Taps For TAPS -- We're That Close -- Biden Vs COP -- February 1, 2023

Reminder: May 30, 2021: why President Biden approved COP's giant Willow Field in Alaska. It was all about saving the TAPS -- a national security issue. 

The Willow project: is all about saving TAPS.

President Biden could lose another pipeline -- though killing COP's Willow exploratory project would not result in loss of TAPS during Biden's first term but it could during Biden's second term.

My two cents: COP needs to go nose-to-nose with Biden administration -- "five or nothing; and nothing means the end of TAPS." 

Re-posting: 

Alaska: COP might get its 3-well project. Alaska is tracked here.

• Reminder: May 30, 2021: why President Biden approved COP's giant Willow Field in Alaska. It was all about saving the TAPS -- a national security issue. Update: link here.
  

• Willlow project on North Slope
• 600 million bbls; $8 billion
• COP wants 5-well exploration project
• Biden willing to go to 3-well program -- COP says anything less is uneconomical
• if no decision quickly, summer 2023 drilling program dead
  
• Biden says "okay" but bureaucrats hold the sealed envelope with the final decision. Me? The story is a political story, not an energy story -- except for COP which is running out of oil plays.

Willow by the numbers:

• 600 million bbls recoverable
• 200,000 bopd production
• 3,000 days of production
• ten years of production
• global production: 200,000 bopd / 100 million bopd = 0.2%
• US production: 200,000 bopd / 12 million bopd = 1.6%
• Permian production: 200,000 bopd / 3.5 million bopd = 5.7%

Guyana-Suriname Basin: rise from obscurity to super potential, WorldOil, May, 2021.

• estimates of 10+ billion bbls of oil
• estimates of 30 tera cubic feet of natural gas

July 1, 2016: this ExxonMobil - Guyana story is getting a lot of press. This may be quite a story:

ExxonMobil and its partner Hess Corp. have announced that the major discovery off the coast of Guyana, is a discovery that is much larger than previously expected.

The Liza field could turn out to be the largest oil discovery reported in two years and the companies say that it could cost $18 billion to develop.

Exxon describes it as a “world-class discovery with a recoverable resource of between 800 million and 1.4 billion oil-equivalent barrels.”

That could amount to as much as half of the entire volume of oil discovered across the entire industry in 2015.

 Update: link here.

More background data, from the EIA, April 26, 2021: 

Holy Crap, Batman! COP Chopped! -- August 18, 2021

The executive branch, the judicial branch, the legislative branch.

Rock, scissors, paper. 

The rock, a federal judge, just crushed the scissors, the executive branch: judge throws out US approval of COP's Alaska oil project, known as Willow, a planned $6 billion oil development project in Alaska. 

Link here to Reuters. 

Two of two articles reporting this story are behind a paywall; by tomorrow, the story will be available everywhere.

COP Selected By Federal Government To Develop Alaska's North Slope -- August 26, 2019

Link to AP. Data points:

• five drill sites
• linked by seven bridges; an airstrip, 38 miles of roads, processing facility
• project could last 30 years
• could produce 130,000 bopd
• max cumulative: 590 million bbls of oil
• nine-year construction project beginning in 2020
• oil production would begin in 2024
• currently, Alaska is averaging 500,00 bopd

Coal Still Keeps New Hampshire Folks Warm During Coldest Days Of The Year -- February 26, 2019

Link here.

ISO New England here.

*******************************

Alaska Unlikely To Affect Global Warming -- Governor

Link here. Data points:

• Governor Dunleavy abolishes Alaska's climate-change commission
• reverses the first administrative order by the former governor 
• that order halted work on:
• the Ambler Road Project
• the Juneau Access Project
• the Susitna-Watana Dam Project
• the Kodiak Launch Complex
• the Knik Arm Crossing -- connects Anchorage and Point MacKenzie by bridge
• the Alaska Stand Alone Pipeline Project 
• disbands task force studying light rail options between Anchorage and the Matanuska-Susitna Borough
• took action to favor right-to-work

This Is Really Cool: New England Shuns Marcellus; Yankees' Loss Is Dixie's Gain -- RBN Energy -- August 24, 2018

Blinked: China's Unipec to resume US oil purchases after tariff policy changes. LOL. Did anyone think otherwise? From oilprice:

The international trading arm of China’s refining major Sinopec, Unipec, will resume U.S. crude oil purchases from October.

The company had suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.

Peak oil, what peak oil: analyst suggests Alaska's North Slope is an "arrested, late-emerging-phase 'super basin' rather than a mature basin."

