Saturday, July 07, 2012

U.S. and Bakken Oil Updates

1. A million people in North Dakota by 2030 and a million barrels of oil per day by 2015 are possible, according to one major oil executive.  (ht/BakkenBlog News)

2. You've never seen anything like this North Dakota Oil Boomtown (in photos), from Business Insider.

3. More from Business Insider: The 15 Hottest American Cities of the Future, including North Dakota oil boomtown Williston, where unprecedented wealth will be created in the years ahead.   (ht/BakkenBlog News)

4. Net oil imports for the U.S. are down to 42.1% this year through May, bringing oil imports as a share of total products supplied down to the lowest level since 1992.   

15 Comments:

At 7/07/2012 8:28 PM, Blogger Benjamin said...

And North Dakota farmers received $1 billion in cash in fiscal 2010, according to the Consolidated Federal Funds Report for Fiscal Year 2010.

Does to make sense to keep propping up ND's farm sector, especially in the one off the anion's least favorable climates?

 
At 7/07/2012 8:31 PM, Blogger VangelV said...

1. A million people in North Dakota by 2030 and a million barrels of oil per day by 2015 are possible, according to one major oil executive. (ht/BakkenBlog News)

How does this happen when a well that is two years old is producing less than 100 bpd and still has a high depletion rate? And if you believe this Mark then why aren't you investing half your net worth in the shares of drillers? Or opening up your own drilling company?

And let me point out that this was the same CEO who claimed that the tight supply and high cost of additional drilling rigs, equipment, employees and oil field services could have a harsh effect on the company to meet its goals as budgeted.

2. You've never seen anything like this North Dakota Oil Boomtown (in photos), from Business Insider.

LOL...Of course we have. Some of us have been to Wood Buffalo and have seen some very large developments take place. If you are interested in a very large recent development look no further than the Oyu Tolgoi copper-gold project in Mongolia. If you have ever wondered why a modern mine demands so much power to run, just look at the SAG (semi-automatous grinding) and the ball mills. Then imagine those loaded with many tonnes of rock and spinning away 24 hours a day, not to mention the myriad of other huge pieces of machinery at the facility. Not only do these projects require the construction of power plants, tail ponds, crushers, huge conveyor belts, and some monster machines that do the excavation and transport of rock they also require flotation tanks, concentrators, as well as brand new roads that will take the product to market. The activity in ND is nothing new. What is new is the level of investment given the negative cash flows and small returns.

 
At 7/07/2012 8:35 PM, Blogger VangelV said...

3. More from Business Insider: The 15 Hottest American Cities of the Future, including North Dakota oil boomtown Williston, where unprecedented wealth will be created in the years ahead. (ht/BakkenBlog News)

Are any of you buying real estate in the city of the future? If you believe the story why not?

4. Net oil imports for the U.S. are down to 42.1% this year through May, bringing oil imports as a share of total products supplied down to the lowest level since 1992.

This is not a surprise. Real activity in the US has taken down demand. With lower demand and a little more production you expect imports to decline. The problem is that the collapsing demand has caused drilling for shale gas to fall off a cliff just as coal based power generation plants are closing down.

 
At 7/07/2012 8:58 PM, Blogger Hydra said...

One barrel per day, per person. How much do these people use to live there and get the energy out?

Seems like there will be a lot of Walmart trucks, etc. Just bringing in all the needed supplies. Not to mention what it costs to heat mobile homes and flimsy boom housing.

Doesn't look like much of a net benefit to me. I'm with Vange on this one. And after this one plays out, off to the Arctic.

 
At 7/07/2012 9:01 PM, Blogger Hydra said...

North Dakota farmers grow crops suited to north Dakota. At the rate we are warming up, that may soon be pineapples.

 
At 7/07/2012 9:32 PM, Blogger Jon Murphy said...

This comment has been removed by the author.

 
At 7/07/2012 9:33 PM, Blogger Jon Murphy said...

Assuming 1 million barrels per day is the highest level of production, that equals an additional 42 gallons of oil per person.

 
At 7/07/2012 9:51 PM, Blogger Mark J. Perry said...

The coming super-fracking I'm talking about is new technology.

 
At 7/07/2012 11:04 PM, Blogger VangelV said...

North Dakota farmers grow crops suited to north Dakota. At the rate we are warming up, that may soon be pineapples.

What warming?

 
At 7/07/2012 11:55 PM, Blogger VangelV said...

Assuming 1 million barrels per day is the highest level of production, that equals an additional 42 gallons of oil per person.

While every little bit helps what the optimists miss is the huge depletion rate that we have to overcome just to stay even. While the EIA, IEA, CERA, and others that Mark likes to keep quoting were telling us that the depletion rate was around 3.5% not all that long ago the skeptics, who understood the actual production much better, said that the number was much higher. Finally, after a lot of pressure to look at the actual production levels on a field by field basis the optimists figured out that the real depletion rate was above 6%. (For tight oil in shale formation the rate can run at more than 70% per year while off shore fields run at 25% or more.)

What all that means is that we need a great deal more than is promised by shale production. Shale gas and oil is the bottom of the barrel and while it should not be ignored it cannot be allowed to destroy capital. Any rational person who has looked at the SEC filings will quickly find that most of the companies have been experiencing negative cash flows and added large amounts of debt to keep going. While this is not a problem early in the game it is a big problem when companies that have been in the business of shale production for half a decade or more have large 'funding gaps' that have to be filled by more borrowing and asset sales.

What we need is to let the markets decide without the distortions that come from the meddling by the Fed and the government.

 
At 7/08/2012 12:48 PM, Blogger Buddy R Pacifico said...

"4. Net oil imports for the U.S. are down to 42.1% this year through May, bringing oil imports as a share of total products supplied down to the lowest level since 1992."

That is a stunning BUT I can't find that in the EIA stats.

Can someone explain this to me, since I have lost contact with my college stats tutor?

 
At 7/08/2012 2:45 PM, Blogger Jon Murphy said...

Can someone explain this to me, since I have lost contact with my college stats tutor?

Sorry, Buddy, but explain what?

 
At 7/08/2012 4:48 PM, Blogger Buddy R Pacifico said...

"
Sorry, Buddy, but explain what?"


Jon, in looking at the EIA link, with its stats, I can't see where the drop of 42% in net U.S. imports occurs. Where is it? I have to admit at not being proficient in sorting through stats, so it is probably obvious to many others.

 
At 7/08/2012 6:04 PM, Blogger Jon Murphy said...

Buddy-

If you look at the 4th link (Table 3.3a), on the right hand side you'll see a column called 'As share of product supplied: New Imports' (3rd from the right). Way down at the bottom is the 42.1% number quoted (3rd line from the bottom).

 
At 7/08/2012 9:53 PM, Blogger Buddy R Pacifico said...

Jon,

Yes young sir, I now understand. Thanks.

 

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