BNSF To Invest Another $326 Million In North Dakota; Is Greece Europe's New Cuba? Thursday -- February 12, 2015

Starting off the day with an incredible video: the far side of the moon. Look at the angular momentum of the earth.

End of the boom in the Bakken? Not for some. BNSF will invest another $326 million in North Dakota. For 2015:

• Construction of 37 miles of double track between Minot and Williston
• Centralized traffic control signaling in Devils Lake, Dickinson, Hillsboro and Jamestown to increase capacity and improve train flow
• Connection track upgrades between Hillsboro and Devils Lake
• Extending siding between Mandan and Glendive, Mont., enabling trains on the same line to pass
• Expanding capacity of the Dickinson Yard to accommodate expected growth in single car volumes

Still think the Fed will raise rates? Not if they pay attention to this data:

Sales at U.S. retailers fell more than forecast in January, reflecting smaller receipts at gasoline stations and declines at clothing and sporting goods stores. The 0.8 percent drop followed a 0.9 percent decrease in the prior month.

How strong is the global economy? Readers know that the EU has negative interest rates. Now, in a surprise move, Sweden announces stimulus package: Sweden's Riksbank to introduce negative interest rates and launch bond purchases, while saying it could take further steps to fight falling prices. 

How "broke" is Russia? Apparently not all that broke. Russia offers to help bail out Greece. Sort of reminds me of Cuba during the Cold War: 

Both Russia and China have made offers of financial assistance. Russia has also moved to strengthen political and economic ties with Athens. Russian President Vladimir Putin’s government has, on multiple occasions, held out the offer of financing to Greece. In late January, Russian Finance Minister Anton Siluanov said the Kremlin was open to considering a financial aid package for Greece.

Reporting today:

• Apache (APA): 76 cents; a fourth-quarter 2014 net loss of $4.8 billion or $12.78 per diluted common share, primarily as a result of after-tax, non-cash charges totaling $5.2 billion. Adjusted earnings, which exclude certain items that impact the comparability of results, totaled $404 million or $1.07 per share. Net cash provided by operating activities was approximately $1.9 billion in the fourth quarter of 2014, with cash from operations, before changes in operating assets and liabilities, totaling $2.1 billion.
• Cabela's (CAB): $1.35; adjusted for certain items, net income decreased 16.4% to $79.3 million compared to $94.7 million in the year ago quarter, and earnings per diluted share were $1.11 compared to $1.32 in the year ago quarter.
• Kellogg (K): 93 cents; The reported fourth quarter 2014 net earnings loss was $293 million, or a loss of $0.82 per diluted share; comparable earnings* were $0.84 per share; this represented a decrease of 1.2 percent from the fourth quarter of 2013's comparable earnings per share. 

California ports in San Pedro Harbor shutting down for four days -- Los Angeles Port and Long Beach Port will stop unloading cargo for four days, Friday (tomorrow) through Monday (next week). Something tells me the truck drivers have had enough of the dockworkers. 

Active rigs:

	2/12/2015	02/12/2014	02/12/2013	02/12/2012	02/12/2011
Active Rigs	137	189	183	203	165

RBN Energy: LNG export update.

The First Four projects now under construction share an important trait: they are, in fact, conversions of existing LNG import facilities that already have docks that can receive LNG ships and solid pipeline connections. The same is true for most of what we’re calling the Second Wave of projects awaiting FIDs: two more trains at Cheniere’s Sabine Pass, one more train at Freeport LNG, and three trains at Energy Transfer’s Lake Charles LNG the plant that is under threat because of BG’s decision to wait until 2016 before confirming its contract for all 2 Bcf/d of the output because of concerns about the low price environment.

(Taken together, the nine trains would require nearly 6 Bcf/d, assuming they ran at full capacity.) That baked-in infrastructure has held down capital costs, and enabled developers to offer liquefaction rates of $3.50/MMBTU and, for Sabine Pass (the pioneer in all this), rates of only $2.25 to $3/MMBTU. For several reasons (including the fact that the facility will be identical in many ways to Sabine Pass), Cheniere’s planned three-train Corpus Christi LNG project—the first greenfield project approved by all federal regulators—has managed to match the so-far-dominant $3.50/MMBTU rate.
That competitive liquefaction fee surely helped the Corpus project line up the SPAs to lock up all of trains 1 and 2 and part of the third train.

The other Second Wave projects also have all—or at least some—of their liquefaction capacity under contract (excepting Lake Charles now because of BG’s decision yesterday) and their engineering, procurement and construction contracts booked.

Some other greenfield LNG projects waiting in the wings may face higher capital costs, not just because of their start-from-scratch nature, but because they require new or beefed-up pipelines to connect them to gas sources—costs that need to be factored in somehow. Take two projects in Oregon: Jordan Cove LNG and Oregon LNG. Jordan Cove includes the 282-mile Pacific Connector pipeline from the Malin (Oregon) gas trading hub to the terminal; and Oregon LNG needs an 85-mile connector.

And, unlike Cheniere’s Corpus Christi LNG (a near-duplicate of Sabine Pass), the Oregon projects can’t benefit from off-the-shelf plans from an earlier plant. (The two Oregon projects do have one real plus though: both offer straight-shot delivery across the Pacific to Asia buyers, avoiding the tolls of--and possible congestion in--the expanded Panama Canal.)