• analysis doe not provide "actionable" intel
• data points of interest, remaining reserves:
• 38 billion bbls boe
• that figure includes 50 trillion cubic feet of natural gas
• 28 billion bbls of oil
• EUR of the North Slope: 55 billion boe (specifically the analyst suggests 54.8 billion boe, not 54.7 or 54.9 but 54.8 -- that's when you know ...)
• 38 boe yet to be produced, combined with the 16.8 billion that has already been extracted
• let's see what the divisor was
• 38 billion boe - 28 billion = 10 billion NG boe 
• 50 trillion / 10 billion NG boe = 5,000 (I've always used 6,001
• compare the estimated natural gas reserves in the North Slope with other global reserves at this post: https://themilliondollarway.blogspot.com/2018/08/us-remains-natural-gas-king-oilprice.html. 
• the US: 341 trillion cubic feet
• although one source suggest the Marcellus-Utica could produce a quadrillion cubic feet (1,000 x trillion)

NG exports: will triple over the next 12 months (2019). Will account for 10% of US production.

WTI: trending toward $69. OPEC basket" $71.75.

Burnaby update: Canada's Supreme Court rules against Burnaby, for the pipeline. Time to start bringing in the sacred bulldozers.

Saudi Aramco IPO: in case folks have lost the bubble on the IPO -- bottom line, the Prince will shelve the Saudi Aramco IPO and take a stake in Sabic, becoming perhaps the world's largest petrochemical company?

*******************************************

Back to the Bakken

Only one well coming off the confidential list today --

• 30524, 884, CLR, Burr Federal 23-26H2, Sanish, fracked 10/23/17 - 10/23/17 -- problem? only one day frack; 7.8 million gallons of water; 88% water; t5/18; cum 32K over 47 days; apparently no problem with the frack; Three Forks 2; 63 stages; 8.1 million lbs;

Active rigs:

$68.55↑↑	8/24/2018	08/24/2017	08/24/2016	08/24/2015	08/24/2014
Active Rigs	62	54	31	74	192

RBN Energy: northeast gas pulled south by Florida power plants and Sabal trail.

• Florida’s increasing demand for natural gas for power generation isn’t new, but like a young alligator in the Everglades, its appetite is voracious and growing. More and more gas-fired power plants have been coming online, increasing gas demand and spurring the development of new gas pipeline capacity into the state. And, because of big shifts in where gas is being produced and where it’s flowing, the Sunshine State will soon be receiving an increasing share of its gas needs from the Marcellus region. Today, we begin a two-part look at how rising generation-sector demand for gas and a new pipeline are changing gas-flow dynamics in the U.S. Southeast.

One doesn't have to read much more to see who the winners are, who the losers are. As to paraphrase, the NY governor, NY never was that great. Certainly not when it comes to strategic planning.

COP Temporarily Exits The Permian; Will Focus On The Eagle Ford /Bakken -- But Also Assets In Alaska -- July 5, 2018

Wow, look at this. Again, this is not an investment site.

I have no idea if lessons learned during the Bakken revolution influenced what is going on in Alaska, but one wonders. Look at this SeekingAlpha link regarding COP.

This is a rig targeting a conventional target.

From the screenshot, COP:

• the increase in length to 28,000 feet is 40% greater than previously
• 1.4 of what = 28,000 feet? 20,000 feet? 
• 1.4 x 20,000 = 28,000 feet

I don't know if that's TD (vertical + horizontal) or simply the length of the horizontal; it appears they are talking about the horizontal length.

• using this method, COP hit a new record for highest initial production in Alaska, >10,000 bopd

Now compare with the Bakken:

• TD: routinely 20,000 feet (vertical + horizontal)
• horizontal alone: 9,000 feet
• initial production, about 15,000 bbls/month, but CLR might have set a Bakken record with >80,000 bbls/month or about 2,500 bopd (an outlier right now)

From the SeekingAlpha article:

• cost of producing Alaska conventional crude oil for COP: $30 / bbl

Also from the article, the writer reminds us that COP has recently announced that the company is "exiting" the Permian in the near term:

The plans to defer Permian growth are not that significant. However, the ability to move the capital budget to other basins is very significant. Many have wondered how oil production can grow when all those Permian challenges are front page news. The answer is that the capital simply shifts to areas without problems.

The Eagle Ford and the Bakken have become far more competitive now that the Permian production sells at a discount. Plus both have some idle pipeline capacity.

Management has plans for even more basins in the future. It is highly likely that there will not be an interruption in the unconventional growth plans at all. Some of these other basins already have pipeline capacity additions under construction and are planning for still more capacity. Therefore some of the basins may "never" suffer the challenges of the current Permian situation.

This is the second source that has said the Bakken has "some" idle pipeline capacity. And there's been a bit of a resurgence in CBR in the Bakken. Some have suggested that lack of takeaway capacity is the reason for the number of DUCs we see in the Bakken. That may be right, I don't know. But with refineries operating at 97%+ capacity, I wonder if it might be something else that accounts for DUC data.

