Active Rigs Hold Steady At 187; RBN Updates The LPG Terminals In Washington State; EOG Philosophy On Re-Fracking

Re-fracking/re-entering: Seeking Alpha has a long transcript of EOG's recent investors' presentation. There was a particularly interesting question and answer:

Question: Is there or will there be an opportunity to go back and use new technology on old wells?

Answer, Bill Thomas - Chairman, CEO: Yes. You are asking about can you go back and maybe refrac the old wells and really the way the industry has gone, the drilling cost on the well – to just get the well initially drilled has become a very small part of the total cost of the well. And it's because the efficiency of the drilling has advanced so far that in total cost of the well, the drilling side is so small that really instead of trying to recomplete the well, its really I think more prudent to go in and just drill a new well and complete it correctly. And then you are assured of getting it technically done right and it's kind of taking a fresh start, and just trying to fix something that weren't done correctly. We think that's probably the best way to do it.

Active rigs:

	5/30/2014	05/30/2013	05/30/2012	05/30/2011	05/30/2010
Active Rigs	187	186	214	172	119

RBN Energy: west coast LPG exports -- Ferndale and Longview, Washington State, terminals

Big increases in LPG (propane and butane) exports are planned for the west coast.  In March (2014) Petrogas purchased the Ferndale, WA terminal from Chevron – the only existing west coast LPG terminal.  Then in April, Sage Midstream announced that the company is developing another LPG terminal about 200 miles south at the Port of Longview, WA.    Both terminals are primarily targeting propane exports, not the export of butane that has been the mainstay of Ferndale for decades.  What is the logic behind these deals?  What needs to happen to make them work?  Today in this second part of our series on the new west coast LPG game, we take a closer look at these two facilities, including their potential supply and market destinations.

Recap on Ferndale: Ferndale is an import/export terminal in Washington State, with 750 Mbbl of above ground storage capacity in two tanks designed to hold propane or butane, two members of the natural gas liquids (NGLs) family that together are usually referenced as LPGs in the international market (liquefied petroleum gasses).  The tank is supported by rail and truck racks, a dock capable of handling VLGCs (very large gas carriers), and pipelines to two nearby refineries.  For most of its existence, Ferndale has been the backwater of NGL markets handling small volumes of seasonal refinery butane storage and occasional exports of butane to Latin America and the Asia/Pacific markets.
Now all that is changing dramatically due to the onslaught of increasing NGL production from the shale revolution.  The volume of U.S. NGL production is already more than U.S. demand, and the imbalance will continue to get larger in the coming years. 

Consequently exports have become the market of choice for U.S. NGL surpluses.  Up to now, most of the action in exports has been along the Gulf Coast , and to a lesser extent in the Northeast out of the Marcus Hook terminal.   But now attention is shifting to the West Coast – with one of the big drivers being the proximity to Asia, the region with an outlook for demand growth bigger than all the rest of the world put together.  Put that together with U.S. surpluses that can get to the West Coast via rail and you have the basic premise for the recent two deals.

At the link, RBN Energy updates the Ferndale and Longview terminals.

The Wall Street Journal

US factory job rebound is uneven, producing winners and loser. Mobile, AL (think energy) is among the winners, while towns around Syracuse, NY, (think taxes, ban on fracking) are losing jobs.

1Q14 contracted, the US now says -- and by a quite a margin -- down a remarkable 1 percent

EPA's carbon rules to spark lawsuits

Shinseki: drip, drip, ...

Measles: the number of measles cases in the US has hit a new high since the highly contagious dissease was officially declared elimined 14 years ago (think lack of security at the borders, another Obama legacy)

Ukraine civil war

Railcar shortage raises lease rates

US seeks to revise rules on gas-export projects; a bit of this was posted yesterday; looks like y initial thoughts were correct: a "mixed bag" for the roughly two dozen projects seeking federal approval

Heard on the street: buying Beats is such a departure for Apple that it raises concerns about the company's creative mojo.