ellaruth Provides Update, Recommendation: Strata-X Quietly Cancels Its Permits In North Dakota; No Press Release From Strata-X Or The NDIC -- February 5, 2015

I started off in less than a good mood when I started this post, but then seeing ellaruth's analysis, I am now in a very good mood ... by the way -- if you google Strata-X cancels permits, "ellaruth's instablog" is the number one hit. I cannot make this stuff up.

Original Post

As of a few minutes ago, Strata-X has not updated its webpage regarding "The Sleeping Giant" in North Dakota. I have found no press releases by the company that it has canceled its permits in North Dakota (but I haven't really started looking yet, either).

Call me naive, and maybe this is the way business works in the oil patch, but I am somewhat disillusioned that after all the hype there is no press release and no media coverage regarding the Strata-X wells in North Dakota.

It looks like there was a reason why the first two Strata-X wells went to DRL status last summer and were not fracked/completed. Those two wells, I believe, are still on DRL status. I haven't checked in the last 12 hours.

On the other hand, ellaruth has an "Instablog," dated December 12, 2014, with this title: Strata-X: The Small Oil and Gas Play That Appears To Be Thriving." Perhaps in Illinois, but apparently not in North Dakota. At that link, the company still says it has "opportunities in North Dakota ... "

This is ellaruth's summary (direct cut and paste; English is perhaps not her first language) :

This is a foreign penny stock with a 100% degress of risk. You can loose everything that you invest. Very soon I will probably take a small position. It appears to becoming successful in several projects in both Illinois and North Dakota's Bakken that are most inviting. Also, the company appears to have capable management, Illinois is touted to be feasible with current low oil prices. Its every person for themselves and due your own do diligence. You might wants to sell half of your position, if you appreciate 50% or more.

And there you have it: "Its (sic) every person for themselves (sic) and due (sic) your own do (sic) intelligence. You might wants (sic) to sell half of your position, if you appreciate (sic) 50% or more."

Her instablog says ellaruth is "Employed in healthcare for 35 years. Interested in novel and destructively innovative healthcare technologies."

If she's interested in destructively innovative healthcare... I suggest ... ObamaCare. 

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Related posts:

• Mentioned it in passing, February 5, 2015. Ignore this link.
• Strata-X cancels permits, February 4, 2015.
• First Strata-X well goes to DRL status, December 22, 2014.
• Anticipating Strata-X announcement, December 19, 2014.
• Update on the Sleeping Giant, July 28, 2014.
• A top story for 2014, July 16, 2014. Ignore this link; just a long list of more links.
• Random comment on the Sleeping Giant, June 30, 2014.
• Could the Sleeping Giant be the next Marcellus? June 28, 2014
• Strata-X strikes natural gas in The Sleeping Giant, June 27, 2014.
• Curiouser and curiouser: Strata-X and The Sleeping Giant, June 21, 2014.
• Curiouser and curiouser, December 11, 2013.
• New drilling in Illinois, October 8, 2013.
• Small company ready to drill into Illinois Basin, April 5, 2013.

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From Strata-X Website -- February 5, 2015, 1:14 p.m. CT

Sleeping Giang Gas Project -- Williston Basin, North Dakota, USA
Project Highlights/Recent Activity

• In December 2013 the Company received permits for 4 drilling locations with the North Dakota Industrial Commission.
• On 20 June 2014, Strata-X spudded one of the permitted locations called the Rohweder #1-11 well, the Company’s first vertical appraisal well in the Sleeping Giant Gas Project, targeting biogenic natural gas from the prolific Upper Cretaceous Niobrara formation in the Williston Basin North Dakota.
• In drilling the vertical Rohweder #1-11 well to a total depth of 1,450 feet, gas shows were encountered immediately after penetrating the regional hydrocarbon seal. In total, gas shows were encountered over an 80 foot interval of the targeted Niobrara formation, with gas shows peaking at approximately 300 units over a background of 25 units. In drilling portions of the targeted Niobrara formation, oil fluorescence and oil cut were also observed.
• After casing, the well was shut-in to allow the Company time to design an optimal completion stimulation method utilizing data obtained during the drilling of the well. The Rohweder #1-11 well is the Company’s first proof of concept well on the Sleeping Giant Gas Project.
  

Strata-X Energy has acquired the rights to and intends to develop four prospective structures for shallow Niobrara gas in the south-eastern Williston Basin, North Dakota, USA. It owns options and leases to a 100% percent working interest in about 115,000 net mineral acres (147,000 gross acres) of currently leased land.

