Tuesday, May 29, 2018

Week 21: May 20, 2018 -- May 26, 2018

Reader identifies five Bakken horizontal wells that have each produced one million bbls to date
North Dakota crude oil production will set new record this summer -- Lynn Helms
Active rigs in North Dakota back up to 65
CLR Olson well in Edge oil field has huge jump in production
Random update of two incredible WXP wells in Reunion Bay
Is Petro-Hunt getting ready to report its Charlson State/USA wells?

Frack sand update 

Bakken economy
Legacy Fund deposits "recover"
Bakken jobs bubble much bigger than expected

Bakken 101
Curve build study

Sudden plunge in price of oil
Sticker shock 
CNBC on location in Williston this week

Crude oil production over the next five years 

Seven New Permits; Four Permits Renewed; Seven DUCs Reported As Completed -- May 29, 2018

Active rigs:

Active Rigs65502980187

Seven new permits:
  • Operators: Whiting (5); Kraken Operating (2)
  • Fields: Tyrone (Williams); Corinth (Williams)
  • Comments: Whiting has permits for a five-well Moline pad in NENE 15-156-101
Four permits renewed: CLR renewed four permits -- two Flint Chips permits and two Dennis permits, all in Dunn County

Two permits canceled:
  • Petro-Hunt ND canceled a Harry Dunne permit in Stark County
  • Petro-Hunt LLC, canceled a USA permit in McKenzie County
Seven producing wells (DUCs) reported as completed:
  • 29712, A, CLR, Cuskelly 3-7H, Rattlesnake Point, 4 sections, t3/18; cum --
  • 29713, A, CLR, Thorvald 4-6H1, Rattlesnake Point, 4 sections, t3/18; cum --
  • 32865, 3,634, MRO, DeMaray USA 41-2TFH, Antelope, Sanish, t4/18; cum -- (see graphic below)
  • 33139, 1,418, Newfield, Bice 148-97-18-17-4H, Haystack Butte, t4/18; cum --
  • 33284, 1,357, Whiting, Johnson 24-7-4H, Truax, t5/18; cum --
  • 33825, 2,486, WPX, Mandaree South 30-31HEL, Reunion Bay, t5/18; cum --
  • 33826, 2,264, WPX, Mandaree South 30-31HQ, Reunion Bay, t5/18; cum --

The Graphic

This graphic or variations of this graphic have been shown many times on the blog. I'm not going to identify wells on this graphic at this time. One can find that elsewhere. The index well in this graphic is the DeMaray USA well, #32865.

Auf Wiedersehen, May; Auf Wiedersehen, Germany -- Crown Prince Mohammed Bin Salman -- May 29, 2018

Saudi Arabia -- Auf WidersehenFrom Reuters:
Saudi Crown Prince Mohammed bin Salman has ordered that no more government contracts be awarded to German companies, in a sign of continued irritation over Berlin's foreign policy in the Middle East.
Citing no sources, it said the move was likely to hit major companies such as Siemens, Bayer and Boehringer Ingelheim as well as carmaker Daimler.
Market -- Auf Wiedersehen: market action today? What's the big deal? "Sell in May, go away." It's May 29, 2018 -- two or three more trading days in May. Why wouldn't folks do what they've been doing for decades? Sell in May, go away.

Does anybody really care if it takes North Korea fifteen years to dismantle its nuclear program? At least "we would be on the right track" if North Korea started dismantling its nuclear program. That beats testing new warheads, new missiles. North Korea has been building up its military arsenal since the 1950s -- that's over sixty years ago. Now it looks like North Korea is willing to start dismantling its program. Who cares if it takes fifteen years. Previous presidents had simply kicked the can down the road and North Korea kept building its nuclear arsenal.

