since then, suggesting that shareholders are confident that executives can keep increasing dividends while investing $1.4 billion to $1.6 billion in various projects this year.
Whether or not TransCanada and Columbia can consummate a deal, that they are talking at all suggests that spirits may be reviving. If the 40 percent rally in crude oil prices in recent weeks holds, it could coax other energy survivors out of their hiding places.
TransCanada’s Keystone XL pipeline plan was denied by the Obama administration last year. Another big project intended to ferry oil from Alberta and Saskatchewan to Canada’s east coast has also become snarled in problems. These developments may have led executives to decide that the company would be better off trying to buy pipelines in addition to building them. Still, steady revenue from the company’s sprawling network of regulated energy infrastructure puts it in a relatively good position in the recent industry slump.
I am getting tired of pipeline operators, oil companies, port terminals, etc., etc., thinking they can get anything done in the Pacific Northwest, New England, or even Nebraska, and to some extent Minnesota and Iowa, where all those CAVE dwellers live.  There are plenty of existing pipelines to maximize efficiency; there are plenty of places to build more export terminals in Gulf Coast along Texas and Louisiana. Everyone is wasting their time in the Pacific Northwest.
Original Post
What do you do when folks won't let you build a new pipeline? Buy another pipeline company.  From The Wall Street Journal:
TransCanada Corp. , the company behind the controversial Keystone XL oil pipeline project, is in takeover talks with Columbia Pipeline Group Inc., a U.S. natural-gas pipeline operator with a market value of about $9 billion.
The companies could reach a deal in the coming weeks, according to people familiar with the matter. Details of the possible deal—including the role of Columbia Pipeline Partners LP, a publicly traded affiliate of Columbia Pipeline Group—couldn’t be learned. The negotiations could still break down, the people cautioned.
With a typical takeover premium, a deal could value Columbia Pipeline Group at about $10 billion. The company also carries a debt load of nearly $3 billion.
Houston-based Columbia Pipeline Group owns about 15,000 miles of gas pipelines from New York to the Gulf of Mexico, together with one of the country’s biggest underground storage systems and related gathering and processing assets.
Most of its assets overlay the Marcellus and Utica shale formations in Pennsylvania, West Virginia and Ohio.
It had profit of $307.1 million last year, up about 15%. Revenue declined slightly to $1.33 billion.
The company was spun off from NiSource Inc., a natural-gas utility operating in seven Eastern states, in the middle of last year. Shares of both Columbia Pipeline Group and Columbia Pipeline Partners have fallen sharply since then as the slump in energy prices undercut oil and gas output and thus demand for pipeline capacity.
I guess this is why Hillary Clinton is going to ban fracking: to destroy the natural gas industry in Pennsylvania, West Virgnia, and Ohio. I guess she plans on going back to coal. LOL. 

Day Rates -- I Thought There Was A Law Against Gouging
I Guess The Anti-Gouging Law Only Applies To Gas Stations After A Hurricane

What do you do to protect yourself from being gouged?

What do you do to protect yourself from $200,000/day rates for supertankers? You buy your own supertankers. Look at the "range of day rates on supertankers, from $200,000 day (then) to $3,000 / day (now). From The Wall Street Journal:
“At the peak of the market in 2007 and 2008 we used to pay daily freight rates in excess of $200,000  for a Capesize vessel,” an executive at one of the Chinese Valemax buyers said. “We are taking steps for this not to happen again when the market recovers.”
Daily rates for Capesize ships currently hover below $3,000.
So, what to do?
Chinese shipping majors Cosco Group, China Merchants Group and ICBC Financial Leasing Co. have placed orders for 30 giant Valemax vessels worth a combined $2.5 billion.
The move will tighten Beijing’s grip on iron-ore shipments from Brazil over the next decade and increase pressure on Western shipowners struggling to find cargo in one of the industry’s longest ever downturns.
The ship orders will also boost Chinese shipyards suffering from a slump in demand, and in the long run will help control costs for Chinese steelmakers by stabilizing freight rates.
Be sure to read the comments. Apparently the Chinese banned these supertankers from their ports; led to the bankruptcy of Valemax; supertankers sold cheaply; now back in Chinese ports. At least that's what some are saying. I don't know the whole story. Maybe the supertankers were safe but not the operators. If true, sounds like the Jones Act in the US. 

This reminds me of buying its own air freight aircraft.