The Sleeping Giant Project is located on relatively flat agricultural lands with existing roads and infrastructure. Two interstate natural gas pipelines transect the prospect providing a sales avenue for developed natural gas. Oil and natural gas field services are readily available in Bismarck and Williston, North Dakota.

The Niobrara Formation is a significant petroleum system in the USA and has produced over 1 TCF of natural gas from shallow accumulations. There has been relatively little drilling in the Sleeping Giant prospect area. The limited drilling there has been located off structure from these gas prospects with prior wells predominantly targeting deeper Cretaceous or Paleozoic targets. The Niobrara Formation in this area has been overlooked despite gas shows and small flares being reported. In the mid 2000’s, four wells were drilled in this part of North Dakota to test shallow gas shows. None of them were completed as all were drilled off-structure for the Niobrara gas play.

XOM Flirts With New High Despite Sanctions On Russia; AAPL Comes Close To Hitting The Century Mark (Again); War On Coal Claims Another Victim, "Update" On the "Sleeping Giant" -- July 28, 2014

For Geo-Political Wonks And Investors Only

With regard to the market today, I think the most interesting story today was XOM up over a percent/over a dollar; almost hit a new high.

The other majors were down and price of crude oil was flat to down.

XOM has the most to lose with Russian sanctions, as far as I know, based on close relationship between XOM and Russian operators (in Russia). XOM has said it won't back away from its contracts/commitments to Russia (at least to the best of my knowledge).

So, XOM's price action becomes a big story on at least three levels:

•  XOM says "no" to Obama; "yes" to Putin (not directly, of course) 
• or XOM says "no" to Obama; "yes to its investors
• investors think XOM is making the right financial decision; this tells us what investors think about the sanctions 

By the way, that second bullet is not trivial: XOM is an international company that just happens to have its roots and headquarters in the US. As a publicly traded company it has a fiduciary responsibility to its owners, the shareholders.

The question is this: what is this telling us that XOM says it won't back away from its commitments, and investors think XOM is doing the right thing?

[Obviously, there may be "real" / actionable reasons for XOM to have risen today, completely unrelated to geopolitical events, which is very likely, but for discussion's sake, let's assume there was no other news to explain the 1.15% jump.]

I think this tells us that:

• investors know that sanctions may be very, very, very painful, but at the end of the day, the "only" energy in Eurasia is Russian (Libya, by the way, supplying much oil to Italy, France continues to implode) 
• (OPEC services the world, and my hunch is that Russia plays a more dominant energy role in Europe than OPEC) 
•  if sanctions are really, really tough on Russia, Putin holds the trump card: energy -- let Europe go three days without natural gas this winter and the point will be made 
• Russia probably needs to pump more oil/natural gas to make up for loss revenue elsewhere, 
• Russia needs US expertise (XOM) to pump more oil/natural gas

And then this, the real reason investors bid XOM up today:

• they know Russia will be around for another 100 years
• they know Putin will be around for another dozen years, plus/minus a few
• they know President Obama has ... drum roll ... 906 days left in office, most of which will be spent golfing, or on vacation, or defending himself in court

For Investors Only

Wow, AAPL was less than 80 cents from $100/share today. 

The market managed to eke out a winning day.

Some of the Bakken operators are getting "cheap" enough:

• for small mom-and-pop investors to start accumulating again,
• or large hedge funds or Warren-Buffett-like investors to start buying en bloc

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

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Navajo Nation Loses Another War To The White Man

Updates

November 4, 2019: This (the original post) was a pretty good post, back in July, 2014 -- background on the Navajo coal plant in Arizona.

This is nothing new, this story by the AP, November 2, 2014. It appears there are two arguments with regard to this issue:

• global warming
• water

Closing this plant will have no effect whatsoever on global warming. Period. Dot. But that's what sold the decision some years ago.

Water. Not mentioned in the article except as part of history and hydroelectricity. My hunch: water was the bigger story, but closing the coal plant was sold on global warming.

Only one national political figure was mentioned in this article, President Trump, and he had nothing to do with this story, except that he is on record as supporting the coal industry.

March 24, 2016: for some reason we are starting to see a lot of stories on the Navajo power plants due to be closed by the EPA. Here is the latest, from Forbes:

Unlike prior regulatory efforts to improve air quality by reducing toxic emissions, the EPA’s Clean Power Plan (CPP) aims to cut non-toxic carbon dioxide emissions by about a third. The stated reason is to slow the increase of the Earth’s temperature by 0.018 degrees Celsius by 2100.