A Reader Identifies Five "Millionaires" In The Bakken -- "Outs Them" -- May 29, 2018


Later, 7:02 p.m. CDT: wow, isn't this interesting? In the June NDIC hearing dockets, this case --
  • 26741, CLR, Cedar Coulee-Bakken; 18 wells on an existing overlapping 2560-acre unit; sections 21/28/33-147-96 and section 4-146-96; Dunn (remember: this is a "case" -- not a permit number)
May 31, 2018: in the original post and the updates, several "families" are mentioned. I track the families here (click on the family names) (I'm sure they all need to be updated):
May 31, 2018: the data in the original post was inspired/provided by a reader. That reader provided an update. There is simply too much information in his (and, yes, it is a "he") update to digest quickly, so I will post it now, and then get back to it later). His update:
By the way, I am pretty certain that CLR is stimulating the Corral Creek 147-96-36 wells finally, 6 of the 14 CC, or the older SI/NC wells look like WIP (work in progress?).  
I’m curious to see how good these wells are. 
Both BR and XTO are drilling around the area too. They both have good acreage but CLR might have better. 
There are a few new IA wells the past few months on the existing CC section 36 well interests, that’s what tipped me off. 
CLR is now on DRL status on two of three brand new Morris 4-5 section 23 Oakdale wells that popped up fast. 
There’s also two Colter Bear Creek wells and one new Hawkinson - 16 section 22 Oakdale well in a CLR 6 well batch on a 9 well pad. 
One month all were LOC and then two went to DRL. Nine wells on a section 22 pad. 
Right now my count is 18 wells to complete between section 22, 23 & 36, that land there, also, that I follow. These include: State-Weydahl and Brandvik/CC - Morris, Carson Peak/Oakdale). Oakdale needs more wells.

MRO is working both the Bailey and Killdeer leases lately with some 2- to 6-year-old wells  going to IA. At least MRO refracs whenever wells get sluggish. [Great, great observation by the reader -- I've noted the same thing -- noted that long, long ago -- I assume the reader noted that, also, a long time ago.]

I’m nearly convinced the more 24- to 25,000-foot total depth (TD wells we see, the more production will grow. Two of the Enerplus Hope, Courage, Pride, Grace, monster wells are 24,000- ft plus. The deeper multi-lateral wells are we more productive I noticed.

I attached an NDIC screenshot of the wells on the CLR pad spanning 2 oil fields in 3 separate sections:

 Original Post

Fortunately I have readers that keep me on task. A reader updated me regarding Bakken horizontal wells that have now gone over one million bbls cumulative. The note:

For the longest there, there were only two North Dakota Bakken horizontal wells that had produced over one million barrels of oil. We now have three more, five total:
  • 16059, 729, Petro-Hunt, USA 2D-3-1H, t10/06, cum 1.67 million bbls 3/18, a short lateral;
  • 20210, 803, CLR, Whitman 2-34H, 34-147-96, Oakdale, 4 sections, t9/11; cum 1.1595 million bbls 3/18;
  • 17263, 3,124, Chandler James 25-36H, s7/08, produced 500,234 bbls in 484 days; as of 8/12 -- 899K; no pump; still producing 8,000 to 9,000 bbls/month; as of 3/18 down to 2,000 bbls/month; t10/08; cum 1.12 million bbls 3/18;
  • 17092, 3,027, Behr 11-34H, Sanish, API 33-061-00678; there is no frack report for this well at the NDIC site (unless I missed it): FracFocus has no record of this well; s4/08; produced 500,725 bbls in 591 days; inactive Jan/Feb 2015; now back on status 3/15; cum 1.08 million 3/18;
  • 17227, 2,191, EOG, Austin 21-28H, Parshall, t8/18; cum 1.06 million bbls; this is a short lateral 
Comments from the reader:
  • the Continental well is a monster (look at the test date). Has been gaining on the Petro-Hunt well (and definitely given time in life has produced most). Seems like an anomaly though ... not one of a set of wells. Just tapped into some pool or something
  • the three new "millionaires" are all Mountrail County (presumably near the anticline sweet spot)
  • interestingly, there are also four wells in the 0.9MM club (not shown). All four are in Mountrail (3 EOG, one Whiting). So that is definitely more of a pattern of a sweet spot versus random luck. The four are in upper half of the 0.9 band (one right at midpoint). So within a year, we should have four more "millionaires."
Additional comments:
  • source: shaleprofile.com (latest ND post)
  • no huge point. Certainly it is true these wells are non-representative in the extreme. Just the sound bite of "only two wells have done a million" has naturally changed as time went on
  • the CLR well was shut in last month or two. Not sure why (nearby completions?) 
My comment: although these wells are non-representative in the extreme, my hunch is we will see many "millionaire" wells in the out years. Good luck to all. 