A Note For The Granddaughters
For Those Who Thought Cactus Was Only In The Southwest

Here's a nice story about taking a baby for a walk during the spring in North Dakota, another person's story, not mine. A nippet:
And, it turns out, cactus. Of course cactus. Because here in Western North Dakota if it isn’t the cold it’s the mosquitoes. And if it isn’t the snow it’s the damn cactus.
As I type this I have a few little wounds on my hands as a reminder. Because as peaceful and angelic as this little scene might look from the still capture of the camera, it turns out ...
A great read today. As usual.

Upstream CAPEX Reductions -- March 11, 2016

From Woods Mckenzie:

I think two interesting data points is the extent to which California Resources will quit drilling in California, and the fact that Whiting is not on the list (if it is, I missed it).

Here We Go Again!

WKOW/Madison is reporting:
The Wisconsin Department of Health Services is reporting four more cases of Elizabethkingia in the Madison-Milwaukee area.
Wisconsin State Hygiene Communicable Disease Deputy Director David Warshauer says 48 cases is worrisome.
"Laboratories may see a case a year, so it is concerning,"  Dr. Warshauer said about the rare blood infection being found in 12 counties.  D.H.S does say they have revised the numbers of deaths from 18 to 15 possibly linked to the bacteria.
Right now, researchers in his lab are isolating Elizabethkingia DNA samples.  Just one of isolation can take up to 48 hours.  His lab has done more than 40 in the last few weeks.
"Everybody has been busy, hoping to find the source for this."
But CDC Spokesman Tom Skinner says there is no smoking gun just yet.
 "We're now including any possible food source here that maybe implemented here, including any soil water or medical products that anyone who may have acquired this infection may have been using," Skinner said.
Hopefully, Chipotle is not part of this story.

Regarding the bacterium:
Elizabethkingia meningoseptica is a gram-negative rod-shaped bacterium widely distributed in nature (e.g. fresh water, salt water, or soil). It may be normally present in fish and frogs but is not normally present in human microflora.
In 1959 American bacteriologist Elizabeth O. King (who isolated Kingella in 1960), was studying unclassified bacteria associated with pediatric meningitis at the CDC in Atlanta, when she isolated an organism that she named Flavobacterium meningosepticum (Flavobacterium means "the yellow bacillus" in Latin; meningosepticum likewise means "associated with meningitis and sepsis"). 
In 2005, a 16S rRNA phylogenetic tree of Chryseobacteria showed that C. meningosepticum along with C. miricola (which was reported to have been isolated from Russian space station Mir in 2001 and placed in the genus Chryseobacterium in 2003 were close to each other but outside the tree of the rest of the Chryseobacteria and were then placed in a new genus Elizabethkingia named after the original discoverer of F. meningosepticum.

Friday, March 11, 2016; Delay In Reporting Wells Coming Off Confidential List

Top Bakken story of the week: Iowa Utilities Board approves Bakken pipeline

Active rigs:

Active Rigs33112192187206

RBN Energy: The Challenges of Making LNG the Go-to Bunker Fuel.
In January 2015 new international regulations came into force that reduced the permitted sulfur content in ships “bunker” fuel in Northern European and North American coastal regions. So far, international shipping companies and cruise lines have been responding to these rules primarily by switching to marine gasoil (MGO), burning lower-sulfur fuel oil, or sticking with higher-sulfur fuel oil and adding “scrubbers” to capture most of the sulfur being emitted by their ships’ engines. More recently, though, some of the shipping sector’s biggest players have unveiled plans to boost the use of liquefied natural gas (LNG) as a bunker fuel, figuring that LNG bunkering will not only help them meet existing regulations but the tougher rules likely to be implemented over the next few years. Today, we begin a short series on the opportunities and challenges associated with shifting ships from fuel oil to LNG.
Besides death and taxes, another certainty in today’s world is that the rules governing emissions from fossil-fired power plants, industrial boilers, and engines of just about every size and type will be tightened, and then tightened again. The same holds true, of course, for fuels used in ship engines (known as bunkers). The International Maritime Organization (IMO), which governs such things, in recent years has been implementing rules that gradually reduce emissions of sulfur (sulphur for many of our non-American readers). In January 2012, the “global” cap on sulfur content in marine fuel was reduced to 3.5% (from the old 4.5%), and in January 2020 it will likely be reduced to a much stiffer 0.5% (more on that in a bit). There are even tougher standards in place in the IMO’s “Sulphur Emission Control Areas” (SECAs, or sometimes ECAs), which include Europe’s Baltic and North seas and (more recently) areas within 200 nautical miles of the U.S. and Canadian coasts. In July 2010, the SECA sulfur limit in marine fuel was reduced to 1% (from the old 1.5%), and January 2015 the limit was ratcheted down again, this time to a very stringent 0.1%. Ships that ply SECA waters have the option of continuing to use higher-sulfur fuel oil and meeting the emission standards by installing post-combustion scrubbers that, as their names suggest, remove enough sulfur from the emissions to meet regulatory limits. (And, we should also point out, if a ship makes a run from, say, the non-SECA waters of Asia to the U.S. West Coast, it only needs to meet the SECA requirements during the last 200 miles of its journey—that is, it can switch from higher-sulfur to lower-sulfur fuel during the final part of its trip.)

