Look West! -- January 2, 2016

Updates

January 3, 2016: Union Pacific says it could ship as much as a million gallons of Bakken crude oil weekly through western Washington state. Don't let the hysteria fool you. NO ONE measures CBR in gallons. This was in an anti-oil publication. One million gallons of oil will take about one-third of a standard unit train. It will take about 30 tanks cars every week to get to one million gallons. It's a non-story, but it continues the "Look West!" saga.

Original Post 

Disclaimer: in a long post like this there will be factual and typographic errors. I often misinterpret what I read. This has not been proofread. Errors will be corrected when discovered. If this information is important to you, go to the source.

For newbies, I think I may have run across three analyses of the Williston Basin that I had not linked before:

• a USGS analysis accepted for publication in May, 2012; published in 2013 
• a DMR analysis of the Spearfish, 2011
• a USGS/Department of Interior analysis of the Williston Basin, 2010; way outdated, but perhaps useful

"California Energy" is irregularly tracked here.

RBN had a series on North Dakota Bakken to California via CBR back in mid-2015. From one post in the series:

This time we turn to the future of rail shipments to the West Coast from North Dakota.

This data comes from Energy Information Administration (EIA) monthly crude rail movement estimates that began publishing in April 2015. Because the EIA does not break this data down within PADDs we assume that it largely covers CBR movements between North Dakota and West Coast refineries located in Washington State and California. This assumption is based on the location of rail loading terminals in PADD II (most are in North Dakota) and rail unloading terminals on the West Coast that are mostly linked to refineries in Washington and California.

Having made that assumption we further separated out CBR shipments to California from North Dakota that are reported separately by the California Energy Commission (CEC).

The CBR shipments to Washington are simply the EIA PADD II to PADD V totals minus California. Shipments to California are a fraction of the total – just 2-5 Mb/d in 2013 and 2014 and (according to CEC) have been zero since November 2014. So West Coast CBR from North Dakota is almost all headed to Washington State. The yellow line on the chart against the right axis is the ANS premium to WTI crude. ANS – Alaska North Slope - is the West Coast benchmark crude and West Texas Intermediate – WTI crude is the Midwest benchmark.

Nevertheless – it is clear that increasing CBR shipments to the West Coast in 2014 and continued average shipments in 2015 of 140 Mb/d were not driven by Alaska North Slope (ANS) premiums – because the latter were dismal compared to 2012.

In fact it seems clear that Bakken CBR shipments to Washington State have been and continue to be dominated by refinery demand.

There are 5 refineries in Washington State with combined capacity of 647 Mb/d. These refineries mostly process ANS crude shipped down from Valdez, AK, together with imported waterborne crude and Canadian crude shipped by pipeline to Vancouver.

Since 2012 – starting with the Tesoro Anacortes refinery they have each built or planned to build CBR unloading terminals that are designed to receive Bakken crude from North Dakota.

The only refinery that has yet to bring a CBR terminal online is Shell Puget Sound that had its permit for a 65 Mb/d rail terminal referred for an environmental impact study in February 2015 – likely delaying construction by at least another year (see update below).

The four rail terminals at the other refineries have so far been the primary destination of North Dakota CBR to the West Coast – with their combined capacity being responsible for the majority of the 140 Mb/d of rail shipments from North Dakota this year.

And although the refiner’s initial motivation was clearly to access cheaper Bakken crude they are also interested in securing domestic supplies to supplement declining ANS production.

Just as we saw with East Coast refiners they have made investments in CBR terminals and rail tank cars and are unlikely to give up using rail until an alternative mode of transport (e.g. pipeline) emerges (if ever).

The status of the Shell Puget Sound Environmental Impact Study:

The co-leads reviewed all comments received and have issued a scoping report that summarizes all comments. Preparation of a draft EIS is under way, with publication and public review, comment and hearings expected in the fall of 2016.

The most recent EIA energy analysis of California was a year ago. It will be updated January 21, 2016. The last EIA analysis (2015; most recent data, 2014):

California ranks third in the nation in petroleum refining capacity and accounts for more than one-tenth of the total U.S. capacity.
A network of crude oil pipelines connects the state's oil production to the refining centers located in the Central Valley, Los Angeles, and the San Francisco Bay area.
California refiners also process large volumes of Alaskan and foreign crude oil received at ports in Los Angeles, Long Beach, and the Bay Area. Crude oil production in California and Alaska has declined, and California refineries have become increasingly dependent on imports to meet the state's needs.36,37 Led by Saudi Arabia, Iraq, and Ecuador, foreign suppliers now provide more than half of the crude oil refined in California.
Additional crude oil supplies arrive by rail from several western states, particularly North Dakota, New Mexico, Utah, and Wyoming.

From CA.gov:

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

Heavy Vs Light

What Are California Refineries Optimized For?

First, some background from wiki, starting with definitions. The clear cut definition of light and heavy crude varies because the classification is based more on practical grounds than theoretical.

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

Definitions

NYMEX:

• light crude oil for domestic U.S. oil as having an API gravity between 37° API and 42° API 
• light crude oil for non-U.S. oil as being between 32° API  and 42° API

Canadian National Energy Board:

• light crude oil as having a density API gravity greater than 30.1°

Alberta, government; Alberta process most of Canada's oil:

• API gravity greater than 35° API

Pemex, Mexican state oil company:

• light crude oil as being between 27° API and 38° API 

This variation in definition occurred because countries such as Canada and Mexico tend to have heavier crude oils than are commonly found in the United States, whose large oil fields historically produced lighter oils than are found in many other countries.

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

Benchmarks

From wiki.

WTI

• A wide variety of benchmark crude oils worldwide are considered to be light. The most prominent in North America is West Texas Intermediate (WTI):
• API gravity of 39.6° API; lighter than Brent, but not by much
• sulfur: 0.24% (sweet oil is defined as oil with sulfur content less than 0.5%)

Brent Crude

• the most commonly referenced benchmark oil from Europe is Brent Crude, which is
• 38.06° API

Dubai Crude

• the third most commonly quoted benchmark is Dubai Crude, which is 31° API
• this is considered light by Arabian standards but would not be considered light if produced in the U.S.

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

Others

Saudia Arabia's Ghawar field:

• the largest oil field in the world, Saudi Arabia's Ghawar field
• light crude oils ranging from 33° API to 40° API

Alaska North Slope: from XOM -- 

• 31.4°
• sulfur: 0.96%

Bakken:

36 to 44 degrees API. The quality of this oil is excellent, almost identical to WTI. The benchmark crude oil is West Texas Intermediate, which is 40 degrees API sweet crude. It is the benchmark because it requires the least amount of processing in a modern refinery to make the most valuable products, unleaded gasoline and diesel fuel.