Remember, John Kemp says we are in a period of "severe backwardation."

Update On Alaska's North Slope -- August 22, 2017

While the mainstream media is focused on GOP's internecine fights, this is an example of just some of the "real" business that is going on behind the scenes. From Rigzone:

Following an executive order from U.S. Secretary of the Interior Ryan Zinke, the U.S. Geological Survey (USGS) is in the process of generating updated assessments of the oil and gas resources on Alaska’s North Slope in what could be the precursor to an exploration and development boom on federal lands that have mostly been off-limits to the industry.

The May 31 executive order has renewed a sense of hope for opening currently off-limit areas of the National Petroleum Reserve – Alaska (NPRA), and opening the 1002 Area of the Arctic National Wildlife Refuge (ANWR), which has been tightly closed to the industry since the 1980s, to exploration.

As older oilfields such as Prudhoe Bay, the Kuparuk River and the Alpine have long since reached their production peaks, the state of Alaska has been anxiously watching the steady decline of oil through the Trans-Alaska Pipeline System (TAPS) over the last three decades – peaking in 1988 at 2.1 million barrels of oil per day to today’s roughly 500,000 barrels.

While it has long been speculated that off-limit areas in NPRA and the 1002 Area in ANWR have the potential for major discoveries of hundreds of millions or billions of barrels of oil, decades of legislation and land management policies have kept them closed to the industry to varying degrees, said David Houseknecht, USGS senior research geologist who is overseeing the North Slope assessments, to Rigzone.

Yet recent, headline-making discoveries on the North Slope by Armstrong Oil & Gas, Inc., ConocoPhillips Alaska and Caelus Energy Alaska have sparked excitement in the Last Frontier State. All lie within a major fairway stretching from the Colville River Delta to the western coast of Smith Bay. If areas that are currently off-limits to leasing near Teshekpuk Lake in NPRA open up, that could be the catalyst to the next energy boom in Alaska, Houseknecht said.

Did President Trump need to get involved? Who cares. This is how it really happened:

Earlier this year, Murkowski introduced a bill to the House and the Senate calling for the opening of ANRW to exploration.

And then a few phone calls to the Secretary of the Interior.

The "good guys" have less than four years to get these projects moving. There's no guarantee President Trump will be re-elected. A four-year window of opportunity.

Making America great. Again.

*************************************

You're Fired

My wife and I mentioned this to each other this morning -- time to sack the 7th Fleet admiral. I guess it's finally happening.

From Navy Times:

The head of U.S. Forces Pacific is preparing to sack the head of the three-star U.S. 7th Fleet after a string of mishaps among the Japan-based ships that have rocked the Navy to its core.

Adm. Scott Swift is traveling to Japan and plans to remove Vice Adm. Joseph Aucoin for a loss of confidence in his leadership there, two U.S. officials confirmed.

The Wall Street Journal first reported the pending firing.

I Wondered How Long The Good Times Would Last -- December 10, 2015

http://themilliondollarway.blogspot.com/2015/11/the-shifting-sands-of-fortune-eia.html
http://themilliondollarway.blogspot.com/2015/11/friday-november-6-2015-getting-lng-out.html

Now that you've reviewed the stories at the links above, the following should not come as a surprise. Fortune is reporting:

Its cash cow is drying up. If Alaska Gov. Bill Walker gets his way, the 49th state will begin to levy an income tax for the first time in 35 years.

In his “New Sustainable Alaska Plan” unveiled Wednesday, Walker called for measures to address the state’s expected $3.5 billion budget shortfall. Alaska fuels 90% of its general fund with oil tax revenue, according to a report by the Rockefeller Institute of Government at the State University of New York. But with oil prices and production in free-fall, the state is debating other methods to fund its services.

Oil-rich Alaska’s residents are accustomed to one of the lowest tax burdens in the nation, according to the Tax Foundation—it’s the only state that doesn’t levy either an income tax or a sales tax of its own. Plus, residents enjoy an annual royalties check for oil revenue that averaged a record $2,072 this year, according to the Wall Street Journal.

But Walker’s proposed budget would put the kibosh on those luxuries. He’s suggested levying an income tax that would take about 1.5% of the average household income, as well as reducing royalties checks. The budget would free up more money with $100 million in operational cuts, a higher minimum tax on the oil industry, and taxes on alcohol, tobacco, and motor oil.

Some of their problems, not all ... are self-inflicted. One wonders if $2,000/resident/year could have been "better spent." Like saving for a rainy day with a Legacy Fund. Good lessons for North Dakota.