One place where the EPA’s 1,500-page regulatory diktat will hit particularly hard is the Navajo Nation, at 27,000 square miles, an area larger than West Virginia in northeast Arizona and adjoining slices of Utah and New Mexico. Home to 174,000 people, many of them without electricity, running water or steady work, the Navajo Nation is also host to two large coal-fired power plants and the two coal mines that feed them. These energy sector activities provide well-paying jobs as well as more than half of the Navajo Nation’s governmental income.

Even before the threat from the Clean Power Plan, the Navajo power plants have been under sustained environmental pressure. The larger of the two, the Navajo Generating Station, installed more than $700 million of air quality equipment in the past 20 years to improve winter visibility over the Grand Canyon to levels not seen since the onset of mankind’s influence over the environment, as if we actually know what visibility was over the Grand Canyon 300 years ago.

Regulators want another $1.1 billion in additional air quality upgrades with very tenuous cost-benefit ratios at best. The other power plant was recently forced to prematurely shut down 3 of 5 boilers, making the nearby coal mine operations less profitable and forcing the Navajo Nation to buy out the mine from BHP Billiton to keep the mine—and the power plant—open and preserve the jobs.

The bigger issue environmentalists have with the Navajo Generation Station is that it is responsible for pumping Colorado River water uphill from Arizona’s border with California—water that sustains 5 million people and lucrative farms in the desert. For primeval idealists, this is a mortal sin against the gods of sustainability made worse by the fact that affordable and reliable coal energy makes it all possible.

Should the EPA and environmentalists get their way and power output from the Navajo Generation Station is cut back, they propose replacing the lost power with wind. This challenge is two-fold: one, the best spot for wind turbines on the Navajo Nation overlaps an important eagle migratory path; and two, wind is notoriously erratic, making wind power uniquely unsuited to power the Central Arizona Project’s massive water works.

Four words: the eagles will lose. They don't vote.

Original Post

Ah, yes, the war on coal claims another victim -- this time the Navajo Nation. The AP is reporting:

The largest coal-fired power plant in the West will produce one-third less energy by 2020 and is on track to cease operations in 2044 under a proposal that the federal government adopted to cut haze-causing emissions of nitrogen oxide at places like the Grand Canyon.

The U.S. Environmental Protection Agency announced Monday that the owners of the Navajo Generating Station could either shut down one of the plant's 750-megawatt units or reduce power generation by an equal amount by 2020.

The owners would have until 2030 to install pollution controls that would cut nitrogen-oxide emissions by 80 percent.

EPA regional administrator Jared Blumenfeld in San Francisco said a final decision didn't come easily and required flexibility. Along with meeting energy demands in the West, the 2,250-megawatt plant powers a series of canals that deliver water to Phoenix and Tucson, fuels the economies of the Navajo and Hopi Tribes, and helps fulfill American Indian water-rights settlements with the federal government.

"This" decisions sounds wrong on so many levels, but it is what it is. 

Reducing power generation by one-third should come easily because the Los Angeles Department of Water and Power and NV Energy have announced their intention to cut ties with the coal plant by 2019. Together, they own almost one-third of the plant near Page, run by the Salt River Project, one of Arizona's largest utility companies. None of the other owners would lose any power generation as a result.

The final rule means the Navajo Nation ultimately will see less revenue from coal that feeds the power plant. But the executive director of the tribe's Environmental Protection Agency, Stephen Etsitty, said it provides a better chance of the power plant continuing operations.

Well, there's always more casino operations, and a light rail operation to the bottom of the Grand Canyon to generate income for the Navajo Nation.

My hunch is that by 2044, California will either be going back to nuclear energy (much, much more expensive to start from scratch) or will return to coal. Regardless, by 2044, I probably won't be much more than a spectator.

Meanwhile, Tucson and Phoenix better start planning for much more expensive water AND electricity.

This is a bit of background with regard to Los Angeles severing ties with coal. Unfortunately, it does not say what will replace coal (note: nuclear plants are also closing). Wind and solar are vastly inadequate (and for every 1 mW of "new" wind/solar in place, it requires another 0.5 mW of fossil fuel (or nuclear fuel) as back up. Obviously nuclear fuel is not in the cards as things stand now, so that means only one thing: natural gas. Unless California plans on burning the sequoia trees for energy. So, -- disclaimer -- this is not an investment site -- don't make any investment decisions based on what you read here or what you think you may have read here -- but it seems investors might want to follow the natural gas industry just a bit more closely with this news. 

