Friday, August 23, 2013

Please, Please Me: You Have To Read RBN Energy Today; Friday Links, News, And Views; Canadians Look To Export Crude Oil Via The US; Statoil With Another Huge IP

The Yahoo!Finance link to NYMEX oil is still broken. Brent is at $110; WTI is down slightly to just below $105.

It looks like the board has finally had enough: Steve Ballmer to retire within 12 months. MSFT shares "jump."

***********************

Throughout 2012, I talked incessantly about the "great recession" of 2013. I guess it's all in the eye(s) of the beholder(s). Today, the lede from Bloomberg:
The next chairman of the Federal Reserve faces an alarming possibility: the new normal for the economy is even worse than advertised.
The long-run potential growth rate for gross domestic product has slid to around 1 3/4 percent per year, from an average rise in GDP of 2 1/2 percent since 1990, according to economists at JPMorgan Chase & Co., the largest U.S. bank by assets. That would be the lowest level since World War II and below the 2 percent mark that Pacific Investment Management Co. pegged as the new normal for the economy.
Normally that news would depress me but I'm in such a great mood, nothing is likely to upset me today. I need to get back on my meds. The cycle is generally three weeks of mania, followed by two to three days of depression. The mania never results in any psycho-social trouble, but the depression can be pretty bad. Fastest way out of depression for me: music. 

***********************

Wells coming off the confidential list have been posted; Statoil has another huge IP

Lots of "good stuff" in the Journal today.

First, active rigs: 182.
A reader noted that BEXP has but six active rigs, and one of the rigs was drilling a salt water disposal (SWD) well. He found that depressing for the Bakken. I wrote back, saying the number of BEXP permits this year is even more depressing (the following data is corrected; see first/second comment):
In 2011: BEXP with 131 permits
In 2012: BEXP with 234 permits
In 2013: BEXP with 35 permits; Statoil with 31 permits at this pace, on track for 104  permits for CY 2013

I believe BEXP had a high of 16 rigs at one time (in 2012 Statoil talked of16 rigs; whether they got there or not, I don't know). 
If you scroll down at this post, you will see that BEXP had 16 active rigs on August 22, 2011. I have not looked at number of rigs by operator in a long, long time. I guess I lost interest somewhere along the way. I suppose, for archival purposes, I should that do that sometime.

RBN Energy: an exceptionally good article on the economics of the "unconventional oil and gas" revolution. Late last night I commented on the fact that elsewhere folks who should know better seem to have no clue with regard to the economics of the Bakken. Perhaps this RBN Energy analysis will help (but I doubt it -- one can lead a horse to water but you can't make it drink).

Please, Please Me, The Beatles

********************

ObamaCare

Delta Airlines: health insurance costs will increase by $100 million next year, some due to ObamaCare.

********************
WSJ Links

Several good articles today:
  • Canada will look to export its oil to Europe, Asia via the US Gulf of Mexico ports
  • Sears in big trouble; lousy, lousy appliance sales
  • H-P also in big trouble: I give Meg Whitman one more year (this is her fourth year of "turnaround); the company will either break up, or go private
  • Greenland quietly becoming a satellite of China (as are other far-flung outposts around the world)
  • Syria is finally back in the news
  • NASDAQ trading system crashes (again)
  • California's health exchange might face delay
The Greenland story:
Fortune hunters taste opportunity. Prospectors from various countries, encouraged by Greenland's investment-friendly policies, have spent over $1.7 billion developing potential projects. A British company is going for iron ore. Scots are testing for undersea oil. Australians are pursuing rare earths. Canadians are digging for rubies, while giant Chinese mining and engineering concerns are jockeying for position.
In Greenland, the Arctic is in play.
The big story: the US won't play in the Arctic. Too pristine. They will let the Chinese and Russians and Canadians and Scots and Australians and Hungarians play.  2016 can't come soon enough.

Following the Greenland story, this is by far the most interesting story in The Journal today -- Canada looks to sell its oil beyond the US. If you have the time, grab a Mayor Bloomberg-sized cup of coffee and a hard copy of this article and enjoy the full article:
Canada's landlocked oil-sands producers have sought to access markets beyond North America in recent years, a quest that has taken on greater urgency as U.S. crude output booms. But with few direct outlets overseas, some have started considering Canadian crude exports from the U.S. Gulf Coast.
For decades, a combination of high demand and declining domestic supply in the U.S. made the idea of outbound shipments a nonstarter.
Exporting American oil remains all but taboo for producers in the U.S., which have been effectively prohibited from exporting since 1975 amid the Arab oil embargo.
The Canadian government imposes no such restrictions, and it's technically legal to re-export crude from the U.S.—if it has been kept completely separate from domestically produced oil. The U.S. Commerce Department has approved eight licenses to re-export crude oil since last October.
But the risk of routing high volumes of Canadian crude through the U.S. is more political than legal. Any plan to re-export significant volumes of Canadian crude is certain to face strong opposition from U.S. lawmakers who view that as end-run around U.S. law. It could also inflame debate about the proposed Keystone XL pipeline, which would provide a new direct route from Canada's oil sands to Gulf refineries. 
There are so many story lines here. One word: fungible. Okay, a second word: commodity.