North Dakota Spearfish: 36°

• presentation, Corinthian, undated, perhaps early 2014 
• sulfur content: 0.8% to 1%

Mexico: generally heavy to medium-light; sulfur content

• Isthmus: 21.8°.3.3% sulfur
• Maya: 33.4°; 1.35% sulfur
• Olmeca: 37.3°; 0.84% sulfur

Iraqi: heavy oil

Crude oil found in Iraq varies significantly in quality, with API gravities generally ranging from 22° (heavy) to 35° (medium - light). Over 70% of national oil reserves are below 28° API  and the International Energy Agency (IEA) predicted in its 2012 report on Iraq that future production is likely to include a larger share of heavier crudes. However some of the crudes produced at the Taq Taq field in the norther semi-autonomous Kurdistan region are as light as 48° API, dubbed by Reuters as "champagne crude". 

California: heavy oil; pdf here -- old data, from 2004, but type of oil probably has not changed

• Kern County: heavy oil with 1.2% sulfur; accounts for 75% of California's on-shore production
• Los Angeles Basin: heavy oil; sulfur content 1.7% to 2.0%
• Off-shore: intermediate for the most part, 18° (heavy) to 36° (medium-light)

Ecuador: heavy oil; 24.1°

Seeks low-sulphur, light oil, September 1, 2015:

Net crude exporter Petroecuador issued a tender to import 30 million barrels of light sweet crude over the course of a year in an attempt to maximize diesel and gasoline production when its Esmeraldas refinery comes back online in the fourth quarter, market sources said Tuesday.

Petroecuador is seeking 30 million barrels of low sulfur crude oil with an API gravity of 28 degrees to be delivered in a one-year period, according to a tender issued late Monday.

The state-owned oil company is seeking the barrels "in order to optimize the Esmeraldas refinery operations, once the revamping has been complete," the tender said. 

Venezuela: heavy oil, similar to Canadian oil sands.

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

Posted From Twitter, March 30, 2017

 

Comment: I was going to add my 2-cents worth but I think I will leave it at that -- what is posted above. One can start to sort out what went on in the past, and what is likely to occur in the future.

What Time Is It? Where Am I? -- December 30, 2015

Updates

December 30, 2015: perfect timing. See note below. I've been suggesting for some time Bakken operators need to start looking "west" rather than "east." Now this article, sent by a reader: bizjournal is reporting --

Companies are responding fast to the lifting of the U.S. ban on crude oil exports, and a first shipment is to leave Texas early in January.

Fred Felleman, a longtime opponent of crude oil shipments through Northwest ports and a newly elected Port of Seattle commissioner, said oil exports through Washington state could follow.

Key to his concern is the fact that Washington’s five refineries are just as able to load crude onto tankers from their terminals as they are to receive it. While the terminals were built to receive crude oil from Alaska, an increasing amount of crude is coming from the North Dakota Bakken oilfields by train. Some of that, Felleman said, could be exported.

The lifting of the 40-year ban on crude oil exports was included in the federal omnibus spending bill that passed earlier this month.

As proof that the export capacity exists in the Northwest, Felleman shared data gleaned from the Washington State Department of Ecology showing that Washington's five refineries, and one Tacoma terminal, shipped out 4 million barrels of crude to domestic customers during 2013, and about half that much last year.

Original Post

 

Things are so slow today, I'm not even going to post John Kemp's weekly energy tweets. If interested, go to Twitter and search John Kemp.

However, this is a pretty cool graphic over at EIA, celebrating fifteen accomplishments in 2015:

Which PADD is underserved? And that, folks, is spelled O-P-P-O-R-T-U-N-I-T-Y. Back on November 12, 2015, I suggested Bakken operators need to be looking west, not east.

At the EIA link above, slide 6 is also interesting as is slide 9. 

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

The Apple Page

Say what you want about Apple, but this is quite incredible. Many, many story lines. For now, from Macrumors:

One of the Apple Watch features Apple often highlights is the device's precise timekeeping, which Apple says is within 50 milliseconds of the global time standard.

Apple Watch is so accurate that the hands of two Apple Watches placed next to one another will move in perfect unison.

This is achieved primarily through 15 Network Time Protocol (NTP) servers that Apple has around the world, kept inside of buildings with GPS antennas that connect to GPS satellites broadcasting time data from the U.S. Naval Observatory in Washington, D.C. The Observatory houses an ultra accurate atomic clock, which uses electronic transition frequency to measure time.

Apple's time servers communicate the time to iPhones across the world, and the iPhone in turn syncs with the Apple Watch via Bluetooth to provide the exact time.

Communicating a GPS signal from a server to an iPhone to an Apple Watch over Bluetooth has its own delays, which Apple corrects for via software. Apple's NTP servers make sure iPhones and Apple Watches keep time at "Stratum One" accuracy, within milliseconds of "Stratum Zero" devices.

Each Apple Watch has a temperature-controlled crystal oscillator inside to combat time drift that clocks and watches see. The oscillator also makes sure the Apple Watch remains warm enough to keep accurate time in very cold climates. Thanks to this hardware, the Apple Watch is even more accurate than the iPhone.

I know that's something I need in retirement: a timepiece accurate to within 50 milliseconds of  the global time standard. Actually, what I really need is something to remind me what day it is. Fortunately my computer desktop has the day-time stamp in the upper right-hand corner. 

Reason #4 Why I Love To Blog-- November 12, 2015

Updates

November 16, 2015: a reader responded to my thoughts on CBR to the west coast, below:

I'll bet $10 against your penny that except for other than minor expansions at existing ports nothing will be built in the next 10 years. This is a report from Paso Robles, CA, central coast California:

In the town south here, Templeton, CA, the train goes right along side the school. No one ever thought that was bad place for the school...until they heard about CBR. It is absolutely positively the hottest discussion topic here in Paso..."we can't allow THAT."

There's a small refinery about 30 miles southwest of here that exports all of it's product to the far east...."we don't get ANY benefit from it."

A few miles farther south is the deeply liberal college town San Luis Obispo home of Cal-Poly, the tracks goes right through the heart of the city.

This is the land of fruit and nuts, and Oregon and Washington are fruit-and-nut wanna-be's. With the newly-elected liberal government in Canada crude oil exports from British Columbia are out of the question.