Another Blow For Alaska -- November 17, 2015

Updates

November 20, 2015: Alaskans would rather let the state go broke and increase taxes. 

Alaska’s finances are unlike those of any other state. It has no income tax, no statewide sales tax and among the lowest per capita tax burdens in the U.S. Instead of from taxes, its money comes overwhelmingly from two sources: oil revenue, which provides close to 90 percent of the discretionary budget, and federal funds, of which Alaska has historically been among the top per capita recipients.

Revenues have slumped along with oil prices, however. In fiscal 2012, when oil prices spent much of the year above $100 a barrel, general fund revenues topped $7 billion. This year, with oil prices down to about $40 a barrel, the state expects to collect just $2.2 billion. Even after billions of dollars in budget cuts in the past two years, the state still faces an estimated $3 billion shortfall heading into the next fiscal year.

Alaska’s problems go beyond oil prices. Federal funding has fallen since stimulus funds dried up after the recession, and the state’s influence in Washington has waned since the electoral defeat of longtime U.S. senator Ted Stevens in 2008. The prices of other natural resources, such as gold and salmon, have also declined. Most significantly, the state’s oil production has been falling for decades, dropping below 500,000 barrels per day in 2014 from a peak of more than 2 million barrels per day in the late 1980s. Lower production means it takes higher prices to generate the same amount of tax revenue; the state estimates that it would take prices of $110 a barrel or more to balance the state budget at current production levels.

Making matters more difficult: Alaska may be entering a recession, if it isn’t in one already. “It’s at that point where my gut says we’re tipping toward recession,” economist Jonathan King of Anchorage consulting firm Northern Economics said earlier this week.
On Friday, the federal Bureau of Labor Statistics reported that after two months of job losses, Alaska added about 2,000 jobs in October compared with a year earlier. But the oil industry continued to cut jobs, as did the government, which makes up a larger share of employment in Alaska than in any other state but Wyoming. Alaska’s unemployment rate, at 6.4 percent in October, is well above the national mark of 5 percent.

Original Post

Seeking Alpha is reporting:

• Statoil says it is exiting its Alaskan operations and closing its office in Anchorage, saying its leases in the Chukchi Sea are no longer competitive within its global portfolio
• the decision means STO will exit 16 operated leases and its stake in 50 leases operated by ConocoPhillips
• it follows Shell's September decision to pull out of controversial drilling off Alaska's Arctic cost after failing to find sufficient signs of oil and gas to make further exploration worthwhile

I've lost the bubble on whether Alaska has raised its taxes on oil production or if it is still being discussed.

***************************
California, Too

The Los Angele Times is reporting that California taxpayers are going to pay a lot more to bailout pension fund for state employees. 

The board of California's largest public pension fund approved a plan Wednesday to lower its estimate of future investment returns — a move that will require taxpayers to pay billions of dollars more than expected over the next decades.

For years, the California Public Employees' Retirement System has estimated it will earn an average of 7.5% or more a year from its investments. Under the new plan, the pension fund will slowly reduce that rate to 6.5%.

The plan that will reduce the rate in small increments over the next 20 years.

The vote was criticized by Gov. Jerry Brown, who had urged the board to move more aggressively to 6.5% rather than stretching the change over decades.

With investment income contributing less to the cost of government worker pensions, taxpayers must pay more.

*********************************

If This Doesn't Put A Smile On Your Face ...

I will come back to these videos later, but if you haven't seen them, wow ... what a thrill awaits you.

A reader alerted me to Jools Holland's second episode in this documentary series, but it was so incredible, I had to go back to the first episode.

If you don't have time to look at a YouTube video today, simply click on the video below, move to 3:50, and let it play in the background while you scroll down the blog. This piano teacher charges $4 / second, according to Jools.

Walking To New Orleans, Fats Domino, Jools Holland's Walking To New Orleans And this is why I love to blog.

Looking At The Wrong Tree To Cut Down? -- November 2, 2015

Oil subsidies mean Alaska is losing hundreds of millions of dollars. Link here.

From FuelFix, September, 2015:

Oil prices are so low, they’re hovering at benchmarks not seen in years, plunging oil-dependent Alaska into a crippling budget deficit. But the industry’s woes won’t affect the payout from the state’s oil investment account to Alaskans even though state government has been scrambling to pay the bills.

In fact, most predictions put the yearly oil check at near record levels, about $2,000 for nearly every man, woman and child who lives in the 49th state. Last year’s check was $1,884.

For the record, this year the checks were cut for $2,072.

The population of Alaska is about 800,000 people. $2,000 x 800,000 = a lot of money.

16 with 8 zeroes.

1600000000.

1,600,000,000.

$1.6 billion dollars. (Note: I often make simple arithmetic errors.)

