Saturday, February 6, 2016

Additional Oil Storage Capacity Found Near Houston -- February 6, 2016

Reuters/Rigzone is reporting:
Early construction of Fairway Energy Partners' Pierce Junction underground crude storage caverns in south Houston has yielded something of an unexpected geologic surprise: an additional 1 million barrels of capacity.

The added space, which will bring storage capabilities at the site to 11 million barrels, is a windfall at a time when oil traders around the world are scrambling to secure a place to hold crude and wait for higher prices as a global supply glut fills available tanks to the brim.

Fairway found the extra space at salt domes previously used for brine production, which over time had prompted the cavern to grow, chief executive officer Chris Hilgert said in an interview.

Salty water, or brine, is widely used to push hydrocarbons from underground storage facilities.

Oil prices have fallen by more than 70 percent in the past 18 months and remain stubbornly around $30 a barrel.

But the current contango structure of the market, where future barrels are worth more than those delivered today, makes storage profitable.

At today's prices an oil trader can fetch nearly $10 more a barrel for crude by holding it in storage for a year , with fairly modest storage costs.
Rigzone is reporting:
Oil producers around the world are continuing to operate many lossmaking oilfields, according to new research by Wood Mackenzie. Less than 0.1 percent of global production has been halted to date even though 3.5 percent of global supply is currently cash negative.

Wood Mac's survey indicates that 3.4 million barrels per day of oil production is cash negative at a Brent oil price of $35 per barrel, however just 100,000 bpd has been shut-in globally to date. The areas with the largest volumes shut-in so far have been Canada onshore and oil sands, conventional US onshore projects and aging UK North Sea fields.
Rigzone is reporting:
Northwest Europe-focused junior explorer Faroe Petroleum confirmed Friday that it will be involved in three exploration wells offshore Norway in spite of the low oil price.

The firm also expects to see progress with a number of North Sea field development projects this year. In an operational update, Faroe said that the Barents Sea-located Kvalross well, where drilling started on January 11, is progressing according to plan. Results from the Wintershall-operated well are expected by the end of this quarter. In the Norwegian North Sea, an exploration well on the Brasse prospect (where Faroe is the operator with a 50-percent interest) is planned for the summer of 2016. Faroe has secured the Transocean Arctic (mid-water semisub) rig for this operation.
From The Wall Street Journal:
With oil hovering at $30 a barrel and gasoline below $2 a gallon, the pleasure of lower fuel prices is turning painful for more of the U.S. economy.
The problem isn’t just the layoffs and investment cutbacks in the oil patch, two effects that have been expected since crude oil began sliding in 2014. Worries about energy-related bankruptcies and loan defaults also are helping to tighten financial conditions, weighing on a broader swath of the economy.
Can the U.S. have too much of a good thing? Few economists expect the crude slump will tip the economy into recession. But the fallout could grow harder to contain if the oil-price declines are instead a symptom of broader weaknesses in the global economy, including soft demand and an oversupply of raw material, productive capacity and labor.
Cheap oil reflects a strengthening dollar, which has already crimped U.S. exports. And consumer sentiment could take a hit if the early-year stock-market declines are sustained.
The bottom line: Even if cheap gas is still good for consumers, the forces behind it could be more corrosive than initially imagined. This past month’s declines in oil “are less a sign that things are about to get a lot better, and more a sign that things are in danger of getting a lot worse,” said HSBC senior economist Stephen King.
Typically, markets treat higher energy prices as tax increases and lower prices as tax cuts. Indeed, cheap gasoline has been a boon to American households, which saved around $140 billion last year as a result, roughly double the savings in 2014. Gas prices averaged $1.82 a gallon last week, down from $3.68 in June 2014.
And last year’s fuel-price drop contributed around 0.5 percentage point in consumption growth, according to Jason Thomas, research director at private-equity firm Carlyle Group.
But the overall boost was weaker than expected, suggesting high household debt levels along with rising housing, health-care and college-education costs have American consumers refraining from bigger purchases.
Finally someone mentions health care. The big three: housing, healthcare, and college education. Congress can't do much about about housing; Congress won't do much about health care. That leaves education. Which explains why Bernie Sanders and Hillary Clinton are rushing to propose free college education for all. Paid for by $10 / bbl "fee" on US crude oil.

