Oil Booms in North Dakota

[SiouxVolley]

There is a story on Yahoo Finance that North Dakota oil is going for less than $50 / barrel.

A lot of exploration companies are going to be really stretched, as they can't make interest payments on their debt if it stays low for a while. The capital expenditures are down 10-20 percent, but they might have to cut it much more. T Boone Pickens says oil will be back above $100/b in 18 months.

In the meantime, refiners in the area (Tesoro, Koch, Cenex, and Exxon Mobil) are making a killing. The cheapest and best oil is in their backyard, but they can still charge substantially more than in Oklahoma or Texas, where gasoline is around $2.00 / gall with more expensive oil. The new diesel refineries in Dickinson, Minot, and Devils Lake will be printing money if the situation doesn't change.

[bison73]

An interesting view if all the pipes underground were above the ground:

 

http://www.nytimes.com/interactive/2014/11/24/upshot/nd-oil-well-illustration.html?emc=eta1&_r=0&abt=0002&abg=0

That is unbelievable. Wow! Interesting stuff. Thanks!

[ScottM]

There is a story on Yahoo Finance that North Dakota oil is going for less than $50 / barrel.

A lot of exploration companies are going to be really stretched, as they can't make interest payments on their debt if it stays low for a while. The capital expenditures are down 10-20 percent, but they might have to cut it much more. T Boone Pickens says oil will be back above $100/b in 18 months.

In the meantime, refiners in the area (Tesoro, Koch, Cenex, and Exxon Mobil) are making a killing. The cheapest and best oil is in their backyard, but they can still charge substantially more than in Oklahoma or Texas, where gasoline is around $2.00 / gall with more expensive oil. The new diesel refineries in Dickinson, Minot, and Devils Lake will be printing money if the situation doesn't change.

 

It's possible some outfits may become victims of their own success.  With global oil prices dropping or staying low for a number of reasons, any sustained decline could impact capital expenditures for a while. 

 

Edit:

 

http://www.bloomberg.com/news/2014-12-04/opec-shale-showdown-misses-target-as-u-s-drillers-cap-costs.html

[SiouxVolley]

Oasis Petroleum, which only has drilling in the Bakken, announced it will drop from 16 rigs drilling down too 6 by March.  That would be 1000 jobs gone in Williston (Oasis drills in Willaims and McKenzie counties.)  More cutbacks are likely to follow.

 

The article says that Saudi Arabia wants to kill major oil projects mainly in Russia and Venezuela that need $80 - $90 oil to break even.  Russia had been planning some major increases in production, but with the Ukraine crisis and sanctions against them, that no longer seems possible.  Russia has been forced to sell a lot of its gold reserves to get cash.  The ruble has been crashing and the Russian economy is in trouble.  The article also says that shale oil will be in a winner in the long term, as American companies can easily start drilling again when prices return.  On the contrary, no one will invest in megaprojects (tens of billions) where the Saudi's can open up a spigot and make it lose money.

 

http://seekingalpha.com/article/2751165-is-this-the-end-of-the-shale-oil-bubble-or-the-beginning

[Fetch]

I do think this is mainly about putting Russia in their place 

[niouxsiouxfan]

Can see the theory of using oil to bankrupt Russia. Sure handed way to deal with Putin.

And I've wondered for the last few years with the US fuels boom, why we haven't gotten rid of OPEC and gone independent.

[ScottM]

http://www.wsj.com/articles/tracing-oil-price-plunge-back-to-texas-1418404579?mod=WSJ_hp_LEFTTopStories

A lot of factors are at play, and it does not appear the chaos will end anytime soon.

[Fetch]

if i had known the DOW would be such a weenie I would have picked gold at $300

[SiouxVolley]

Looks like Stanley and Berthold will get diesel plants by Quantum Energy.  They want to build on the Mt/ND border at Fairview too, as well as Baker, Mt.

 

http://bismarcktribune.com/news/state-and-regional/diesel-gas-stripping-plants-proposed/article_f54c889a-8188-11e4-8b75-2f27282a1fbb.html

 

MDU wants to build one at Minot and another company has been announced one  in Devils Lake.  Highway 2 would have four plants across the state.  A lot of construction next summer, plus the fertilizer plants in Jamestown and Grand Forks.

