From a Platts Tweet -- June Gas Futures Rise On Expectations of Cooler Weather Extending Into June

NYMEX June gas futures rose early Monday on cooler weather in the short term, expectations of another smaller-than-average build to storage.

Who wudda thought?

WTI and Bakken Spread Narrowed Over The Past Year -- Dated Article But Good For The Archives

This article is dated, but nice for the archives.

The EIA is reporting: WTI and Bakken spread narrows over last 14 months.

Crude oil production in the Bakken grew from 274,000 barrels per day (bbl/d) in January 2011 to 673,000 bbl/d in January 2013, according to the North Dakota Department of Mineral Resources. However, new transportation infrastructure completed in the second half of 2012 helped ease the bottleneck in North Dakota and contributed to a narrowing of the price differential between Bakken and WTI.

Traditionally, the midcontinent pipeline system was configured to deliver crude oil imported to the U.S. Gulf Coast and domestic production from West Texas to the refineries in the Midwest via Cushing, Oklahoma. However, transportation constraints resulting from limited pipeline capacity into and out of Cushing have led to bottlenecks in the region. In February 2012, the discount between Bakken and WTI reached $28 per barrel as increasing Bakken production faced severe transportation constraints.

The addition of new rail takeaway capacity from the Bakken region in spring and fall of 2012 let Bakken crude oil bypass the bottleneck in Cushing, Oklahoma and reach refining markets on the East and West coasts, as well as the Gulf Coast. This takeaway expansion resulted in Bakken crude oil briefly selling at a premium to WTI, which unlike waterborne crudes imported by refineries of the East and West coasts is itself subject to transportation constraints at the Cushing, Oklahoma trading hub.

Pipelines are the most cost-effective way to transport crude oil in the United States, but they are expensive to build and may face regulatory hurdles. For these reasons, companies have turned to rail transport to deliver crude oil across the nation.

Total takeaway capacity from the Williston Basin grew from about 678,000 bbl/d at the end of 2011 to over 1.1 million bbl/d in 2012. Takeaway capacity via rail represented most of this expansion, increasing from an estimated 265,000 bbl/d in 2011 to approximately 660,000 bbl/d in December 2012.

Lots of graphs. Worth reading. 

Under The Radar: Natural Gas Exports to Mexico Hit Record in 2012 -- EIA

The EIA is reporting:

U.S. natural gas exports to Mexico grew by 24% to 1.69 billion cubic feet per day (Bcf/d) in 2012, the highest level since the data collection began in 1973. With imports now accounting for over 30% of its total supply, Mexico's natural gas use is also at its highest level ever.

Lots of graphs; expansion projects. Worth reading.

Disclaimer: this is not an investment site; do not make any investment decisions based on what you read here or what you think you've read here.

Monday Morning Links; Wells Coming Off Confidential List Have Been Posted

Initial production numbers have been posted for the wells that came off the confidential list since last Thursday. About a third of wells coming off the confidential list went to DRL status.

RBN Energy: overview of the Bakken NGL situation. Huge story. A must-read.

Natural gas liquids (NGL) production from the Bakken has increased from only 20 Mb/d two years ago to almost 50 Mb/d today.  And that is with nearly one-third of the natural gas in the region being flared and no outlet for ethane.  For years gathering, processing and pipeline constraints have held back production growth.  But that’s all changing.  ONEOK has completed their NGL pipeline and plant expansion project and more outlets are on the way.  Production could rise to more than 300 Mb/d by 2018.  In today’s blog, we examine the Bakken NGL situation.

Does anyone care any more? Another article on the safety of pipelines, and the Keystone XL in particular from The Brainerd Dispatch. Regional media links break often and break early, so a quick excerpt:

The still heavy dilbit requires extra pressure to move through the pipeline, and it is also more acidic and corrosive than conventional oil. This creates a greater danger of pipeline leaks with risks to ground water aquifers such as the Ogallala, over which the pipeline will pass.

