Statoil To Abandon Greenland For "Greener" Pastures; Delta Airlines Refinery 4Q13 Earnings

For background, scroll through this site: Cairn and Statoil in Greenland.

It appears things did not work out so well for Statoil in Greenland: Statoil will "abandon" Greenland's west coast for greener pastures, at least according to Bloomberg.

Statoil ASA (STL), Norway’s biggest energy company, may walk away from exploration in west Greenland as it tries to contain spending.

The licenses are an “exit candidate” as they are costly and Statoil is being choosier where it explores, Tim Dodson, the head of exploration, said in an interview in Sandefjord, Norway. “It has to do with the costly nature, it has to do with the risk profile,” he said, adding the matter isn’t yet decided.

An exit would be a blow to Greenland’s ambition to pump its first crude oil, aided by Statoil’s experience exploring in the Arctic. Cairn Energy Plc (CNE) spent about $1 billion in a Greenland campaign in 2011 that failed to produce any discoveries.

Statoil, 67 percent-held by the state, this month said it sought to rein in investments after spending reached a record $19 billion last year. Rising costs and lower profitability are hurting oil producers. Royal Dutch Shell Plc (RDSA), last week had its first profit warning in a decade with fourth-quarter earnings at Europe’s largest energy company seen falling from a year before. 

I've blogged about Cairn and Greenland periodically on the blog. I was initially excited about the prospects, but like so many other stories, it seemed not to pan out so well. These stories reinforce, for me, again, how good the Bakken really is. Let's hope the ND state attorney doesn't screw it up.

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From Delta Airlines 4Q13 earnings transcript:

On the fuel front, our all-in price per gallon for the quarter was $3.05. The Trainer refinery produced a $46 million loss for the quarter, but overall fuel expense for Delta declined $91 million from lower market fuel prices and nearly $60 million in hedge gains.

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A Note to the Granddaughters

I did not know this until recently. And now that I know it, I'm thrilled.

I never cared for Sean Hannity. I have posted that before.  A couple of weeks ago I heard Savage Nation in the Hannity time slot here in the DFW metroplex area. I thought it was a short-term replacement while Sean was on vacation.

Today, I heard that Savage Nation is a replacement for Sean Hannity in this time slot, a change which occurred on 52 talk-radio stations across the nation. Wow. I don't care for Savage as much as others apparently do, but I could not stand Hannity, and Savage Nation might be a great change. Maybe I'll tune in for awhile and see what I think. I seldom catch Rush any more. And when I do, I generally listen for about ten minutes. Only three minutes if my wife is in the car with me.

Later...oh, here's the rest of the story: both Hannity and Rush are leaving Cumulus for Clear Channel. Not a big story. But are both Hannity and Rush (New York-based) moving to no-state-income-tax state of Texas?

Never, Never, Never Give Up -- The Greenland-Cairn Saga -- Absolutely Nothing To Do With The Bakken

Link here.

UK oil firm Cairn Energy is getting together with Norway's Statoil to explore for oil and gas in Greenland.

Cairn announced Monday that it has entered into a "farm down" agreement with Statoil for the Pitu block in the Baffin Bay Basin, west of Greenland.

After a number of failed drill attempts to find hydrocarbons in Greenland, Cairn believes that Statoil's background of exploring for oil in the Arctic will improve its chances of success in the region.

There are three stories that fascinate me: a) the Keystone XL story; b) the Greenland-Cairn story; and, c) the megaload story coming out of Idaho and Montana.

They fascinate me because they have one thing in common. They seem to be the epitome of "never, never give up."

A fourth story fascinates me: The Ingenious Gentleman Don Quixote of La Mancha (Spanish: El ingenioso hidalgo don Quijote de la Mancha).


Johnny B. Goode, River City Rumblers, Australia

Cairn To Abandon Two Exploratory Wells in Greenland; Re-Evaluate Program There

Update

January 21, 2014: Statoil to abandon Greenland for "greener" pastures.

January 23, 2012: Never give up. Now, Statoil will join Cairn in looking for oil off Greenland.

December 1, 2011: Good, I'm not confused. Rigzone reports what I noted below -- "Cairn remains optimistic despite recent failures in Greenland."

November 30, 2011: Well, I'm confused, although it doesn't take much to confuse me. Today, it's being reported that Cairn is optimistic about prospects in Greenland:

Cairn Energy PLC expressed encouragement that all ingredients for commercial success are present off western Greenland after its 2010 and 2011 wells encountered oil and gas shows in multiple basins and found reservoir quality sands in the Atammik block.

The company is evaluating data on multiple blocks and discussing farm-outs in selected areas. It is considering another 3D seismic survey over the Lady Franklin and Atammik region next year that could lead to further drilling in later years.

The rest of the story did not sound all that encouraging, but who knows? That's a rhetorical question; please don't answer. 

Original Post

Link here. Just another example how fortunate North Dakota is to have the Bakken.

London-listed shares of Cairn Energy fell 3.8% after the company said it’s abandoning two exploration wells in Greenland. The company said it would review its exploration program there. 

