We Start The Day With 31 Active Rigs In North Dakota -- July 21, 2016

Active rigs:

	7/21/2016	07/21/2015	07/21/2014	07/21/2012	07/21/2011
Active Rigs	31	68	196	207	180

RBN Energy: update on California state's power and gas markets. Prelude to the "duck curve."

California energy markets look quite a bit different today than they did five years ago when the state enacted a renewable portfolio standard (RPS) law that requires every utility and other electricity retailer to serve 33% of their load with renewable energy by 2020. Since then, California has seen huge changes in its energy balances – it shut down the nuclear generating plants at San Onofre, regulators expedited the build-out of new transmission lines to get more wind and solar power into the market, the state implemented a carbon cap-and-trade program, the legislature increased the RPS target to 50%, and SoCal Gas’s Aliso Canyon natural gas storage facility sprung a leak.  Today, we look at the changes in California’s energy markets since 2011, and what they mean for future developments in a state far out front in the adoption of renewables and environmental regulation.

It was 2011 when California’s state legislature approved –– and Governor Jerry Brown signed into law –– Senate Bill 2, which launched the state into what amounts to a restructuring of its energy markets.  A year later (2012), problems with newly replaced steam generators at the two-unit San Onofre Nuclear Generating Station (SONGS) resulted in their permanent shutdown, taking 2,250 MW of generation capacity out of the power-hungry Los Angeles basin.

The combination of RPS implementation and the loss of San Onofre prompted state regulators to speed up the build-out of new transmission lines to allow more wind and solar power to move from supply regions to key demand areas.  Both wind and solar saw capacity grow in 2012, with wind up 800 MW and solar rising 600 MW.  That intermittent renewable power supply was far from enough to make up for the San Onofre shutdowns, but fortunately there was help from the Pacific Northwest, which was able to provide hydroelectric power into California thanks to a few strong “water years.”

Saudi Aramco announces $13.3 billion gas processing plant. Data points:

• Fadhili gas processing plant
• to be completed in 2019
• will include a 1,500 MW power plant; 400 MW to power the gas project; 1,000 MW to the domestic grid
• first program in the kingdom to process gas from both onshore and offshore fields
• will boost Saudi gas production to more than 17 billion cfpd by 2020
• industrial firms in KSA complain that a gas shortage crimps expansion plans
• KSA wants to use more natural gas for power generation and water desalination instead of burning crude oil

Jobs: prior, 254K; consensus, 265K (a rise of 11,000 forecast); actual: 253K, a decline of 1,000. Four-week moving average: 257,750. Reuters story here. From Econoday, the consensus was based on the "usual" summer auto-retooling layoffs. 

All the readings in this report are very low, arguably at the lowest levels on record. But the missing piece is this summer's auto retooling which, when it appears, may have an outsized reverse effect on the data. The Labor Department says there are no special factors in today's report, one which points to a second month of strength for the monthly employment report.

Did not honor the pledge: Ted Cruz. My hunch: consulted the "great Mark Levin" when making the decision. Others who did not honor the pledge: John Kasich. Jeb Bush. [Later, it looks like the general consensus is that Ted Cruz committed political suicide on national television when he clearly went back on his word to support the GOP nominee.] By the way, I had completely forgotten this until a reader reminded me, from an earlier post about Ted Cruz:

Ted Cruz was not aware he was a Canadian, that he had dual citizenship, until the media reported it. Once he found out, it took him nine months to officially renounce it. Coincidentally this was about the same time he got serious about running for president. This guy graduated from Harvard Law School.