In response, pipeline builder TransCanada notes that existing dilbit pipelines are operating safely. This includes the Alberta Clipper pipeline which brings dilbit from Alberta to Northern Minnesota.  The Alberta Clipper is a 1,607-km (1,000-mile) crude oil pipeline that provides service between Hardisty, Alberta, and Superior, Wis.,  A spur pipeline at Clearbrook, Minn., brings 300,000 dilbit barrels/day to our Pine Bend refinery, the source of most of Minnesota’s gasoline, diesel, and aviation fuel. Nebraska governor, DaveHeineman, has approved a revised route for the Keystone Pipeline. 

WSJ Links

Section R (Journal Report):

• Will longer hours boost (restaurant) sales?

The basic problem: Restaurants need to shoulder more expenses to keep the lights on longer—but the crowds usually aren't that big at odd hours, and customers don't end up spending very much. In fact, franchisees and industry experts say, some markets may not have enough all-night types to make the concept work at all.

Longer hours appeal mostly to "younger folks out and about, and they have cut back so much on restaurants," says Bonnie Riggs, restaurant-industry analyst at research firm NPD Group. "Maybe if you're in some big metropolitan or tourist areas it's worthwhile."

• Microsoft is leaving money on the table by not providing Office for Androids, iPads.

The idea is to convince buyers that Windows-based tablets can do more than rival devices and, consequently, that they can save money buying one product instead of a laptop and tablet. That sales pitch revolves around a key feature of Windows tablets: They are the only ones that run a full version of Office.

Particularly popular among business users, the Office suite includes Word, Excel, Power Point and other productivity apps. And it is a far bigger business for Microsoft than even Windows. Microsoft's Business Division, of which Office is the primary component, generates around 30% of sales and nearly half of operating income. Office is so popular, Morgan Stanley has estimated that even 30% to 40% of Mac users pay for it.

So the fact that Office isn't available for iPads and Android tablets, the most popular devices in the fastest-growing segment of the computer market, means Microsoft is leaving money on the table.

Section C (Money and Investing):

• In stocks, payouts trump potential.

Investors searching for higher yields are driving up the shares of dividend-paying companies, fueling a debate over whether these traditional haven stocks are getting dangerously expensive. Some buyers argue that dividend stocks have entered a period where demand for income will keep valuations high, perhaps for years, thanks to Federal Reserve easy-money policies that are expected to remain in place at least into 2015. Skeptics say the "this time is different" thesis will prove wrong, and that investors will discover they have overpaid.

Section B (Marketplace):

• Boeing's Dreamliner returns to service: my favorite airline -- Ethiopian Airlines.  

Section A:

• Real culprit behind smaller workforce: age.

Americans are leaving the labor force in unprecedented numbers. But the trend has more to do with retiring baby boomers than frustrated job seekers abandoning their searches.

The share of the population either working or looking for work in March hit its lowest level since 1979. The measure, known as the participation rate, now stands at 63.6%, down from 66% when the recession began. That represents close to seven million workers who are now "missing" from the labor force.

The April jobs report, coming Friday, probably won't repeat March's historic decline, when the labor force shrank by nearly half a million workers. But it likely won't show much improvement, either. The participation rate has trended downward through both the recession and the recovery, continuing to fall even as other measures of economic well-being have improved.

• Wow, that didn't last long. Air travel delays are easing. 

• Impact fees fracture Pennsylvania.

Unlike many communities focused on cutting budgets, this small township of hilly farmland an hour south of Pittsburgh recently splurged on a new firetruck, a police cruiser and a new pavilion, bathrooms and riding mower at its Wana B Park.

The shopping spree was financed by a $1 million check—nearly half as much as the township's $2.3 million operating budget—thanks to a state law passed last year to assess fees on natural-gas wells drilled into the Marcellus Shale formation. The township, which has 130 such wells on its 39 square miles, is among the state's most densely drilled areas.

