Thursday, March 28, 2013

Thursday Morning Links

RBN Energy: crude by rail.
Today we complete our survey of crude loading terminals.
The first episode in this series provides an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail). We describe the rapid growth in US crude oil production that put pressure on pipeline logistics and made rail a viable alternative for moving crude to market. The second installment (see Crude Loves Rocking Rail – The Bakken Terminals) began our survey of rail loading terminals with a map and a complete list of facilities in North Dakota.  The follow up episodes covered EOG, Hess and Inergy, Plains, Enbridge and Global, Bakken Oil Express, Dakota Plains, BakkenLink and Savage and Bakken terminals north of the Canadian border in A Plethora of Terminals in the Williston Basin. Last but not least we discussed the development of rail terminals loading heavy oil sands bitumen crude in Western Canada in two episodes Heat It! (Bitumen Economics Part 1) and Part 2.
WSJ Links

I assume one needs a paid subscription for this story; it's Ben Winkley's "morning jolt of news." Today its headline: Energy Journal: Shaking All Over. I had not seen this "blog" before because I never read the on-line edition. Now that I am traveling, I am doing what I never do, reading the on-line edition. And it's quite good, I must say.  This much I will "cut and paste":
Thousands of Dutch residents have filed property-damage claims against the country’s largest natural-gas producer, after government studies linked a string of recent earthquakes to production. 
It is important to note at this stage that – unlike a spate of tremors in England – these Dutch quakes aren’t being linked to fracking, the often-controversial method of extracting shale gas. Although fracking has its own problems, battling accusations of water pollution, the affected Dutch region is home to one of the world’s largest conventional gas fields, which has been pumping for nearly 50 years. Now the porous reservoir has begun to deflate, building tension along a fault zone.
The only way to stop the quakes would be to shut down production. Not a chance in an era of economic struggles, the government says.
Section D (Personal Journal):
Section C (Money & Investing):
  • The other day I sent a one-line note to an investor friend: what if the current run-up in the market is due almost entirely to migration of money in bond funds to equity funds? The WSJ addresses that issue today: funds reshape investment mold. I didn't read. But I can think of several story lines, one of which I doubt the linked story mentions.
A combination of better fuel efficiency and switching consumption from oil to natural gas is taking hold in the U.S. and globally, according to analysts at Citigroup. If they are right, the mainstream belief that oil demand will rise inexorably as emerging markets like China continue developing could be misplaced. In fact, oil-demand growth could plateau by the end of this decade under this scenario, potentially reducing oil prices and hitting major producing nations and companies.
Mr. Bush is partly responsible. Legislation he signed in 2007 to reduce gasoline consumption in vehicles has taken effect, and the European Union, Japan and Canada all have similar measures in place. If oil demand grew at 1.2% a year to 2020—in line with its rate over the past decade—demand would reach 97.9 million barrels a day from 89 million in 2012. But that 2020 projection could instead be 94.8 million, thanks to such fuel-efficiency measures, Citi estimates.
Meanwhile, the U.S. shale revolution is encouraging major oil-consuming industries, from trucking to shipping to petrochemicals, to switch to much-cheaper gas. Even in countries where the price gap between oil and gas isn't so wide, gas is being promoting to help cut carbon emissions. The net effect could reduce oil demand by another 3.6 million barrels a day, bringing Citi's 2020 estimate to 91.2 million barrels by 2020.
Section B (Marketplace):
Suncor Energy Inc., Canada's largest oil-sands producer, said it and partner Total won't proceed with a plan to build a multibillion-dollar facility designed to refine heavy bitumen into a light, low-sulfur synthetic crude.
Suncor has warned for months that it was reviewing the project amid a glut of low-sulfur crude in the U.S. New drilling and extraction techniques there—in particular, in North Dakota—have enabled producers to extract large volumes of light crude across the U.S. That is competing with the synthetic crude that Suncor and other Canadian producers have been processing and selling to U.S. refineries.
Amid the U.S. oil boom, Suncor executives said it may not make sense to spend money on a new upgrading facility, which was to be located in Alberta. Instead, Suncor said it could be more economical to simply send unprocessed heavy bitumen to refiners equipped to handle it.
  • Glad to see. US Supreme Court sides with Comcast: high court rules in favor of Comcast. I don't care about the specific case; the specific complaint may have merit. What I don't like are class action suits: a law firms reaps millions (billions) and the plaintiffs get a $1.00 coupon off next purchase from company that was successfully sued.
Mitsubishi Motors Corp.  reported two accidents involving batteries manufactured by its venture with GS Yuasa Corp., the maker of lithium-ion batteries for use in Boeing Co.'s grounded 787 Dreamliner.
The Japanese auto maker said Wednesday that a lithium-ion battery pack caught fire while charging during a test inspection at the company's plant in Okayama Prefecture in western Japan last week. The battery pack is used in Mitsubishi's  i-MiEV model, the world's first mass-produced electric car.