Putting Things Into Perspective -- May 29, 2018

According to Barrons, the "US stock market is worth $30 trillion, January 18, 2018. A two-percent drop represents a paper loss of $0.6 trillion. Italy's GDP is $1.7 trillion?

TSLA is up over 1% -- now trading up almost $3, and trading at $282/share.

Disclaimer: this is not an investment site. Do not make any financial, investment, travel, job, or relationship decisions based on anything you read here or think you may have read here.

The Supremes: Arkansas law on abortion not worth taking another look. Let it go. It seems the Arkansas law was not a lot different than the Texas law that was found unconstitutional.

Frack Sand Update -- May 29, 2018

From SeekingAlpha: Summary:
  • three public capable frac sand companies face increased competition from a new, gigantic entrant.
  • the three companies have navigated the downturn and transportation constraints to serve the skyrocketing Permian oil and gas market
  • important factors going forward will be the crude oil price, continued transportation constraints, the Dunes Sagebrush Lizard, new OSHA regulations, finding enough truckers, and managing logistics. 
Best update I've seen. Archived.

Linked for educational purposes, not for investment purposes.

Idle Chatter -- May 29, 2018

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

I see that the market is down about 300 points today. Alibaba (BABA)  is up today and flirting with a 52-week high, now trading over $200.

My dad's second largest holding in his quite remarkably-performing portfolio is Alibaba. His cost basis for Alibaba is less than $90/share. That suggests he bought shares in Alibaba in 2016 or before. In 2016, my dad was 94 years old. He was living in an assisted nursing home. For the past thirty years or so, his only financial news available to him was a day-old Bismarck Tribune that simply had a list of 50 or so ticker symbols with latest price, day's high, day's low, 52-week high/low, P/E, and dividend. There may be some hyperbole there, but not much.

He did go talk to his "broker" every day; in person if he could catch a ride, or by telephone.

At 94 he was a better investor than I was at age 54. Or 64. Or 44.

I don't even know if he knew what Alibaba was. He never mentioned Alibaba to me. I'm not even sure what Alibaba really does.


Five people in the restaurant, which is about as many as it has had all morning. The drive-through line never seems to stop and it seems there is always an order or two or three waiting to be picked up by folks who have ordered on the app and will come in to the restaurant to pickup their order. No millennials as far as I can tell.

Scott Adams thinks Starbucks will open more homeless shelters with more bathrooms. My hunch: Starbucks will open more kiosk-drive-through coffee shops with no inside seating and no bathrooms. Just saying. Certainly in urban areas.

A Note for the Granddaughters

Galois is pronounced "/ɡælˈwɑː/;" according to the wiki entry.
Évariste Galois, 25 October 1811 – 31 May 1832) was a French mathematician.
While still in his teens, he was able to determine a necessary and sufficient condition for a polynomial to be solvable by radicals, thereby solving a problem standing for 350 years.
His work laid the foundations for Galois theory and group theory, two major branches of abstract algebra, and the subfield of Galois connections. He died at age 20 from wounds suffered in a duel.
The river Oise is pronounced "the River Was."

From the ACM Digital Library, security for the Internet of Things:
This paper investigates the feasibility of a unified processor architecture to enable error coding flexibility and secure communication in low power Internet of Things (IoT) wireless networks. Error coding flexibility for wireless communication allows IoT applications to exploit the large tradeoff space in data rate, link distance and energy-efficiency.
As a solution, we present a light-weight Galois Field (GF) processor to enable energy-efficient block coding and symmetric/asymmetric cryptography kernel processing for a wide range of GF sizes (2m, m = 2, 3, ..., 233) and arbitrary irreducible polynomials. Program directed connections among primitive GF arithmetic units enable dynamically configured parallelism to efficiently perform either four-way SIMD 5- to 8-bit GF operations, including multiplicative inverse, or a wide bit-width (e.g., 32-bit) GF product in a single cycle.
To illustrate our ideas, we synthesized our GF processor in a 28nm technology. Compared to a baseline software implementation optimized for a general purpose ARM M0+ processor, our processor exhibits a 5-20 x speedup for a range of error correction codes and symmetric/asymmetric cryptography applications. Additionally, our proposed GF processor consumes 431μW at 0.9V and 100MHz, and achieves 35.5pJ/b energy efficiency while executing AES operations at 12.2Mbps. We achieve this within an area of 0.01mm2.
My very closest friend when growing up in Williston tried to explain this to me. I lost him at "energy-efficient block coding and symmetric/asymmetric crptography kernal processing for a wide range of GF sizes ..."

