OKE Earnings Are Better Than Okay -- February 23, 2015; 4/4 Wells Go To DRL Status

OKE earnings, forecase 36 cents: fourth-quarter 2014 net income attributable to ONEOK of $94.5 million, or 45 cents per diluted share, which includes income from discontinued operations of $0.8 million.

Fourth-quarter 2013 net income attributable to ONEOK was $90.7 million, or 43 cents per diluted share, which includes income from discontinued operations of $17.1 million, or 8 cents per diluted share.

Income from continuing operations attributable to ONEOK was $93.7 million in the fourth quarter 2014, compared with $73.7 million in the fourth quarter 2013.

Active rigs:

	2/23/2015	02/23/2014	02/23/2013	02/23/2012	02/23/2011
Active Rigs	126	187	181	204	168

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

Wells coming off the confidential list Tuesday:

• 28016, drl, Petro-Hunt, USA 153-95-22D-15-5H, Charlson, no production data,
• 28412, drl, Hess, SC-JCB-154-98-1720H-2, Truax, no production data,
• 28777, drl, Slawson, Holst 2-33MLH, Big Bend, no production data,
• 29151, drl, Slawson, Rainmaker Federal 10-36-25TF2H, Big Bend, no production data,

Nine (9) new permits --

• Operators: BR (4), Whiting (3), EOG (2)
• Fields: Corral Creek (Dunn), Twin Valley (McKenzie), Parshall (Mountrail)
• Comments:

Oasis canceled six (6) permits:

• 27643 - 27645: Banks permits in Mountrail County
• 24971: Celia Horob in Williams County
• 24907: Jenny Vaughn in WIlliams County
• 26451: Ranger in McKenzie

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Water Project To Go Forward

Bakken.com is reporting:

An expected reduction in state oil tax revenues due to a global drop in oil prices could mean less money for the Northwest Area Water Supply project.

Gov. Jack Dalrymple’s budget included $18 million for NAWS, but the Legislature is considering $10 million. However, there still should be enough money to go ahead with a proposed $20 million expansion of the city’s water treatment plant.

The $14 million remaining from the current two-year budget and $10 million in new funding would bring the total to $24 million, more than enough to pay for design and construction at the water plant.

The NAWS project is to bring Missouri River water to northwestern North Dakota. Officials in Missouri and Canada have held up the project in the courts for years over environmental concerns, but a federal judge is allowing some construction work to proceed because the upgrades are needed in the area that’s on the edge of the oil patch.

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RBN Energy, Part 2, Refiners
Link here

While producers are licking their wounds after a more than 50% oil price crash, refiners have continued to enjoy healthy margins – even in the face of the largest refinery strike since 1980. Strong refining margins, supported by an ongoing boom in refined product exports, continue to encourage high levels of refinery utilization in the Gulf Coast region – home to more than 50% of U.S. refining capacity. Today we look at how Gulf Coast refiners are faring after the oil price crash.

In Episode 1 of this two part series we noted an uptick in domestic U.S. demand for gasoline and distillates during December 2014 and January 2015, presumably spurred by lower prices following the crude price crash during the latter half of 2014. That surge in demand goes against a longer-term decline trend in the use of these fuels and it remains unclear if it will be sustained in 2015.

What is clear from looking at crack spreads for a typical Midwest refinery is that refiners are still prospering in that region even as the upstream side of the hydrocarbons business suffers after the crude price crash. Midwest refiners have been used to making good margins over the past three years because of their access to cheaper advantaged crude. Following the crude price crash the spread between prices for inland and coastal crudes declined – removing most of that advantage.

However, refiners still fared well by benefitting from the lag between refined product prices (slower to fall) and crude. Now the growing crude surplus being added to Cushing inventories to take advantage of contango market storage will likely keep the lid on Midwest crude prices to the benefit of refining margins.

In this second installment we take a closer look at how Gulf Coast refineries are weathering the crude price crash.

The Gulf Coast region is home to more than 50% of U.S. refining capacity (over 9 MMb/d) but has only in the past two years begun to take full advantage of the shale era boom in U.S. domestic crude production.

While – as we described last time - Midwest refiners have enjoyed access to low priced advantaged crude since 2011, Gulf Coast refiners had to await the build out of pipeline and rail infrastructure to get access to cheaper crude supplies. Nevertheless, as we detailed in a two-part analysis last April, Gulf Coast refineries have enjoyed an export led boom since 2012 - largely driven by increased demand for diesel from Latin America.