Alaska has no state income tax.

Maybe it's just me but the state legislators may be looking at the wrong tree to cut down.

North Dakota is a considered a "high-tax" state for oil companies (compared to Texas, see Filloon), and residents of North Dakota do not get an annual check from the state's oil money.

**************************

Carnival Cruise Lines

To run on natural gas, not diesel. I wonder if anyone has given any thought to running these ships on human waste. After all, they are making electricity from manure in Wisconsin.

***************************

Chipotle's E. coli Outbreak 3rd This Year

Link here.

The folks commenting on possible causes are probably not too far off target. 

Random Update On Kuparuk River Oil Field, North Slope, Alaska -- October 13, 2015

From wiki:

The Kuparuk River Oil Field, or Kuparuk, located in North Slope Borough, Alaska, United States, is the second largest oil field in North America by area.

It produces approximately 230,000 barrels per day of oil and is estimated to have 2 billion barrels of recoverable oil reserves.

Kuparuk was discovered by Sinclair Oil in April 1969 at the Ugnu Number 1 well, named for the nearby Ugnuravik River. Oil was found in the Kuparuk sandstone on the Colville structure. Production was first announced by ARCO in 1979 and planned to start in 1982. Production actually began December 13, 1981, on five small gravel drilling pads. Production was expected to peak in 1986 at 250,000 barrels per day, but did not peak until 1992 at 322,000 barrels per day.

Today Oil & Gas Journal announced:

ConocoPhillips Alaska Inc. has started oil production from its Kuparuk drill site on Alaska’s North Slope (ANS). Known as Kuparuk Drill Site 2S, or DS2S, the project is expected to add 8,000 bopd gross at peak production. 

The project includes 14 development wells, a gravel road, a drilling pad capable of handling 24 wells, power lines, pipelines, and other surface facilities. The drill site is in the southwestern section of Kuparuk field.

Let's see: 8,000 bopd / 14 development wells = 571 bopd/well
Or, 8,000 bopd / 24 wells = 333 bopd/well 

Alaska Pipeline Viability -- September 29, 2015

I am posting a note here, but I follow the bigger story chronologically at this post. The AP is reporting:

Royal Dutch Shell's dry hole in the Chukchi Sea may be disappointing to shareholders, but it's potentially devastating to Alaska.

The company's decision to end oil exploration in offshore Alaska for the foreseeable future means the state must find another source to fill the 800-mile trans-Alaska pipeline and solve its economic woes, Gov. Bill Walker said.

"We need to get some oil in the pipeline, and we need to do it as quickly as possible and in the safest method possible," Walker said. He is suggesting the federal government open the Arctic National Wildlife Refuge to natural gas drilling.

The petroleum industry funds upward of 90 percent of state government. Declining oil production and low prices have left Alaska with a billion-dollar budget gap, and state leaders saw rays of hope in Shell's offshore prospects.

Confirmation of the estimated 15 billion barrels in the Chukchi lease area could have led to additional exploration by other leaseholders. And a transition to production — though a decade or more off — would have meant jobs, potential revenue and a source to replenish the trans-Alaska pipeline, now running less than one-quarter full.

Viability of the pipeline based on throughput. Here's a nice article suggesting there's a long way to go before Alaskans have to worry about that. The pipeline carried 2 million bopd at its max; down to around 650,000 bopd now; originally the minimum was felt to be in the 350,000 bopd range, but now folks think one could get down to as low as 100,000 bopd and the pipe throughput could still be maintained.

Everything I Know About The Oil And Gas Industry I Learned From The Bakken -- July 7, 2015

Rigzone is reporting:

As part of its goal to become a dominant player in Alaska’s energy industry, Hilcorp Energy is reportedly buying the Cook Inlet assets owned by XTO Energy, an Exxon Mobil Corp. subsidiary.

Suann Guthrie, a media advisory for XTO Energy in Fort Worth, confirmed to Rigzone that XTO has agreed to sell its interest in the Cook Inlet, which include 29 producing wells from two platforms and an onshore facility to Hilcorp Alaska. Altogether, the assets produced about 2,000 barrels of oil per day in 2014.

Really? Am I misreading something? 29 producing well from two platforms and these assets produced about 2,000 bbls of oil per day in 2014?

2,000 / 29 = 70 bbls/day? These are practically off-shore stripper wells.

Had I not followed the Bakken I would not know how to put this information into perspective.

Everything I know about global gas and oil, I learned from the Bakken.

[Note: I often misread things, and it's very possible I'm misreading something in this article, but it seems fairly clear: 29 wells and "altogether, the assets produced about 2,000 bopd."

