Wednesday, November 30, 2016

ND Legacy Fund Through November, 2016 -- Deposits Total About $3.7 Billion

I track the Legacy Fund here.

Deposits through November, 2016: $3,700,055,301.

It appears that about $30 million was added in each of the last two months, October, and November, which is comparable to the $32 million added in September, 2016. See first link above.

Note: deposits do not equal asset value of the Legacy Fund.

Bakken 2.0: Dunn County's Breakeven Costs About The Same As Iran's; A Little Higher Than Iraq's -- Reuters -- November 30, 2016

So much for the trope that it's so much cheaper to drill in the Mideast. It may cost Saudi Arabia $12.50 / bbl to produce but its national budget is based on $92 oil. 

From Reuters: leaner and meaner -- US shale greater threat to OPEC after oil price war.

This is a must-read article for Bakken fans. It is quite amazing. Note:
  • this article is a Reuters article; and,
  • of all the shale plays in the US, it is the Bakken that is singled out.
The lede:
In a corner of the prolific Bakken shale play in North Dakota, oil companies can now pump crude at a price almost as low as that enjoyed by OPEC giants Iran and Iraq.
In an earlier post it was noted that break-even costs in some areas of the Bakken are now below $20/bbl. Compare that with the break-even costs for middle eastern oil field breakeven costs at the linked article:

Amazing, huh?

The trillion-dollar mistake:
Rather than killing the U.S. shale industry, the ensuing two-year price war made shale a stronger rival, even in the current low-price environment.
In Dunn County, North Dakota, there are around 2,000 square miles where the cost to produce Bakken shale is $15 a barrel and falling, according to Lynn Helms, head of the state's Department of Mineral Resources.
Again, this is a Reuters article:
Dunn County's cost is about the same as Iran's, and a little higher than Iraq's. Dunn County produces about 200,000 barrels of oil a day, about a fifth of daily production in the state.
It is North Dakota's sweet spot because it boasts the lowest costs in the state, yet improved technology and drilling techniques have boosted efficiency for the whole state and the entire U.S. oil industry.

And more:
The breakeven cost per barrel, on average, to produce Bakken shale at the wellhead has fallen to $29.44 in 2016 from $59.03 in 2014, according to consultancy Rystad Energy. It added that in terms of wellhead prices, Bakken is the most competitive of major U.S. shale plays.
Wood Mackenzie said technology advances should further reduce breakeven points.
More at the link. 

I can't wait for Donald Trump to visit the Bakken.

Energy Drilling Rig No. 7 in Casper, Wyoming, from 2014:

North Dakota Borrows Another $7 Million For DAPL Protest Costs -- November 30, 2016

Link here.
The group earlier approved $10 million in emergency spending.
Officials say the new loan should cover the state's cost of policing protests over the $3.8 billion pipeline through December.
I guess this explains why the governor says he will meet with the protestors this week, or whenever it was.
Record Cold In USA Next Week
Link here: I cannot recall last time I have seen such a cold anomaly forecast across almost entire USA.’-- climatologist Dr Roger Pielke, Sr. See NWS forecast.

The Washington Post: frigid air mass building in Alaska, poised to spill into Lower 48 next week. 
Alaska is witnessing its coldest air in almost two years, and some of the biting chill is forecast to plunge into the western United States in about a week’s time.
In Fairbanks on Tuesday morning, the temperature tanked to minus-31 degrees, ending a 624-day stretch in which it was warmer than that — the second longest on record.
Tuesday afternoon, the mercury only recovered to minus-21, ending a record-long 658-day stretch with highs above minus-10.
It was even colder in Bettles, Alaska, on Tuesday, where the temperature dropped to minus-41 with a bone-chilling wind chill of minus-53.
Statewide, it was the first time Alaska’s daily temperature index was significantly below normal in almost a year.
So, we'll see.

Whatever Happened To Harrisburg?

