Wednesday - The Day After Putin Blinked And The Market Surged

Active rigs:

	3/5/2014	03/05/2013	03/05/2012	03/05/2011	03/05/2010
Active Rigs	192	186	206	172	99

RBN Energy: natural gas and manufacturing in the US, part 2, a revolution.

Consistent lower natural gas prices resulting from the boom in shale production are expected to fuel a major increase in industrial demand over the coming years. RBN expects that sector’s demand to increase by 5 Bcf/d from 19 Bcf/d in 2013 to 24 Bcf/d in 2025. There have been numerous announcements of new plant builds and expanded capacity projects in primary industries. Less well documented are the wider ramifications of abundant shale natural gas and natural gas liquids (NGL) supplies for US manufacturing industry as a whole. Today in the first of a two part series Taylor Robinson from PLG Consulting outlines the changes underpinning a new industrial renaissance.

ObamaCare delayed for a full two years. That was easy. That's pretty much the end of ObamaCare as we know it. There will be a few unintended consequences, but this will work out perfectly for Big Business, not necessarily for Big Health.

Didn't Mike say this a year ago: the price of frack sand could go parabolic in 3Q14? The article is dated March 4, 2014,  but I know I saw this same article a year ago, or thereabouts.

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

At least one analyst has raised its EOG price target from $190 to $214.

Stock market. Ratio of new highs to new lows -- 14:1.

Exxon Mobil to start production at record number of new oil and gas projects in 2014; 10 major projects to add new capacity of 300,000 net oil equivalent barrels per day this year: Co announces it expects to start production at a record 10 major projects in 2014, adding new capacity of ~300,000 net oil equivalent barrels per day and contributing to profitable production growth.

Price of oil fell quite a bit after Putin's quiet invasion of the Ukraine has evolved into a diplomatic spat, something that Mr Obama is very comfortable with. Putin has obviously studied Sun Tzu; Obama, not so much (probably never). Speaking of which I was unaware that then-Senator Obama led the fight to de-arm the Ukraine, and then re-affirmed his position as president. I had forgotten why the Ukraine had no will to fight. The army had no means. Now, the president is getting ready to cut the US Army to numbers not seen since before WWII.

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A Note to the Granddaughters

I left North Dakota earlier this morning and have just gotten to Chadron, Nebraska. I love cross-country driving, but I have to admit, my least favorite stretch between the Rio Grande and the Missouri-Yellowstone confluence is eastern Nebraska. It's too bad they aren't laying the Keystone XL; it would have been something to watch.

Having said that, I love cross-country driving. It is a paradox, but the trip seems to go by much more quickly the slower I drive. I try to keep the speedometer at 59 so I can watch the scenery. Periodically, I look down and see that my speed has crept well above 59. I don't like to go to cruise control on rolling hills; cruise control is perfect on I-94, I-90, and I-84 through the Great Plains but that's about it.

For the past hour or so I've been listing to "The Range," 95.3, I think. Not sure. Just before I stopped for a rest:

Sweet Dreams, Patsy Cline, Jessica Lange

Tuesday, March 4, 2014 -- QEP Withdraws Proposal To Unitize Grail Field

QEP requests to withdraw its proposal to unitize the Grail oil field. The NDIC approves without prejudice. Case 21213; orders 23517, 24239. A "huge thank you" to a reader for sending me this. I believe NDIC orders are published/archived in "Premium Services" to which I do not subscribe.

Another month, another ObamaCare delay. The Hill is reporting:

The Obama administration is set to announce another major delay in implementing the Affordable Care Act, easing election pressure on Democrats.

As early as this week, according to two sources, the White House will announce a new directive allowing insurers to continue offering health plans that do not meet ObamaCare’s minimum coverage requirements.

Prolonging the “keep your plan” fix will avoid another wave of health policy cancellations otherwise expected this fall.

Active rigs in North Dakota:

	3/4/2014	03/04/2013	03/04/2012	03/04/2011	03/04/2010
Active Rigs	189	183	207	172	98

 RBN Energy: Jones Act vessels through the Panama Canal.

There are no crude pipelines running from the Gulf Coast refining region to the West Coast. A Kinder Morgan plan to build such a pipeline last year (2013) floundered on lack of shipper interest. Surging crude supplies at the Gulf Coast and downward pressure on prices in the absence of an end to the crude oil export ban raise the tantalizing possibility of moving crude East to West through the Panama Canal (or the Transpanama pipeline). Today we look at the economics of such shipments.

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The Wall Street Union

So much for the Crimean Crisis. It's over. That was easy.