And although some of that boom was driven by lower U.S. crude prices, Gulf Coast refinery sophistication and lower fuel costs (using cheap natural gas) were equally important ingredients for success. In the past two years as infrastructure was built out, Gulf Coast refineries became destination central for a flood of new domestic and Canadian production looking for a market.

This year new pipelines such as the 300 Mb/d Magellan/Plains BridgeTex from the Permian Basin and the Enbridge/Enterprise 450 Mb/d Seaway Twin from the Midcontinent continue to increase crude flows to the Gulf Coast.

These new flows are competing with and gradually replacing imported crude supplies. However, a mismatch between refineries configured to process heavy crude and an incoming surplus of lighter crudes has kept downward pressure on crude prices –leaving refiners in the cat bird seat to pick and choose from among competing suppliers and make limited capital investments to increase their throughput of lighter crudes.

 Again, this article will be archived at the source.

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The Oscars

My wife loves the Academy Awards; it might be the only show for which she might skip my funeral. LOL. I very much enjoy watching it with her, but I doubt I would watch it alone. I was thrilled to see The Grand Hotel Budapest won four Oscars, tying with Birdman, for most Oscars, 2015:

The film won the Golden Globe Award for Best Motion Picture – Musical or Comedy and garnered three more Golden Globe Award nominations, including Best Director for Anderson. It also garnered nine Academy Award nominations, the joint most for the ceremony, including Best Picture and Best Director. It won the Academy Awards for Best Production Design, Best Original Score, Best Costume Design and Best Makeup and Hairstyling.It tied with Birdman or (The Unexpected Virtue Of Ignorance) for the most wins (4) this year.

I love GHB; when I get in the mood to see it again, I will watch it three or four or five times in succession over several days.

I did not see Birdman. Some big name actors -- Naomi Watts, for example.

I haven't seen American Sniper; something tells me the Academy was uncomfortable with it. The Academy is about 75% white male; median age about 62 years old.

I don't know how a show-opening joke about the white audience went over for the Oprah Winfrey crowd. But according to the critics it was a joke that had to be done. Sort of "check that box," "get that out of the way," and then get on with the show.

Best part of the evening for me: GBH winning four Oscars early in the show. Best part of the evening for my wife: Eddie Redmayne, best actor, for his portrayal of Stephen Hawking. I can't argue. Absolutely incredible.

Biggest snub: not including Joan Rivers -- a two-second slide -- in the "memoriam" segment. The Academy said there was not enough time.

The show ran over by about 20 minutes.

WAWS Water At 13-Mile Corner

CRC provided the link.

Great story. KFYR out of Bismarck reporting:

The demand for water is bigger than ever in western North Dakota, as residential and industrial growth continues to flourish. Thanks to some unique water depots, help is officially on the way. These depots are part of the Western Area Water Supply Project being installed throughout the western half of the state. Unlike most state-run projects, this one is being paid for by the oil industry.

Water is for sale at the 13 Mile Corner and area truckers couldn't be happier.

"Oh this is extremely helpful having this here, it really shortens the distance us truck drivers have to go for water and it makes our turnaround so much faster," said truck driver Rick Ingraham.

Go to the link for some interesting additional data points.

This is a very big story; lots of implications. Key phrase in the article: "state-of-the-art" water depots.

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This really was my favorite album at the time it came out:

Wah-Wah, George Harrison

Why WAWS Is Needed

Link here.

R&T Water Supply, which serves Ray, Tioga, Stanley, and Wildrose is coming off a long hot summer of water restrictions and earlier this month concluded it will wait as long as a year before allowing any new rural developers to hook up. 

Business manager Liz Suhr said three developers who want to build rural subdivisions outside Ray for up to a 1,600 population in each development will have to put their plans on hold unless they can come up with another source of water. 

The three proposed developments are the Southern Cactus Star, Dix Development, and Iron Horse-West Bank, she said. 

R& T water was so tight this summer that two large man camp developments near Tioga were shut off for a period and one of them -- a Target Logistics facility -- was just put back on the system on Friday, she said.

Question Regarding WAWS, Heating Water -- The Bakken, North Dakota, USA

NOTE: I have a number of posts already written and ready to post but I am waiting for responses to the post below regarding WAWS. I will leave this post up until later this evening. After 7:00 p.m. EST I will post the posts I have already posted.