November 30, 2016: whatever happened to Harrisburg? In 2011, Harrisburg, Pennsylvania, became the first and only capital city in America to file for bankruptcy. The seven-term mayor has been indicted on 500 counts of corruption.  He was mayor for 27 years, from 1982 to 2010.
What was the result of that case?
“He has pled not guilty and the case is ongoing.”
“But it’s not just him. It’s the people who advised him. It’s the people who drafted the documents. He didn’t do this alone. Now, he’s facing 500 charges of corruption. He has pled not guilty to all of them. A trial date has not been set, but this is going to trial. The people who helped him — none of them have been held accountable. He didn’t do this by himself. He didn’t draft those documents alone. He didn’t write this stuff up alone. He had lawyers, accountants — they were all in on this.”
“The Attorney General of Pennsylvania has said that they are also being investigated. There is a grand jury investigating right now. They are looking into this to see what charges they can bring against the professionals who helped him. Also, the Governor of Pennsylvania has hired a law firm from Washington DC to go after the firms and the professionals civilly to try and claw back some of the money that Harrisburg lost in these loans that shouldn’t have been issued.”

Two New Permits -- November 30, 2016

Active rigs:

Active Rigs3965185191182

Wells coming off confidential list Thursday:
  • 31249, 127, EOG, WEst Clark 201-01SWD, Clarks Creek, Three Forks, 2 stages, 800K lbs proppant, t6/16, cum -- ; but note the name of the well; from the sundry form: perf'd and frack'd two (2) stages; noted a pressure drop at end of stage 2; determined that casing "part" at the collar with slight casing offset; as a result it was decided to not attempt to continue on with fracking operations due to operational risks associated with a reduced I.D. (internal diameter?) from a casing patch
  • 32217, SI/NC, XTO, Little Pete Federal 41X-3G2, Bear Creek, no production data,
  • 32218, SI/NC, XTO, Little Pete Federal 41X-3D, Bear Creek, no production data,
  • 32379, SI/NC XTO, Werre Trust 21X-3E, Bear Creek, no production data,
Two new permtis:
  • Operators: NP Resources, BR
  • Fields: Elkhorn Ranch (Billings), Big Gulch (Dunn)
  • Comments:
Fourteen wells temporary abandoned:
  • Statoil: 6 - all in Williams County
  • Oasis: 6 - all in Williams County
  • Enduro: 2 - one in Bottineau County; one in McKenzie County
No producing wells (DUCs) reported as completed.

Alaska Rejects 5 Cubic Feet Of Natural Gas Every Day For Every Cubic Foot Of Natural Gas North Dakota Produces -- November 30, 2016

From an earlier post, from RBN Energy:
Every day, crude oil producers on Alaska’s North Slope re-inject nearly 7.8 Bcf of natural gas into their wells, enough gas to supply the entire U.S. West Coast—California, Oregon and Washington State.
7.8 billion cubic feet of natural gas per day.

How much natural gas does North Dakota produce each day? From the most recent Director's Cut, North Dakota produced 1,611,836 million cubic feet per day or 1.6 billion cubic feet day.
  • 7.8 billion / 1.6 million = almost 5 cubic feet in Alaska for every one cubic foot of natural gas in North Dakota (assuming I did the math correctly -- which is a huge assumption).
This sort of helps me put things into perspective.

Note: I made huge mistake when I first posted this. See first comment below. I made the corrections above. Hopefully they are correct now. 

And a huge "thank you" to the reader who caught the error ... and didn't call me an idiot in the process. LOL. Much appreciated.

Kenmare, ND - November 30, 2016

I guess NoDaks don't have to dream about a white Christmas this year ..... it's already here .... from a reader in Kenmare....

Beautiful, isn't it?

Notes From All Over, Mostly Politics -- November 30, 2016

OPEC. If indeed this headline is correct, "Why Saudi Arabia Shocked The Skeptics With An OPEC Deal," shorts are getting hammered today. Had OPEC not cut a deal, the price of oil would have slumped, possibly below $40, taking oil companies down with it.

Pelosi wins. Jill Stein asks about a recount.

Priorities. Early in his presidency, Barack Obama brings a law enforcement officer and a Harvard professor together over a glass of beer. Before he was sworn in as president, Donald Trump saved 1,000 jobs in Indiana. No alcohol involved. 