My understanding is that most of the crude into California is via tankers, mostly from Alaska...which will soon be a thing of the past. We'll just have to ship it in from Mexico and South America...probably add $1.00 a gallon, so we pay $2.00 more per gallon than the rest of USA...not a problem.

Morro Bay is 25 miles west of here - where a huge, maybe 500 MW gas-fired, power station sits idle...as it has for many years. Meanwhile, this past week, plans were announced to build a wind farm 50 miles offshore from Morro Bay.

(Trump thinks people in Iowa are stupid...wait until he checks out California).

Original Post

 

On November 7, 2015, once the Keystone XL was officially dead, I posted this:

Commentators are looking east when they should be looking west. The tea leaves tell me that California is in a world of pain when it comes to oil. The Bakken contributes a small amount, but a significant amount of oil, to California, but with the loss of the Keystone, and the likely loss (and definite delay) of the Sandpiper and the Dakota Access, this is an incredible opportunity for Enbridge CBR and Warren Buffett CBR to start looking at increased shipments to the Far West. Again, all things being equal, California is going to need more Bakken oil.

At the time I wrote it, I was aware that CBR destined for California would go through the Pacific Northwest.

A reader sent me this story this evening, in which Puget Sound Business Journal is reporting just that:

A new report from research group Oil Change International, commissioned by Seattle-based nonprofit think tank the Sightline Institute, found that in Keystone's absence, the oil industry will now likely turn to massive oil-by-rail terminals proposed across the Pacific Northwest as a second-best alternative for transporting the commodity.

Much more at the link, but the point is made.

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

A Day Late, And A Dollar Short

I guess it was "Back To The Future" day a few days ago; I missed it -- "a day late, and a dollar short." But I went out and bought the entire trilogy in a metal case at Target a week ago, and finally got around to watching it this week. I watched it over the course of three evenings, and finally finished it tonight. I had forgotten how really good it was. (I'm not sure if I will watch the two sequels; I generally don't care for sequels). I am quite impressed how well the movie holds up over the years. I haven't watched the extras yet; it will be interesting to watch some of the extras.

Monday, August 10, 2015

Initial production numbers have been posted for wells coming off the confidential list over the weekend, today.

Active rigs:

	8/10/2015	08/10/2014	08/10/2013	08/10/2012	08/10/2011
Active Rigs	72	193	184	200	190

RBN Energy: continuing series on Bakken CBR. (Archived)

This time we turn to the future of rail shipments to the West Coast from North Dakota.
The chart in Figure #1 (at the link) provides a summary of CBR shipments to the West Coast from North Dakota. The blue and red shaded areas against the left axis represent crude volumes shipped from Petroleum Administration for Defense District (PADD) II – the Midwest to PADD V – the West Coast.

This data comes from Energy Information Administration (EIA) monthly crude rail movement estimates that began publishing in April 2015 (see A Look At The Rail Track Record). Because the EIA does not break this data down within PADDs we assume that it largely covers CBR movements between North Dakota and West Coast refineries located in Washington State and California. This assumption is based on the location of rail loading terminals in PADD II (most are in North Dakota) and rail unloading terminals on the West Coast that are mostly linked to refineries in Washington and California.

Having made that assumption we further separated out CBR shipments to California from North Dakota (red shaded area) that are reported separately by the California Energy Commission (CEC).

The CBR shipments to Washington (blue shaded area) are simply the EIA PADD II to PADD V totals minus California. Note also that shipments to California are a fraction of the total – just 2-5 Mb/d in 2013 and 2014 and (according to CEC) have been zero since November 2014. So West Coast CBR from North Dakota is almost all headed to Washington State. The yellow line on the chart against the right axis is the ANS premium to WTI crude. ANS – Alaska North Slope - is the West Coast benchmark crude and West Texas Intermediate – WTI crude is the Midwest benchmark.

To sum up – West Coast CBR shipments from North Dakota remain firmly routed in supplying Washington State refineries for the moment. As such – the shipments will expand if and when Shell gets their permit – but only by 65 Mb/d or so. There is also a good possibility that one or more of the rail to marine port terminal projects in Oregon or Washington will eventually be built – that could increase Bakken crude shipments to California. There is also likely to be a slow increase in CBR shipments to California as unload terminals there are permitted – but pipelines such as the Inland California Express may overshadow these in due course. For the moment there is no apparent end of the line for CBR shipments from North Dakota to Washington refineries.

Much, much more at the link. Bottom line: could the Bakken become the option of choice for out-of-state oil for California refineries?

Note: ANS – Alaska North Slope - is the West Coast benchmark crude and West Texas Intermediate – WTI crude is the Midwest benchmark.

Active Rigs Increase By One After Days Of No Movement; Also, Break-Even Prices In The Bakken; California Reliance On Foreign Oil, Bakken Oil -- July 31, 2015

Active rigs:

	7/31/2015	07/31/2014	07/31/2013	07/31/2012	07/31/2011
Active Rigs	74	193	180	208	184

So, what's the breakeven price for drilling for crude oil in North Dakota? NDIC has this to say about that with link here:  https://www.dmr.nd.gov/oilgas/BreakevenHistorical.pdf.

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

Exhibit A: Why Feds Won't Stop CBR

90% Of California's CBR Comes From The Bakken

Exhibit A is at this EIA link.

Bakken crude oil production from the Midwest (PADD 2, Cushing) is the major source of rail shipments to the West Coast (PADD 5), accounting for nearly 90% of West Coast crude-by-rail receipts in 2014. Relatively small shipments from other domestic regions have also increased. Shipments from the Gulf Coast (PADD 3, Texas-Louisiana) tripled from 2013 to 2014, and Rocky Mountain (PADD 4) shipments quintupled. These increases in crude-by-rail movements occurred only after West Coast crude-by-rail unloading infrastructure was significantly expanded.

And there's more, look at this headline, from June, 9, 2015: Crude by rail provides the West Coast with supply as regional crude oil production falls --

While total U.S. crude oil production increased by nearly 3.2 million barrels per day (b/d) from 2010 to 2014, production in the West Coast region (PADD 5) decreased by 0.1 million b/d, continuing a long-term decline. With no major crude oil pipelines connecting the West Coast to other parts of the country, refineries on the West Coast adjusted to the declining in-region production by increasing imports of foreign crude oil, reaching an average of 1.1 million b/d over the past five years. Shipments of domestic crude by rail (CBR) to the West Coast have also increased, from an average of 23,000 b/d in 2012 to 157,000 b/d in 2014. In the first quarter of 2015, West Coast CBR movements averaged 191,000 b/d.

There's a nice graph of PADD crude oil capacity at this link. 