Monday, May 29, 2018

Read this post first.
One bitcoin transaction now uses as much energy as your house in a week -- Motherboard, November 1, 2017. Bitbcoin's surge in price has sent its electricity consumption soaring.

Bitcoin mining guzzles energy -- and its carbon footprint just keeps growing -- Wired, December 6, 2017. Bitcoin is slowing the effort to achieve a rapid transition away from fossil fuels. What’s more, this is just the beginning. Given its rapidly growing climate footprint, bitcoin is a malignant development, and it’s getting worse.
That's a legitimate story; a legitimate concern. Look at this, over at the Associated Press:
New gold rush: Energy demands soar in Iceland for bitcoins.
Iceland is expected to use more energy "mining" bitcoins and other virtual currencies this year than it uses to power its homes.
And it goes on.
Now this from The Seattle Times. Wow: 
Bitcoin backlash as ‘miners’ suck up electricity, stress power grids in Central Washington.
Bargain electric rates are attracting digital currency entrepreneurs, but three public utilities districts are reassessing how they deal with the surging demand, and whether they should even try to keep up. Residential customers, meanwhile, worry that their rates will go up. Public hearings for rural electric utilities are rarely sellout events. But the crowd that showed up in Wenatchee two weeks ago for a hearing about Bitcoin mining in Chelan County was so large that utility staff had to open a second room with a video feed for the overflow.

The turnout wasn’t surprising. Chelan County, along with neighboring Douglas and Grant counties, has been at the center of the U.S. Bitcoin boom since 2012, when the region’s ultracheap hydropower began attracting cryptocurrency “miners.”

The scale of some new requests is mind-boggling. Until recently, the largest mines in Chelan County used five megawatts or less. In the past six months, by contrast, miners have requested loads of 50 megawatts and, in several cases, 100 megawatts. By comparison, a fruit warehouse uses around 2.5 megawatts.
Read that again:
The scale of some new requests is mind-boggling. Until recently, the largest mines in Chelan County used five megawatts or less. In the past six months, by contrast, miners have requested loads of 50 megawatts and, in several cases, 100 megawatts. By comparison, a fruit warehouse uses around 2.5 megawatts.
I can't get my mind around megawatts, but let's put that in perspective. Assume I have been giving my daughter (when she was growing up) an allowance of  $2.50 / week, and had been doing that for years. And then all of a sudden, with no explanation I started giving her $100 / week.


And the bitcoin industry has barely gotten started.

Now add two EVs to every household in America.

What's the first thing you think of?

Yup, coal.


Notes For The Granddaughters

This may be one of many family photos I post over the next few days. Not sure.

This photo was taken on Thursday, May 17, 2018. I last spoke to him on Facetime, Friday, May 18, 2018,  Dad turned 96 years old earlier this year.

He had been up and around on his walker -- ambulating by himself -- up until a few days before this photo was taken. Then, it was discovered he had a broken pelvis of some weeks' duration. It must have been a "hairline" fracture but his nurse thought maybe a wheelchair was the appropriate thing to do until the bone healed. Dad never complained about the "fracture."

Cross-Country Trip, Part 2 -- May 29, 2018

Okay, I'm sort of caught up with the "current" news in the Bakken. I'm going to throttle back and enjoy the next hour or so with some rambling. I have no idea where this rambling will go, but if you come/came here for the Bakken, I doubt this page will be of any interest to you. But it helps me put things into perspective.

Having just said that, some thoughts on the Bakken this morning. Just in passing.

WTI: For folks in the Bakken: be very afraid.

For folks in the Permian: be very afraid.

Saudi Arabia: be very, very afraid.