Memo To Self: Lindahl Wind Farm -- February 6, 2016

Updates

May 7, 2017: the wind farm is now up and running. Additional data points:
  • owned by Enel Green Power North America, an Italian company specializing in renewable energy
  • capable of eliminating 450,000 tons of carbon dioxide each year (that's theoretical; of course it will never come close)
  • now said to be a $220 million "facility"
  • developers now given approval for feasibility study for an adjacent wind farm, to be called Another Scam the Aurora Wind Project
Original Post 

This post will eventually help me understand data points regarding wind farms. Note the data points below. This wind farm is "rated at 150 MW." It will have a mix of 75 wind turbines; some will be 2 MW; some will be 3.3 MW.

If all 75 wind turbines were rated at 2 MW, this wind farm would be rated at 150 MW, I suppose.

If all 75 wind turbines were rated at 3.3 MW, this wind farm would be rated at 250 MW, I suppose.

But the wind farm is said to be a "150-MW-wind farm" with a mix of 2-MW and 3.3 MW wind turbines with 75 wind turbines. I'm sure there is a simple explanation.

The best data point will be the actual wind energy output posted on an annual basis. Let's see if that data is forthcoming three years from now. 

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Keep your eye on this project. I will write about it at a later date, the wind farm north of Tioga, the Lindahl wind farm.

Data points:
  • 75 wind turbines; 2 to 3.3 MW each
  • 150 MW
  • approved December, 2015
  • four (4) miles north of Tioga
  • 13,000 acres
  • there are no bald eagle nests within 20 miles of the wind farm
  • Tradewind Energy; wind farm will be sold to Basin Electric Power Cooperative
  • construction will start in early 2016 and will be completed by the end of the year
  • estimated cost: $248.5 million 
  • $248.5 million / 150 MW = $1.7 million / MW
Related links:

First Day Back In The Bakken -- February 6, 2016

10:30 a.m. central time, I suppose, yesterday, Friday, February 5, 2016, north of Bowman, ND.

US Highway 85 is the same two-lane highway I’ve known for decades. There is a “new” courthouse in Amidon — about one to two years old. The sky was clear, not a cloud in sight. The temperature reached a high in the 40’s I think. There was very little snow in the ditches; none on the road. Very wet on the road, though.

Traffic was very, very light between Bowman and Belfield, probably about the same as traffic before the Bakken boom, about the same as I remember as a high school student on wrestling / football trips.

As usual I stopped at the truck stop in Belfield. They were remodeling the back: the deli, the truckers’ break area, showers, bathrooms, etc. But — and, good for them — they still had a few booths up front and free internet. I was surprised. I caught up on blogging; a quick 30 minutes and then back on the road.

Traffic picked up a bit north of Belfield, and as I got closer to Watford City, definitely heavier, but very, very light compared to even a year ago or whenever it was that I was last here. [That's right: I was here last September to attend a family reunion.]

The bypasses around Watford City and Alexander continue to amaze me: four-lane divided highways. Really, really nice. No highway patrolmen noted during the whole trip from the South Dakota state line to Williston. Most folks stayed within the posted speed limit.

The four-lane divided highway continued all the way to the south side of the Missouri River, south of Williston. I have been on this new highway about three times I think. The first couple of times I was simply amazed that they actually built this highway, and did it so quickly. They built much of it during the boom, and there was little emphasis on traffic control during the construction; the effort was on getting the highway built.