This will be one of several QEP wells that should come off the confidential list today:
  • 29324, 1,963, QEP, Jones 3-15-23TH, Grail, t9/15; cum 130K 1/16; only 8 days in 12/15:
DateOil RunsMCF Sold

While we are waiting, some data points from the well file regarding this well:
  • API: 33-053-06233
  • according to FracFocus, fracked 9/13 - 18/2015: 5.3 million gallons of water; almost 19%, by weight, sand; works out to 44,22,900 pounds of water; 81% of what = 44,229,900 pounds = 54.6 million lbs proppant x 19% sand = 10.3 million lbs of sand (so, we'll see); no frack report yet; geologist's report not there yet
  • a Three Forks well, first bench
  • kick-off point, Lodgepole M 1; 10,350feet
  • kick-off / curve: about 400 linear feet
  • target zone: about 10,700 feet
  • permit was revised to change bottom hole location to avoid "collision issues with a nearby well"
  • spacing unit: 2560 acres
As of 9:50 a.m. Central Time, these wells have not been taken down from the confidential list. [Update: 3:50 p.m. -- these wells have finally been posted.]

2932433053062330000QEP ENERGY COMPANYJONES 3-15-23THNWNW 15-T150N-R95W3/11/2016
2932533053062340000QEP ENERGY COMPANYJONES 5-15-22THNWNW 15-T150N-R95W3/11/2016
2932633053062350000QEP ENERGY COMPANYJONES 3-15-22BHNWNW 15-T150N-R95W3/11/2016
2932733053062360000QEP ENERGY COMPANYJONES 6-15-22THNWNW 15-T150N-R95W3/11/2016
2932833053062370000QEP ENERGY COMPANYJONES 4-15-22BHNWNW 15-T150N-R95W3/11/2016
2932933053062380000QEP ENERGY COMPANYJONES 15-22-16-21LLNWNW 15-T150N-R95W3/11/2016

Zeits Over At Seeking Alpha

From Seeking Alpha:

  • Significant restrictions on re-injected water volumes now apply over the majority of the Miss Lime play.
  • Regulatory action in central Oklahoma impacts 54 of Devon’s wastewater disposal wells.
  • Asset values in the Miss Lime may be impacted due to significant operational and “seismicity liability” exposure.
  • The STACK play is not affected but is now part of the area closely monitored by the regulators.
  • The seismicity may be disruptive to operating plans due to the “blanket” nature of potential future regulatory actions.
See map at link. The article covers several issues, begins with this:
On March 7, the Oklahoma oil and gas regulator expanded restrictions on the re-injection of wastewater in western and central Oklahoma. The restriction area now covers essentially the entire Miss Lime play. The wastewater is co-produced from oil and gas wells and is believed to be the cause of the spike in the seismicity in the area. In the areas subject to restriction, over 2.5 million barrels per day of wastewater was re-injected in 2015 by the oil and gas industry.
The decision follows several notable quakes recorded this year, including the 5.1 magnitude quake reported on Feb. 13 near Fairview, Oklahoma.
Bakken Economy

Press release from Investors Real Estate Trust:
Investors Real Estate Trust, a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest, today reported its financial and operating results for the quarter and year to date ended January 31, 2016.
From a reader from the press release:
Occupancy rates in housing in Minot is 86 % and Williston is 75 %. All other areas in the 92-96 % full range.
Bakken Economy -- For The Archives

CNBC is reporting:
There is perhaps no place where the transformation is so stark as North Dakota. The state's oil production grew tenfold over the past decade as it built a thriving industry virtually from scratch, driving unemployment to a national low and filling government coffers with surging tax revenue. 

