"Nebraska Lite" -- February 13, 2016

On January 30, 2016, I wrote:

The Dickinson Press is reporting:

Phillips 66 may consider increasing its 25 percent stake in Energy Transfer Partners' pipeline project to move North Dakota Bakken oil to Illinois and Texas, but likes its current commitment as is, President Tim Taylor told analysts on Friday.

This was my last entry regarding this pipeline:

January 20, 2016: North Dakota approves Dakota Access Pipeline; only Iowa is yet to approve; company expects Iowa to approve "next month." I'll believe it when I see it.

This week from The Des Moines Register:

The Iowa Utilities Board concluded its fourth day of deliberations Thursday without reaching a decision on a request for a state permit to construct the Bakken pipeline, which would transport North Dakota crude oil through 18 Iowa counties en route to an Illinois distribution hub.

Chairwoman Geri Huser said deliberations will resume Feb. 19, and the board has reserved March 9 and March 10 for additional meetings if necessary.

The three-member state panel appeared to struggle at times this week as it weighed evidence in what a board lawyer described as a first-time regulatory case.

One can see the writing on the wall: "Nebraska Lite." Each day deliberations are delayed, it provides additional time for opposition to mount its forces. It really won't matter if the IUB grants the request. That decision will end up in court. 

The good news: the pipeline is not needed. Plenty of existing pipeline and plenty of rail. And if push comes to shove, simply truck/CBR the oil across the state of Iowa. I'm sure it wouldn't cost that much to put in a pipeline-to-CBR-transloading terminal near Sioux Falls, SD.

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ObamaCare Again Not Mentioned

CNN Money reports:

Workers at the Carrier manufacturing plant in Indianapolis were caught on video booing and jeering after being told that the plant would be relocated to Monterrey, Mexico. A YouTube video showed Chris Nelson, the company's president, delivering the news on Wednesday. The plant employs roughly 1,400 people.

At least ObamaCare helps people forget about NAFTA. This is the first year (2016) that the entirety of ObamaCare is finally in play; all delays, deferrals, waivers (with some exceptions, I suppose) have come to an end. Unfortunately even if Congress were to "end" ObamaCare (and it won'), the country will never get these jobs back that have gone south of the border.

Wells Coming Off Confidential List Friday -- February 11, 2016

These are being posted early; this is my last post for about 24 hours. Good luck to all. 

Anything posted in last 48 hours subject to more typographical and factual errors than usual. Posted quickly. Will correct errors when I find them later next week.

Wells coming off confidential list Friday:

• 28754, A/no IP, Oasis, Kline Federal 5300 31-18 8B, Baker, firs production 9/15; cum 48K 12/15;
• 28755, 1,774, Oasis, Kline Federal 5300 31-18 7T, Baker, t9/15; cum 30K 12/15; on-line about half the time since it was tested;
• 28756, 1,174, Oasis, Kline Federal 5300 31-18 6B, Baker, t9/15; cum 43K 12/15; off-line much of the time since it first started producing;
• 30730, drl, Slawson, River Rat Federal 2-23-14H, Big Bend, no production data,
• 30789, 1,479, Oasis, Kline Federal 5300 31-18 15T, Baker, t9/15; cum 49K 12/15; off-line much of the time it first stared producing;
• 31585, SI/NC, Statoil, Ruth 28-33 8TFH, East Fork, no production data,
• 31663, SI/NC, Hess, AN-Evenson-152-95-0310H-12, Antelope, no production data,

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30789 see above, Oasis, Kline Federal 5300 31-18 15T, Baker:

Date	Oil Runs	MCF Sold
12-2015	18066	6887
11-2015	3713	6454
10-2015	14653	15711
9-2015	12423	3308

28756, see above, Oasis, Kline Federal 5300 31-18 6B, Baker:

Date	Oil Runs	MCF Sold
12-2015	14863	11729
11-2015	6978	5028
10-2015	16174	12452
9-2015	4923	1397

28755, see above, Oasis, Kline Federal 5300 31-18 7T, Baker:

Date	Oil Runs	MCF Sold
12-2015	6477	6946
11-2015	2627	1645
10-2015	10135	1330
9-2015	10215	2621

28754, see above, Oasis, Kline Federal 5300 31-18 8B, Baker:

Date	Oil Runs	MCF Sold
12-2015	16927	11364
11-2015	4422	3312
10-2015	13315	10513
9-2015	12996	4449

Jobless Claims Fall Much More Than Expected -- February 11, 2016

Weekly jobless claims plummet to 269,000 vs 281,000 estimated. Whenever I see such a huge discrepancy, it makes me wonder. How can analysts be so far off? I guess economy improved remarkably since last week.

Initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 269,000 for the week ended Feb. 6, the Labor Department said on Thursday. The prior week's claims were unrevised.

The four-week average fell 3,500 to 281,250. 

Thursday, February 11, 2016

Updates

2:02 p.m. Central Time: departing Belfield under overcast skies, but sun trying to break through. Looks like an absolutely gorgeous day. I would call it partly sunny and getting better. The Dickinson Press would probably call it overcast, with chance of more gloominess before dusk in just a couple of hours. 

1:22 p.m. Central Time: Belfield. Roads were fine between Williston and Belfield. Traffic moving 10 mph below the posted speed limit between Williston and Watford City; moving at the posted speed limit south of Watford City all the way to Belfield.
 

Original Post

 

It looks like I will be departing the Bakken today. Light snow falling; seems a bit warm. The snow is heavy, wet, sticky. Yes, it's about 24 degrees, apparently. Really warm for this time of year.

Market looks to be extremely volatile (a Wall Street euphemism for "scary"). I'm sure glad Janet Yellen started raising rates last year; gives her an opportunity to cut rates this year. LOL. She "doesn't know if she has legal authority" to cut to "negative rates." I suppose if she doesn't know, no one knows except President Obama. The US is fortunate to have an experienced finance expert at the helm.

What a mess for MDU, ratepayers, and regulators. The Dickinson Press is reporting (archived):

Montana Dakota Utilities has scaled back a 21.1 percent electricity rate increase it had been requesting in Montana, but that didn’t stem the tide of questions the company faced at a public hearing that started Tuesday in Glendive.

In North Dakota, they’ve been collecting costs for these upgrades via trackers and riders so there has not been a public hearing process per se. This makes the Montana public hearings an important arena for public engagement about the requested rate increase that would cover the three states.

While the rate increases are for Montana customers, MDU has an integrated electric system that is serving customers in a three-state area that includes western North Dakota and South Dakota.

The company’s original proposal to the Montana Public Service Commission sought to recover $11.4 million annually in costs, but two Montana advocacy groups both said justifiable recovery costs were more like $2 or $3 million.

I suppose this is the cross we bear with federal government dysfunction, questionable presidential executive orders, a slumping economy, a Bakken bust, a killed Keystone, and PPP.

For those still interested, this is the transcript for 4Q15 earnings, MDU: http://seekingalpha.com/article/3865706-mdu-resources-group-mdu-david-l-goodin-q4-2015-results-earnings-call-transcript?auth_param=63j3:1bb779i:86532afa76913ef3446e10b4c09b31ea.

The Dickinson refinery: it looks like the writing is on the wall. Refinery utilization target is 90%.

We are working on optimizing where the plant is at. Longer-term, you know this is a business you have to get in on scale, not just one refinery, you have to have several or else you would exit. Obviously, we may not be the right long-term owner but at this point that decision hasn't been made. (page 3) 

Our refining segment includes the company's 50% interest in the Dakota Prairie Refinery which began commercial operations just in May of last year. Our share of 2015 refining results is an adjusted loss of $20.5 million. Earnings were impacted by unplanned outages in October and November due to equipment problems that have since been repaired. Economics have also been affected by historically low Bakken differentials from the West Texas Intermediate pricing, which has reduced the discount for our oil feedstock.

Thursday, February 11, 2016

Active rigs:

	2/11/2016	02/11/2015	02/11/2014	02/11/2013	02/11/2012
Active Rigs	41	137	195	183	203

RBN Energy: Warm Winter and Surging Production Push Gas Storage Surplus Higher (And Prices Lower).

As of the weekly EIA natural gas storage report due out today (Thursday) for the week ending February 5, 2016, the U.S. gas inventory surplus is likely to grow to near 600 Bcf above levels at the same time last year. Current weather forecasts suggest the surplus over 2015 will soar to near 800 Bcf by the end of February. With outright inventory levels already exceptionally high, this surplus growth kicks the market’s oversupply problem further down the futures curve – meaning prices could stay lower for longer. Today we look at the winter 2015-16 fundamentals leading to this surplus and what it means for the rest of 2016.

The gas market started this winter (November 2015 to March 2016) oversupplied, with a record high inventory and a surplus of nearly 400 Bcf versus the previous year. At the time a cold hard winter presented the best chance to correct the supply/demand imbalance through increased heating demand. But weather forecasters instead predicted an exceptionally warm winter due to the effects of El Nino. And sure enough, winter has been largely a no-show so far. Meanwhile, on the supply side, gas production has not given up any ground, and in fact, has even experienced another surge to record levels in recent weeks. This mixture of lower demand and higher supply has meant not as much gas has been withdrawn from storage to meet winter peak needs as usual this year.  As a result, the storage surplus has continued to grow.