Natural Gas Explosion In Northern California Results In Serious Injury -- April 17, 2015

No one in the US has been killed by a derailed train carrying Bakken crude oil.

Hold that thought.

KCRA out in California is reporting:

Four patients are being treated at Community Regional Medical Center's burn and trauma unit. Three of them are in critical condition and one is in serious condition. 

Four other patients were taken to St. Agnes Hospital and three more to Madera Community Hospital. 

Traffic going north and south on Highway 99 was halted by the explosion at about 2:30 p.m. 

The explosion happened at the Fresno County Sheriff's gun range, where a work crew including county jail inmates using heavy equipment apparently hit a pipe carrying natural gas. One of the workers appeared to be in critical condition.

I am not saying that CBR is safer than pipelines. I am saying that both CBR and pipelines carrying crude oil or natural gas are inherently risky but processes can be put in place to minimize risk.

Record Amounts Of Bakken Crude Reached California Last Year -- April 17, 2015

Bakken.com is reporting:

California imports of Bakken crude oil from North Dakota on barges totaled a record 1.5 million barrels last year, 27 percent greater than the amount that reached the state by rail.

The transport of Bakken crude by rail is controversial, with fiery derailments in recent years prompting safety and environmental concerns. In California, 15 cities and towns have passed resolutions opposing the trains in their towns.

But many California refineries do not have the infrastructure necessary to unload crude oil trains. Attempts to add rail extensions to those refineries have in some cases been delayed due to opposition from environmental groups.

To get the low-cost Bakken crude to California refineries, producers load it onto trains in North Dakota bound for transport terminals in the Pacific Northwest. From there it is loaded onto barges bound for California refineries, which are better equipped to receive crude from sea vessels.

The Global Partners LP transport terminal in Clatskanie, Oregon, is a key departure point for barges carrying Bakken to California.

More:

The facility, on a small canal that feeds into the Columbia River, began quietly transshipping oil from trains to barges in 2012 and is now receiving so-called “unit trains,” mile-long trains that only carry crude oil.

More:

Refineries such as Tesoro Corp’s facility in Carson, California, are likely destination points for the barges.

And the environmental input:

But Bakken transported on water poses unique risks since it is lighter and more volatile than other crudes, environmentalists say.

“An oil barge accident in San Francisco Bay or off the coast of Los Angeles would be catastrophic,” said Matt Krogh, a director at environmental group ForestEthics.

“Bakken is simply too dangerous to move by barge or train and we don’t need this extreme oil,” he said.

For newbies: to the best of my knowledge, there are no pipelines taking oil into California. Like Hawaii, California is "an island" when it comes to oil. 

Only 1% Of California's Oil Supply Moves By Rail; California Has No Crude Oil Pipelines Coming Into The State -- What's Wrong With This Picture? -- October 7, 2014

The Wall Street Journal has two interesting stories, both on crude-by-rail, and both published today.

The first:

About a third of Canadian Pacific Railway Ltd.'s expected revenue gains through 2018 will be driven by crude oil shipments aided by improvements at oil-loading terminals and track (CBR) in western Canada, the company’s chief operating officer said on Tuesday.

Last week, Canadian Pacific unveiled a series of aggressive financial targets, including a doubling of earnings per share by 2018 from this year, and revenue of 10 billion Canadian dollars (US$9 billion), from a projected C$6.6 billion this year.

The company’s bet on oil-by-rail (CBR) underscores the growing interdependence between North America’s oil and rail industries. The amount of crude moving by rail in Canada has quadrupled since 2012 and is expected to continue to surge.

The second:

For the past decade, the U.S. shale boom has mostly passed by California, forcing oil refiners in the state to import expensive crude.

Now that’s changing as energy companies overcome opposition to forge ahead with rail depots that will get oil from North Dakota’s Bakken Shale.

Thanks in large measure to hydraulic fracturing, the U.S. has reduced oil imports from countries such as Iraq and Russia by 30% over the last decade.

Yet in California, the use of imports has shot up by a third to account for more than half the state’s oil supply.

“California refineries arguably have the most expensive crude slate in North America,” says David Hackett, president of energy consulting firm Stillwater Associates.

Part of the problem is that no major oil pipelines run across the Rocky Mountains connecting the state to fracking wells in the rest of the country. And building pipelines is a lengthy, expensive process.

Railroads are transporting a rising tide of low-price shale oil from North Dakota and elsewhere to the East and Gulf coasts, helping to keep a lid on prices for gasoline and other refined products. Yet while California has enough track to carry in crude, the state doesn’t have enough terminals to unload the oil from tanker cars and transfer it to refineries on site or by pipeline or truck.

Just 500,000 barrels of oil a month, or 1% of California’s supply, moves by rail to the state today. New oil-train terminals by 2016 could draw that much in a day, if company proposals are successful. Bakken oil since April has been about $15 a barrel cheaper than crude from Alaska and abroad, according to commodities-pricing service Platts. That would cover the $12 a barrel that it costs to ship North Dakota crude to California by rail, according to research firm Argus.

California: only 1% of California's crude oil supply moves by rail; there are no crude oil pipelines running into the state; and, Alaskan supplies are dwindling.

At the end of the day, adult leadership will be needed. If not, California is in a world of hurt.

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

Cameras

I wrote this yesterday:

Folks looking to buy a new camera might want to take a look at Canon's PowerShot SX50 HS -- if you can find them. They are being discontinued, and prices are coming down significantly.  The camera was introduced in 2012, and may simply be one of the best Canon cameras for the buck, especially now that the price has come down significantly.

There may be many, many reasons for this camera to be discontinued, but the biggest reason might be the newer cameras "have" more megapixels. The SX50 has "only" 12 megapixels. The new Canons have 18 megapixels which are recommended if printing pictures bigger than 18 x 24. The largest I have ever done are 8 x 10's and I'm doing a lot more of those now with the granddaughters swimming and playing soccer.

I wrote that because after looking for a new camera for the past six years or so, I finally broke down and bought the Canon PowerShot SX50HS ... and love it.

Earlier today, without going into specifics, I was reading the October issue of Consumer Reports. CR reviewed digital cameras, giving the Canon GX1 the highest rating it had ever given a digital camera:

The November (sic) 2014 Consumer Reports says the Canon PowerShot G1X Mark II "not only outscored all of the other cameras in its category for image quality and video, it also outscored all of the SLR cameras in our Ratings."

The specs for the SX50 are almost identical to the G1X Mark II. Twelve (12) megapixels vs 13 megapixels is almost inconsequential/trivial.