Stunned! Absolutely Stunned! -- March 11, 2016

From The Des Moines Register:
Thousands of construction workers could start work this spring on the Bakken oil pipeline through Iowa, but a statewide coalition of environmentalists, community activists and property owners is vowing to do everything possible to stop the project.
The Iowa Utilities Board voted 3-0 on Thursday to approve a state permit for the underground pipeline, which will run diagonally for 346 miles across 18 Iowa counties. The project is proposed by Dakota Access LLC., a unit of Dallas-based Energy Transfer Partners.
The massive pipeline project has deeply divided Iowans from many walks of life, from those who welcome it as a potential economic benefit to those who deride it as an environmental threat and a violation of private property rights.
The board took about seven minutes to issue its decision. It came after 18 public informational meetings, 12 days of public hearings, and weeks of deliberations over the past year and a half. In the process, the board received more than 8,000 public comments and compiled more than 3,500 pages of transcripts.
A huge "thank you" to a reader for alerting me to this.

I lost a month's wages in betting against this to happen. Regular readers know that I said Iowa would never approve this.

The Bismarck Tribune also has this story

A Note to the Granddaughters

I am entering my ninth year as the 24/7 nanny for our grandchildren.

When I retired from the USAF back in 2007, I told my wife that I planned to live in every major American city two years at a time. We would rent an efficiency apartment for two years somewhere in the US and then move to the next big city. We had pretty much "lived everywhere" overseas and had no more desire to travel outside the US. We had also lived in or visited most of the US, but we had missed a few big cities.

We visited our granddaughters (just two of them at the time; the younger six months old) in Charleston, SC, at Christmas, 2007. During that visit, I realized that the granddaughters were likely to "fall in between the cracks of life" because of the extremely busy schedule our daughter and son-in-law had with work and school (advanced degrees).

So, at the end of the Christmas visit, I simply announced that I would not be leaving. I would simply "live" in the spare bedroom upstairs and assume 24/7 care for the granddaughters, making it easier for our daughter/son-in-law to pursue their interests.

I lived in that bedroom for two years. My wife gradually joined me in this endeavor and now we are often together taking care of the children, but we often take some time off (generally no more than two weeks at  a time). At least one of us is always with the granddaughters with some very minimal exceptions. When the family goes on vacation, we have our own vacation.

Today when dropping off the two older granddaughters for school, I thought about that as I drove past all the sights that held so many memories.

I am going into my 9th year of retirement (I think). In that time, we've spent two years in Charleston, South Carolina; four years in Boston, and, now three years (and counting) in the Dallas-Ft Worth area.

We take the kids to school every day. We take them to all their sporting events. We take them to extra-curricular school events. Many days it takes three of us to manage the schedule. Their father will take the youngest (19 months old now) to soccer practice. Their mother will take the 9-year-old to her soccer game. I will take the oldest to here water polo tournament. (May is out in California for a couple of weeks.)

Because of their water polo and soccer schedule (and before that, competitive swimming), math and science club competitions, we have been to numerous (too many to count) venues in suburbs and cities on the north side of Ft Worth and Dallas. 

After dropping off Arianna at middle school this morning, I drove by the middle school natatorium where she spent every weekday afternoon swimming laps for competitive swimming. It brought back a lot of great memories. She no longer participates in competitive swimming but now is a middle schooler playing on the high school water polo team over at Southlake in an even bigger venue. When her middle school team plays, she is a starter; on the high school team, a reserve, but she does get some playing time and lots of quality practice.

I have the day free but at 3:30 p.m. I get to pick up the 19-month-old at TutorTime. She can stay as late as 6:00 p.m. (which she never has); her mom likes her to be picked up about 4:30 for various reasons (which have to do with activities at TutorTime) but I cannot wait that long. I try to pick her about 3:30 but (for various reasons) have acquiesced to other people's "demands" that I wait until at least 4:00 p.m.

From 4:00 p.m. to 6:00 p.m. Sophia and I are at the park.

So, now the day is mine. Some blogging. Some biking. But mostly just an interlude between taking care of the granddaughters.

We may not get to many more major US cities, but San Francisco is my wife's #1 choice; Washington, DC, is my #1 choice. We have spent a significant amount of time in both cities -- a long time ago -- but never actually lived there. I doubt it's going to happen. Too many things have changed.

And I've grown lazy and content. It's hard to beat the DFW area. But I would probably say that wherever we lived. I could have even retired in Adana, Turkey.