 The California health exchange story:
California's new health-insurance exchange, the biggest of the state marketplaces emerging under the federal health overhaul law, has started telling insurers that there's a possibility it won't be ready to sign up consumers for coverage online when it launches on Oct. 1.
A spokesman for Covered California, the state agency creating the exchange, said the technology for its enrollment process is still being tested, and "we are fully planning on being fully functional on Oct. 1." But, he said, "we've communicated to the health plans that there's a possibility, depending on the success of the tests, that we would have an aided enrollment and work toward a self-enrollment shortly thereafter."
If a tree falls in a forest and no one is there to hear it, does the falling tree make a sound?

H-P's separation anxiety story
More worrisome is that Ms. Whitman's strategy seems misguided. Faced with relentless price pressure, H-P often chooses not to compete for lower-margin sales opportunities, aiming to maximize profitability. But in the long run the outcome may well be the opposite. Because many of H-P's products are commodities, its only sustainable advantage is its size. That helps save on purchases of components such as Intel processors for PCs. When H-P cedes market share to rivals, it also erodes that negotiating leverage.
The best news for PFC Bradley Manning who was just handed a 35-year-prison term for leaking classified information: free health care for gender-change medical and surgical therapy. And he will probably serve less than a third of his sentence, meaning he can start dating again in his mid-30's. Who says America isn't the best country in the world where we can all pursue happiness?

The Sears story:
Sears Holdings Corp. built its Kenmore brand into the dominant force in U.S. major appliances over the better part of a century. It only took a few years of tinkering by hedge fund manager Eddie Lampert to take it apart.
The breakdown was evident on Thursday, when Sears said weakness in home appliance sales caused a key measure of sales at existing U.S. stores to shrink. That contributed to a poor showing for the three months ended Aug. 3, when Sears' net loss deepened to $194 million as overall sales fell 6.3%.
The article goes on to say that it has to do with switching to a different manufacturer. Perhaps. But 30+ years ago, I learned that good sales people could sell anything to anybody.

Natural gas futures rose 2.5% yesterday.
Natural-gas prices climbed to a four-week high after government data showed a smaller-than-expected increase in the amount of gas in storage, implying a pickup in demand.
Analysts said the modest inventory rise suggested greater usage of natural gas, rather than coal, to generate electricity. A sharp selloff in natural gas earlier this month made the fuel more economical. 
I'll cut this article out and sent it to my wife. We visited the Louvre a dozen times while serving overseas: I can't count the number of times I walked up those huge stairways, passing the "Winged Victory of Samothrace." Great article. I actually read the entire article.

And for The Journal today, I will finish with this link: five famously delayed movie productions. I still think "The Big Sleep" is highly overrated. It is an extremely important film for various reasons, but it would not make my top-ten list by any stretch. I probably need to see "The Outlaw" with Jane Russell -- her debut film.

 *********************

The StarTribune provides an update on the Enbridge Sandpiper pipeline project
Enbridge Energy is finalizing plans to build a 600-mile pipeline to transport North Dakota crude oil to Superior, Wis., and soon will begin contacting Minnesota property owners along two proposed paths across the state.
Although two proposed pathways across 11 northern counties are under review for the $2.5 billion Sandpiper Pipeline, an Enbridge official said Thursday that the company is leaning toward a route that runs through Clearbrook, Minn., sweeps around Park Rapids and then turns east.
The $2.5 billion project would employ as many as 3,000 workers in Minnesota and North Dakota during construction that could start in late 2014, said Christine Davis, a community relations consultant for Calgary-based Enbridge.
***************************
 Catty

The Fukushima radiation leak is out of control. And our domestic activist environmentalists are worried about CO2 and a two-degree rise in global temperature over the next century (currently paused, for the past 15 years).

From the linked article:
The result was a rush order for steel tanks supplied by Taisei Corp, Shimizu Corp and Hazama Ando that were relatively cheap and could be put together quickly, according to the utility and three people involved in the project.
The tanks, which stand as tall as a three-storey building, were shipped in pieces and bolted together as makeshift repository for the cascade of water being pumped through the reactors of Fukushima every day to keep fuel in the melted cores from overheating.
One wonders if Canada or the US had a similar nuclear meltdown whether activist environmentalists would physically and legally block megaloads from going over US Highway 12 in Idaho? The hypocrisy is boundless.

4 comments:

  1. I believe that you have to look at BEXP and STO (Statoil) together. Internally they appear to have transferred most but not all operations to STO.

    ReplyDelete
    Replies
    1. You are absolutely correct. I mis-read my database last night when the sorting did not work correctly. My bad.

      The number of rigs seems to be correct: I cannot find BEXP rigs listed anywhere at NDIC active rigs, and I count only six Statoil rigs (active) at the NDIC site.

      However, the number of permits I listed above was inaccurate. I will update with correct data.

      Thank you for calling attention to my huge error.

      Delete
  2. In re: The Sears Story,
    Sears did well selling its Kenmore brand when that was all they sold. (Units were made, at various times, by GE, Maytag and Whirlpool)under the Kenmore name. Joining with K-Mart, they diluted the brand by selling all other brands in store. No longer exclusive, with options customers in sears/K mart often will buy the "Name Brand" instead. Deal has not helped either store, in my opinion

    ReplyDelete
    Replies
    1. The other problem: these appliances just seem to last forever. And although some folks might consider buying new appliances periodically, it's such a pain to go through the process if the old appliances are still, at least, adequate.

      Delete