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

Global Warming

IceAgeNow is reporting:

The Daily News reported that an all-time (114-year) record was broken on September 13, 2014, when the thermometer dipped to 31 degrees F.

The low of 31 degrees not only was a new record for the day, but a new record for the first frost of the fall.

It also means this year’s growing season — at 134 days — is the third shortest on record in this bread basket of the U.S.. The shortest was 114 days in 1901, followed by 133 days in 1912.

Previously, the earliest fall frost in 117 years of record keeping at the Kansas State University Agricultural Research Center was Sept. 17, recorded twice in 1901 and again two years later in 1903.

That means this year’s first frost broke the previous 114-year-old record by five days.

This is just "weather," not climate.

Update On Phillips (PSX) CBR In North Dakota -- October 6, 2014

A reader reminded me to look at this story. I can't remember if I have previously posted it. Reuters is reporting, September 3, 2014:

Phillips 66 is buying more railcars to eventually move up to 185,000 barrels per day (bpd) of North American crude oil, including output from North Dakota's Bakken shale and Canada, to its refineries on the East and West coasts, Chief Executive Officer Greg Garland said on Wednesday.

The fourth-largest U.S. refiner has already bought, or has on order, 3,200 railcars. Garland said during a webcast of a presentation at the Barclays CEO Energy-Power Conference that the company has ordered another 500 railcars to boost its fleet to 3,700 railcars.

On Aug. 1 the company's 238,000-bpd Bayway refinery in Linden, New Jersey, received its first crude-only train at the plant's newly expanded offloading system. The system can take up to 70,000 bpd, in addition to up to 75,000 bpd from a joint venture with Global Partners.

Phillips 66's 30,000-bpd offloading system at its 100,000-bpd refinery in Ferndale, Washington, is on track to start up in the fourth quarter, Garland said.
Garland said the company was "disappointed" in the lengthy permitting process for a rail offloading project at its refinery in Santa Maria, California, but remained optimistic it would be built.

NorthJersey.com provides this update, published yesterday, October 3, 2014:

Garland also said that Phillips 66 had acquired 710 acres in North Dakota near the oil fields and plans to build a rail facility there that would move as much as 7.8 million gallons of oil [at 42 gallons/bbl = 186,000 bbls] a day to Bayway and its refineries on the West Coast. A Phillips 66 spokesman said the company carries crude oil only in tanker cars with the latest safety features, not in older cars that regulators have called substandard.

The oil business has boomed in North Dakota since a huge reserve was found almost six years ago. The 1 million barrels of crude extracted from Bakken shale each day has been credited with helping reduce oil imports to the lowest level in 29 years along with revitalizing refineries on the East Coast.

Perhaps a reader knows where the 710-acre proposed site is. 

Why Did The Chicken Cross The Road; Up To 100 People Now On Ebola "Watch" List In Texas; October 2, 2014

Why did the chicken cross the road? It was the shortest distance to the other side.

Why build an oil terminal in Vancouver, Washington? It's the shortest distance to San Francisco.

A reader sent me the story (thank you). Puget Sound Business Journal is reporting:

Vancouver is the nearest point to the Bakken oil fields of North Dakota to load a ship bound for West Coast refineries.

For those concerned about oil train derailments and the environmental mayhem they cause, Vancouver helps mitigate the risk.

“If you start in North Dakota, (Vancouver) is the closest place you can get to load onto ocean-going vessels. The Port of Vancouver minimizes the amount of miles crude goes by land,” said Rick Weyen, vice president for logistics for Tesoro Corp. and vice president for operations for its logistics.

Oil producers are scrambling to create the infrastructure to get the Midwestern-sourced oil to refineries. The infrastructure to the East Coast, South and Gulf Coast is fairly well established, but the West Coast is underserved.

“The West Coast is kind of the missing piece,” he said.

Declining production from Alaska’s and the West Coast refineries need the Midwestern products.

Oil began moving to the coast by rail in 2013 — about 150,000 barrels a day or one percent of total demand.

Weyen said rail is the most effective way to move crude oil. Pipelines cost billions to build and generally depend on buyers willing to enter long-term agreements. No shipper is ready to commit to a 10-year contract, he said.

Politically, he said, there is no way to get a pipeline from North Dakota to the West Coast.

Weyen said Tesoro pursued the chance to develop a terminal at the Port of Vancouver USA in part because of the port’s $175 million investment in rail upgrades. The venture would handle up to four trains per day, with oil transferring to double-hulled, U.S.-flagged tankers bound for refineries in California.

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

Ebola

It started with two on the "watch list." It quickly went to 10, where it was this morning. It's now up to 100. Will the affected Dallas public school be closed for 21 days? No way, but I bet there are discussions. And now we have a steady stream of US airmen and US soldiers going back and forth between West Africa and the US.

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

Something Doesn't Add Up

Everyone "knows" that the only way to become infected with Ebola is through direct contact with bodily fluids from someone ill with the disease. So, how does an NBC free-lance camera man come down with Ebola. If he denies coming in contact with any infected bodily fluid, this is more worrisome than we are being led to believe. 

Port Of Vancouver Presentation From The Williston Economic Summit -- September, 2014

From the Williston Economic Summit -- 2014, "Port of Vancouver."

Slide 6 -- an eye-opener. Note all the crude oil pipelines in the west (Washington state, Oregon, California, Idaho, Montana, Nevada, Colorado, Utah, Arizona, and New Mexico). After looking at that slide, then vote on the poll regarding CBR at the sidebar on the right.

Slide 8: cost to ship crude oil over next two years -- California, by rail, $13 to $15/bbl; Bakken rail to Cushing, $9/bbl; Alberta to east coast by rail, $9 to $12/bbl. By ship, Brent to the US, $0 to $9.

 Slide 9: Bakken crude by rail to San Francisco ($13/bbl); to Los Angeles ($14/bbl) -- remember, there are no pipelines to California

Slide 10: West Coast refineries increasingly dependent on foreign oil

Slide 11: by 2025 -- zero oil from Alaska North Slope -- an incredible slide

Slide 12: opposition in California to CBR is growing ... do you see where this presentation is headed ..? Remember, this is a "Port of Vancouver" presentation.

The most important data this presentation did not share: the likelihood that California in-state crude oil production could also decline significantly. It was touched on in slide 13, but easily overlooked. At best, there is no increase in California oil production from now to eternity.