This time I had a different “feeling” about the four-lane highway. I kept expecting it to end. After all the little two-lane roads I was on in Nebraska and South Dakota, and with traffic so light here in the Bakken, I had a dream-like feeling that this really wasn’t a four-lane highway, that I was imagining things, and at any moment I would be brought back to reality when it returned to two lanes. It never did, but I often caught myself trying to match reality with my imagination. Confounding things, I lost all my landmarks. On the old two-lane highway, I always knew where I was. This time, I kept having to consciously figure out where I was. I can’t explain it.

Wal-Mart is probably selling a lot of windshield cleaning solution. I had to use it almost continuously between Watford City and Williston.

Construction on the bridge across the Missouri River seems to have stopped. The same two cranes are there and they seem no farther along than they were last autumn when I was up here. I asked my sister about it but she did not know. She says she has not been down that far since I was last here. The bridge is about seven miles from where she lives and is the only route south out of town. The fact that she hasn’t seen the bridge in months speaks volumes about … well, about something. [The Missouri River is "frozen up." The ice is probably 10 feet thick; someone suggested that's the reason the construction has come to a temporary halt, but the bridge will be completed.]

Traffic was “constant” but nothing like the traffic during the boom. There were very few 18-wheelers; no oil trucks. No fracking sand trucks. There was nothing on the road to suggest I was in oil country. But lots of pickups, commercial and POVs. I did not see any evidence of businesses closing down but I’m sure there were some. There were some “motels” or man-camps that had closed outside of town, between Williston and Watford City. The man-camp at the turn between Watford City and Alexander advertised rooms for "$24.99 and up."

I took a quick tour of downtown Williston — the two strip clubs on south Main were still there but I did not go inside. I stopped inside Books on Broadway for a few minutes. The new four-story “Renaissance” business building is completed and occupied (?) on south Main just north of the two strip clubs. The old Hedderich building is unchanged from when I was here, going to high school. Or even unchanged since I was in kindergarten. I remember the store very, very well, my mother taking me there to buy — clothes, shoes? I don’t remember what we bought there. Shoes, I think. Interestingly enough, it’s the only store in which I recall shopping or even going out anywhere with my mom when I was in elementary school. We didn’t have much money growing up in Williston, and I don’t recall every really going shopping with mom. Never with dad. I remember going to the movie theaters once in a while, but rarely.

The most amazing thing I saw in Williston: the four-lane divided bypass that went around Williston on the northwest side. It was wide, and smooth, and no sharp turns — just one long gentle curve. The bypass forms an arc west-to-south from the nine-mile corner north of Williston where it connects with US Highway 85; it seems to go on forever, skirting hundreds of acres between it and Williston. It connects with US Highway 2 at the 4-mile corner west of Williston. Original plans had this road connecting with US Highway 2 farther west which would have made no sense. I was blown away. This was the best bypass they could have possibly built. Somewhere along the route will be the new airport. The bypass is designated US Highway 85 which suggests the original "2&85" which went through Williston will now be redesignated. I vaguely recall seeing US Highway 85B somewhere. North Dakota DOT, the Williams County commissioners, and surface owners deserve a lot of thanks and appreciation for this incredible success story. [Update: US Highway 85B is the bypass on the east side of Williston, based on signage on state highway 1804 just east of Williston.]

I had supper in Fuddruckers because it had free internet. I always eat at Fuddruckers when I am in Williston. My dad doesn’t have internet at his house.

Tonight on the way home about 8:00 p.m. the Wal-Mart parking lot was full — perhaps not as packed as it was during the boom but it was as busy as any of the busiest Wal-Marts I’ve seen in this part of the country. There were cars in even the seediest motels, but a lot fewer cars in the better motels compared to two years ago. Applebee’s was busy, but, again, the parking lot was perhaps a third what it was during the boom. Fuddruckers was not deserted but it certainly was not very busy, but the folks working there were very, very pleasant. Traffic at Fuddruckers was constant, and even a party of 16 people or so were there. Asking about Super Bowl Sunday, they did not expect a big day. Most folks have their own Super Bowl parties at home.

