Saturday, April 9, 2016

New Dry Pea Processing Plant In Harrold, South Dakota, With Ties To The Bakken -- April 9, 2016


There are several story lines not mentioned in the posts below: the role the North Dakota agriculture research station in Williston has played in this story; the role that increasing atmospheric CO2 might be playing; and the role a warming climate in North Dakota might be playing. 

April 10, 2016: I guess this is reason #48 why I love to blog. After posting the story about the new pea processing plant in Harrold, SD, a reader -- "thank you very much" -- sent me a Bloomberg story on pea processing on the prairie. In the very first paragraph, "Williston" is mentioned:
Farming on the Northern Plains is a never-ending battle to keep the soil alive and in place. Long, dry winters kill precious organisms; the ever-­present wind blows dirt across the prairie. Certain crops can help, especially pulses. Legumes such as dried peas, lentils, kidney beans, and ­chickpeas fight erosion and replenish life-giving nitrogen, reducing the need for chemical fertilizers. That made Beau Anderson an early convert to pulses on his wheat and barley farm outside Williston, ND, where he added them to his crop rotation more than a decade ago
There wasn’t much money in it then. Pulses are high in protein and low in fat, but Americans don’t eat a lot of them. Expanding demand for corn ethanol and surging U.S. soybean exports to China helped keep pulses in the background. “When we first started growing lentils, our strategy was to break even on them,” Anderson says.
For him and many other farmers, that calculus has changed.
The biofuels industry and the Chinese economy are stagnant, which is weighing on demand and prices for U.S. corn and soy.
And India, an emerging buyer with a huge appetite for pulses, is beginning to assert itself on the world food market.
“The next couple decades could belong to India,” says Erik Norland, an economist with the Chicago Mercantile Exchange. “It will have a real impact on what farmers choose to grow and on what the world eats.”
India’s annual food imports have risen 61 percent since 2010, to $22.6 billion, and there’s more room to grow. Its population is expanding at a rate of 1.2 percent per year, compared with 0.7 percent for the U.S. Indians eat 17 percent fewer calories per day than the world average, a deficit that Norland projects will shrink as the nation becomes more prosperous and imported food becomes more abundant and affordable.
Led by India, global demand for U.S.-grown pulses reached $702 million last year, more than double that of a decade ago.
Pulses won’t overtake ­traditional American cash crops anytime soon, if ever: in 2015, U.S. farmers dedicated 88 million acres to corn production and less than 2 million acres to peas and lentils. That’s partly because legumes require higher maintenance when it comes to controlling insects and weeds, so massive acreage becomes labor-­intensive.
Still, with corn and soy at less than half their peak prices, the economics of growing pulses is becoming more attractive. “The more demand we have, the more consistent the market becomes, the easier it is to convince farmers to grow them,” Anderson says.
This is one of the reasons why this story -- pea processing on the prairie is close to my heart. I posted this note back in early 2012, on Turkish workers coming to Williston to process peas. 
Original Post
From The Williston Wire and reported here:
Temporary housing from the slumping western North Dakota oil patch is being brought to South Dakota to house professionals from Turkey who will be working on a dry pea processing plant.
The Turkish workers will be overseeing the assembly and installation of specialized equipment at the $4.5 million South Dakota Pulse Processors plant near Harrold.
There are few motel rooms in Harrold, so plant CEO Steve Brown is buying two three-bedroom mobile homes from the Alexander area in northwestern North Dakota that once housed oil field workers. The homes will house the Turkish workers for up to 1 ½ months after they arrive in mid-May.
Dry peas are used for a variety of foods including flour and soup. The Harrold plant will process about 40,000 tons each year. That equates to about 35,000 acres of production. Dry peas have been grown in small amounts in South Dakota for years, but farmers had to haul them to processors in North Dakota and Minnesota.
The Harrold plant is expected to begin operating in mid-July, in time to take in field peas grown this summer.
Some years ago, a similar story out of Williston, back in 2011, I believe: Turkish workers being brought in to Williston to operate a dry pea processing plant. I don't know the status of that plant any more.

Notes to the Granddaughters

Where is Harrold, SD? It appears to be the geographical center of South Dakota, not sited on any major state or federal highway, about 35 miles east of Pierre, SD.

It's hard to believe, but many, many years ago, as a college student, in the dead of winter, probably Christmas break, I hitchhiked from Pierre, SD, to Williston, ND. My roommate drove me from Augustana College, Sioux Falls, to his home in Pierre where I spent the night. The next day he dropped me off at the intersection of state highway 14 and US highway 83 north and I started hitchhiking. I still vividly remember the day -- bright, sunny, cold winter day. And I also vividly remember my first ride: a native American couple in their 50's in a very, very old 4-door sedan picked me up and drove me, probably to the turn-off to Mobridge. After that, I don't remember any of the rides. I have no idea how I got across the interstate; got through Bismarck.