One hundred million bopd -- global production -- and with talk of OPEC/Russia increasing production by one million bopd -- WTI plummets from $72 to $66. That's all it takes. Talk. The Bakken and the Permian are not going to go away with $65 oil. But Saudi Arabia cannot survive $65-oil. Again, it looks like Saudi Arabia is falling into the trap of group-think. They thought the discussion had changed from "supply" to "demand." It certainly appears Saudi Arabia is getting ready to make another trillion-dollar mistake. 

What does Bloomberg have to say about this? "OPEC and Russia best not poke the shale oil bear."
Here’s one under-reported factor that may explain Russian and Saudi Arabian  willingness to turn their backs on almost 18 months of OPEC oil supply cuts – the spread between Brent crude and West Texas Intermediate has reached its widest level in three years.
The simple reason for this is that the shale oil boom has left crude sloshing around the U.S., resulting in a local oversupply. While Brent prices have risen some 14 percent over the past three months, WTI is up just 7.5 percent and Midland crude – the version of WTI priced in the booming Permian basin rather than the benchmark delivery point in Cushing, Oklahoma -- is down 4.8 percent.
The last time we saw these sorts of spreads, there were sound legal reasons for it. The U.S. had forbidden almost all exports of crude oil for four decades until the end of 2015, so for many years its soaring shale oil production was trapped by the ban and the capacity limits of U.S. refineries that were able to convert it into exportable products.
The growing spreads now suggest that supply is pushing up against a different sort of bottleneck: A shortage of pipeline capacity between Midland and Cushing, and then a further shortage of pipeline and port capacity to get U.S. crude onto a hungry global market.
And the comments: if there is so much oil sloshing around, then tell me why gasoline is so high-priced? Those comments are tedious. Anyone that follows the oil industry knows there is a huge disconnect between price of oil and the price of gasoline. That is also true for potatoes and potato chips. And wheat and bread.  I think one large potato can be bought for about twenty cents at the local farmer's market; from that one potato, half a bag of potato chips for $2.29. And regardless of what the potato costs, the bag of potato chips costs the same for weeks on end. 

Cross-Country Driving

My round-trip was uneventful from Dallas, TX, to Williston, ND. I can't say the same for my Portland, Oregon, brother-in-law and their older son, traveling from Portland, to Williston.

Just after crossing the Idaho-Montana state border, they were startled by a small, private plane, that just minutes earlier had landed on the highway in front of them. The pilot walked away; traffic was tied up for a few minutes, but Dave and Cameron sailed on.

"Just after that," they were again startled by a semi-truck / 18-wheeler that had crashed into a guard rail. They passed without difficulty.

Not too much farther down the road, they were almost pushed off the road by another 18-wheeler -- that was the most dangerous situation so far. In fact, it sounds like they were quite fortunate to have survived that near disaster. 

So, knowing that things come in three and having cheated the jaws of death, Cameron said, "well, we got through that. Should be okay now."

Dave: "We're not home yet." 

Shortly after that they got caught by a truck that was passing inappropriately in a no passing one. Three-wide is not something you want to see when one is in a car, no matter how big, and the other two vehicles are 18-wheelers. Yup, Dave threaded the need. One truck, one car going in one direction and one truck going in the opposite direction on a two-lane road. 

All in Montana. Four near-misses, or more accurately, four near-hits. They weren't "near-misses." Dave adroitly avoided all potential mishaps. 

Dave told the story with a bit more enthusiasm.

Cross-Country Trip, Part 1 -- May 29, 2018

Okay, I'm sort of caught up with the "current" news in the Bakken. I'm going to throttle back and enjoy the next hour or so with some rambling. I have no idea where this rambling will go, but if you come/came here for the Bakken, I doubt this page will be of any interest to you. But it helps me put things into perspective.

First, I just spent a week in Williston, ground zero for the Bakken. On the way up, I spent two days in the Black Hills. Maybe not as impressive as the Grand Canyon, but I bet there's a lot more for kids aged 3 years old to 18 years old to do than at the Grand Canyon, and, yes, I've been to the Grand Canyon twice in the past three years or so. I haven't been to Yellowstone National Park or Yosemite, so can't comment/compare.

Dakota economy: Bismarck; Sioux Falls; Fargo/West Fargo; and, Rapid City -- incredible growth. Something's going on.