Assuming Washington State Will Approve (Big Assumption), Bakken Oil To Be Shipped To Alaska Refinery

This is a most fascinating story, the link sent by a reader (thank you). Argus Media is reporting:

Tesoro will deliver 1.6 million bbls of  Bakken crude into its Alaska refining system in the first half of 2015.

Bakken offers a $5/bl to $7/bl advantage to the west coast benchmark Alaskan North Slope (ANS) in the US independent refiner's predominantly west coast system.

Tesoro is the last major fuels refiner operating in Alaska. Its 72,000 b/d refinery in Kenai, Alaska, southwest of Anchorage in Cook Inlet, supplies jet fuel, gasoline and diesel, including to Flint Hills Resources, which shut down its North Pole refinery last year. 

Tesoro has previously said it can run 20,000 b/d to 30,000 b/d of Bakken crude at Kenai with little modification. The facility was built to run on Cook Inlet crude and similar light, sweet crudes.

Tesoro plans to use a 360,000 b/d proposed rail offloading terminal in Vancouver, Washington, to supply its west coast refining system including Kenai with greater volumes of Bakken crudes. That facility continues to inch through a state permitting process chief executive Greg Goff called "painfully slow" during a morning conference call to discuss earnings.

Tesoro now expects a draft environmental report from the commission this summer, with a final ruling by a state energy site review commission and, ultimately, the governor to follow.

"But at the end of the day, we're somewhat at the mercy of how that progresses," Goff said.

I'm not holding my breath.  

Never Saw This Coming: Alaska Crude Oil "Piling Up" At Port -- Bloomberg; Ten (10) New North Dakota Oil Permits; BR Reports Two Nice Wells Today -- October 21, 2014

Bloomberg is reporting:

Stockpiles of oil from Alaska’s North Slope have surged to a five-year seasonal high as tanker maintenance slows loadings, forcing the grade to trade at a discount to U.S. crude for the first time since 2010.

Inventories at the Valdez terminal, the northernmost ice-free port in North America and the loading point for Alaskan oil, have averaged 4.38 million barrels this month, the most for October since 2009, data posted on the Alaska Revenue Department’s website show. Tanker repairs have shrunk the pool of vessels available. 

A couple of data points from the linked article:

• California is bringing in a record volume of oil by rail from other states and the region has increased imports from countries including Iraq and Saudi Arabia.  
• Alaska North Slope crude for delivery to the U.S. West Coast weakened by 50 cents a barrel to a discount of 40 cents relative to domestic benchmark West Texas Intermediate. It’s the first time the grade has been discounted against WTI since Dec. 9, 2010. The oil fell $1.53 a barrel versus the international benchmark North Sea Brent for prompt delivery to a $3.81 discount. 
• Production of [Alaskan] oil has declined from a peak of 2.1 million barrels a day in 1988 to an average of 523,797 barrels a day this month, state data show.  
• The tanker work is another blow for Alaskan oil producers as the West Coast replaces their output with less-expensive barrels from other states including Utah and North Dakota. California took 16,373 barrels of oil a day by rail in July, a record for the month.

And that's why I love to blog. Read the linked Bloomberg article above in context with one of my recent postings on the growing relationship between California and North Dakota. 

******************************************************

Active rigs in North Dakota:

	10/21/2014	10/21/2013	10/21/2012	10/21/2011	10/21/2010
Active Rigs	191	182	186	195	151

Wells coming off the confidential list Wednesday:

• 27308, drl, BR, Lillibridge 21-27MBH, Johnson Corner, no production data,
• 27581, 2,342, MRO, Viani USA 44-10H,  Chimney Butte, t6/14; cum 42K 8/14;
• 27797, drl, Hess, AN-Evenson-152-95-1003H-8, Antelope, no production data,
• 28112, 11, Legacy, Legacy Berge 13-31H, North Souris, a Spearfish well, t6/14; cum --
• 28161, conf, Hess, BB-Budahn A-LS-150-95-0403H-1, Blue Buttes, no production data,

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Ten (10) new permits --

• Operators: Hess (4), XTO (2), Whiting (2), Murex (2),
• Fields: Robinson Lake (Mountrail), Dollar Joe (McKenzie), Grinnell (McKenzie), Temple (Williams)
• Comments:

Nine (9) producing wells were completed:

• 26382, 331, Oasis, Mallard 5692 21-20 9T2, Alger, t8/14; cum 3K 8/14;
• 26769, 526, Mandaree 134-05H, Squaw Creek, t10/14; cum --
• 26898, 548, Oasis, Delta 6093 24-15 3B, Gros Ventre, t9/14; cum --
• 27059, 1,320, BR, Denali 21-4TFH, Johnson Corner, 4 sections, t9/14; cum --
• 27580, 1,440, BR, Sequoia 41-4TFH, Hawkeye, t9/14; cum --
• 27677, 290, Delta 6093 44-15 8T, Gros Ventre, t8/14; cum 5K 8/14;
• 27767, 698, SM Energy, Todd 13X-35H, Camp, t9/14; cum --
• 27769, 965, Tracy 13-35H, Camp, t9/14; cum --
• 28480, 262, Dishon 5893 44-36 1T2, Enget Lake, t8/14; cum 2K 8/14; 

Shell Will Not Drill in Alaska's Beaufort Sea This Year -- Not a Bakken Story

Link here.