Bully. The mainstream persists in meme-ing the mainstream left's portrayal of Trump. One of the memes: Trump is a bully. (Wow, I hear that from my wife on a daily basis, that Trump is a bully.) Now that Trump has bullied Carrier into keep the Indiana plant open -- I did not hear MSNBC or CNBC use the word "bully" or "bullying" when describing Trump's success in Carrier agreeing to keep at least some jobs in Indiana instead of moving "everything" to Mexico. I guess, like pornography, "bullying" is in the eyes of the beholder.

Tax relief. The new SecTreasurer-appointee said there would be no tax breaks for the top 1%. At least that was on one of the bullets on CNBC today. I doubt any Hillary supporter even saw that. The caps on deductions (like mortgage) will be capped. Those caps will not affect the "average" American.

Damn the torpedoes, full speed ahead: I don't think folks have any idea how fast Trump plans to move. One of the things that slows down the first 100 days is a) Senate confirmations; and, b) the constraints of the House calendar where tax and spending bills begin. If Trump gets any push back, if he sees any hint that there is any political delay he will have the "Obama Pen" that was handed to him on January 20th. The Obama Pen:
  • executive orders
  • czar appointments (Reagan had one; Obama had 38)
From wiki:

Ready to move day 1: I doubt many caught it but on CNBC this morning, the SecTreasurer-appointee appeared to have really "startled" the "expert" journalists. Mnuchin (the "munchkin") outlined very clearly the Trump plans. The "expert" journalists appeared surprised that the appointee appeared to be talking directly from a very well-laid-out plan. My hunch is that the plan is 90% draft; will be completed over the Christmas holidays; and line items will be laid out by January 20th, and with a series of executive orders, legislative actions, presidential bullying, tweeting, 24/7 attention-to-detail, the line items will be checked off one-by-one.

Presidential bullying. By the way, when did the concern about "bullying" become so noteworthy. If one wants to talk "bullying," one needs to read the biography of LBJ. I just checked my Funk and Wagnall's: next to the entry for "bully" there's a photo of LBJ. But let's go a bit more mainstream. One of our greatest presidents -- in fact, the big national park in North Dakota is named after him -- from wiki:
This term was coined by President Theodore Roosevelt, who referred to the White House as a "bully pulpit", by which he meant a terrific platform from which to advocate an agenda. Roosevelt used the word bully as an adjective meaning "superb" or "wonderful", a more common usage in his time than it is today.
So, the question again, why is "bully" all of a sudden becoming an issue? One word: "cupcakes."

Legacy: on November 11, 2016, I asked the question, "how long is a presidential legacy expected to last?" I suggested that Obama's legacy could be erased before Trump is even sworn in. I'm beginning to think that the Obama legacy is not much more than the smile of the Cheshire cat. The cover of this week's The New Yorker suggests the same thing.


BHI to build a new FRACKING and CEMENTING services company in North America. Data points:
  • new company: under the BJ Services brand
  • headquarters in Tomball, TX
  • Baker Hughes, CSL Capital Management, and Goldman Sachs fund West Street Energy Partners are backing the new firm
  • Warren Zemlak, current president and CEO of Atlanta-based Allied Energy Services will serve as CEO of the new company
  • Zemlak has worked as a senior exec with both SLB and Sanjel (two names well known in the Bakken)
  • "will renew the BJ Services legacy"
  • BHI acquired BJ Services in a $5.5 billion deal that closed in mid-2010
  • CSL and WSEP together will own 53.3%; BHI will have a 46.7% stake
World Chess Championship

King Olaf vs The Tsar.

Tiebreakers will begin this afternoon. Data points here:
  • First, a mini-match of four rapid games will be played. Each player gets 25 minutes for all of his moves, plus 10 bonus seconds after every move played. Four games.
  • If the players remain tied after those four games, they will play a mini-match of two blitz games. Each player will get five minutes, plus three seconds after every move. They’ll keep playing those, if the two-game mini-matches are tied, for up to five total mini-matches (10 total blitz games).
  • Finally, if none of that settles it, they’ll play one sudden-death game using a format known as Armageddon. White gets five minutes and black gets four minutes, but a drawn game counts as a win for black.
Meanwhile, TutorTime will begin teaching chess to 3-year-olds after the first of the year.

Sophia is already getting ready. The best part is going to be ringing the bells when one has made his/her move (and the M&M treat whenever an opponent piece is captured).