Closing Out The Poll -- Active Rigs At 199 -- September 10, 2014; One Shy Of 200; Ties Record For This Date; California Caves - Agrees To Take Bakken Crude By Rail; Mining Bitumen Without Strip Mining

Active rigs:

	9/10/2014	09/10/2013	09/10/2012	09/10/2011	09/10/2010
Active Rigs	199	184	192	199	141

The Poll:

Wiki defines summer for the northern hemisphere as the full three months of June, July, and August. By that definition, summer has ended.

The autumn equinox falls on September 23.

This is the first time I looked at the poll results, so it will be a surprise to me how it comes how. 

The poll:

• we will reach 200 rigs by the end of summer: 61%
• we will NOT reach 200 rigs by the end of summer: 39%

Regardless how you voted, I think we can consider this a win-win for everyone. 199 is very, very close to 200 (and if we reach that number by September 22/23, I will say we hit the 200 mark this summer, though 39% of you will cry foul). But today's 199 ties the record, last set in 2011. And, the rigs are much more powerful and the roughnecks much more efficient in 2014 than they were in 2011.

Quite remarkable to say the least.

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

California Caves

This is also quite remarkable. California approves a new CBR off-loading terminal and will accept Bakken crude oil.

The first substantial oil-by-rail project at a California refinery won approval on Tuesday despite a last-minute push for more scrutiny by some environmental groups.

The facility at Alon USA Energy Inc's shuttered Bakersfield refinery in Kern County, home to about 65 percent of California's heavy oil output, will push crude offloading capacity to as high as 150,000 barrels per day (bpd) from the current 13,000 bpd.

The Kern County Board of Supervisors approved the $100 million project after a lengthy environmental review. Alon Chief Executive Officer Paul Eisman told the board the project could start up by the third quarter next year.

At least someone can make a decision, even if President Obama cannot.

By the way, California may not have had much choice. It is my understanding (posted a long, long time ago), California is like Hawaii in that the state has no crude oil pipelines running to it. Again, if I recall correctly, I believe I read somewhere, no crude oil pipelines run to California. That makes sense due to the tectonic movement in that state; the fact that California had its own (almost?) self-sustaining oil and gas industry; and, c) it had ports on the ocean to take Alaska oil. 

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

"Mining" Oil Sands Bitumen Without Strip Mining

This is a great article; the link sent to me by a reader. I did not know this. More than half of that Alberta, Canada, oil sands bitumen is being produced in-situ, with steam, without disturbing the surface through strip mining. The Economist is reporting:

Many operators now extract the bitumen without strip mining. “In-situ” production, as it is called, involves injecting high-pressure steam, heated to more than 300°C, into deep boreholes. The steam, emerging from millions of slits in a steel borehole liner, liquefies the bitumen and allows it to be pumped out.

Using steam extraction means that nine-tenths of the land above a reservoir can be left intact. There is no need for waste ponds because the sand is left underground and most of the water recovered from the bitumen can be cleaned with distillation for reuse. Steam can also produce bitumen from a reservoir half-a-kilometre underground, whereas strip mining is only economical for deposits less than 70 metres or so from the surface.

The proportion of bitumen produced with steam now stands at 53% and will continue to grow, says the Alberta Energy Regulator (AER), a government agency. One of the newer methods, steam-assisted gravity drainage (SAGD), has proved particularly effective, says Ken Schuldhaus of the AER. SAGD involves drilling two horizontal wells through an oil-sands reservoir, one about five metres below the other. Steam is then released from the top well and over a few weeks can melt bitumen as far as 50 metres above and to the sides of the bore. The bitumen then percolates down and into the lower well, from which it is pumped to the surface.

 Much, much more at the linked article.

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

Hawaii Energy

RBN Energy: LNG in Hawaii. 

PSX To Build New CBR Terminal In The Bakken; Location Not In This Story -- September 4, 2014

Updates

November 21, 2014: update on the Sacajawea Pipeline and Palermo Rail Terminal. To be on-line in first quarter 2016. 

September 5, 2014: see first comment. Looks like this may be at Palermo, ND, about 10 miles east of Stanley, ND, one of the hottest areas in North Dakota. Palermo was mentioned in this posting last year.
 

Original Post

I track CBR terminals here. To the best of my knowledge this PSX announcement is separate from the just-announced Plaza CBR terminal.

Argus Media is reporting:

Phillips 66 will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal. The company will also buy 500 rail cars, bringing its total fleet to 3,700.

"We have permits in hand in engineering to construct a new rail-loading facility. This is permitted up to 200,000 b/d. We'll probably do about 160,000 b/d" and build about 300,000 bl in storage.

Refiners like Tesoro, Phillips 66 and PBF Energy have been keen to source crude by rail but so far largely invested in refinery-side or destination unloading facilities while taking out capacity, without owning or building the facilities, on the origination side. Producers like EOG Resources and Hess have invested in terminals on the origination or oilfield side.

Phillips 66 is working to bring more advantaged crudes to its refineries and invest more in shale crude logistics, including dropping midstream assets into a master limited partnership (MLP). It is adding another Jones Act vessel for a total of three in its fleet in January, and looking to bring more advantaged crudes to its 250,000 b/d Alliance refinery in Belle Chasse, Louisiana.

The company last year took order of 2,000 new railcars and put in an additional order of 1,200 general purpose rail tanker cars for receipt from summer of 2014 through early 2015 for a total rail-owned fleet capacity of 160,000 b/d.

Phillips 66 unloaded its first unit train on 5 August at its new 70,000 b/d crude-by-rail facility at its 250,000 b/d Bayway refinery in New Jersey. It also has capacity to take 50,000-75,000 b/d from a Global Partners facility, and can also receive crude from the Texas Gulf coast via its two Jones Act vessels.

Garland also sees "a lot of opportunity" around condensate-related infrastructure, including gathering, splitting and dock facilities. "More to come on that in the future," he said.

A 30,000 b/d rail unloading facility at the company's 96,000 b/d refinery in Ferndale, Washington, will be online in the fourth quarter.

With all the environmental activism in the Pacific Northwest I was surprised to see that last line, Ferndale, Washington. I think I posted the story some time ago, but have long forgotten.

And then the very next line in the story:

"We're disappointed" in the slow permitting process for the company's planned 40,000 b/d Santa Maria rail unloading facility, which would serve the company's San Francisco refining complex, but "it just takes time in California to get things permitted," Garland said. The company has also contracted for 20,000 b/d of capacity out of Plains All American Pipeline's upcoming rail terminal in Bakersfield, California.

It is counter-intuitive but that's good news for the Bakken that the company is having problems in California. The dollars that can't be spent in California will be spent elsewhere until California gets the permitting process completed.  