I met a young woman — perhaps in her late 20’s — who had just come from Denmark (in Europe) to live here in Williston. Her husband works in the oil patch. They met six years ago in Thailand (Asia). They dated — geographically separated — for three years — and finally got married three years ago — and eventually ended up in Williston. She says Williston “is not as bad as she thought it was going to be.” That’s an incredible compliment about Williston's hospitality. I’ve been to Denmark and its incredibly beautiful and cosmopolitan. I can’t imagine moving from Denmark to live in Williston. Her only complaint: she used to ride her bicycle everywhere in Denmark: the weather was good for cycling; the terrain was flat; and the traffic was safe for biking.

A receptionist at one of the places I visited was from Alabama. Having lived in Alabama for two years (Montgomery/Prattville), I asked her where in Alabama she was from. I did not recognize the name of the town she was from but she says she later moved to Huntsville, and seemed happy to be able to say she was from Huntsville and not the other town she mentioned.

At Books on Broadway, the store was filled with more books than ever. I’m not sure how I asked it, but the bookie said that with all the families living here and the baby boom they were doing exceptionally well. The store has lots and lots and lots of stuff for babies, toddlers, kindergarteners, etc.

I was concerned about something else, though. A young couple with a child or two had moved here during the boom because they were unable to make “a go of it” in California. They were a lovely couple. But it was difficult to find an affordable place to open a donut shop and all kinds of problems I won’t get into when they were starting their business in Williston during the height of the boom. For several months — maybe a year — they were in between places — when I saw them last autumn they had a new donut shop. I stopped by this afternoon; they were still there. I didn’t get a chance to talk to them. She was out and about picking up her kids from school, and he was busy with his business. I will try to talk to them while I’m here. I hope they are doing okay. But I was much relieved they were still making it in Williston.

At Cashwise there were not so many people in the deli/restaurant area, but a lot of traffic in the parking lot and a lot of shoppers. It is precious/heartwarming to see a female roughneck in her work clothes coming in from the field with her boyfriend or husband and picking up a fresh bouquet of roses.

Friday, February 5, 2016

Week 5: January 31, 2016 -- February 6, 2016

Operations
We end the week with a post-boom record low for active rigs: 42
Idle chatter on DUCs, commentary
Vertical wells in the Bakken; a confused story?
February, 2016, NDIC hearing dockets agenda posted
Visualizing US shale oil production: a new data link

Bakken economy
Number of active business registrations in North Dakota leveling off
North Dakota budget shortfall identified

Miscellenaeous
Obama declares war on the US oil and gas industry; favors Iran 
Wal-Mart to pump its own gasoline
Weatherford to cut 6,000 jobs (on top of previous announcements)
Global oil demand growth is slowing going into 2016
Venezuela crude output falls short, forces it to import oil
US gasoline demand -- perhaps some good news
Ethanol: The New York Times must be reading the blog
Petrobras slashes oil reserves to lowest level in 14 years 

Investing
COP slashed dividend
MDU reoprts 4Q15 earnings
CLR lost almost $700 million on bet price slump wouldn't last long

Four (4) New Permits; XTO Reports A Huge Well In The Bakken -- February 5, 2016

Active rigs:


2/5/201602/05/201502/05/201402/05/201302/05/2012
Active Rigs42136191182202


Four (4) new permits --
  • Operator: BR
  • Field: Corral Creek
  • Comments:
This is the graphic including the area for the newly proposed 4-well pad:



Ballantyne Oil canceled one permit, a Sagsveen permit in Bottineau County.

BTA renewed three permits, all were Beaver Creek permits in Billings County.
WPX renewed one permit, a Helena Ruth Grant permit in Dunn County.

One producing well was completed:
  • 29861, 2,661, Johnsrud Federal 34X-14A, Bear Den, gas shows up to 7,013 units; t1/16;  cum --
Whiting transferred another Federal well (#16223) in Billings County to White Rock Oil & Gas.

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Pontoon -- George Jones Would Have Approved

Pontoon, Little Big Town