Archer Daniels Midland, one of the world’s top biofuels producers, has slowed North American biodiesel output, the latest sign the industry is battling uncertainty over U.S. renewable fuel policy while the oil rout curbs demand.
The Chicago-based agri business has “temporarily” shifted production at its Velva oilseeds processing facility from biodiesel to other products and cut production at its other North American facilities, ADM spokeswoman Jackie Anderson said in an emailed statement.
With 140 million gallons of annual capacity at its wholly-owned Velva site and two joint ventures in Missouri, ADM is a sizeable player in the 2-billion gallon U.S. industry.
The ADM spokeswoman declined to give the timing and size of the cutbacks. The Northern Canola Growers Association said the switch in North Dakota took place a few months ago.Meanwhile, North Dakota coal production increases. The Dickinson Press is reporting:
While North Dakota leaders question the future of the oil industry, another natural resource is increasing in production.
The state’s four lignite mines sold approximately 28.7 million tons of coal last year, up from 27.7 million tons in 2013. The mines near Beulah, Center and Underwood increased or maintained their 2013 production levels.Less than two years left in this presidency. Funny how things turn out.
US wraps up Ebola military mission in Liberia - @AFPYesterday's tweet:
Guinea, Liberia, Sierra Leone report 99 new confirmed Ebola cases in week ending Feb. 22, per World Health Organization - @ReutersAt least it's hard to catch.
Initial jobless claims surged unexpectedly in the February 21 week, up 31,000 to a 313,000 level that is far outside the Econoday consensus (279,000 to 300,000).
The 4-week average is up 11,500 to 294,500 but is still more than 10,000 below a month ago in a comparison that, despite the latest week's surge, still points to improvement for the labor market.
Data on continuing claims, which are reported with a 1-week lag, are mixed. Continuing claims for the February 21 week fell 21,000 to 2.401 million but the 4-week average rose 2,000 to 2.399 million. The unemployment rate for insured workers is unchanged at a recovery low of 1.8 percent.
The impact of the disappointment for initial claims is likely to be mitigated by a couple of factors: the February 21 week was a week shortened by Presidents' Day, a factor that makes for outsized adjustments to the data, and the prior week, the February 14 week, not the latest week, was the sample week for the monthly employment report.
Nuverra has agreed to fund $5.5 million of the total settlement amount to fully resolve the matter. The settlements were fully approved by the District Court of Dimmit County on July 15, 2014. Terms of the settlements, including the total settlement amounts and the portion paid by the Company’s insurer, are confidential. These settlement agreements include all plaintiffs and the Company’s insurer and release Nuverra and all of its subsidiaries from all past and future claims or liabilities related to this matter.
The Company will take a charge related to the settlement in the second quarter ended June 30, 2014, which will include the $5.5 million one-time cash payment and related legal fees and defense costs.Surprise, surprise -- came in well under the "available insurance limits."
North Dakota’s oil producers have pulled back to the core areas of the Bakken formation to cut costs and maximize output amid the slump in prices.
The number of active rigs in the state has fallen to just 121, from 190 a year ago, according to an active rig list published by the state’s Department of Mineral Resources (DMR) on Wednesday.
The rig count is now below the threshold of “at least 130″ DMR Director Lynn Helms identified last month as needed to sustain output at the current level of just over 1.2 million barrels per day.
But more important than the raw number is their distribution across the state, with drilling now increasingly concentrated in only the most promising areas.
Of the 121 rigs active on Wednesday, 115 are drilling in just four counties at the heart of the Bakken – Dunn, McKenzie, Mountrail and Williams.
| 2/25/2015 | 02/25/2014 | 02/25/2013 | 02/25/2012 | 02/25/2011 | |
|---|---|---|---|---|---|
| Active Rigs | 121 | 190 | 181 | 204 | 169 |
Will hold-by-production (HBP) drilling by producers acting to preserve their leases for the longer term end up sending U.S. oil and gas production volumes higher when energy fundamentals and prices suggest production should slow down? This has happened before, with one of the highest profile instances in the Haynesville Shale between 2009-13, leading to even lower natural gas prices. Could it happen again in the Marcellus this year? Today we continue our look at HBP lease provisions with a focus on the Marcellus.
In Part 1 we looked at the HBP provision that is a standard component of oil and gas land lease agreements between producers and mineral rights owners in the U.S. Producers can pay bonuses of thousands of dollars per acre for rights to conduct exploration and production activities on parcels of private land. However lease agreements typically dictate that drilling rights expire after an initial term, (that varies by negotiation but is typically 3-5 years) unless the lease operator produces minimum commercial quantities of oil or gas from the acreage to hold the lease by production. Once HBP’d the lease begins a second term that lasts as long as minimum production continues.
We discussed how HBP clauses sometimes lead to “forced drilling” by producers to preserve drilling rights beyond the primary term. In the Haynesville, LA dry gas play there was a leasing frenzy in 2008-09 as producers rushed in to sign up landowners – typically with a 3-year initial term. Just as they began developing the shale in earnest, gas prices tumbled below breakeven levels ($4/MMBtu at the time in the Haynesville). But despite the poor economics, producers continued drilling because of the need to secure their leases by production. After the 3-year terms expired around 2011-12, new drilling and production declined. For reference, Figure 1 is the graph from Part I that shows the Haynesville lease timeline, production volumes, gas prices, and breakeven.