Unlike most other states that require drillers to pay severance taxes based on the volume of gas produced, Pennsylvania's impact fee is based on natural gas prices and the year of production for each well. When the price of natural gas is between $2.99 and $5.00, the fee is $50,000 a well during the first year of production. Critics of the law faulted Pennsylvania for not raising even more revenue from fracking.

While severance taxes typically flow into a state's general fund, the impact fee is designed to send money back to areas most affected by drilling to pay for wear and tear on roads and new equipment.

• Tough slog for Obama's gun orders.

His nominee to lead the Bureau of Alcohol, Tobacco, Firearms and Explosives, which has long lacked a permanent director, awaits a Senate hearing. A $10 million budget allocation to research the causes and prevention of gun violence needs congressional approval. This comes on top of the biggest setback for the administration, the Senate's rejection this month of a proposed expansion of background checks for gun buyers.
The administration says many of Mr. Obama's 23 executive actions will have an effect, even as officials acknowledge that they can't accomplish all that legislation could.

Few of the measures were intended to bring wholesale changes, both gun-rights and gun-control advocates say, with many seeking to improve the effectiveness of existing laws and regulations.

The ACLU will love this, rifling (no pun intended) through medical records as part of a background check:

And the Department of Health and Human Services said it would write new rules to ensure that federal health-privacy law doesn't prevent states from providing records to the background-check system.

Cue up Connie Francis.

• Op-ed: on taxes.

It's not just rates that vary but rules that determine what's taxable and what isn't. Wisconsin has a 1,400-word regulation on when the sale of an ice-cream cake is taxable. If the ratio of ice-cream layers to cake layers is too high, sales tax has to be collected. Candy bars are taxable in New York, but not in New Jersey. In Texas, large pretzels are tax-exempt baked goods, but small pretzels are taxable snacks. Iowa charges a sales tax on decorative pumpkins but not edible ones.

Rhode Island taxes soft drinks but not bottled water. It taxes clothing accessories but not fur clothing. It taxes kidney-dialysis machines with or without a prescription, unless used at home, whereas prosthetic devices, eyeglasses and contact lenses are taxable without a prescription but tax-free with one.

• Op-ed: profiling.

But it is not good enough for the CFPB. In a quest to make sure that all individuals falling within the "protected classes" under the Equal Credit Opportunity Act get the same interest rate as those who are not covered by it, the agency wants financial institutions to guess your race, ethnicity and gender based on your name and the address on your application. Put bluntly, they want lenders to profile you.

It sounds bizarre. But during a conference call on March 21 to congressional offices explaining how auto lenders were supposed to comply with the Equal Credit Opportunity Act (as outlined in CFPB's Bulletin 2013-02), agency staff advised us that they would recommend that financial institutions use "proxies to give probabilities of the race, ethnicity and gender of borrowers" to guess if an applicant falls into a protected class, or not, for the purpose of setting interest rates. In other words, they would like lenders to use stereotypes associated with your name and location in order to monitor compliance with equal-opportunity requirements.

Does that mean a person named Jefferson who lives in the Bronx is to be presumed an African-American, but not a Jefferson in Wichita? Is Taylor Rosenstein living in Miami a woman or a man? He or she must certainly be Jewish, right?

Random Look At Two 9-Well Hess Pads in Robinson Lake; Potentially 18-Well Pads

 This started out as a 6-well pad, but three more wells have been added.

This started out as a 6-well pad, but three more wells have been added.

