The Williston Wire: Fuddruckers Opens In Williston

The Williston Wire is easy to subscribe to, so mostly just headlines here.

Fuddruckers opens in Williston: along US Highway "2 & 85" north, adjacent to the Brroks Hotel. The co-owners of Fuddruckers hope to break ground on another restaurant in Minot next month.

Williston churches seek to house homeless. Regular readers know the background to the story

Seniors still struggle with rising rents.

The Bakken is soon to join the million-bopd club. The EIA says the state should reach that milestone by the end of December. Of course, the Montana-North Dakota Bakken has broken the one million boepd milestone. I track projections here.

Many, many other stories at The Williston Wire, but for the most part theyhave been previously posted on the blog.

Three Observations On Today's Director's Cut

Three observations on today's Director's Cut.

1. Despite the record number of producing wells, a new natural gas production record, and a new crude oil production record, the percent of natural gas flared in North Dakota in the most recent reporting period actually decreased over the previous month.

2. This comment from the director:

Crude oil takeaway capacity is expected to be adequate as long as rail deliveries to coastal refineries keep growing. 

Is the director telegraphing his concerns over the recent CBR derailments/spills, or is he seeing something the rest of are not seeing? With regard to takeaway capacity, I only know what I see based on corporate presentations and past NDIC comments. [Update: see first comment -- I think the reader has "hit the nail on the head": BNSF CBR is competing with grain shipments, etc. As the economy recovers, rail other than CBR will also continue to increase, putting pressure on rail. Great comment.  The reader provides this link for more: http://www.trainorders.com/discussion/read.php?1,3233439.]

3. Finally, this. Regular readers know that larger operators hedge and collar the prices on the crude oil they contract to deliver on a specific date. The floor for these hedges and collars has been between $90 and $95 based on the corporate presentations I have reviewed. This means, that while the contract with this hedge/collar and floor is in effect, the Bakken operator will get "at least" $90/bbl upon delivery, regardless of the spot price of oil. Hold that thought.

The October sweet crude price quoted by the director: $85.

Today's sweet crude price quoted by the director: $71.

If an operator runs into a production glitch and can't meet the delivery contract, the operator can buy crude oil for the spot price of $75 and sell it to the refinery for $90. It's been my impression that quarterly earnings are often adversely affected when the spot price of oil has been higher than the hedge/collar/floor for which the operator has contracted.

This is very, very idle chatter. I am way beyond my comfort level and expertise but per my "disclaimer/welcome" I will throw it out there just for the fun of it. My thinking could be very wrong.

Update: Don points out, in response to the above, that the $71 would be after trucking/local pipeline/rail expenses have been deducted, so the $71 is probably the net Bakken operators would get for spot. Don is correct; I am wrong; I had forgotten those pesky little transportation costs.
 
North Dakota farmers, by the way, are very, very familiar with similar issues involving grain.

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

Despite the precipitous fall in the price of oil (NYMEX/WTI) from $104 to $94 over the past few weeks, almost all oil and gas companies I follow are "green" today, and some by a significant amount.

In addition, regular readers know what RBN Energy has to say about "netbacks" (CBR) for Bakken operators (the WTI-Brent spread -- the wider the spread, the better for CBR); and, about the reason for the recent decline in the price of oil, and what it likely means.

I Need To Know; My Heart Goes Out To The One-Third That Wanted To Keep Their Jobs

This is an op-ed from the New York Times on the story that is breaking: the machinists union voted down the Boeing contract which would have guaranteed that the 777X would have been built in Seattle.

... [but Boeint's plans came apart with] a vote of the people who actually assemble the planes. By a 2-1 margin on Wednesday, the machinists of Puget Sound told Boeing to stuff it. With this act of economic suicide, the state could lose up to 56,000 jobs on the new 777X plane.

The writer says Boeing:

tells the people who make its products that their pension plan will be frozen, their benefits slashed, their pay raises meager.

But the writer doesn't give specifics.

And the writer does not mention that ObamaCare is now available, where people have the opportunity to shop for the best medical insurance ever. Based on the president's sales pitch, ObamaCare is better than any union health program.

