Wednesday Links, News And Views

Active rigs: 183

Wells coming off confidential list have been posted. OXY USA with a nice well.

RBN Energy: Bakken crude logistics favor pipeline over rail

Earnings surprise: MHR reports earnings of 5 cents/share, easily blowing past analysts' consensus of an eleven-cent loss. Wow. 

WSJ Links

Interesting: NYMEX crude to climb back to prominence --

As new pipelines winnow down a glut of crude in the U.S. Midwest, oil futures on the New York Mercantile Exchange are starting to better reflect world prices, increasing the contract's appeal to investors. Nymex crude settled at $103.14 a barrel Monday, less than $5 below Brent, the global benchmark. A month ago, the gap was more than twice as large; in February, it was $23. Historically, Nymex futures typically traded within a few dollars of Brent oil from the North Sea, a rival contract offered by IntercontinentalExchange Inc.

The market's return to its old structure is luring some investors back to Nymex oil and signals an end to a trade in which investors bet on whether the gap would widen or shrink.

"Whenever I've traded oil in the past year or two, I've always taken Brent. Now, I'm more open-minded," said Jeffrey Sherman, commodities-portfolio manager at DoubleLine Capital LP, which manages $57 billion. "The markets are reconnecting…the [Nymex] market is coming back to being the barometer."

Then this, from "Heard on the Street": Europe's oil majors should focus on shareholders. 

New [European oil company] projects are looking less profitable. A further 18% of European oil majors' capital investment is going on projects that need an oil price at $80 or above to avoid making a negative return, Goldman estimates. For Total and Royal Dutch Shell, nearly a quarter of their investment is going on projects that need oil prices to remain relatively high.

Who wudda thought? One of the nation's world's top business schools is selling its campus to a for-profit college operator due to financial stress.

Thunderbird, which was founded in 1946 on a former Air Force base in Glendale, Ariz., has long identified itself as a training ground for global business leaders, even requiring its full-time students to display proficiency in two languages. But that claim carries less weight as more schools tag their own programs as "global" and open outposts across Asia, Latin America and the Middle East.

Applications to Thunderbird's two-year, full-time M.B.A. have tumbled by nearly 75% in the past 15 years, and less than half of job-seeking students from last year's class landed positions within three months of graduation. Despite adding a number of short and Web-based programs, the student body shrank by 8% from 2007 to 2012.

Thunderbird's woes reflect the existential crises that many business schools now face as demand softens for full-time, two-year M.B.A.s. Graduate business programs historically fared well during economic downturns as workers sought to beef up their resumes in a tough job market, but the prolonged recession gave many prospective students pause as they worried about taking on debt without seeing clear return on the investment.

Utilities take a hit from regulators on solar-power systems. A very slippery slope indeed.

Regulators in two states recently sided with the solar-power industry and homeowners who have solar-energy systems, marking defeats for electric utilities faced with a fast-growing constituency that is cutting into their revenue.
The Idaho Public Utilities Commission last week rejected a proposal to raise monthly fees paid by homeowners and small businesses who install solar panels, denying a petition from Idaho Power Co., which serves Boise and other parts of southern Idaho.

Fracking firms face new crop of competitors. 

So many companies have jumped into the hydraulic-fracturing business that the price of performing the key part of the oil- and gas-drilling technique has plunged in recent years, forcing fracking's pioneers to play up new technologies to stand out.

Schlumberger Ltd.,  Halliburton Co.  and BJ Services, a company that is now a subsidiary of Baker Hughes Inc., once did nearly all the hydraulic-fracturing work in the U.S., helping energy companies unlock previously unreachable oil and natural gas in shale formations and ushering in a boom in domestic energy production.

But their profits attracted competition and spurred the construction of new fracking fleets by independent companies. Now their share of the market for pressure pumping—the main step in the fracking process, in which water and other materials are injected into a well to break apart rock formations and unleash oil or gas—has dropped off as smaller, cheaper competitors have proved they could do similar work. 

The Front Section: what happened to Syria? What happened to Afghanistan? What happened to Yemen? Amazing. Every week it's a different country, a different revolution, a different crisis. This week it is Egypt.

Many stories starting to come out about the "runaway freight train."

The operator of the runaway train that derailed and exploded in Lac-Mégantic, Quebec, this weekend recorded an accident rate far higher than the U.S. average over the past 10 years, federal data show.

A train operated by Montreal Maine & Atlantic Railway Inc., a subsidiary of U.S. train operator Rail World Inc., is at the center of a Canadian probe after the train was left unmanned at a crew rest stop and slammed into the small town early Saturday, triggering a deadly explosion and fire.

Rail World is controlled by a Chicago-area railroad veteran, Edward Burkhardt, who has put together an empire of small railroads around the world. Mr. Burkhardt, Rail World's chairman and chief executive, has spent a lifetime in the industry, earning the respect of many fellow rail executives.

But the 74-year-old Yale graduate has also faced criticism for a bitter battle with one of his boards and for championing the controversial use of remote-controlled trains in rail yards and one-person crews. The deadly Quebec derailment has put MM&A's safety record under a microscope.

The Transportation Safety Board of Canada, the country's main investigator of rail accidents, doesn't publicly post safety records of individual operators, but does make that data available upon request. MM&A didn't turn up in a basic record search of Canadian accidents. A spokesman for the safety board said late Monday that a fuller record wasn't immediately available.

Op-Ed: can environmentalists think?

As environmental disasters go, the explosion Saturday of a runaway train that destroyed much of the Quebec town of Lac-Mégantic, about 20 miles from the Maine border, will probably go down the memory hole.

It lacks the correct moral and contains an inconvenient truth.

Not that the disaster lacks the usual ingredients of such a moral. The derailed 72-car train belonged to a subsidiary of Illinois-based multinational Rail World, whose self-declared aim is to "promote rail industry privatization." The train was carrying North Dakota shale oil (likely extracted by fracking) to the massive Irving Oil refinery in the port city of Saint John, to be shipped to the global market. At least five people were killed in the blast (a number that's likely to rise) and 1,000 people were forced to evacuate. Quebec's environment minister reports that some 100,000 liters (26,000 gallons) of crude have spilled into the Chaudière River, meaning it could reach Quebec City and the St. Lawrence River before too long.

Environmentalists should be howling. But this brings us to the inconvenient truth.
The reason oil is moved on trains from places like North Dakota and Alberta is because there aren't enough pipelines to carry it. The provincial governments of Alberta and New Brunswick are talking about building a pipeline to cover the 3,000-odd mile distance. But last month President Obama put the future of the Keystone XL pipeline again in doubt, telling a Georgetown University audience "our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution."

Yes, this was obvious from day 1 but yet another editorial is needed, I guess. President O'Bama suspends the law. 

President Obama's decision last week to suspend the employer mandate of the Affordable Care Act may be welcome relief to businesses affected by this provision, but it raises grave concerns about his understanding of the role of the executive in our system of government.

Article II, Section 3, of the Constitution states that the president "shall take Care that the Laws be faithfully executed." This is a duty, not a discretionary power. While the president does have substantial discretion about how to enforce a law, he has no discretion about whether to do so.

This matter—the limits of executive power—has deep historical roots. During the period of royal absolutism, English monarchs asserted a right to dispense with parliamentary statutes they disliked. King James II's use of the prerogative was a key grievance that lead to the Glorious Revolution of 1688. The very first provision of the English Bill of Rights of 1689—the most important precursor to the U.S. Constitution—declared that "the pretended power of suspending of laws, or the execution of laws, by regal authority, without consent of parliament, is illegal." 

If Congress does not address the abuse of power, it reveals how far we have moved toward a monarchy form of government.