The EPA needs more time to study air quality permits.

Anything to destroy the oil industry.

Isn't this the second company to delay drilling "in" Alaska? I think I recall BP dialing back on Alaskan drilling this year, also.

Texas Hold 'Em

My hyperbole gets ahead of me so I know what I am about to say will turn out to be wrong, but it's my two cents worth regarding the events of the past week or so.

The question is this: has the current administration and/or the environmentalists pushed the domestic oil industry beyond the point of no return?

My thesis is this: as long as the price of oil was trading in a $60 - $80 range, and the price of gasoline was staying in the $2.50 to $2.75 range, the administration could make political points and the environmentalists could maintain the support of the moderate center.

The administration and/or the environmentalists had to know that at some point their positions would become untenable but they were willing to push to the edge of the envelope. As long as everything was going okay, they could push the price of oil to $80 and the price of gasoline to $2.75, and then back away a bit if necessary.

But things are all of a sudden, perhaps, spiraling out of control for both the administration and the environmentalists.

The moratorium on any more drilling in the Gulf of Mexico clearly pushed the edge of the envelope. Had things stopped there, the position of the administration and the environmentalists was tenable. It would have remained only a local issue (for Louisiana and Texas) and a corporate issue for a handful of companies (such as Noble and BP).

But then the unexpected happened: the interruption of the Alaskan oil pipeline. It will be shut down again this weekend to put in a bypass line. The pipeline is expected to be shut down not longer than 72 hours, but operators say they will take the time necessary to make sure it's done safely.

The price of oil ended the day higher. Every pundit agrees that in the short term, the price of oil is headed for $100/barrel, and with it, gasoline at $4.00/gallon in California.

Following the oil spill, Noble mothballed ten deep water rigs due to "new" regulations. On January 4, 2011 (ten days ago), another Noble rig was to be taken off line because the contractor in the Gulf no longer wanted it. Noble will either mothball that rig (number 11) or will move it off shore elsewhere, probably Africa, bringing the number of deep water rigs that have been moved out of the Gulf to six (6), at least by my count.

When the rigs started moving out of the Gulf, I opined that they would "never" come back. "Never" is a long time, but in this case, I think "never" can be at least until the price of oil hits $150/barrel, or until the price per barrel outweighs the liability associated with another spill along the American coast.

Up to this point, the position of the administration and/or the environmentalists remained tenable, but hanging by a thread. Any more bad news within the domestic oil industry would make $100 oil a certainty, and maybe worse.

At noon today we were still at a tipping point. It could go either way. Perhaps some good news would be announced that would assure consumers that oil might not hit $100. But, and more ominously, just as much of a chance some bad news would be announced that would assure $100 oil or worse.

Less than four hours later, we were no longer on the cusp. We had passed the tipping point.

BP made a momentous announcement.

BP, whose well it was that blew in the Gulf, and whose pipeline in Alaska that leaked, made a deal with a state-owned oil company. It is being said that this is the "first time in the history of [the] industry that there's been a significant cross shareholding between a major international oil company and a major national oil company."

Some have opined that this deal means that BP has turned its back on drilling in Alaska. I don't know. Money is money. It's unlikely BP would risk losing the pipeline. Or would it?

It is said that under the best of circumstances the Alaska pipeline may no longer be viable by 2017. And if a certain amount of oil does not flow down that pipeline, it must be closed. I don't know the amount, but it was said during the week that the 400,000 barrels of oil flowing through the pipeline at the end of this week was not enough to keep the pipeline open on a permanent basis.

In all of the talk about the BP story and the price of oil going to $100 I have not heard any mention of one of the key players. It doesn't take a rocket scientist or an oil engineer or even a political scientist from Harvard to recognize that Vladimir Putin has been becoming more and more open in his anti-America rhetoric. This BP-Russian deal would not have happened without Putin's okay.

The question is this: has BP "blown off" Alaska?

If BP saw the demise of the pipeline within the next three or four years, was it better to cut its losses now and buddy up with a more reliable partner? It takes a few years to begin the development of a new field in the likes of Russia.

