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Thursday, October 1, 2015

SHELL Shocked

Wow, winter comes on with a fast and furious seriousness where the “Girl from the North Country” gets to hibernate. OK, is the cold causing amnesia? Are Alaskans sometimes “Brain Dead” when it comes to Simple Simon oil resource reasoning? Why in hell are all the resource news' hounds chomping at the bit this news from SHELL calling it quits any further exploration in the Chukchi? OK, so “Big Oil” has once again showed us that we have not a clue as to how this “Corporate Conglomerate” works in Alaska – even though “Big Oil” has been our good neighbor for some 40-years by now. It was in 1969 wherein Alaskans were hearing the same damn thing from Prudhoe Bay - “Dry Hole”! Not bad so far as “Big Oil” has squeezed well over 16-billion barrels of oil from that weeper and made $Billions$ in return. Boy, were we fooled! See, SHELL said it's leaving Alaska because it hit a dry hole in its first attempt to exploit the Arctic. After spending $billions$, well now what? But here is the catch most seem not to understand or comprehend. First and foremost, that money spent for exploration will find its gainful use as a tax revenue “write-off”, maybe not right away, but it has the potential to cover-up future revenues $ for $ - so money well spent. And get-over-it, as “Big Oil” never tells the truth of what is found during exploration – else it breaks rule number UNO. Regardless of what was found or not found, such an investment requires a “Tight Hole”, and more secretive then Hillary's e-mail servants. The only idiots that spill-the-beans after spudding a well are the stupid “Independents”, wherein wannabe CEO oil barons rush to the podium to announce there's “Black Gold” in them-thar-hills in efforts to excite the Alaska legislatures into a resource galore orgasm. The “Independents” so far to Alaska have tried to manipulate the system through lies and cheating, for “Tax & Revenue” breaks and lucrative handouts from AIDEA. You don't see “Big Oil” crying for a helping hand handout. See, SHELL isn't about to tell the truth on what it found during an expensive drilling season some many miles off the coast of Alaska in the Chukchi. Sure it sank drill pipe some 6000-ft into unchartered territory, that's an accomplishment with respect to the short-lived drilling season finding delays brought on by environmental concerns. And YES, I am in agreement with some, as to build a transportation infrastructure in such harsh climates in efforts to “Strike it Rich”, it is a mind-blowing expedition. I have been in the oil business many years in Alaska – have witnessed what works and what fails, and in my thoughts the jury is still out with respect to what SHELL is trying to accomplish – with respect to actual “development” some fifty miles offshore Pt. Lay. “Ice Scouring” does not allow for a pipeline of any design in that arena, we have not the technology to exploit the resources in such an un-civilized wilderness with present day technologies. When one looks back at what means of transportation was envisioned for getting the “Dry Hole” oil out of Prudhoe bay, in the end it was a carefully designed pipeline – not by specially designed Boeing 747s or under-ice tanker-submarines. Not even ice-breaking tankers like the S.S. Manhatten – specially modified for Arctic travel. It was a pipeline that won favor the investors, but to build a pipeline offshore in the area that SHELL finds a fascination, it demonstrates it is not serious. So why spend the loot for a “Dry Hole”. Because it ain't dry! That is what SHELL wants you to believe. And sure that company's stock fell 2% after the announcement, that there was “NO” oil and time to quit – but what does it really mean? See, that core sample will be analyzed and that area owned by SHELL with drilling rights will be evaluated. It will take several years, as the “core samples” are confidential for a minimum of 2-years then with some clout, the data retrieved by SHELL could be listed as “Confidential”. So we may never know what was actually found during SHELL's attempt to delineate...that's the key “delineate”. See, after analyzing the sample and using high-tech cross-boundary algorithms, SHELL will then announce that the area under their Burger Posey prospect contains billions in recoverable resources. With that, it is then considered and included in the company's portfolio and the stock value realizes that interest. It is like money in the bank! But SHELL will play out the waiting game as it is all part of this game. See, it is a spy verses spy type of game. Case in point: A few years after Prudhoe Bay came on-line - because of that “dry hole” - Big Oil heard the call to “Go West”. And soon we heard about another “Dry Hole” called Kuparuk. Now just shy out-of-reach the Kuparuk/West Sak boundaries is the NPR – the National Petroleum Reserve. Now “Big Oil” faked some samples in an area called the Colville in Henderson Bay, when EXXON was trying to outwit ARCO. Guess who won, as the only thing left to ARCO is a bunch of AM/PM stores in California! See, EXXON drilled in the Colville as did ARCO, so samples once confidential soon became “Public”. Now after the “Confidential” expired and ARCO sold out to Conocco, in come the “Independents” from Texas who don't have the deap pockets budget to do their own exploration so request “core samples” that have by now become “Public Information”. So to save a buck, it uses “Big Oils” research and soon wants to look for the real McCoy “Dry Hole”, which happens and “Big Oil” is still laughing at Pioneer Natural Resources – the 1st Independent that thought it could pull a fast one. So most have no idea this game that is played out by “Big Oil” in Alaska. And time is on their side, as SHELL's “I QUIT” was news for about 3-seconds Alaskan time and now the reality game commences and all we learn is more doom & gloom from those trying to cover and comprehend what it all means. Anyway, in a few years when oil prices rebound, SHELL will have delineated the Burger field and then able to add that forecast to its portfolio. The intent by SHELL was not to actually recover any “Black Gold”, but utilize the potential to shore up its “Reserves”. Look, going back to “Pioneer”, which also called it quits in Alaska. That company's stock has cratered since oil prices started to be controlled again by “Big Oil”, in efforts to squash the “Independents”. The only reason the Pioneer CEO still has a $20-million salary is the fact the “Reserves” the company acknowledges – oil still in the ground – it provides value and is keeping the stock safe for the time being – SELL! So that $billions$ thrown out by SHELL to fight the harsh environment and fight the environmentalists opposed to any crapping in the Arctic, the results have far reaching interests you and I are condemned to try and understand. And here is another intersecting interest. Alaska Governor Bill Walker just returned from Japan, in efforts to try and pull a fast one on EXXON and sell LNG to our friends. OK, so Bill says the sale's pitch went well? What went well, the fact they laughed Bill back to the 49er with egg on his face! See, Japan is on the forefront of becoming an “Independent” energy producer. No not with nuclear power plants that fall apart during a rain storm and fallout that cause cows to piss out blue milk, but by 2020 that small nation will be self-sufficient to supply 100% of its energy needs – and not from LNG imported from Alaska. It has mandated that by 2020 it will be using gas hydrates found offshore to boil water. So, that is only 5-years from now. And if it takes 5-years to build Walker's “Pipe Dream” to deliver LNG, wow we will end up with the biggest “Dry Hole” of ever and then the “Big Quit” may have some semblance of Sarah Palin's lagacy. Look, get over it, an Alaskan World Class LNG project was DOA some 30-years ago and never found the interest it needed to fruition. The only natural gas pipeline project that finds merit today in Alaska is an instate line to Fairbanks, maybe a tie-in to the Beluga pipeline down south Anchorage way. That's it! No big sales contracts to 3rd world nations and in the meantime, well SHELL proves it can “shell” it out and make a ROI that mesmerizes even with an “I QUIT” attitude. And when finally we hear the same from “Big Oil” with respect to “Our” stranded natural gas, then maybe we can find room to get that gas to wherein it's needed and deserved, wherein the “Export Ban” finds true meaning with “I QUIT”!

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