 

That's nearly $5 billion in industrial construction to begin next year.   Another $6 billion with the cracker plant and related ethane separation projects.

[darell1976]

Looks like Stanley and Berthold will get diesel plants by Quantum Energy.  They want to build on the Mt/ND border at Fairview too, as well as Baker, Mt.

 

http://bismarcktribune.com/news/state-and-regional/diesel-gas-stripping-plants-proposed/article_f54c889a-8188-11e4-8b75-2f27282a1fbb.html

 

MDU wants to build one at Minot and another company has been announced one  in Devils Lake.  Highway 2 would have four plants across the state.  A lot of construction next summer, plus the fertilizer plants in Jamestown and Grand Forks.

 

That's nearly $5 billion in industrial construction to begin next year.   Another $6 billion with the cracker plant and related ethane separation projects.

Not to mention....JOBS JOBS JOBS!!

[Oxbow6]

The US consumes 6.9 billion barrels a year. The activity in the Bakken, et al is still going to be going strong at $50 or $100/barrel.

Drill baby drill!

[Fetch]

If the drop in oil prices can take out Putin I say good & I say that with mineral rights

[BIGSIOUX]

http://www.msn.com/en-us/news/other/in-north-dakota-where-oil-corruption-and-bodies-surface/ar-BBhj1V2

 

tribal oil talk.

[SiouxVolley]

ND oil is as low as $32 / barrel once transportation costs are figured in.  Most oil companies are hedge at around $90 / barrel til December.  Watch out below if the price in less then that later in the year.  Rig counts will drop massively.

 

http://www.reuters.com/article/2015/01/09/bakken-oil-breakeven-kemp-idUSL6N0UO1Z520150109

 

Crosby is really feeling a slowdown right now.

 

http://www.reuters.com/article/2015/01/11/us-northdakota-oil-idUSKBN0KK0IU20150111

[homer]

ND oil is as low as $32 / barrel once transportation costs are figured in. Most oil companies are hedge at around $90 / barrel til December. Watch out below if the price in less then that later in the year. Rig counts will drop massively.

http://www.reuters.com/article/2015/01/09/bakken-oil-breakeven-kemp-idUSL6N0UO1Z520150109

Crosby is really feeling a slowdown right now.

http://www.reuters.com/article/2015/01/11/us-northdakota-oil-idUSKBN0KK0IU20150111

Some companies are expecting $20 per barrel through summer rising back up to $50-$60 by years end. Drill out the leases that are up this year and that's about it at those prices.

[Cratter]

Prices are controlled by supply and demand right? Half the amount of gas in the world is being used or the world started producing twice as much oil in the last three months! Hurray!

[ScottM]

Prices are controlled by supply and demand right? Half the amount of gas in the world is being used or the world started producing twice as much oil in the last three months! Hurray!

 

Part of the current dive is being driven by OPEC's refusal to cut production in hopes of maintaining market share, and perhaps driving higher cost production out of business.  Couple that with lower overall demand and the world is bascially awash in crude right now.

[Nodak78]

Part of the current dive is being driven by OPEC's refusal to cut production in hopes of maintaining market share, and perhaps driving higher cost production out of business.  Couple that with lower overall demand and the world is bascially awash in crude right now.

This is true.  None of the countries wants to cut production, OPEC countries or Russia.  This will have slowing effect on Texas and ND.  Small companies will either be bought out or go bankrupt.  ND revenue will decrease.  Only the sweet spot will continue to produce, because oil is going lower before it recovers and levels off between $60 and $80 a barrel.  Peak oil is dead.  The only way the Saudis maintain market share is too keep production level and drive down the price to level off the shale production.

 

Critical for ND to pour money into the Bakken for infrastructure.  This is an investment in the future to prevent development from feeing to other shale that is not develop at this time.

[The Sicatoka]

OPEC raises production, price drops, we take the sucker play of cheap oil today and they control us. 

 

The US stops drilling, stops building pipelines and infrastructure, and then OPEC cuts production, prices rise, and OPEC controls us. 

 

Sounds like win-win for OPEC (down and up) ... unless the US controls what's its to control. 

