Better Fill up today

[frawin]

The Risk Reward level makes this Acreage very risky , that plus the lack of infrastructue to gather and transport any oil or gas found makes tehe acreage released almost worthless.

U.S. to permit oil companies to bid for oil, gas leases

(AP) For the fifth time in a decade, the U.S. government will allow oil companies to bid for oil and gas leases in the National Petroleum Reserve-Alaska, officials announced Wednesday. No oil or gas production has resulted from previous lease sales. However, officials with the Bureau of Land Management said the coming sale would be an opportunity to offset high fuel costs. The government estimates that the roughly 3 million acres it plans to put up for bid this fall could yield several billion barrels of oil and a significant amount of natural gas. Oil companies face difficult hurdles in getting the fuels to market. The Colville River separates reserve lands from the Prudhoe Bay oil field and its satellites to the east. The lack of roads, pipelines and other infrastructure in the reserve makes production risky. Last year ConocoPhillips, Anadarko Petroleum Corp. and Pioneer Natural Resources returned 300,000 acres in the reserve to the federal government, saying the land did not contain enough oil and gas to justify the high costs of extraction and transportation in the remote environment. Those companies and others continue to pay for the rights to extract fossil fuels from more than 3 million acres, secured in previous lease sales. Oil companies have paid from $5 to $950 an acre for leasing rights, plus annual rental fees of from $3 to $5 an acre, to the state and federal governments, according to Bureau of Land Management records. Alaska and the federal government split those fees evenly, said a bureau spokeswoman. Federal estimates of technically recoverable oil and gas in the reserve vary widely. According to 2002 data from the U.S. Geological Survey, the numbers range from 5.9 billion to 13.2 billion barrels for oil and 39 trillion to 83 trillion cubic feet for natural gas.

[frawin]

Below is the EIA wekly Natural Gas Storage report, this week's is fairly bullish as we are still under the 5 year average and time is getting shorter to make up the bigger pulls we have had to make  to replace fuel oil with Natural Gas.
Frank


--------------------------------------------------------------------------------

Released: July 24, 2008 at 10:35 A.M. (Eastern time) for the Week Ending July 18, 2008.
Next Release: July 31, 2008 
Working Gas in Underground Storage, Lower 48 other formats:  Summary TXT  CSV   
Region Stocks in billion cubic feet (Bcf)  Historical Comparisons 
07/18/08 07/11/08 Change Year Ago (07/18/07) 5-Year (2003-2007) Average
Stocks (Bcf) % Change Stocks (Bcf) % Change
East 1,308 
1,245 
63 
1,438 
-9.0 
1,310   
-0.2 

West 336   
325   
11   
395 
-14.9 
350   
-4.0 

Producing 752 
742 
10 
909 
-17.3 
758 
-0.8 

Total 2,396 
2,312 
84 
2,743 
-12.7 
2,418 
-0.9 


Notes and Definitions 


Summary
Working gas in storage was 2,396 Bcf as of Friday, July 18, 2008, according to EIA estimates. This represents a net increase of 84 Bcf from the previous week. Stocks were 347 Bcf less than last year at this time and 22 Bcf below the 5-year average of 2,418 Bcf. In the East Region, stocks were 2 Bcf below the 5-year average following net injections of 63 Bcf. Stocks in the Producing Region were 6 Bcf below the 5-year average of 758 Bcf a net injection of 10 Bcf. Stocks in the West Region were 14 Bcf below the 5-year average after a net addition of 11 Bcf. At 2,396 Bcf, total working gas is within the 5-year historical range. 

Working Gas in Underground Storage Compared with 5-Year Range   
  Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2003 through 2007.
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report." The dashed vertical lines indicate current and year-ago weekly periods.   
     
Data
History (XLS)
5-Year Averages, Maximum, Minimum, and Year-Ago Stocks (XLS)
References
Methodology
Differences Between Monthly and Weekly Data
Revision Policy
Related Links
Storage Basics
Natural Gas Weekly Update
Natural Gas Navigator

[frawin]

The NYMEX is trading down on Crude oil, with Sept 08 at $123.90 down $0.54 and Aug 08 gas is trading down $0.648 at $9.14 with the outer months trading down in the $0.24 to $0.25 range. I was hoping we could get Washington to make some positive Committments before crude falls to far, instead our politicians are going to do absolutely nothing. They are more interested in their own well-being than the future of the PEOPLE.

