Desperate: A Word One Does Not Like To See In The Oil Patch; When The Keystone XL Is Approved -- Too Little, Too Late? Economic Collapse: Also Not A Phrase One Wants To Hear in The Mideast

Wells coming off the confidential list have been posted. Hess and BR both have nice wells.

Active rigs: 184

Bakken/WTI spread at Clearbrook, MN: no change from yesterday; at $2.50.

RBN Energy: sailing stormy waters -- the Gulf Coast market for Canadian heavy crude. This will be the first in a series of articles on this issue. It will be interesting if the writer addresses the newly proposed Easter Energy Pipeline.

Western Canadian heavy crude producers are getting desperate to find markets for oil sands production expected to increase by 1 MMb/d over the next 3 years. Few Canadian refineries can process these heavy bitumen crudes and domestic Canadian conventional crude production exceeds local refining capacity. Of all the current market alternatives, the US Gulf Coast is the most logical. Transporting heavy crude to that market continues to be constrained by a lack of infrastructure. Oversupply into the Midwest market and continued uncertainty about infrastructure have created a volatile price environment. Today we begin a two-part analysis of the Gulf Coast market for heavy Canadian crude.

In the past year, Canadian heavy oil has sold at a discount of almost $40/bbl to WTI (currently about $15/bbl). On the other hand, Maya oil has sold at a premium to Western Canadian Select by as much as $40 (currently about $20).

The unnerving part about this price analysis for Canadian producers is that over the past 15 months the price relationships that we have looked at between WTI, WTS and Maya have been extremely volatile.

Price swings of $20/Bbl in either direction during relatively short time periods have been common. This volatility is very unattractive to producers facing high transportation costs to market. (It goes a long way toward explaining why more heavy crude rail transport capacity has not been developed from Western Canada to the Gulf Coast yet).

Canadian heavy crude producers do not have the luxury of multiple market destinations that (for example) Bakken producers have been afforded by rail destinations on the East and West Coast in addition to the Gulf.

Except for a few notable exceptions like the PBF Delaware City refinery, the Gulf Coast is the only destination market for Canadian heavy crude right now. Selling into a volatile market with high transport costs and no alternative destinations is not a pleasant occupation. Or one that makes much sense economically over the long term. 

WSJ Links

Section D (Personal Journal):

Another tablet: a laptop with a flip screen is not a tablet. It a laptop with a flip screen.
Dell laptop does flips to try to be a tablet; by Walter Massberg. It's still a laptop:

However, as with all of its competitors I've tested that don't completely separate the screen and the keyboard, the XPS 12 doesn't make for a very usable tablet, both for hardware and software reasons. The hardware weighs 3.35 pounds, more than double the weight of the heaviest iPad. At its thickest point, it's twice as thick as an iPad. It's also much larger.

The XPS 12 was uncomfortable to use as a tablet, in my hands or lap, for long periods. Like its convertible rivals, it is, at best, a standard laptop that can be occasionally used in tablet mode, preferably on a desk or table.

Best tip of the day, no relevance in North Dakota: does turning off cruise control in the mountains help?  The answer is what I always thought (common sense): allowing the vehicle to slow a bit while ascending hills and gradually regain speed on the descent, a driver can do better than the cruise control, which may use more fuel as it tries to maintain speed. 

Section C (Money & Investing):

S&P fires new salvo in battle with states;

Standard & Poor's Ratings Services said the Justice Department failed to tell a federal judge the "true" reason the U.S. government is supporting 17 state attorneys general in their lawsuits against the rating firm.

In an eight-page filing ... the McGraw-Hill Cos.  unit complained that Justice Department officials failed to tell the same judge in a filing last week that they have "actively collaborated with" the 17 states and are doing so "to this day."

It was S&P's latest salvo in a legal battle that could wind up costing S&P billions of dollars if the firm loses the cases or settles them to cut its losses.

As part of S&P's defense against the state lawsuits, which accuse the firm of shoddy ratings and could cost it billions of dollars in damages, the company is trying to combine the 17 cases into one and move them to federal court. The Justice Department, in a filing Friday, asked a judge to rule that the cases should be decided in state courts, echoing earlier arguments by state attorneys general in various court filings.

Section B (Marketplace):

TransCanada pushes Eastern pipeline project; posted yesterday at MDW: big story; nothing new from earlier posts.

Section A:

Oil exports get a second look; won't happen in my investing lifetime; from my perspective, there is only "bad news" in that story.
Economic collapse: Egypt's subsidies stall its IMF aid; IMF very unhappy that government subsidizes heating oil, gasoline, other products

A delegation from the International Monetary Fund is due to visit Cairo on Wednesday for talks over the country's bid for a $4.8 billion loan, as a political impasse over tough economic reforms pushes Egypt closer to economic collapse.

How's that Arab Spring working out?

Op-ed: for the archives; about those tax breaks for Big Oil;
President Obama has been telling America for months that special tax breaks for the oil and gas industry must come to an end. The presidential demand always prompts puzzled gazes among tax and energy-industry experts, who ask: What special tax breaks?

Thanks in part to a bill sponsored by Rep. Chris Van Hollen, a Democrat from Maryland and ranking member on the House Budget Committee, it's all much clearer now. The congressman has inadvertently called attention to the fact that those special tax breaks just for the oil and gas industry don't exist. Mr. Van Hollen proposes to create some very special punishments instead. Regardless of the bill's fortunes on Capitol Hill, it has already performed a public service by illuminating the fallacy behind assaults on the industry.

Mr. Van Hollen's ''Stop the Sequester Job Loss Now Act" would raise taxes on individuals—what he calls the "Fair Share on High-Income Taxpayers"—and effectively hike taxes on the oil and gas industry by changing the way their taxes are calculated. The problem with the bill is that the so-called tax breaks the industry would lose are not specific to oil and gas at all. They are widely available to lots of industries. [just what I said on MDW the other day.]