The original 6-well pad (the original post), 2560-acre spacing; this is the only 2560-acre spacing unit in the Robinson Lake. I assume there will eventually be overlapping 2560-acre spacing units in the rest of the Robinson Lake. Also, note how long ago the original Cvancara wells were put in -- back in late 2011, and they already had 2560-acre spacing units. The original wells are about 1.5 years old and already exceed 100,000 bbls total production:

• 19899, 603, Hess, EN-Fretheim A-155-93-3334H-3, Robinson Lake, t4/12; cum 82K 2/13;
• 19900, 1,037, Hess, EN-Cvancara A-155-93-3231H-3, Robinson Lake, t12/11; cum 129K 2/13;
• 19901, 668, Hess, EN-Fretheim A-155-93-3334H-2, Robinson Lake, t11/11; cum 112K 2/13;
• 19902, 1,132, Hess, EN-Cvancara A-155-93-3231H-2, Robinson Lake, t11/11; cum 151K 2/13;
• 19903, 795, Hess, EN-Fretheim A-155-93-3334H-1, Robinson Lake, t11/11; cum 133K 2/13;
• 19905, 1,341, Hess, EN-Cvancara A-155-93-3231H-1, Robinson Lake, t10/11; cum 199K 2/13;

Now, add three more:

• 24868, drl, Hess, EN-Fretheim A 155-93-3334H-9, Robinson Lake,
• 24869, 868, Hess, EN-Fretheim A 155-93-3334H-8, Robinson Lake, t8/13; cum 84K 6/14;
• 24870, 662, Hess, EN-Fretheim A 155-93-3334H-7, Robinson Lake, t8/13; cum 74K 6/14;

Also, note: for the Fretheim wells, the shorthand is Fretheim-1; Fretheim-2; Fretheim-3; Fretheim-7; Fretheim-8; and, Fretheim-9; suggesting that #4, #5, and #6 are yet to be filled in (and they were; see below). Doing the same for the Cvancara wells, and one quickly has an 18-well pad. Lynn Helms, Director/NDIC, recently mentioned that we will be seeing 18-well pads very, very soon.

25788, 762, Hess, EN-Cvancara A-155-93-3334H-6, Robinson Lake, t4/14; cum 35K 6/14;
25787, 758, Hess, EN-Cvancara A-155-93-3334H-5, Robinson Lake, t4/14; cum 36K 6/14;
25786, 1,121, Hess, EN-Cvancara A-155-93-3334H-4, Robinson Lake, t4/14; cum 51K 6/14;
28576, conf, Hess, EN-Fretheim A-155-93-3334H-4, Robinson Lake,
28575, conf, Hess, EN-Fretheim A-155-93-3334H-5, Robinson Lake,
28574, conf, Hess, EN-Fretheim A-155-93-3334H-6, Robinson Lake, 

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

Likewise, this started out as a 6-well pad in Robinson Lake, but three more wells have been added. First, the original 6 wells:

• 19074, 629, Hess, EN-Frandson-154-93-2116H-1; RL, Bkn, t12/10; cum 107K2/13;
• 19075, 225, Hess, EN-Frandson-154-93-2116H-2; RL, Bkn, s8/10; t5/11; cum 91K2/13;
• 19076, 1,325, Hess, EN-Frandson-154-93-2116H-3; RL, Bkn, s8/10; t8/11; cum 215K 2/13;
• 19077, 717, Hess, EN-Trinity-154-93-2833H-1; RL, Bkn, s7/10; t2/11; cum 141K 2/13;
• 19078, 941, Hess, EN-Trinity-154-93-2833H-2; RL, Bkn, s8/10; t7/11; cum 150K 2/13;
• 19079, 1,125, Hess, EN-Trinity-154-93-2833H-3; RL, Bkn, s8/10; t8/11; cum 197K 2/13;

Now, these three wells have been added:

• 25203, conf, Hess, EN-Trinity-154-93-2833H-4, Robinson Lake,
• 25204, conf, Hess, EN-Trinity-154-93-2833H-5, Robinson Lake,
• 25205, conf, Hess, EN-Trinity-154-93-2833H-6, Robinson Lake,

Unlike the first 9-well pad discussed above, which was on 2560-acre spacing, this 9-well pad is on1280-acre spacing.