[Rudy Taylor]

I didn't take the time to scroll back to previous posts, so this may have already been discussed.

Frank, are you following the SemGroup LP bankruptcy?  I'm amazed that a company like that can go down so quickly. To find itself $2.4 billion short in futures contracts therefore not have cash to meet margin calls or cash deposits is shocking.

The crazy thing is: I don't think the execs at SemGroup did anything particularly wrong or unusual. They were victims of Wall Street trading as a result of the fluctuating price on oil futures. When those stocks started dropping, it caused a sell-off by traders and the company simply was caught short of cash to pay those who were selling.

The bottom line will be that the company will now sell all its assets and lay off its employees. In short: They're broke.  And only a month ago they were pledging millions of dollars to the new BOK Center and the new Tulsa Drillers Stadium projects.

I don't understand big-time finance, at all.

As a small business owner, I have no hanky-panky accounting options at my disposal. If I can't create enough revenue to cover my expenses, I become history mighty fast. Why the corporate world thinks that hedging is the answer, I'll never know.  But then again, I don't have a corporate mentality.

Rudy

[frawin]

Rudy, I am following it as I am familiar with the Principals and have friends in the company. The Founder was the mastermind of Koch Oil Company's NYMEX trading programs. I do some business with them for operators but had no exposure at this time. It is a sad thing, but I don't agree with you that they done nothing wrong, you don't loose $2.9 Billion without doing something wrong.. They had way to much "bare" exposure in the futures market, and that is the one thing that took them down. They, SEM Group/SEM Crude knew better that to go that long in this market with out some offsets and they also knew the risk of betting them farm with the risk that it was a winner take all. Hopefully it will make some of the big Futures Players take notice and reduce their exposure. Rudy, my concern is that we haven't seen the worst of what can happen to the "Speculators" out there, SEM Group/SEM Crude was not the only  big speculator out there that was betting  "Long" in the market and there could be some even bigger losses show up.
Frank

[frawin]

In overnite trading, Sept 08  Crude is at $125.975 up $0.385, and Aug 08 Natural Gas is at $9.41 up $0.087. The market may be a bit oversold and is taking a breather.

[DanCookson]

Rudy,

I agree wholeheartedly with Frank.  It is insane to think that they had no offsets as a "just in case" scenario.  On the other hand, it is companies like this who are causing a lot of the inflated pricing on the NYMEX.  Going to be tough as the CEO had pledged a large gift to the KU football program as well.

[Rudy Taylor]

Thanks for your thoughts on the SemGroup. My world is so far from theirs that I have trouble identifying.  But I do try to understand as I read the morning paper.  The hedging thing has never clicked in my mind --- but lots of things don't click there anymore.

Yes, KU will miss the SemGroup's donations, and I noticed this morning that the LPGA tournament that is scheduled for 2009 might be in jeopardy especially it's known as the SemGroup Open or something equally clever. They made major donations to the BOK Center in Tulsa and were set to make significant donations to the new Driller baseball park.

According to this morning's Tulsa World, Bank of Oklahoma will lose $71 million "more" than they originally had forecast for this quarter because of accounts receivable due from the SemGroup.

It will be interesting to see what other large companies must suffer because of inept management at SemGroup. OK, yes, I also noticed that several top managers will receive compensation for the next two years following their dismissal. Again, that's a part of the big-time that I have never understood.

Rudy

[frawin]

Rudy, Tom Kivisto, X-Koch Oil VP, was the founder, CEO of SemGroup, Tom was also on the Board Of Directors of BOK. Tom was a KU Grad and big supporter. Tom is probably one of the most knowledgable NYMEX/Futures Traders in the business. I feel sure that he full well knew the risk thay were taking. I start my day with reading the Tulsa World, Bloombergs and CNN on line, I did see the benefits/severance package that the "key" employees are to receive. That is the biggest bunch of bull I know of. The people that sold goods and services, i.e. oil, natural gas, services etc to SemGroup may and probably will loose but the employees get up to 2 years salary. In my opinion that money should go to the suppliers. I am surprised that the Referee will approve that severance.
Frank

[frawin]

Sept. 08 Crude is trading at $123.10 down $2.39, there does not seem to be much trading in the months months, Aug 08 Natural Gas is trading at $9.24 down $0.083.
Frank