California CBR -- A Huge Success Story

There are a lot of metrics in this story that will be interesting to follow. InvestorVillage is reporting:

California, the most-populous U.S. state and biggest gasoline market, more than doubled the volume of oil it received by train in the first quarter as deliveries from Canada surged.

The third-largest oil-refining state unloaded 1.41 million barrels in the first quarter, up from 693,457 a year ago.

Canadian deliveries made up half the total and were eight times shipments a year earlier. Supplies from New Mexico jumped 71 percent to 173,081 barrels. Those from North Dakota slid 34 percent to 277,046.

U.S. West Coast refiners including Tesoro Corp. and Valero Energy Corp. are developing projects to bring in more oil by rail from reserves across the middle of the U.S. and Canada to displace more expensive supplies.

Crude production in PADD 5, which includes California and Alaska, has dropped every year since 2002 while drillers are extracting record volumes from shale in states including North Dakota and Texas.

The surging flows of domestic oil to California “reflect a continuing improvement in crude-by-rail receiving facilities here,” David Hackett, president of Stillwater Associates, an energy consultant, said by phone from Irvine, California.

Rail shipments still account for a small fraction of California’s oil demand.

In February, the state imported more than 20 million barrels of crude from abroad.

Crude from North Dakota and Canada trades at a discount to Alaska North Slope oil, which is near $108 a barrel (on the day the story was originally posted). Western Canada Select, a heavy, sour blend, $83.

North Dakota’s Bakken crude is priced slightly over $95.

It costs $9 to $10.50 a barrel to send North Dakota’s Bakken oil by rail to California, according to Tesoro, the West Coast’s largest refiner.

A lot of story lines there. The best one: President Obama's decision to dither on the Keystone XL changed completely the dynamics of the flow of oil and gas in this country. It will be interesting to see how this plays out.

But when California imports 20 million bbls of oil per month, it certainly leaves open the opportunity for a lot more CBR terminals. Regular readers may remember that Canada sees absolutely no more foreign imports of oil for its east coast refineries, except from the US.

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

A Note For The Granddaughters

This is a must-read for those interested in the status of the sage grouse in North Dakota. The Dickinson Press is reporting:

North Dakota’s sage grouse population appears to have collapsed.

The counters found 31 males. That’s down from 50 last year, continuing a trend that began half a dozen years ago.

This year’s count is the lowest number ever recorded.

It’s down from nearly 300 displaying males in 2000 and 159 in 2007.

Consistent with the Game and Fish Department’s management plan, North Dakota’s hunting season on sage grouse was closed in 2008, when the annual count of dancing males fell below 100 birds.

The results of the count in Bowman, Slope and Golden Valley counties — the state’s three southwestern-most counties, all of them bordering Montana — left Game and Fish biologists disappointed, concerned, puzzled, frustrated, even a little bit angry.

The story does not mention the most likely culprit: West Nile virus. 

Nor does the article weigh in on wind farms which take up a much larger footprint/energy unit than oil and gas ever will. And unlike oil and gas well pads which will eventually be returned to their original state, wind farms are expected to live on forever.

Increasing Bakken Crude Oil Reaching California

Despite all the talk about problems with CBR, rail and crude oil continues to roll.

Bloomberg is reporting:

California, the third-biggest refining state in the U.S., is about to see a flood of oil by rail from places such as Canada and North Dakota as suppliers seek to tap a market isolated from the rest of the country.

The Western U.S. may bring 500,000 barrels of light oil by rail a day in 2015 as the region’s refiners seek to replace shrinking output in California and Alaska and more costly foreign imports, Mark Smith, Tesoro Corp.’s vice president of development, supply and logistics, said at a conference yesterday in Glendale, California. California refineries can run 1.63 million barrels a day, the most in the U.S. after Texas and Louisiana, government data show.

The region has become one of the most depending in the nation on foreign oil as the West lacks pipeline access to crude from shale supplies in the middle of the country. Companies from Alon USA Energy Inc. to Valero Energy Corp. are looking to tap the market with projects that would bring more crude into the West by rail.

“The West Coast is one of the last frontiers where foreign imports really have a stronghold, and there’s not a lot of alternatives,” Smith said yesterday at the Crude By Rail 2014 conference organized by Houston-based American Business Conferences. “Obviously there is a huge opportunity here” for oil shipped by rail. 

It costs $9 a barrel to send North Dakota’s Bakken crude to Washington and $4 to $5 more to carry it by ship from there to California, according to Valero, the world’s largest independent refiner. Tesoro said the cost of delivering a barrel by rail from the Bakken to California would range from $9 to $10.50.

Royal Dutch Shell Plc posted a price of $88.33 a barrel yesterday for Bakken crude in North Dakota. Alaska North Slope oil typically used in West Coast refineries cost $109.70 at 12:05 p.m. New York time today, according to data compiled by Bloomberg.

California may get more than one-quarter of its crude from Canada and U.S. states other than Alaska should six proposed rail-offloading projects win approval, state Energy Commission data show. Companies including Valero, Phillips 66 and Plains All American Pipeline LP support the projects.

A huge "thank you" to a reader for sending this story. While I am traveling, I will be posting less.  Sorry. 

Sierra Club To Kill CBR; Late On Fracking Will Not Let This Opportunity Pass

If the Sierra Club can't stop fracking, they will stop CBR. The Journal is reporting:

Companies that thought they had found a relatively easy way to move crude from the booming oil fields of North Dakota to the West Coast are encountering obstacles.

Half a dozen companies are trying to build rail terminals on the coast of Washington state to receive trainloads of crude from the Bakken field in North Dakota. The oil would then be transferred to ships and barges that could carry it to refineries in the Pacific Northwest or south to California. Analysts say regulatory hurdles make it difficult to build the necessary rail yards and tank farms in California, and it's more expensive to ship crude there.

But getting a permit in Washington is proving more challenging than companies expected.

Targa Resources Partners recently called off plans to build a new crude-oil tank farm and rail yard at the Port of Tacoma, saying it was "unable to identify an economical path forward."

The company, which didn't return requests for comment, applied earlier this year to get a permit from a regional clean-air agency that would allow it to ship crude by barge from its existing facility at the port, but that is still being reviewed.

And in the wake of this summer's train derailment in Quebec that killed 47 people, some groups are vowing to stop projects that would increase the number of oil trains rumbling through communities. "The whole enterprise raises serious concerns about the heightened risk of transporting crude by rail," said Devorah Ancel, a staff attorney for the Sierra Club, an environmental advocacy group that has opposed some of the crude-by-rail projects at Washington ports. Companies that want to transport crude by rail say the risks are minimal, and the rewards are great. Refiners have said shipping crude by rail from North Dakota to Washington is a bargain at as little as $10 a barrel, compared with $13 to $16 for a barrel of crude to travel by rail to California and $16 to ship a barrel to the East Coast.