  • Can the tablet please take your order. When the iPad came out I suggested the uses would be endless;. a lot of people wrote to tell me that was nonsense. I think folks will be amazed where the iPad shows up.
Carla Hesseltine is considering buying a few tablet devices for her bakery so customers can place orders for her signature M&M cupcakes on their own, straight from the counter.
The reason: She fears the $7.25 an hour that she currently pays her 10 customer-service employees, mostly college students, could rise, perhaps to $9 an hour under a pledge by President Barack Obama earlier this month.
In order for her Just Cupcakes LLC to remain profitable in the face of higher expected labor costs, Ms. Hesseltine believes the customer-ordering process "would have to be more automated" at the Virginia Beach, Va., chain, which has two strip-mall locations as well as a food van. Thus, she could eliminate the 10 workers who currently ask customers what they would like to eat. 
I'm waiting for McDonald's to do the same. I don't know if folks have ever looked at a McDonald's cash register, but if an 8th grade graduate from a foreign country who does not speak English can operate a cash register, I assume the average American can do the same, using an iPad.
Section A (Front Section):
As energy companies have turned to trains to move crude from booming North American oil fields not adequately served by pipelines, such railroad-related incidents have risen sharply in the past few years, according to federal data analyzed by The Wall Street Journal.
From 2010 to 2012, 112 oil spills were reported from U.S. rail tanker cars, up from just 10 in the previous three years, according to the Pipeline and Hazardous Materials Safety Administration, a part of the Department of Transportation that tracks most releases of hazardous materials. But the amount of crude leaked in spills has declined since 2008, when a big accident in Oklahoma released more than 1,900 barrels. On August 22, 2008, a BNSF Railway Co. train carrying crude derailed northeast of Oklahoma City; five tanker cars leaked oil that caught fire, leading to an evacuation of nearby residents.
Questions about the safest way to transport crude are bubbling up as President Barack Obama considers whether to approve an expansion of the Keystone pipeline, which would move crude from the oil sands of Alberta, Canada, to the U.S. Gulf Coast. Pipelines carry much more crude than trains and have fewer leaks per mile, though failures can be serious. In 2010, for example, an Exxon Mobil Corp. pipeline spilled 1,500 barrels of oil into Montana's Yellowstone River in an hour. The possibility of oil spills from derailments is only beginning to be on the public's radar.
Most of the recent rail spills occurred at refineries or other places where the oil is transferred to storage tanks or pipelines, and involved just fractions of barrels that were noticed by inspectors who look for leaks. But at almost 300 barrels, the 2010-2012 total of crude spilled is almost eight times higher than the amount that leaked in 2002-2007. Energy companies typically foot the cleanup bills.
The railroad industry says the amount of oil spilled is tiny compared to the volume of oil transported by the U.S. rail system, which has surged from 9,500 carloads in 2008, the year widely seen as the beginning of the current oil boom, to 233,811 carloads in 2012, according to the Association of American Railroads. 
In the big scheme of things, I'm not worried about railroad mishaps. Nor am I worried about pipeline spills. 
  • Here it comes: huge cost overruns repairing the San Francisco Bay Bridge. Dog-bites-man story. No link.
A policy change that expanded bison hunting in Montana has led to a surge in the number of animals killed, while fueling anger over how authorities are attempting to control the size of the country's largest bison herd.
Hunters—mainly American Indians—have killed some 250 bison since a group of federal and state agencies and tribal officials in October implemented a policy that enlarged the hunting and grazing area outside the animals' main habitat in Yellowstone National Park. That compares to 29 bison killed by hunters in the 2011 season, and a previous high in recent decades of 194 in 2010.
Some tribal hunting of the Yellowstone bison herd ends Sunday, while the state-sanctioned hunt ended in February.
Conservation efforts that began in 2005 had enabled the Yellowstone herd to grow to about 4,000 bison from roughly 2,600 two decades earlier.
The giant animals had increasingly eaten up vegetation in the park, occasionally feasting on the lawns of local residents and even the local football field in Gardiner, Mont., a town inside Yellowstone. Park officials had been trying to keep the size of the herd in check by occasionally culling diseased animals, but that had angered Indians, who wanted to hunt them.
Among the 10 fastest-growing metro areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte, Phoenix, Houston, San Antonio and Dallas. All of these are in low-tax, business-friendly red states. Blue-state areas such as Cleveland, Detroit, Buffalo, Providence and Rochester were among the biggest population losers.
This migration isn't accidental. Workers and business owners are responding to clear economic incentives. Red states in the Southeast and Sunbelt are following the Reagan model by reducing tax rates and easing regulations.
They also offer right-to-work laws as an enticement for businesses to come and set up shop. Meanwhile, the blue states of the Northeast, joined by California, Minnesota and Illinois, are implementing the Obama model of raising taxes on businesses and the wealthy to fund government "investments" and union power.