Registration -- Signing In

Who's Driving This Train? Update On Halliburton - Baker Hughes -- April 9, 2016; Kansas Utility Up For Sale?

When one follows the story about the US government denying a merger between Baker Hughes and Halliburton, one needs to ask the question: who's driving that train?

From Bloomberg/Rigzone:
General Electric Co. could become one of the top players in the oil services and equipment industry if it decides to bid for Baker Hughes Inc.
A Justice Department lawsuit filed this week against Halliburton Co. to stop the merger of the world’s second- and third-largest oilfield service companies could soon put Baker Hughes back in play, with GE seen as the most likely bidder. Halliburton and Baker Hughes have said they plan to contest the government’s case, which could delay the timing of any future takeover offers. In December, GE was said to be exploring bids for various assets Halliburton was marketing in an attempt to secure antitrust approval for the deal.
"This is one way you could really accelerate yourself in the oil and gas industry," J. David Anderson, an analyst at Barclays Plc, said Thursday in a phone interview. "Buy Baker to fill in the gap and all of a sudden, you’re one of the more dominant oil service companies out there."
GE has expanded its oil and gas business in recent years through more than $10 billion in acquisitions, making it the company’s fourth-largest division. Yet, within the world of oilfield services and equipment manufacturing, the company ranks 11th, according to Tulsa, Oklahoma-based consultant Spears & Associates.
Among GE’s four largest business units in the oilfield sector, none rank larger than third for market share. A large acquisition would vault GE into the top tier. "If they buy Baker Hughes, they’re immediately in the top 3," Anderson said. "This is sort of the big missing piece." Melanie Kania, a spokeswoman for Baker Hughes, and David Lurie, a spokesman for GE, declined to comment.
I am really, really irritated with myself. Yesterday, on my bike ride home, I said to myself that with the Halliburton-Baker Hughes deal falling through, this is a huge opportunity for GE. Wow, I wish I had blogged that yesterday. My paid subscriptions would have surged. LOL. (For newbies: I don't have a subscription blog.)

More from the linked article:
Oil and gas has become central to GE as Chief Executive Officer Jeffrey Immelt focuses operations on industrial manufacturing. He is selling the bulk of GE’s finance arm and its home-appliances unit while expanding divisions making drilling equipment, gas turbines and jet engines.
With the oil market slumping, GE is likely to be opportunistic as it explores potential acquisitions, said Deane Dray, an analyst with RBC Capital Markets.
“They are interested, but they’re going to be very, very discerning on the valuation because they’re in the driver’s seat.”
GE has a budget target of about $10 billion for dealmaking in the next few years. While the company could go well over that for the right acquisition, a large purchase may be difficult for some investors to stomach since that could conflict with GE’s stock buyback plans, Dray said. Even small bolt-on deals could set up GE’s oilfield equipment-making unit to cash in on a return to industry growth in a couple years, Anderson said. Providing offshore services and equipment to the oil industry looks "dead" until about 2018, he said.
Biggest Electric Utility In Kansas Up For Sale?

Bloomberg is reporting:
Westar Energy Inc., the biggest electric utility in Kansas, has drawn takeover interest from rival Ameren Corp. as well as an investor consortium that includes Borealis Infrastructure Management Inc. and the Canada Pension Plan Investment Board, according to people familiar with the matter.
Westar is working with Guggenheim Partners to field interest, the people said, asking not to be identified because the discussions aren’t public. Initial bids for the utility, which has a market value of about $7 billion, are due next week, they said.
Many, many story lines in the linked article.

International Data Points -- April 9, 2016

I don't know when I put these two data points in draft. They've been in draft for quite some time; simply moving this to active post. For the archives only; not particularly noteworthy.

Breaking now: Canada's Bankers Petroleum agrees to takeover by Chinese firm. Headquartered in Calgary, it looks like this company's assets were in Albania.

Kurdistan: from Rigzone --
Iraqi Kurdistan is keen to attract Russian oil companies to work on its territory.
The semi-autonomous region of Iraq is ready to take all necessary measures, including security ones, to ensure that Russian energy firms can work safely there.
Gazprom Neft, the oil arm of state gas company Gazprom, is currently working on four projects in Iraq, of which three - Halabja, Shakal and Garmian - are located in Iraqi Kurdistan. 
For most recent update on the Kurds, see this post

Gasoline Demand -- April 9, 2016

My bad. I apologize. I was so tied up taking care of Sophia I completely forgot about posting the data point that most interests me right now: gasoline demand.