Targa was in the news a year ago when it was announced it would invest $1 billion in North Dakota-Bakken-related operations. I don't know how this latest setback -- calling off plans for a CBR unloading facility in Washington State, Port of Tacoma.

Oil And Gas Industry Using Existing Assets To Facilitate New Market Conditions -- Platts

There is an incredible post over at Platts.

The analyst pieced this together by listening to several conference calls during earnings week.

There are so many story lines in this article; things are changing rapidly; CBR -- essentially a Bakken strategy -- is changing the oil industry faster than anyone could have expected. I still remember, vividly, the comment I received a year or so ago from a reader who said the CBR phenomenon was temporary: once all the pipelines are laid, CBR will be history. I've always said it costs the oil industry more to ship by pipeline than by rail. Parse that sentence carefully before pointing out the errors of my way. But I digress. Read the linked article over at Platts.

1. First: read my post on the Buckeye pipeline, taken from RBN Energy, posted just a few weeks ago. And from there, read the original RBN Energy article. The photos are great.

2. RBN talked about the Caribbean/Bahamas being a distribution center, taking oil to the east coast of the US. Platts suggests that Buckeye Pipeline, the company, is considering moving Canadian heavy crude to the Bahamas, and from there, it could go almost anywhere. Forget Keystone XL, forget Cushing, forget Texas/Louisiana refineries.

2. As noted, this would take the "anti-oil sand fight out of Canada and the US and extend [that fight] toother areas where oil form the sands might end up. [China would not care.]

3. So, that helps out western Canadian crude. What about the Bakken? Okay, what about the Bakken.  it turns out that Plains All American has revealed plans to create a giant rail hub in Bakersfield, CA, bringing in Bakken and other Midcontinent crudes [probably Permian and Eagle Ford].

4. The Platts folks see at least three scenarios developing.

First: Bakken oil is "low carbon" compared to heavier oils (like Canadian) and the Californian refineries might see the advantage of Bakken oil over Canadian oil coming down from the west coast.

Second: CBR now solves "the California problem": As Platts says, "the idea of a disconnected California market, almost like Hawaii but attached to the rest of the country, starts to fade.

Third: from Platts, the “cheap” crude oil that powered Midcontinent refiners to amazing margins earlier this year may now be available on a less profitable basis to refiners outside of PADD 3.

Readers need to read "Bridget's" comments in italics at the linked Platts article, which includes this bit:

 ... both companies [Buckeye Pipeline and American All Plains] are planning to use existing assets to facilitate new market conditions. How smart. New crude production is changing everything, but a handful of midstream companies seem to really be staying ahead of the game. I haven’t been in this market too long, but I came in at the right time… right as crude by rail took off.

Regular readers of the blog have been in on CBR since about December 31, 2009, when the EOG Stanley facility came on line two months early.

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

From the Plains All American conference call that was referenced above:

And with regard to our rail projects, our Tampa Colorado loading facility is expected to come into service this month and our Yorktown Virginia facility is expected to be in-service in December. We expect unloading facility in Bakersfield, California and expansion of our Van Hook, North Dakota loading facility to be in-service by mid 2014. We're also developing a rail loading project in Canada, which we expect to be in-service in the first quarter of 2015.

Finally, I note that our -- that the completion of both our Gulf Coast pipeline and our Bakken North line had been moved to 2014 primarily due to the timing of permits or right of way.

More about the CBR terminal in Bakersfield:

Just circling back to Bakersfield a little bit. I know some of the California refiners have actually cited some permitting delays out there for the lone unloading facility. Curious as to how you guys are looking at that facility in terms of the ultimate scale and ultimately flexibility of the facility to bring in Canadian heavies as well as access a number of different light U.S. shale basins?

It's currently -- that's currently permitted to move, it can move unit train a day, 65,000 to 75,000 barrels a day. The facilities are such that they could -- we could move two unit trains a day, but we need an increase in our admissions permitting for the increase, which we have recently -- we are in the process of making. So ultimately, we think we will able to bring a both light and heavy and actually -- probably be more lighter crudes and sort of a unit train a day type of volume.

A digression: I don't know if I posted this before or not, but I talk about it a lot (especially with my dad). The railroads "took off" twenty or thirty years ago when they realized what "business" they were in. A hundred years ago, railroad companies thought they were in the "railroad" business and operated as such. But, business took off exponentially when railroads realized they were in the transportation business and reconfigured cars for intermodal freight transport. Railroad companies now see themselves as part of a system that includes ocean-going vessels and 18-wheelers.

The PAA/CEO said the same thing about his pipeline company. PAA now "melds" pipeline activity directly into their CBR activities. PAA doesn't think of themselves as a pipeline company any more; they think of themselves as a mover of crude oil.

I have the Air Force to thank for all the training they provided me for this type of thinking.

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

For the archives. Platts 2013 Insight -- Top 250 Energy Companies.

Monday Morning

Active rigs: 184

RBN Energy: another great article for those who want to better understand the Bakken. In this post, RBN Energy looks at the future of CBR to the west coast.

For Bakken producers and shippers, the economics of moving crude from North Dakota to the West Coast by rail are governed by the price spread between Bakken crude and the West Coast benchmark Alaska North Slope (ANS). So far this year those economics have been favorable.

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

Shell abandons two shale projects

Shell abandons two projects, first out west (Colorado), and then down south (Eagle Ford). The Wyoming Star-Tribune is reporting:

Royal Dutch Shell PLC became the latest company to abandon efforts to turn Western Slope oil shale into oil, joining a long line of companies in a boom and bust cycle in the region.
The company said energy markets have changed since the project started in 1982, and the company no longer wants to continue efforts to turn oily shale rock into liquid by heating the rock and pumping out the oil.

Meanwhile in the Eagle Ford, Reuters is reporting:

Royal Dutch Shell plans to sell its 106,000-acre stake in the Eagle Ford shale formation in South Texas, the Wall Street Journal reported on Sunday.
Shell's decision comes after it took a $2.2 billion charge against its U.S. shale business in August. 

Major oil companies have struggled in oil-and-gas rich regions such as the Eagle Ford, where smaller energy firms have thrived. BG Group and BHP Billiton have also taken impairment charges against their U.S. shale assets.

Unless the Bakken is a whole lot better than the Eagle Ford this suggests that majors may not be interested in the Bakken, either.