2013-06-14

2013 June 14

Posted by: Jim Hansen

The Master Resource Report  2013-06-14

Bakken production continues to slow

The North Dakota Industrial Commission, Department of Mineral Resources released oil production data this morning. Next week the report will take a deeper look at the information but for now here are some key points to consider.

  • The rig count in the state remained flat.
  • Currently 184 rigs operating (all-time high 218 May 2012)
  • Permits for new wells in May was 211 (all-time high 370 Nov. 2012)
  • The number of state wide wells producing is at a new all-time high of 8,758
  • State wide oil production hit a new high of 793,249 barrels per day in April
  • State wide production increased 10,250 barrels per day from March
  • The number of wells waiting on completion climbed to an estimated 490
  • Sweet crude price averaging around $87 per barrel (≈$10 discount to WTI)
  • Over 95% of drilling is occurring in the Bakken/Three Forks

Since all the activity is in the Bakken here is some Bakken specific data.

  • Bakken production rose 8,282 barrels per day to 727,149 up 1.2% over March
  • Production was up 180,307 barrels per day year-over-year or 33%
  • The producing well count in the Bakken climbed to 5,617 up 47% year-over-year
  • Daily oil per well continued the decline that has been in place since the end of Oct. 2012
  • Daily oil per well fell to 129 barrels per day from 144 barrels per day one year ago

Next week the report will take a look at these trends paying close attention to the apparent decline in well productivity. During the period beginning January 2011 through December 2012 the average monthly addition of new Bakken oil production was 18,709 barrels per day. Since October of 2012 when daily oil per well began to decline the average monthly addition of new oil is 7,215 barrels per month for the Bakken based on the data provided by the state. This is despite the continued addition of 150 new producing wells each month. If that average of new oil production add per month remains in place the Bakken will not reach 800,000 barrels per day of production by the end of 2013.

One thing is clear – North Dakota is not the New Saudi Arabia.

Natural gas rig count down 1

Natural gas prices have essentially doubled from year ago levels yet the number of rigs drilling for natural gas is down 209 from 2012 levels according to the latest Baker Hughes data released today. So why haven’t these “higher prices” increased drilling activity? Could it be that the price still isn’t high enough?

2013-05-31

2013 May 31

Posted by: Jim Hansen

The Master Resource Report  2013-05-31

There will be no report June 7th.

One way to reduce charge anxiety

One solution to the range problem with electric vehicles would be to charge intermittently while actually on the road. This is exactly what ABB is developing with a new quick charge system for transit buses. The key feature that allows this to work is the predetermined and frequent scheduled stops that buses make over the routes they follow.

(The Globe and Mail) - Claes Rytoft, acting chief technology officer at ABB, said the new system takes only 15 seconds to charge a bus carrying 135 people with enough power to reach the next stop and fully charges the battery in just three to four minutes at the end of the line.

This approach would allow the battery system to be smaller since the distance between charges would short being continually topped off over the full distance of the route. This will help reduce the cost of the vehicle and the need to maintain a network of overhead wires to support traditional trolley buses.

The Canadian aircraft and rail manufacturer Bombardier is also looking at a similar system for buses using wireless induction charging built into the road surface.

Several other companies are working on similar systems and hybrid models built around conventional propulsion systems. Soon the bus you are riding may be charging its batteries while you are stepping on and paying your fare.

Note: Clients and advisors at Ravenna Capital Management currently hold positions in ABB. They do not hold currently hold positions in Bombardier.

2013-05-24

2013 May 24

Posted by: Jim Hansen

The Master Resource Report  2013-05-24

Alaska is worried

Everyone knows that Alaska depends on North Slope oil for the lion’s share of its tax revenue. Everyone also knows that production from the field is in decline and will soon face volume issues with keeping the pipeline flowing. But to get a sense of just how important this is to Alaska consider this latest proposal.

Alaska’s government proposed investing its own cash in an assessment of oil reserves in the U.S. Arctic National Wildlife Refuge, seeking to prod the federal government to consider drilling in the protected area.

Alaska’s governor plans to seek $50 million of state money to help with funding the assessment. This seems silly given the latest news that the U.S. is “energy independent” and is on the verge of passing Saudi Arabia in oil production. Based on the “SaudiAmerica” story Alaska should keep its money. We don’t need their oil.

Oh but wait they need our money for their oil. Remember Alaska is a petro state just like any Opec member.

There is one further reason Alaska should hold onto its money. They may need it to help deal with all those abandoned wells the U.S. Bureau of Land Management is planning on cleaning up. The draft plan was released earlier in May to deal with 50 identified wells in the Alaska arctic region.

For now though it doesn’t sound like Alaska wants to help with the clean-up cost. The reason is fairly simple; these wells were not drilled by oil companies or the state of Alaska. BLM manages the National Petroleum Reserve-Alaska, where more than 130 wells were drilled under the federal government’s direction as part of an exploratory oil and gas program from the 1940s to the 1980s.

Finally there is the ultimate question of when and who is going decommission the pipeline and that entire oil production infrastructure on the North Slope. Has anyone reserved for that future expense? Then again with the prospect of offshore production in the Arctic maybe it will last forever….????

Railroad intermodal volumes up

The Association of American Railroads reported carload traffic was up 1.9% compared to the same week in 2012. Petroleum continued its amazing growth rate up 38% on the back of increased U.S. crude production.

Intermodal continues to be a star performer with U.S. up 3.5%, Canadian up 4.6% and Mexican up 8.7% as rail continues to expand at the expense of long haul trucks.

Rig count

The number of rigs drilling for natural gas in the U.S. was unchanged at 354 from last week according to Baker Hughes weekly rig data. The U.S. total drilling for oil was down 6 with North Dakota losing 5 from last week.

2013-05-17

2013 May 17

Posted by: Jim Hansen

The Master Resource Report 2013-05-17

Is the conventional wisdom about clean energy decades out of date?

Chris Nelder looked into that very issue by reviewing the REN21 Renewables Global Futures Report. It appears the conventional wisdom on clean alternative energy is stuck in the late disco era. The following excerpt gives some examples of just how far off the marks past forecast concerning the growth of clean energy has been.

…“[t]he history of energy scenarios is full of similar projections for renewable energy that proved too low by a factor of 10, or were achieved a decade earlier than expected.” For example, the International Energy Agency’s 2000 estimate for wind power in 2010 was 34 gigawatts, while the actual level was 200 gigawatts. The World Bank’s 1996 estimate for China was 9 gigawatts of wind and 0.5 gigawatts for solar PV by 2020, but by 2011 the country had already achieved 62 gigawatts of wind and 3 gigawatts of PV.

Whether you are a skeptic on renewables or a proponent Chris’s review is a good starting point. Then hit the full 76 page report which is available here.

Combining wind and tidal currents to generate power

This device to be tested in Japan would generate power from both wind and tidal currents (not waves). The design could at maximum generate enough power for 300 homes. The problems come when cost is considered. This device is very large, expensive to deploy and maintain in the marine environment. It is an interesting concept but will it be economic? The only way to know is to get on with testing it.

The video below if from CBS News. More information here.

Energy Efficiency

The Financial Times video below takes a look at the need for energy efficiency improvements. Note the graphic that illustrates the percentage of GDP consumed by energy and the discussion that concerns that relationship.