According to wiki:

Navajo Generating Station is a 2250-megawatt-coal-fired powerplant located on the Navajo Indian Reservation, near Page, Arizona, United States. This plant provides electrical power to customers in Arizona, Nevada, and California. It also provides the power for pumping Colorado River water for the Central Arizona Project, supplying about 1.5 million acre feet (1.85 km3) of water annually to central and southern Arizona. As of 2013 permission to operate as a conventional coal-fired plant is anticipated until December 22, 2044.

My hunch is that water and energy will be the big, big stories in the latter half of the 21st century. 

If you have time, look at the list of the coal-fired power plants in the world, over at wiki. It is interactive, and you can re-sort the list to place the plants in order of decreasing size. Unless I counted wrong (which is possible), there are 197 coal plants worldwide listed. 197.

115 of them (again, I may have miscounted by one or two) are in China (not counting Taiwan).

115 in China. Of the 197 worldwide.

The US has 17.

One has to scroll through 51 coal-fired power plants before one finally gets to a coal-fired plant in the US, based on size: Plant Bowen in Georgia.

China continues to build coal-powered power plants faster than I can count, so closing the Navajo Generating Station will do nothing for CO2 emissions worldwide, assuming CO2 can freely cross international borders, but it will make some folks feel better. But, again, the plant will be closed due to the haze it causes near the Grand Canyon, not to lower global CO2 emissions.

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Seriously: once one gets past all the politics, and deals with the realities, cities like Tucson and Phoenix, need to start thinking about how their water needs and energy needs as resources become tighter and tighter. Trying to replace coal with solar/wind does not add up, and nuclear being out of favor, only one thing is left: natural gas.

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Speaking of natural gas, Strata-X has discovered natural gas in southeastern North Dakota, outside the "limits of the Bakken." This has previously been reported; it is not particularly new news, and much more needs to be done to determine if the source is economical. I would not have posted this because it's been posted before, from a different source, but if I don't post it, I will receive a gazillion comments and e-mails linking me to this site. Regardless, it has a nice map/graphic.

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By the way, back to the Navajo Generation Station. Presidents come and go. Energy is going to get tighter and tighter. My hunch is that the next EPA administrator -- or the next one after her -- or the next one -- will end up granting a waiver to extend the deadline.  Although it's very possible, the Navajo Nation will look at converting part of that plant to burn natural gas.

Idle Chatter, Saturday Afternoon, Could "The Sleeping Giant" Be The Next Marcellus? -- June 28, 2014

Updates

June 30, 2014: from a reader, which adds more perspective to the original post:

A $1.5 billion plant is planned for Grand Forks as well. Not sure where they are at with their permitting or investors. I imagine with the fertile Red River Valley and all of the sugar beet producers, a plant at the north and south end would be good for the farmers.

http://www.prairiebizmag.com/event/article/id/15783/publisher_ID/46/ 

Original Post

I track "The Sleeping Giant" story here.

A reader, overnight, sent me some thoughts regarding "The Sleeping Giant" which I've incorporated in the following note.

In this week's issue of Bloomberg Businessweek the lead story is "The $28 Trillion Writedown." For current investors in oil, gas, and coal, it's a bullish, bullish story. Embrace it.

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

But any time 2/3rds of a commodity is removed from the market, it just makes the holder of that commodity that much better off, all things being equal. Ban all oil production in the US overnight, and tomorrow morning Saudi Arabia's worth triples, quadruples.

Right now, the tea leaves suggest natural gas is in the "sweet spot." Wind and solar are in the 1% niche. No one except the French like nuclear power these days. No one except Germany and China like coal, and that's only because of necessity. That leaves natural gas. Everyone "likes" natural gas.

Because of that, some utilities could be winners, some could be losers. Right now, I think MDU sits in a "sweet spot." Yes, it has a lot of coal, but coal is easy. What MDU has, to put it in the "sweet spot" is location, location, location, and experience in unconventional plays, something they simply stumbled into, I think.

All those meandering dots lead to another meandering dot. "The Sleeping Giant." A few people knew about the Bakken long before the boom, but no one knew how to get to it. "The Sleeping Giant" is different; everyone knows there's natural gas throughout the entire state of North Dakota. I've blogged about it before. Natural gas is found in every county in North Dakota, except ironically, Sioux County, which lies entirely within the Standing Rock Indian Reservation. Yes, that Standing Rock Indian Reservation.

The reader got me to thinking about this suggests that "The Sleeping Giant" could be a "big deal." He suggests that the Niobrara formation lies beneath 2/3rds of North Dakota, which is right below the Pierre Shale, and which surfaced south of Marmarth, North Dakota, and where Fidelity (MDU) has had natural gas wells for eighty (80) years.