[Nodak78]

 

Best way to help the USA is open export markets so producers can expand market share and stay in business, this will also keep gas prices lower.  This would be a win win for the USA.  bad for Russia, Venezuela, Iran.  They can't produce at $60 a barrel like we can in the Bakken.   This over production is a reset and a opportunity for the USA to become the leader in oil production in the world and energy independent.

[SiouxVolley]

The best explanation for falling oil prices was driven home by this Israeli paper:

 

http://www.israelnationalnews.com/News/News.aspx/188905#.VLQlqJt0zIU

 

The Shia's and Sunni's are in effective war in the gulf with proxies.  Iran getting nuclear weapons would make Saudi and the other Gulf States spend $500 billion to get their own nuclear weapons.  The price of oil started dropping two weeks after Iran pulled out of nuclear talks.  The Saudi's and the other Gulf States want Iran to sign on a non-proliferation treaty.  The Russian's are a big Iranian nuclear supplier and Syrian ally, so hurting the Russians is just a side benefit to the Gulf States.  The cost to their treasuries to the Saudi's and Gulf States would be even bigger if they delay putting the kibosh of Iran's economy.  The Iranians are really hurting now, just like the Venezuelans and Nigerians.  Cuba relied on Venezuela's oil money before.  Cuba had to reach out to the US now, because there was no money from Russia or Venezuela.

 

The US and Canadian Financial Press have  been slow to understand the game the Gulf States have been playing here, but their finally getting it:

 

http://business.financialpost.com/2014/12/27/nevermind-u-s-shale-saudi-arabias-oil-power-play-targets-irans-economy/

[Nodak78]

The best explanation for falling oil prices was driven home by this Israeli paper:

 

http://www.israelnationalnews.com/News/News.aspx/188905#.VLQlqJt0zIU

 

The Shia's and Sunni's are in effective war in the gulf with proxies.  Iran getting nuclear weapons would make Saudi and the other Gulf States spend $500 billion to get their own nuclear weapons.  The price of oil started dropping two weeks after Iran pulled out of nuclear talks.  The Saudi's and the other Gulf States want Iran to sign on a non-proliferation treaty.  The Russian's are a big Iranian nuclear supplier and Syrian ally, so hurting the Russians is just a side benefit to the Gulf States.  The cost to their treasuries to the Saudi's and Gulf States would be even bigger if they delay putting the kibosh of Iran's economy.  The Iranians are really hurting now, just like the Venezuelans and Nigerians.  Cuba relied on Venezuela's oil money before.  Cuba had to reach out to the US now, because there was no money from Russia or Venezuela.

 

The US and Canadian Financial Press have  been slow to understand the game the Gulf States have been playing here, but their finally getting it:

 

http://business.financialpost.com/2014/12/27/nevermind-u-s-shale-saudi-arabias-oil-power-play-targets-irans-economy/

 

 

This is also true.  But the Saudis are forced to keep production up and drive down the price to maintain marketshare in the long run.  It is a perfect storm.  Remember the Saudis talk out of their mouth more that both ways.

[Redneksioux]

Really too bad to hear about the salt water spill in the little muddy river. This river enters lake sak/Missouri. Basically a deadly salt brine was spilled into the river and to no surprise you hear very little about theses things on the eastern side of the state. It makes me sick that the state sweeps this stuff under the rug and continually lowers fine amounts to the oil companies.

[SiouxVolley]

Really too bad to hear about the salt water spill in the little muddy river. This river enters lake sak/Missouri. Basically a deadly salt brine was spilled into the river and to no surprise you hear very little about theses things on the eastern side of the state. It makes me sick that the state sweeps this stuff under the rug and continually lowers fine amounts to the oil companies.

With the internet of things getting going, pipeline companies need more sensors (thermal, hydrocarbon, etc) along their lines. They have flow measurements, but the intervals are too far and the precision isn't that good. Or just fly a UAV to continuously monitor. It may be well worth the cost, otherwise the public will demand that they shut down.

[sprig]

http://www.forbes.com/sites/johntamny/2015/02/02/lets-be-serious-falling-oil-prices-are-not-causing-the-busts-in-texas-and-north-dakota/?utm_source=yahoo.com&utm_medium=partner&utm_campaign=yahootix&partner=yahootix

Price change caused by value of the dollar