Cross-country driving: best times of the year, without question, just before the tourist driving season and just after it ends, i.e, the last two weeks of May before Memorial Day and the last two weeks of September, after Labor Day. This country is absolutely incredible. I assume the least "beautiful" / the least "impressive" part of the country is from Texas north to Canada. And if that's the least "beautiful" / the least "impressive," I can only imagine how the rest of the country is -- and I've been in all 50 states (as far as I know) and I lived in most regions of the country, and have spent more than three months in every region of the country (except Hawaii -- I've only been there for a week while in the US Air Force; the military can squeeze a year's worth of experiences into one week).

Texas friendly. Best day to drive cross country from North Dakota to Texas? Probably Memorial Day. On the four-lane divided highways, the posted speed limits gradually increase from 60 mph to 75 mph going from north to south (from Nebraska to Texas), although in western South Dakota it was either 75 mph or 80 mph on the interstate. The average speed travelers were driving appeared to be about five miles above the posted speed limit. That was the average. That means most were going ten to fifteen miles per hour faster than the posted speed limit to average out the folks who were driving Volvos (supposedly the safest cars on the road) fifteen to twenty-five miles slower than the posted speed limit. There were very few trucks. The last stretch from Wichita, Kansas, to Dallas, Texas, -- a four-lane divided I-35 -- was busy, busy, busy, but it was only half what it could have been.

Texas friendly, continuing. I did not spot one highway patrolman or state trooper from Wichita to Dallas. That's not quite accurate. One state trooper (either southern Nebraska or northern Kansas) was parked on the median watching for speeders. But he/she was not stopping anyone. A few miles down the road, a state trooper in the very same type of vehicle was speeding north, I assume to relieve the other state trooper at shift change. And then somewhere in Kansas, one highway patrolman had stopped one speeder. And that was it. Normally, I see not less than six or seven highway patrolmen/state troopers in every state I go through on that Texas-North Dakota trip. I didn't even see a trooper on my way out of the Bakken, nor anywhere all the way to Rapid City. There was the fake cop car in Amidon. That car, by the way, has been updated; and still has the Canadian flag painted on the driver's door. There is no longer any dummy in the driver's seat.

My hunch is that law enforcement is out in full force after dark and they "rest" during the day. An analogy. NBA basketball. Some games, the refs call the game very, very tight -- calling the game very, very closely, lots of fouls. In other games, the refs back off, and "let the players play." I had the feeling that law enforcement on Memorial Day were letting the "drivers drive." It's possibly law enforcement was tied up in Memorial Day parades, policing and/or participating.

[Everyone loves a parade, except me when I'm trying to get through some one-stop-sign town.]

It's also my impression that on four-lane divided highways, things go a whole more smoothly when law enforcement is not out there. Drivers know what they are doing and they all generally drive at the same speed. Throw in a state trooper and everyone modifies their behavior and it screws everything up. The cars all going 85 mph all of a sudden slow down to 60, and then when one speeder is cut from the herd, everyone takes off again, but now instead of everyone standing still (at 85 mph) relative to each other, folks are now going anywhere from 60 to 90 mph. That's a disaster for an accident. At 85 mph one tends not to doze off. At 55 mph, everyone falls asleep, including the driver.

Texas friendly, continuing. Fourteen hundred miles. Actually, 1,420 miles - exactly. Not one sign of road rage. No road rage because we all assume everyone is carrying a long gun or two. That's what we mean by Texas friendly. I had one incident -- if one can call it that -- of a whale of a car tailgating me. I was going 81 miles per hour passing a truck in a posted 70-mph zone so the tailgating did not bother me. I signaled that I would be moving to the slow lane as soon as I cleared the truck, and I did. But that was it.

Texas friendly, continuing. I was really, really impressed. Everyone, on the very crowded interstate, I-35, was falling into line in the slow lane, going 75 - 85 mph. The right lane was left open for passing. There was a three-mile stretch or so that there was not one car in the left lane. It looked like the Daytona when 43 cars are all in single file using the draft or whatever to gain speed. For those three miles, no one broke from the pack to pass. It was surreal.

Texas friendly, continuing. I never go over the speed limit when driving, and usually drive about ten mph slower than the posted speed limit when I'm driving my own car, but for the this trip, I had a rental. A Chevrolet Sonic. Awesome car. Almost as good as my 2012 Honda Civic. First time I hever had Sirius XM. I highly recommend Sirius XM if traveling cross-country. If one never travels cross-country, one probably doesn't need Sirius. I'm serious. Couldn't resist.