This was on a day when other oil companies soared; price of WTI solidly at $101/bbl; and US stock market soared 400 points. Not all energy companies are being treated equal.

Note disclaimer at top of sidebar at the right. This is not an investment site. Do not make any investment decisions based on what you read at this site. If something seems wrong at this site, it probably is. Fact check at wiki.

Speaking of Greenland, the Vikings were apparently the cause of anthropogenic global warming a thousand years ago through the use of their coal-powered Viking ships. 

By the way, a bit of trivia. The term "rostrum" comes from the Latin rostum, meaning beak. The beak of the Viking ships were called rostra. Following a successful raid, the victorious Vikings would carry in the rostrum of a defeated opponent and place it in their mead halls as decorations. That's the background to why the speaker's dais of modern day is still called a rostrum. To the best of my knowledge, the Vikings did not need teleprompters.

Notes From New England

This posting is not about the oil industry in North Dakota. It is simply a rambling post from some Saturday morning reading. These are some notes from this month's issue of National Geographic and from the Boston Globe. Take it for what it is worth.

First, the cover story from the June, 2010, issue of National Geographic: "Greenland: Ground Zero for Global Warming." On page 49, the big introduction to the story: "Viking Weather: As Greenland returns to the warm climate that allowed the Vikings to colonize it in the Middle Ages, its isolated and dependent people dream of greener fields and pastures -- and also of oil from ice-free waters."

I cannot make this stuff up.

"... Greenland returns to the warm climate that allowed the Vikings to colonize it in the Middle Ages..." I guess the global warming in the Middle Ages was due to man burning all that wood and coal, and had it not been for Sir Gore Alad who instituted cap and trade, trading lutefisk credits for coal briquettes, back in the 1500's, the earth would have been destroyed by rising global temperatures.

Second: same article. Greenland is pinning its economic hopes on oil. "The sea off the central west coast now typically remains ice free for nearly half the year, a month longer than 25 years ago. ... ExxonMobil, Chevron, and other oil companies have acquired exploration licenses. Cairn Energy, a Scottish company plans to drill its first exploration wells this year....Greenland estimates it has 50 billion barrels of recoverable oil and gas reserves. With oil at $80 a barrel, those reserves would be worth more than four trillion dollars."  [Update, May 27, 2011: Cairn to drill four exploratory wells.] [Update, September 21, 2010: yup, a Scottish oil company reports that they have found oil off the coast of Greenland.] [Update, October 26, 2010: Scottish oil company, Cairn, is happy with initial results off Greenland.] [Update, January 6, 2011: Cairn has secured two rigs to drill at least four wells.] [Update, January 27, 2011: Cairn solidifies position off west Greenland with as many as four exploratory wells in 2011.] [Update, November 30, 2011: great news for environmentalists. No oil; Cairn is abandoning two exploration wells in Greenland; the company said it would review its exploration program there.]

I cannot make this stuff up.

Four trillion dollars would work out to a billion dollars for each resident of Greenland.

Third story: this story is from the Boston Globe, Saturday, May 22, 2010. Cape Wind is a wind farm off Nantucket Sound, Massachusetts. It is now in negotiations to start selling electricity to regional utilities. Earlier this month, National Grid, a large regional utility serving several New England states, signed a 15-year contract to buy half the power Wind Cape is expected to generate. The cost is almost exactly twice what conventionally-produced electricity costs, 20 cents vs 10 cents per KWH, respectively. The cost will increase at an annual rate of at least 3.5%.  Massachusetts attorney general has now stepped in to see whether that contract is in the best interests of the state's taxpayers. (Obviously not.) Wind Cape "invited" NStar, another major regional utility over for tea, to discuss contracting for the rest of Wind Cape's production. NStar was polite enough to accept but paying that high a price for electricity was meant with less than a lukewarm response.

It turns out that Wind Cape has been in the works for nine (9) years now, at a cost of $1 billion, "but industry observers say the technology has become more expensive. Officials of the project have declined recent requests for new estimates." It should be noted that not a single turbine is yet in the water.

Again, I can't make this stuff up.

Okay, one more story.

Fourth story, again from National Geographic, this month's issue: the whooping crane is the number 1 endangered species in North America. Great strides have been made in the past several years to save this bird. Things were going well until 2008. Biologists and whooping crane census takers "... are now worried. The flock's population had reached 266 in the spring of 2008. But by the following spring, 57 had died, 23 of them in the birds' wintering grounds in south Texas ... Others probably perished during migration, often after striking power lines, the biggest known killer along the flyway." The flyway is from south Texas to northern Canada, right through "wind farm country." Yup, after all these years of working to save the whooping crane, it appears the environmentalists' answer to coal is killing them.

Again, I can't make this stuff up. (Yes, I know the same transmission lines carry coal-generated electricity as well as wind farm energy, but the wind farms are spread out over hundreds of thousands of acres requiring new transmission arrays, compared to existing conventional power plants where the transmission lines are already in place.)

So, that was my reading this fine Saturday morning in Boston. As JRR Tolkien said, we all have our myths. You have yours; I have mine.