For investors in energy: everything I've seen over the last couple of days is good news for those holding shares in the oil and gas industry, particularly in the Bakken. The story right now is the "surge" in the price of natural gas. It's up another ten cents today. Disclaimer: this is not an investment site. This has nothing to do with buy, sell, or hold recommendations. It is simply idle chatter that one might hear at the Economart in Williston.

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At this link, an overview of WAWS, a reader has asked several questions that I cannot answer. Perhaps others can.

There are rumors that WAWS will be adding several (four?) water depots north of the river. True? Locations?

Does anyone know the background of the company operating the WAWS water depot on Second Street West, Williston, ND. Is it Armstrong Hot Water Depots? Will this company assume operating responsibility for the entire WAWS system?

Will all WAWS depots in the future provide heated water?

Is the Bakken/industry moving toward heated water?

Should independents provide heated water?

Is this to allow fracking year-round? See comments below: all water is heated for fracking, to about 80 degrees.

Huge: Love's Truck Stop Coming To Williston -- The Bakken, North Dakota, USA

Updates

March 4, 2012: Wendy's and Chester's Chicken.

Original Post

In the big scheme of things, this may not be that big a story.

But, in the big scheme of things, Williston is a) a small town; and, b) has no interstate highways.

And yet Love's is coming to Williston.

Data points:

• To be built this year; to be open later this year (2012)
• 10,000 square-foot facility with a national fast food restaurant (Subway? McDonald's? Wendy's and Chester's Chicken, announced March 4, 2012)
• Eight gasoline islands
• Eight diesel fuel dispensers
• 100 truck parking spaces; a 400-unit electrified truck parking area
• A convenience store
• On US Highway 85 just north of Williams County Road 6 between the Target Logistics man camp and Fox Run RV Park
• Will be near where the new truck bypass re-enters US-85
• Adjacent to the new Western Area Water Depot (WAWS)

Little-by-little the Bakken infrastructure is coming together. Chaos is self-organizing.

Source of Fracking Water for the Bakken

Someone googled that question: the source of fracking water for the Bakken? See question 50 at FAQs (I occasionally change the numbering, so the number could change; use browser to search water if necessary).

It's the Missouri River for the most part.

Well water is also used.

Through 2011, I believe most water was provided by independent water distributors and, perhaps, the city of Williston municipal water supply. Sometime in 2012/2013, I assume most fracking water will be provided by WAWS. I don't know the specifics on fracking water because I do not follow it closely. There is not a supply issue regarding water for fracking in the Bakken.

There is more than enough water in the region for fracking. The one thing the Bakken is not short of is water, regardless of what folks may tell you. One inch of water off the top of the Sakakawea Lake (the Missouri River behind the Garrison Dam) will provide all the water that is needed for 5,000 Bakken wells annually; and the operators can drill a max of about 2,000 wells each year.  So don't let anyone suggest there is not enough water. Period. Dot.

For more, look at the tag "WAWS" or "water" below -- at the very bottom of the blog where the labels/tags are kept.

Fracking Water -- Bakken, North Dakota, USA

Update

A personal note to me suggests that these lines are not bringing fracking water in but rather one is an oil pipeline and one is for waste water (salt water/brine) or possibly one is for natural gas. That would make more sense: fracking is a one time event; moving oil and salt water is an on-going task.

Original Post

Probably the number one problem on the highways is trucking the water used for fracking.

In the old days, when the wells were spread out that was about the only economical way of doing it.

Now, two things are happening: many, many wells are going to be drilled closer and closer together, and the new pipeline for the Western Area Water Supply is now going in, making it possible for oil companies to tap into this supply for fracking.

Here is a photo of some of that fracking water pipeline that is being laid. This is midway between Alexander, North Dakota, and Williston -- the heart of the Bakken, just to the east of the US Highway 2.

I assume the green pipe is for fresh water for fracking, and the black pipe is for salt water that comes back up during the fracking process.

Cudd Coming To the Bakken -- Bakken, North Dakota, USA

Updates

See comments below. Apparently Cudd has been in Williston for over a year, but not yet fracking.

I spoke with a man who was pretty high up in the food chain of one of the local operators; he mentioned he cannot keep up with all the companies coming into Williston. That made me feel much better.

Here are a couple of photos regarding Cudd in Williston:

The blue pipeline is water pipe for the new Western Area Water Supply (WAWS) project. This was a shovel-ready job. I believe it was approved by the North Dakota state legislature in the winter/spring of 2011, and was already being laid by the summer, 2011. 