Maybe more on this later, but for now, need to move on.

The Bakken Jobs "Bubble" Bigger Than Expected -- 14,000 Jobs Go Unfilled -- May 29, 2018

I'll get back to this story later. Have to keep moving. A big "thank you" to the read who sent me this story.

From The Williston Herald: Bakken jobs bubble bigger than reported. State losing million in state tax revenues with unfilled positions.

I have returned to Texas after a week in the Bakken. I can verify that headline is correct. It's all good.
The jobs bubble in North Dakota has grown much larger than has been reported, but no one is certain how much bigger it’s getting to be. Nor has the state done any particular studies on how much revenue it’s losing from the thousands and thousands of positions that are going unfilled, and the activity that isn’t occurring as a result.
North Dakota Job Services has estimated that the state’s current jobs bubble is 14,000 statewide — a brand new Jamestown, if all of the positions were filled.
Not stated in this article, but off the radar scope: truck manufacturing. 

Canada Buys A Pipeline -- May 29, 2018 -- First Nominee For Doofus Of The Year, 2008


July 24, 2018: deadline passed for Canadian government "to flip" the pipeline. Trudeau's hope was that by stepping in at the last moment, "buying" the pipeline, he could find a buyer for the pipeline by this date. No buyer. So, now, the Canadian government owns the pipeline, lock, stock, and barrel. The country promised $4.5 billion for the assets to date, plus another $7.4 billion to finish the pipeline.  Simple arithmetic suggests this adds up to $11.9 billion. 

June 4, 2018: another oilprice.com article suggesting that Kinder Morgan Canada outsmarted Trudeau. Hard to say; I'm sure there are two sides of the story. But Canada has lost the Keystone XL; the Energy East; the Enbridge Line 3 (perhaps); and, at risk, Kinder Morgan's Trans Mountain Pipeline Expansion project. 

May 31, 2018: concessions made by the Trudeau government over the years to get the opposition to agree to the Trans Mountain Pipeline expansion project.

May 30, 2018: Kinder Morgan Inc hands over its controversial Trans Mountain Expansion project to Canada. Motley Fool.

Later, 3:14 p.m. CDTfrom cbc.ca --
The Liberal government will buy the Trans Mountain pipeline and related infrastructure for $4.5 billion, and could spend billions more to build the controversial expansion.
Finance Minister Bill Morneau announced details of the agreement reached with Kinder Morgan at a news conference with Natural Resources Minister Jim Carr this morning, framing the short-term purchase agreement as financially sound and necessary to ensure a vital piece of energy infrastructure gets built.
"Make no mistake, this is an investment in Canada's future," Morneau said.
Comment: this will be delayed when BC takes this to the Canadian Supreme Court, and even if the Court says it's constitutional to do, it does not mean the protesters will continue to delay the project.
Original Post
Re-posting from last night:
A reader sent me these two links. I was not going to post them until tomorrow, but they need to be posted tonight -- the two stories:
Update coming out of Canada today: from SeekingAlpha. Yup, Warren Buffett bought a railroad, Justin Trudeau bought a pipeline. I.N.C.R.E.D.I.B.L.E. Is there an emoji for that? But apparently only "temporary":
  • Effectively nationalizing the project until an operator can be found, Canada is likely to buy Kinder Morgan Canada's Trans Mountain oil pipeline and its controversial expansion project
  • The Canadian government intend to offload the project as soon as it's guaranteed that it will be built, but it's unclear if other Kinder Morgan assets will be included in any sale
From a reader, citing a quote from the Vancouver Sun, quote by Chris Gardner, president of the Independent Contractors and Business Association. This is what he says about the John Horgan, Prime Minister of British Columbia:
“In less than a year on the job, John Horgan has ripped-up the approval of the Trans Mountain project; created a constitutional crisis; started a trade war with B.C.’s closest neighbour; sent a chilling message to investors that Canada does not respect the rule of law; and forced Ottawa to spend billions of taxpayer dollars to build a project that the private sector was more than willing to deliver.”
I guess that about covers it --
  • ripped up the approval of this project -- so much for "rule of law"
  • created a constitutional crisis
  • started a trade with its closest neighbour
  • sent a chilling message to investors that Canada does not respect the rule of law (i.e., a "banana republic")
  • forced taxpayers to spend billions of dollars to build a project that the private sector was more than willing to deliver
What a doofus.