Sophia has already told me she is going to replace/rename the chess pieces, to include:
  • the front row will be eight Disney princesses instead of pawns
  • the rooks will be miniature Barbie doll houses
  • knights will be small unicorns or "My Little Pony" 
  • bishops will be Harry Potter wizards
  • the King: papa
  • the Queen: Sophia, of course

 On a side note: people may laugh at TutorTime introducing chess to 3-year-olds, but TutorTime is nationally-recognized leader in childcare. There is no question that they have researched this to the nth degree. So, let's google "chess and three year olds": in 0.68 seconds, there were 3,880,000 results.

"Chess at Three" was the first non-ad hit. And, then, of course, YouTube. At 2:26 in the video note the highly sophisticated move this kid makes -- castling:

Off The Net For Awhile -- Going Biking -- November 30, 2016

Dow 30 Rallies Continue -- November 30, 2016

Dow 30 hitting all-time highs.

S & P 500 hits record high.

NASDAQ: needs 5,404 for a trifecta. Not there yet.

OPEC rally:

Trump rally:

At 8:43 a.m. Central Time: Dow 30 almost up 100 points; new all-time record. OPEC cut deeper than previously "telegraphed."

CNBC: Saudi taking brunt of cut. Will Iran/Iraq cheat? That's a strawman.

OPEC Agrees To Cut - Bloomberg -- November 30, 2016

Story posted at 7:42 a.m. Central Time: Bloomberg. Data points:
  • first cut in eight years
  • OPEC will reduce production by 1.2 million bopd
  • to 32.5 million bopd
  • oil jumped 7.6% to $49.90 / bbl in London at 1:23 p.m. local time
WTI futures in NY: $48.54 (up 7.32%).

Cramer: it looks like Saudi Arabia takes the cut; Iran, Iraq don't do anything; Russia even agrees to a cut; US drillers are winners. 

Getting Ahead Of Our Headlights

Hey folks, before we go any further, take a look (again) at the two graphics at this post. I may be missing something. A reader has pointed out something very, very interesting. The reader has street cred with more than a decade working in Saudi Arabia. The reader suggests that the Saudis may be doing the same thing that is being done in the Bakken: drilling DUCs. Saudi could be drilling wells but not bringing them into production. "A few hundred shut-in wells is a lot better than money in the bank for surviving the next ten (10) years or so." Saudi might be significantly increasing productive capacity because they anticipate:
  • increasing financial difficulties; and/or
  • possibly some significant "social unrest"
I would add two more possibilities:
  • major disruption in mideast oil shipping 
  • major mismatch in supply / demand if Libya, Nigeria, Iran, Iraq, others falter 
The "interesting graph" at this post could change significantly if any oil suppliers falter. 
Schlumberger Rigs

I haven't had a chance to really take a look at Schlumberger's new rigs. Some data points:
  • last year Schlumberger announced: "Drilling System of the Future"
  • a departure from the past where oil service companies would stay out of contract drilling services
  • SLB specifically acquired T&T Engineering, a Houston-based rig engineering company, to help develp the new rig's design
  • SLB rigs will be manufactured by a joint venture that SLB has created with BAUER Maschinen GmbH
  • Cameron's drilling rig portfolio: the new rig will receive top-drives, pipe handling modules, and blow-out preventers
  • five engineering prototypes of the new system would be ready for field testing in US and Ecuador before year-end 2016
  • first prototypes manufactured in US
  • complete version of the rig is expected in 2017
It would be incorrect to think of the "rig of the future" as an attempt by Schlumberger to capture a share of the highly competitive and commoditized North American land drilling market. It is an attempt to capture a share of the entire oil services market by moving from selling a Schlumberger downhole tool or a Schlumberger reservoir characterization service to selling a Schlumberger well, and extrapolating a Schlumberger full field development. In many ways, the "rig of the future" is a logical extension of the company's integrated project management philosophy and should be viewed in that context.
Debate: is SLB concentrated on international markets, rather US unconventional markets? It sure looks like that. But....
While the leading North American independent drilling contractors, such as Helmerich & Payne and Patterson-UTI , have achieved tremendous success in designing and continuously improving highly efficient drilling rigs specifically tailored for shale drilling, their advantage versus Schlumberger may not be long-lived. There is certainly a risk that Schlumberger's integrated technology approach will make a difference in producing "smarter" wells at a lower overall cost.
Bottom line: it looks like Schlumberger is trying to to "integrate" the entire drilling operation rather than contract out the pieces. 