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Transformers expose limits in securing power grids.

The glue that holds the grid together is a network of transformers, the hulking gray boxes of steel and copper that weigh up to 800,000 pounds and make it possible to move power long distances. Transformers were badly damaged in an attack on a California substation last year, and government reports have warned for years that saboteurs could cause sustained damage to the grid by targeting the massive machines.

Only a handful of companies build transformers in the U.S., and it can take weeks or months to ship transformers in from overseas. The manufacturing process itself can last more than a year, in part because a transformer can't be bought off the shelf but rather must be made to measure for its substation.  

There's actually a bigger story regarding transformers than terrorism, a story we've discussed before.

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Americans open wallets in January and factories bounce back in February.

Reported previously, in North Dakota, pipelines are losing luster, rails surging.

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Porsche Cars North America unit reports February sales increased 15% y/y to 3,232 vehicles.

Subaru of America reports February sales increased 24% y/y to 34,909 vehicles. 

Nine (9) Producing Wells Completed -- The Williston Basin, North Dakota, USA; EOG To Report Two Huge Parshall Wells Wednesday

Active rigs:

	3/3/2014	03/03/2013	03/03/2012	03/03/2011	03/03/2010
Active Rigs	189	184	207	170	96

No new permits issued today.

Wells coming off confidential list were posted earlier; see sidebar at the right.

Nine (9) producing wells completed:

• 20916, 2,361, HRC, Fort Berthold 151-94-34C-27-2H, Antelope, t1/14; cum 9K 12/13;
• 24414, 2,856, Statoil, Garmann 19-18 4TFH, Banks, t2/13;  cum --
• 24752, 1,377, ERF, Bobcat 150-94-04A-09H, Spotted Horn, t1/14; cum 16K 12/13;
• 24784, 891, Hess, LK-Bice-147-97-1201H-3, Big Gulch, t2/14; cum 10K 12/13;
• 24839, 758, CLR, Dolezal 3-5H, Chimney Butte, t2/14; cum --
• 25312, 939, Hess, EN-WEyrauch A 154-93-1720H-8, Robinson Lake, t1/14; cum 10K 12/13;
• 25422, 2,757, XTO, Alice 44X-34D, Siverston, t2/14; cum --
• 25423, 2,798, XTO, Alice 44X-34H, Siverston, t2/14; cum --  
• 25426, 996, Hess, EN-Nelson 155-94-3328H-3, Alkali Creek, t1/14; cum 14K 12/13;

Wells coming off the confidential list Tuesday:

• 25335, drl, XTO, Martin Federal 21X-33B, Cedar Coulee, no production data,
• 25541, drl, XTO, Clarence Federal 34X-7B, Haystack Butte, no production data,
• 25802, drl, KOG, Koala Wold 153-97-1-5-9-15H, Banks, no production data,
• 25896, 116, Denbury Onshore, CHSU 31B-27SHR 15, Cedar Hills, South Red River B, t10/13; cum 16K 12/13;
• 25920, drl, Emerald, Hot Rod 4-27-26H, Boxcar Butte, 31K as of 12/13;
• 26012, drl, Hess, HA-Chapin 152-95-3239H-4, Hawkeye, no production data,

Wells coming off the confidential list Wednesday:

• 21529, 2,015, Newfield, Pittsburgh Federal 153-96-3-2H, Sand Creek, t11/13; cum 37K 12/13;
• 21530, 2,058, Newfield, Pittsburgh Federal 153-96-3-3H, Sand Creek, t11/13; cum 26K 12/13;
• 24076, 1.096, EOG, Austin 31-2919H, Parshall, a huge well; 175K in less than five months; t9/13; cum 175K 12/13;
• 25526, drl, HRC, Fort Berthold 152-94-11B-14-7H, Antelope, no production data,
• 25527, drl, Zavanna, Sylvester 32-29 3TFH, Springbrook, no production data,
• 25651, 1,179, EOG, Austin 36-0532H, Parshall, t9/13; cum 96K 12/13;
• 25676, 15, Whiting, Davidson 44-31H, Beach, a Red River well, t11/13; cum -- 
• 25729, 570, Fidelity, Cindy 14-23H, Dickinson, t9/13; cum 32K 12/13;
• 25803, drl, KOG, Koala Wold 153-97-1-5-8-15H3, Banks, no production data,
• 25999, drl, Oasis, Kelter 7-1HTF3, Eightmile, no production data,
• 26053, drl, CLR, Winston 5-12H1, Long Creek, no production data,
• 26054, 768, Hess, BW-Thelma 150-99-3031H-2, South Tobacco Garden, t2/14; cum 10K 1/14;
• 26255, 100, Legacy, Legacy Et Al Bernstein 12-7 2H, Red Rock, a Spearfish well, t9/13; cum 1/14;