Doofus of the year nominee?

Tuesday, May 29, 2018

Back in the saddle again. I will be slow getting started but at least I'm home and back to blogging. Talk about great timing. See this post -- something I thought about over the weekend and finally posted last night. This morning: The US is the only economy with legs.
  • GDP:
    • Italy: $1.85 trillion
    • Texas: $1.7 trillion
Permian: added 11 rigs last week. Now up to almost 500 rigs. Compare to Williston, maybe 65. And daily production between the two "in the same ballpark." As they say.

For planning purposes: Starbucks closes early today. For sensitivity training.

Back to the Bakken

Active rigs:

Active Rigs65502980187

RBN Energy: pipeline alternatives gunning to provide Permian relief.
Natural gas supply growth from the Permian Basin has flooded the Texas market in recent months, filling up takeaway pipelines and sending Waha spot prices to steep discounts relative to its downstream markets. Incremental demand — from exports to Mexico for gas-fired power generation as well as for power demand in Texas — has provided some relief for West Texas prices in recent weeks. But Texas power demand is seasonal and, while Waha’s exports to Mexico are expected to continue growing, it’s likely to be on a piecemeal basis. Thus, longer term, new Permian takeaway capacity will be needed to balance the Waha market. To that end, there are a bevy of takeaway projects vying to expand capacity from the Permian. These projects — their timing and routes — will drive the Texas gas flows and pricing relationships over the next several years. Today, we continue our series on Permian gas, this time delving into the various takeaway capacity projects competing to move Permian supply to market.
We know that much of the incremental Permian supply growth over the next five years will head east to the Texas and Louisiana Gulf Coast. But which pipes get built will determine where along the coast all that gas will end up — South Texas, Louisiana or somewhere in between. And that, along with the timing of LNG export demand, will drive downstream prices at Agua Dulce, HSC and Henry Hub.

Monday Evening, The Market, Energy, And Political Page, Part 3, T+18 -- May 28, 2018


May 29, 2018: Italy: ready to "exit." The US is the only economy with legs.

Original Post

Failed (and failing) states: I touched on this briefly the other day. Something tells me this is a story that is not getting the attention it deserves.
  • Turkey: a tyranny establishes itself. London Review of Books, May 24, 2018; a very, very long ten-page article. 
  • Italy: ready to "exit." The US is the only economy with legs.
  • Venezuela.
  • Colombia. 
  • Mexico. In July will elect a far left president that is very likely to take Mexico down the "road-to-Venezuela."
  • Brazil. Now the truck strike. Country at a standstill after nine days of this nonsense. No end in sight.
  • Saudi Arabia. Needs $88 oil; the price of oil now trending down again. 
  • Canada. Can't even get a simple pipeline project approved. Everybody sees this as a "financial" problem; it's much more than that.
Russian roulette? Has anyone been following the latest Russian malware scare? [That's a rhetorical question: do not reply with answers.]
The FBI says that "as many as" 500,000 routers in 54 countries "may have" been infected with Russian malware. The FBI is talking about "personal routers" -- routers used in homes and in small businesses. I assume there are 500,000 routers in the state of North Dakota alone. Plus or minus a few thousand. But, c'mon man, 500,000 routers in 54 countries -- how did they come up with this number? I'm not saying this isn't likely to have happened, but it sounds like the FBI is CTA.
So far, although I may have missed it, it appears the Drudge Report has not linked this story. This sounds like the kind of story the Drudge Report would link and so far it has not. I believe the story is at least two days old. My wife told me about it when I got home after being gone for a week. I had to google it. The FBI urges everyone to re-boot their routers. And change their passwords. How does one re-boot a router? One unplugs it for 30 seconds. Electrical storms in Texas do that on a regular basis. I think our router is re-booted at least once a month during tornado season. Changing the password is a bit more difficult. I will take action if my internet provider contacts me and suggests I do that.
Back to the Bakken tomorrow