Gasoline demand has plateaued for the moment, and remains well above last year's demand:

Week 14: April 3, 2016 -- April 9, 2016

From this week's Oil & Gas Journal On-Line twitter, pretty cool, 1951 - 64 years ago, I guess:

Now, back to the other big stories of the past week:

If this project is as far along as the article suggests, this was clearly the biggest North Dakota story posted this past week -- technically it was almost two weeks ago but I didn't get it posted until this past week -- whatever -- as I was saying, if this project is this far along, that they are ready to break ground on a second refinery in North Dakota, this is a huge story, especially considering everything else going on. Remember: a recent RBN Energy story suggests operators are paying $6.50/bbl to ship their oil by railroad to St James, Louisiana -- think of the cost benefits of refining this oil here in the state.

The Oil & Gas Journal has a great twitter post: North Dakota remains in 2nd position among US states in crude oil production.

Internationally, the stories coming out of Norway regarding its deteriorating oil and gas industry were noteworthy.

Whiting's Flathead Federal wells are ... simply staggering
Whiting reports a well that has produced > 210,000 bbls in less than 5 months 
North Dakota remains in 2nd position among US states in crude oil production
QEP reports five big wells in Grail, Blue Buttes oil fields
A well to follow: BR drilling a new lateral from an old well site
MDU announces sale of its last marketed oil and natural gas production properties
Filloon's update on the Bakken: focus on Halcon
Update on the St James, Louisiana hub -- an important hub for Bakken crude oil
Freezing soil and severance taxes: North Dakota vs Texas
Comparing well costs across the US

Refinery operations
Plans for Belfield refinery moving forward: the Davis Refinery

North Dakota operators losing $6.50/bbl shipping CBR

Oasis announces open season for Johnson's Corner Pipeline Project

Natural gas
The word for the day: Wobbe

Bakken economy
Turkish cuisine in Williston
North Dakota farmland values decline for first time in 11 years
Watford City high school senior opens bakery 

What the Emerald bankruptcy might mean for mineral owners
Oil bulls have a great week 
"Happy Birthday" to Clarence Iverson #1
Norway's oil and gas industry challenges
The world is moving quickly for the Saudis; depegging the riyal from the US dollar

No New Permits; No Cancelled Permits; No Producing Wells Completed -- April 9, 2016

But there were twelve (12) permits renewed in today's daily activity report:
  • XTO (6), six Bud permits in Williams County
  • Hess (5), four SC-Mari permits in Williams County; and, a BW-Spring Creek permit in McKenzie County
  • WPX, a Lucy Evans permit in McKenize County
For The Archives -- Putting Things Into Perspective

UND professor plans to call "911" every time she sees ROTC students parading/training. As the reader who sent me the link said, "Oh, happy day." LOL. To be on the safe side, she says she will continue to call "911" every time she see ROTC training. Link here.

She had already turned in her resignation. Starts to explain everything.

She's "fairly pleased how it's turned out."

And those are the problems they face in North Dakota. What a great state.

Well, This Isn't Good News -- GDP Now Forecast Pert Near 0 Percent -- April 9, 2016

GDP Now (a dynamic link):
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.1 percent on April 8, down from 0.4 percent on April 5. After this morning's wholesale trade report from the U.S. Bureau of the Census, the forecast for the contribution of inventory investment to first-quarter real GDP growth fell from –0.4 percentage points to –0.7 percentage points.
California state releases details on four proposed routes for bullet train, southern California. The Los Angeles Times is reporting:
The roughly 164 miles of track from the Central Valley to Anaheim will be the most technically complex, environmentally sensitive and financially taxing part of the $64-billion project to connect San Francisco to Southern California by 2029.
Among the key disclosures in the reports was a plan to enter Union Station with surface tracks, abandoning an option to arrive at the rail hub on a viaduct with an elevated platform. The state also revealed that it was considering sharing tracks with the Metrolink commuter rail service on a portion of the 12-mile stretch from Burbank to Los Angeles — which could affect the bullet train system's capacity and speed.
The general path for four sections of rail in Southern California has been well defined — taking the bullet train from Bakersfield up a 4,000-foot incline to Tehachapi and then through the Mojave Desert to a station in Palmdale. From there it would descend through the San Gabriel Mountains in long tunnels to a station at the Burbank airport. It would make its way along an existing railroad right of way to Union Station and then travel along another rail corridor to Anaheim's new transportation hub.
But the reports released Friday, known as supplemental alternatives analyses, laid out the tremendously different effects associated with the still-to-be-decided route options.
For example, each of the three possible paths from Palmdale to Burbank through the rugged San Gabriels would require up to 24 miles of tunnels as deep as 2,000 feet below the surface, one report says. The tunnels would be about four miles longer than earlier indicated.
One of the routes would require a single tunnel of nearly 17 miles that would cut through geologically complex shattered rock and fault zones. Another would displace as many 918 homes, while yet another alternative would displace 87 homes. But the vibration and noise, the report said, would affect many more.
This project is easily a 4-generation endeavor. Children being born today will be the lawyers, engineers, and politicians spearheading this project 40 years from now. Their children will be going to school with plans to follow in their parents' footsteps working on this railroad.