I think this BP-Russian deal is so much bigger than most of us can comprehend. To give you an idea of how big this story is:

• It was perhaps the biggest story in the Wall Street Journal today
• It was perhaps the biggest story in the New York Times today
• And at least one congressman, no friend of the oil industry, is now concerned this deal may not be in the best interests of the US. Well, duh.

And that would be the end of the story, except for one thing.

Back to the beginning of this posting in which I asked: has the current administration and/or the environmentalists pushed the domestic oil industry beyond the point of no return?

I think there is evidence that the administration realizes that if it hasn't pushed the domestic oil industry beyond the point of no return, it is very, very close. Here's the evidence. It has to do with the de facto moratorium for any new drilling in the Gulf:

Michael Bromwich, the head of the Bureau of Ocean Energy Management, Regulation and Enforcement, told a Washington audience that he understands the anxiety within industry and its congressional backers about the changing regulatory landscape -- even as he laid out plans for a new agency that will oversee environment and safety.  

Bromwich said he understands the anxiety about new requirements imposed since the Gulf disaster. 

"The implication is that we have other regulatory requirements up our sleeve that we have not yet unveiled," Bromwich said in a speech at the Center for Strategic and International Studies. "That is not the case. Barring significant, unanticipated revelations from investigations into the root causes of the Deepwater Horizon explosion that remain in process, I do not anticipate further emergency rule makings -- period." 

When I read between the lines, I am hearing one of two things: either doublespeak from an administration bureaucrat, or a genuine plea to have the rigs brought back to the Gulf and drilling to begin again. If it's a genuine plea, it's similar to the famous trip George Bush took to Saudi to ask for help in keeping the price of oil down. If it's that, the administration is desperate. As I've opined before, Obama's worst nightmare is $100 oil and 10% unemployment, both of which are here except for slight technicalities.

If the oil companies don't come back to the Gulf and if BP turns its back on Alaska, $100 oil will be an obvious outcome in the minds of any thinking American, and with it, $4.00 gasoline on the West Coast. [It's already $3.59 in Los Angeles.] Once the $4.00 threshold is passed, it's easy to get to $4.50. And $4.50 is the same as $5.00 for anyone who can't afford $4.00 gasoline in the first place.

My hunch is that the administration and/or the environmentalists overplayed their hand with the Gulf of Mexico oil spill. In language any oilman can understand, the spill in the Gulf of Mexico was the flop. The Alaska pipeline was the "turn."

The BP-Russia deal was the "river card."

And Putin won.

*******

Unrelated to this commentary, but a link I did not want to lose:
Amount of oil spilled into the Gulf of Mexico last summer will be based on political and legal wrangling, not science.

Hydraulic Fracturing in Alaska -- Not A Bakken Story

I normally try not to stray too far from the Bakken, but this is an interesting story.

A newly formed Texas-based independent that recently acquired 537,000 acres of state of Alaska leases on the North Slope has plans to drill into source rocks below the region's prolific producing fields and produce oil by fracturing, a company official said Nov. 24.

"This is a new play for the North Slope but the rock types are right for this to be viable and the exploitation technology can be easily transferred from the Lower 48 states," where fracturing is now widely used to produce from tight shale rocks, said Ed Duncan, president of Great Bear Petroleum LLC.

"It could be a game-changer for the North Slope," Duncan said. 

The Rigzone article continues:

Oil and gas fields on the Slope now produce from conventional reservoirs but Great Bear's plan is to drill down and produce from the source rocks, the geologic formations in which the oil and gas originally formed.

Three layers of source rocks feed most of the existing fields on the Slope, and Great Bear has access to all three of them.

"Any one of them could be viable for us but we plan to initially target the Shublik.

Very, very interesting. Stay tuned.

Alaska's Oil Reserves Cut By 90% (Non-Bakken Story)

This is a most interesting story: Alaska's oil reserves cut by 90 percent.

The U.S. Geological Survey says a revised estimate for the amount of conventional, undiscovered oil in the National Petroleum Reserve in Alaska is a fraction of a previous estimate.

The group estimates about 896 million barrels of such oil are in the reserve, about 90 percent less than a 2002 estimate of 10.6 billion barrels.

It will be interesting to see the stories that follow. This story has to have huge geopolitical implications. You think?

CNN reports this story today. It makes me wonder: when did the oil companies know this? It explains a lot.

For example, back in August, 2010, the federal lease sale was "disappointing" for the reserve. Only five bids were submitted, all from ConocoPhilips (COP) and totaled less than $800,000. It costs that much just to frack one well in the Bakken. That's incredible. But now we know why: lousy EUR projections and onerous federal regulations.

Can you imagine the talk around the coffee tables today up in Anchorage?  Is this the beginning of the end for Alaskan oil? All of a sudden, in my simple mind, the Canadian oil sands become a bit more important.

More to follow.