In addition to the current national glut of natural gas, the other problem for natural gas operators in North Dakota has been the lack of infrastructure to gather, process, and transport that commodity. But with the Bakken, much of that infrastructure is now being built out.

Someone asked where the Rohweder natural gas would go. I noted that the Bakken is just a short hop, skip, and a jump over Mr McGregor's farm to the west, where the infrastructure is being put in on a daily basis.

But let's say that someone is thinking outside the proverbial box, or thinking outside the Bakken box. Only eighty-five (85) miles to the northeast of the Rohweder natural gas well is Jamestown, North Dakota. So what, you ask.

Spoiler alert: the proposed $2 billion fertilizer plant at Jamestown just received final regulatory approval to begin building (posted earlier). Its feedstock is natural gas. By language in the permit, they need to start building within 18 months.

Then this little pearl which I had forgotten. I had forgotten this but the reader pointed this out to me: the WBI (yes, another division of MDU) pipeline that was rerouted from Watford City, North Dakota, to Williston, to the northeast corner of North Dakota, was originally shown as going to Bismarck, then Jamestown, and then east to Fargo to hook up with regional/national grid in Minnesota.

Could the "Sleeping Giant" be another regional Marcellus/Utica in the making?

Curiouser And Curiouser -- Getting Closer And Closer: The "Sleeping Giant" -- The Natural Gas Play In North Dakota (No, This Is Not The Bakken) -- June, 2014

I track the Strata-X wells here. 

Operations have commenced, according to the company's press release:

• Drilling operations on the Rohweder #1-11 well anticipated to start within a week.
• First test of Company's 120,000 net acre shallow gas project.
• Release of the Sleeping Giant Primer Presentation

The directors and management of Strata-X Energy Ltd. are pleased to announce that the Company started operations on the vertical Rohweder #1-11 well located in Emmons County, North Dakota, USA. 

Final location work is currently being completed with the rig mobilization anticipated to begin on or around June 20, 2014. The Rohweder #1-11 well is the Company's first appraisal well in the Sleeping Giant Gas Project. 

Strata-X is the operator of the well and retains a 100% working interest in it. Overall, the Company has acquired exploration rights to 120,000 mostly contiguous net acres in the Sleeping Giant Gas Project.

Back on December 11, 2013, just a few months ago I posted a link to this story: the "Sleeping Giant" in North Dakota, east of the Bakken.

"Anon 1," who hasn't sent a comment in a long time, alerted me to the company's most recent presentation. At the link, there are two presentations: the "USA" presentation has the "Sleeping Giant" update.

A huge thank you to "Anon 1."

More from the linked press release:

The Sleeping Giant Gas Project is targeting biogenic natural gas from the prolific Upper Cretaceous Niobrara formation in the Williston Basin, North Dakota. The Niobrara Formation is a significant petroleum system in the USA and has produced over 1 TCF of natural gas from shallow accumulations including the project's geologic analogue, the Beecher Island field in the Denver-Julesburg Basin (Colorado, USA). 

To date, Beecher Island field has produced over 101 Bcf of natural gas and is expected to ultimately produce 157 Bcf within an area spanning approximately 32 square miles. A field analysis done by Walt King shows that reserves per well average 650,000 Mcf on 160 acre spacing in the Beecher Island Gas Field. It is expected that the Sleeping Giant Gas Project could yield similar economic resources per well due to similar geologic conditions. 

There has been relatively little drilling in the Sleeping Giant Gas Project area to date, with most wells targeting the deeper Cretaceous and Paleozoic targets. Sub-commercial natural gas has been produced outside the mapped closure on the large structures in the project area, with the crestal regions of the structures remaining untested within the targeted zone. The Rohweder 1-11 well will test the Beaver Creek Prospect structure, which is just one of the 26 prospects and leads that have been identified in the Sleeping Giant Gas Project.

The Company anticipates that drilling and casing operations on the Rohweder #1-11 well will be completed by early next week. Thereafter, information obtained during the drilling of the well will be used to design and optimize a completion stimulation of the well. The drilling permit for the Rohweder #1-11 well is one of four permits granted to Strata-X by the North Dakota Industrial Commission. The other drilling permits held by Strata-X on the Sleeping Giant Gas Project are the Aberle #1-31 and Just #1-24 wells located in McIntosh County and the Hoff #1-32 well located in Emmons County, North Dakota.