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24076, see above, EOG, Austin 31-2919H, Parshall:

Date	Oil Runs	MCF Sold
1-2014	32354	23014
12-2013	46092	30704
11-2013	47349	22334
10-2013	39255	0
9-2013	9999	0

25651, see above, EOG, Austin 36-0532H, Parshall:

Date	Oil Runs	MCF Sold
1-2014	19484	4781
12-2013	11445	31
11-2013	34033	7951
10-2013	24871	0
9-2013	5547	0

Bakken Pipeline Analysis -- Update -- Oil & Gas Journal

Updates

March 3, 2014: the WSJ had an almost identical article. It seems I've read it before; I don't know. Regardless, here is the WSJ article -- rail trumps pipeline in North Dakota. 

Original Post

This is a very, very good analysis of the Bakken pipeline, sent in by a reader. It is at The Oil & Gas Journal and may require a log-in. If it does and you don't have a subscription, take a phrase and google it. It's a very, very good page to save to your computer for archival purposes if interested in this stuff. Some data points:

More than 760,000 b/d, or 71%, of Williston basin production is leaving North Dakota by rail. This number dipped slightly as the WTI-Brent spread narrowed, but the spread between North Dakota light sweet and Brent was still wide enough to warrant prudent crude-by-rail shipments.

The majority of crude oil moving by rail within the US and Canada is from the Bakken. EPRINC estimates that of the 1.4-million b/d of crude oil and petroleum products moving via rail in the US alone, roughly 900,000 b/d is crude oil. Of the 700,000 b/d of crude oil and petroleum product moving via rail in Canada, about 160,000 b/d is crude oil. Together, 1-million b/d of crude is moving via rail in the US and Canada, 780,000 b/d of which is Bakken crude.

An additional 100,000 b/d is likely moving from other plays within the US (the Niobrara and Anadarko formations). Roughly 160,000 b/d is moving out of Canada to refineries within Canada, along the US East Coast, and increasingly to the Gulf Coast. And roughly 600,000 b/d of ethanol bound for the gasoline supply is also moved via rail.

Canadian railroads have not moved as quickly as US railroads to accommodate growing, discounted production in their backyard. Origin terminals are being planned and rapidly built in Canada, but only a few sites are currently available to unload and process heavy bitumen via rail. The most likely method for shipping bitumen via rail would be heated cars, avoiding diluent or condensate use, each of which add cost. Without the diluent, however, proper unloading of the rail cars requires heating, which in turn requires the necessary infrastructure at the unloading facility.

The story includes several graphics and spreadsheets. A very good source, again, for those interested in this stuff.

Another Month, Another ObamaCare Deadline; "1099-Jobs"; Another Derailment

US News & World Report is reporting:

Consumers can expect a relatively smooth experience on the site now, though the administration has admitted that issues still persist. In December, the White House completed a series of fixes that allows the site to handle up to 50,000 users at once, and the system was working 90 percent of the time, according to a Health and Human Services report.  

And that about says it all. I imagine Amazon, Google, Apple, and a few other Fortune 500 companies would be going broke if their on-line services were working 90 percent of the time. Can you imagine if your smartphone worked only 90% of the time?

And you know it is human nature to round up to make the numbers look better. If "they" say it works 90% of the time, one can assume it might be working 75% to 85% of the time.

Regardless of what side of the issue one is on with regard to ObamaCare, a website working 90% of the time isn't exactly reassuring.

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Wow, again, now folks at CashWise, Williston, the heart of the Bakken, again talking about ObamaCare hurting them. This is a young, slow-talking out-of-stater up here looking for a job. Huge complaints about ObamaCare. The older Willistonite retiree says young folks (like the one he is talking to) will be paying for the health care of old retirees like him. The older retiree is telling the younger worker he will end up on welfare. I honestly didn't think folks were all that concerned about ObamaCare here in the booming oil patch. They also talk about "1099-jobs" and that workers are being surprised by how much they owe the government. I've heard that more than once: folks not wanting to take "1099-jobs." That's the first I had heard of "1099-jobs" anywhere in the country. Interesting. A million stories in the Bakken.

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Derailment

By the way, there was another BNSF derailment yesterday: eastern Montana, empty coal cars. It turns out that, unlike highly flammable Bakken crude oil, empty coal cars do not burst into flame.