Original Post

If you go over to my "Top Ten" lists on the sidebar at the right, and click on top ten fracking companies in the Bakken, you will note that "Cudd is not in North Dakota yet."

Tonight, I noticed a sign west of Williston (about a mile west of Williston) that said: Future Home of Cudd.

Overview of the Western Area Water Supply (WAWS) Authority

WAWS

Overview

Locations

• West 2nd street, west side of Williston; congested; hard to make left turn when heading back onto highway toward Montana, Watford City
• US-85 north of Williston, truck bypass, County Road 6; at Love's Truck Stop (to be built in 2012)

Updates

December 18, 2012: from the Dickinson Press

• original authority: $110 million; will be repaid through sales
• another $40 million in loans will be requested in the next legislative session
• and another $80 million will be requested after that due to huge growth
• by 2025, expected to serve more than 80,000 people (about $3,000/person; and it's a renewable resource) 

May 14, 2012: groundbreaking, Crosby to Wildrose water pipeline

The Western Area Water Supply Authority will be breaking ground on a water pipeline between Crosby and Wildrose Tuesday.

The new pipeline will carry treated drinking water from the Missouri River to Burke, Divide, McKenzie, Mountrail, and Williams counties. By the end of this year, Ray, Tioga, Stanley, Ross, Wildrose, Crosby, Columbus, Fortuna, Ambrose, and Watford City will have access to Western Area Water Supply Project water. [Comment: I remember independent water suppliers fighting WAWS, but to the best of my knowledge, the indies had no plans to provide water for cities for the long term. From the little I know, WAWS looks like a brilliant decision in hindsight.]

May 9, 2012: see comment this date, important. 
March 29, 2012: the state Water Commission is debating benefits of WAWS and the case brought against it by the Independent Water Providers Group. Story in the Bismarck Tribune.  The IWPG says WAWS was grossly overbuilt (which I find interesting). WAWS will provide drinking water to towns throughout the oil patch long after the oil industry is done fracking; the IWPG does not provide drinking water to these communities. The IWPG argues that WAWS is unfair competition paid for by the state.

Original Post

Overview

Link here (this link will break soon).

WAWS Authority: the City of Williston, McKenzie County Rural Water District, Williams Rural Water District, R&T Rural Water Association, and the legislative-appointed BDW Rural Water System, will own and operate the supply and transmission system. The WAWS will make direct sales to different entities, who in turn will sell water to individual homeowners and businesses.

Background: Earlier this year, the North Dakota State Legislature passed a law that would fund $110 million of the total project. A water treatment plant, that is headquartered in Williston, ND, currently has a 10 million gallons a day water capacity and will have additional filter systems added that will increase that to 14 million gallons a day in the next two years. Future projections are that the project could produce 28 million gallons of water a day.

Project designer: AE2S, Grand Forks.

Status of project: AE2S is currently designing the project.

Time line: The project is expected to start later this year and be completed in 2012. It will include pipelines that will transport water to the communities of Williston, Watford City, Stanley, Tioga, Wildrose, Ray, Crosby, and Alexander.

Funding: The project is being funded from the State Water Commission, State General Fund, and the Bank of North Dakota. Water sales to the oil industry are expected to pay for 80 percent of the project.

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On a separate issue, a short story on the Southwest Water Authority can be found here.

$150 Million State Project To Provide Water for Municipalities, Fracking Approved -- Williston Oil Basin, North Dakota, USA

This was a fairly "hot" issue pitting developers of a $150 million "state" project against independent water suppliers.

As far as I can tell, there were two issues for legislators to consider:

• The cost and how to pay for it, if passed
• Water management: whether it was needed (whether there was a problem that needed fixing)

The bill was overwhelmingly supported by the legislature and will be signed by the governor.

Data points:

• $150 million project
• Financed by a "patchwork" of state government loans (3 loans, including one from Bank of North Dakota)
• Project to be overseen by a 11-member state board
• If the project fails/defaults, the project will be taken over by the state Water Commission and will be responsible for paying back the loan

Water will be piped from the Missouri River near Williston, North Dakota

The project will expand the Williston water treatment plan to handle 21 million gallons per day, up from the current capacity of 10 million gallons. The pipeline will extend to Grenora to the northwest, Ray to the northeast and Alexander and Watford City to the south.

Smaller lines will bring water to individual properties that don't currently have access to river water, said, David Johnson, the project's chief engineer. Those pipes should be carrying water by the end of 2012, he said.

FYI.