Every Day Enough Natural Gas "Rejected" In Alaska That Could Supply The Entire US West Coast -- California, Oregon, Washington -- RBN Energy -- November 30, 2016


Later, 11:15 a.m. Central Time: snow totals (so far) from winter storm Blanche -- this was a huge ND storm. I wonder if the Kennedys will send their grandchildren to see the snow. The Kennedys, as folks well remember, said their children and grandchildren would never see snow because of global warming.
  • Van Hook Park: 24"
  • Bismarck: 18"
  • Minot: 17"
  • Williston: 6"
Original Post
US student loans: the US will forgive at least $108 billion in student debt in coming years; the Obama program is proving to be far more costly than predicted. And this is news? Over at The Wall Street Journal
The report, to be released on Wednesday by the Government Accountability Office, shows the Obama administration’s main strategy for helping student-loan borrowers is proving far more costly than previously thought. The report also presents a scathing review of the Education Department’s accounting methods, which have understated the costs of its various debt-relief plans by tens of billions of dollars.
DAPL: the weather should start improving later today. Late last night, moving into today:

Active rigs:

Active Rigs4065185191182

RBN Energy: the dilemma posed by Alaska North Slope's stranded gas. When you read the first paragraph below note the amount of natural gas that is being "rejected" in Alaska, and then recall the huge outcry in the Bakken about the incredibly small amount of natural gas that was not being captured in the early days of the Bakken:
Every day, crude oil producers on Alaska’s North Slope re-inject nearly 7.8 Bcf of natural gas into their wells, enough gas to supply the entire U.S. West Coast—California, Oregon and Washington State. If only there were some way to monetize that gas supply, to move it to market. The problem is that there isn’t, at least in today’s gas/LNG market, which is characterized by ample supply and relatively low prices. This same market also favors infrastructure projects that are simple and low-cost; no one wants to make multibillion-dollar commitments when natural gas prices and margins are so low. Today we conclude our series on the tough times ahead for Alaska’s energy sector with a look at the state’s vast natural gas reserves and the challenges associated with tapping them.
The Market

Trump rally continues: Fifteen trading days since the election. Thirteen days were "up" days and most of those days new records were set. We're now in a new trading range, but it looks like we might have another "up" day. Dow 30 futures are showing green, albeit only 23 points to the "up" side.

"Trump inheriting a very strong economy" -- CNBC "Squawk Box" -- jobs. ADP data. Jobs:
  • 216,000 private sector jobs added (forecast, only 170,000)
  • previous number revised downward by 28,000 to 119,000 -- last month; when you look at the ADP of 119,000, remember the magic numbers; 
  • market responds; futures rise, now up 50+ points
Oil: oil "jumps" on prospects for OPEC output cut. Oil had dropped to $45 yesterday; today, it's back up to where it was a few days ago: $48. That represents a 7% increase overnight.

 Deal or no deal, OPEC can't win in fight against American frackers. Link here to Forbes. Again, the Harold Hamm quote: "We've doubled oil production. We can double it again."
Oxy is the biggest producer and acreage holder in the Permian basin, with a vast legacy position in old conventional fields. In the two years since prices collapsed in 2014, Oxy has cut its spend per barrel in half and doubled its Permian tight oil production to 125,000 bopd. With thousands of drilling locations economic at $50, Oxy should be able to double that and double it again.
Tesla. The SEC is writing strongly-worded letters to Tesla about "individually tailored" measurements in its August earnings release.

The market, Dow 30:
  • new highs -- 204, including Anadarko (APC), Apache (APC), BHI, CVX, Concho Resources, CLR, EOG, Enerplus, HAL, Helmerich & Payne, MRO, McDermott Int, ONEOK, Plains All American, RSP Permian, SLB, Tenaris, UNP, WPX
  • new lows -- 53