But.

60% of the machinists said "no."

30% of the machinists voted "with" Boeing.

I need to know more what the 60% were unwilling to give up. And the New York Times writer did not provide those specifics, except that $80,000/year is not enough for these Boeing workers.

The World’s Only Paleoscatologist Visits The Pioneer Trails Regional Museum, Bowman, North Dakota

Nautilus is reporting:

Ms Karen Chin was in North Dakota visiting Dean Pearson, a paleontologist at the Pioneer Trails Regional Museum, who has done a great deal of work on the K-Pg. Pearson tries to create reconstructions of what the environment looked like prior to and after the big event by studying a geologically rich outcropping that contains evidence of the impact. The K-Pg boundary is marked by a thin layer of sediment containing high levels of iridium, an element that is scarce on earth but abundant in asteroids and comets, as well as two types of rock created by powerful impacts: shocked quartz and glass spherules.  

Chin isn’t the world’s only paleoscatologist—a handful of other researchers around the world study the fossilized excrement of ancient peoples to learn about their diet, health, and lifestyles, and a few others study the fossilized droppings of extinct animals. But Chin is an undisputed leader in the field, and her work has brought new insights to scientists’ understanding of Mesozoic Era, when towering reptiles walked the earth. “I think it’s fair to say I’ve studied more dinosaur feces than most,” she says modestly.  

A few weeks ago on my trip back to the Bakken I had the wonderful experience of touring one of the best museums in the country when it comes to dinosaurs and regional history: the Pioneer Trails Regional Museum. I was very, very surprised how really nice this museum was. It is worth your while, if anywhere in the area, to make a side trip to visit the museum. Check the webite/call ahead ot make sure it's open the day you plan to visit.

A bit more from the linked article on Ms Chin's background:

In the 1980s, Chin was getting a master’s degree in biology at Montana State University when she took a job with the legendary dinosaur hunter Jack Horner, the inspiration for the paleontologist protagonist in Jurassic Park. At first, Chin’s job was simply to slice fossilized bones into thin sections that Horner could examine under the microscope. They were working with fossils found in Montana’s Two Medicine Formation, a sandstone outcropping that Horner was exploring.

The rock layers were rich with bones of a newfound duck-billed dinosaur named Maiasaura, and not just the bones—also nests and eggs, and strange blobby deposits a bit removed from the nests. Horner believed these chunky rocks, embedded with shreds of fossilized plant material, were dinosaur patties.

I read Jack Horner's first book, and still have it in my library. It's a keeper. 

Did This Article Forget About The Dickinson Calumet-MDU Diesel Topping Plant ...

... or is the diesel topping plant not considered a refinery. According to MDU's 3Q13 earnings press release, the Calument-MDU diesel topping plant construction is on schedule.

In this article, this plant is not mentioned. The Minot Daily News is reporting:

A crew with heavy equipment began moving dirt this past weekend near Makoti for the construction of the transload facility, the first part of the Three Affiliated Tribes' clean fuels refinery project.

Glenda Baker Embry, public relations officer for the tribes, who visited the site Tuesday, said nine employees with Parks Construction, a Minneapolis firm, began the grading work at the site 2 1/2 miles west of Makoti on Saturday.

The construction of the transload facility is the first part of the tribal refinery project.

Costs for the refinery are conservatively estimated at $450 million, according to the article.

Later, in the article;

The refinery is conservatively estimated and projected to cost $450 million, according to tribal officials at the ground-breaking event.

The plans are for the refinery to refine Bakken Formation crude oil into diesel fuel, propane and naphtha products at the site in southwest Ward County, where the Three Affiliated Tribes own 469 acres of land. A portion of the land is specifically for the refinery. Some of the land will be used for feed for the tribes' bison.

The refinery will be one of the first refineries built in the United States in many years. The last refinery built in the U.S. was built in Garyville, La., and began operating in 1976.

The state has one refinery, the Tesoro Corp., in Mandan. Two other refinery projects have been proposed in North Dakota.

The two projects I am aware of:

• Calumet-MDU, southwest Dickinson (noted at the beginning of this post
• a diesel topping plant at Trenton