Thursday Morning Links, News, And Views

Active rigs: 182

Wells coming off confidential list have been posted.

RBN Energy: Update on propylene.

Up until a few years ago, propylene production was mostly a derivative of the petroleum refining and olefin cracking industries. But that is changing big time. Nowadays propylene demand in Asia is booming, US propane supplies are abundant and propylene output from refineries and olefin crackers is declining. Time to get serious about making propylene on purpose! As a result three new propane dehydrogenation (PDH) plants are expected online at the US Gulf Coast in 2015 and 2016 that will produce 4.3 billion pounds/year. These plants will help close the gap between increasing world propylene demand and declining “by-product” production from olefin crackers and refineries. They will also help soak up growing US propane supplies. Today we examine the recent rapid growth in PDH plant projects.

WSJ Links

Top of the fold, page C1: Detroit rattles muni market; plan to replace current sewer bonds raises concerns over "safe" investments; not a pretty picture for municipalities across the country.

Heard On The Street: EOG beats Shell at its own game. 

Shell last week reported dreadful second-quarter results marred, in particular, by a $2.1 billion write-down of North American shale assets. The implication: Shell got sold a few lemons in its U.S. shale grab. The oil major's market value dropped by $9 billion, or 4%, on the day.

Contrast that with EOG, the exploration-and-production company that reported quarterly earnings late Tuesday that beat the consensus forecast by a whopping 21% (Shell missed by 21%). But that wasn't actually EOG's trump card.

EOG's edge is in an area where majors such as Shell are really struggling: balancing growth ambitions with spending. Shell topped off its results by abandoning its medium-term production target even as it maintained its gargantuan capital-expenditure budget.

Royal Dutch Shell, market cap: $203 billion; EOG, market cap: $43 billion; CLR, market cap: $17 billion.

 Several stories on Apple in Section B but they seem to be fairly trivial. However, on page B3, and we've talked a lot about page B3 over the years, this headline: "booming oil, gas partnerships draw fire." Now who would be doing the shooting? Let's see:

Energy companies that are eager for cash to fuel their increasingly costly operations have been selling billions of dollars of aging oil-and-gas fields to partnerships whose growth has been fueled by individual investors.

Critics are raising questions about the soundness of these partnerships, saying that they use accounting maneuvers to understate their costs, and warn that this source of easy money for energy companies could soon dry up.

Master limited partnerships don't pay corporate taxes but must distribute available cash to their partners. These hefty payouts have made them popular with yield-hungry individual investors.

Energy companies themselves have set up many MLPs to own pipelines, whose revenues are dictated by long-term contracts, and provide a reliable income stream that appeals to investors.

Another kind of MLPs, one that buys oil-and-gas fields, has been booming. Often backed by private-equity firms,More than a dozen of these partnerships have been formed since 2006. Their market capitalization exceeds $20 billion, according MLP tracker Alerian, a fivefold increase in the past five years. 

That's a great story for newbies, and for me. I may post it again as a stand-alone post, as part of my ongoing education efforts. I noted this phenomenon when I first started following the Bakken, trying to sort out ENB.

Don sent me this story yesterday; I didn't have the energy to post it; I was exhausted last night, but here it is from The Wall Street Journal: a third LNG export proposal has been approved.

A third proposal to export U.S. natural gas won a government green light Wednesday, signaling the approval process is on a faster track despite some concerns that greater exports will raise natural-gas prices at home.

The three projects approved by the Department of Energy would have the capacity to ship 5.6 billion cubic feet of gas a day, or about two trillion cubic feet a year. The U.S. produced about 25 trillion cubic feet in 2012.

The latest approval was awarded to Lake Charles Exports LLC, a venture between U.K.-based BG Group PLC and Texas-based Energy Transfer Equity LP that plans to ship up to two billion cubic feet a day from Lake Charles, LA. The approval lasts for 20 years and permits sales to countries that lack free-trade agreements with the U.S., including some in Europe and Japan.

Energy companies are seeking to take advantage of increased U.S. natural-gas production and robust demand around the world. More than a dozen export proposals are still pending before the Department of Energy.

 Huge story.

Unfortunately this story on page A3: heroin makes a comeback.

Ellensburg, WA: This small city east of the Cascade Mountains is known for its hay farms, rodeos and, increasingly, something more sinister: a growing heroin problem.

The drug surfaced in the past two years and is spawning a new generation of addicts. The fatal overdose of a state trooper's son in May convulsed the town—especially when the two men arrested and charged with selling him heroin turned out to be a county official's sons. They pleaded not guilty in Kittitas County Superior Court and are awaiting trial.

"It really shook our community," said Norman Redberg, executive director of Kittitas County Alcohol Drug Dependency Service. He has evaluated 27 heroin users in the fiscal year that ended June 30, compared with three in 2008. Ellensburg has 18,000 residents.

Heroin use in the U.S. is soaring, especially in rural areas, amid ample supply and a shift away from costlier prescription narcotics that are becoming tougher to acquire. The number of people who say they have used heroin in the past year jumped 53.5% to 620,000 between 2002 to 2011, according to the Substance Abuse and Mental Health Services Administration. There were 3,094 overdose deaths in 2010, a 55% increase from 2000, according to the federal Centers for Disease Control and Prevention.

CarpeDiem often reports on the US war on drugs. 

Some democrats waver on immigration. Democrats in name only? DINO?

Every Democrat voted for the Senate's immigration bill when it passed the chamber in June. That unanimous party support isn't likely to be replicated if the House votes on its own immigration effort this fall.

In the GOP-controlled House, some Democrats, largely from conservative-leaning districts, are set to bolster the ranks of Republican lawmakers skeptical of the Senate's ideas on immigration. As a small faction within the minority party, they won't likely sway key votes, but amid signs that momentum behind the effort might be flagging, their concerns could put the finish line further out of reach.

Wow, this is cool: a follow-up to the story on Henrietta Lacks that I posted back on April 13, 2013.  At that time, descendents of Henrietta Lacks was suing a German research team for lack of consent to use "her" DNA. The response of the German team:

The German team did not seek the consent of the Lacks family before publishing the HeLa sequence, claiming it revealed nothing specific about Ms. Lacks's own genome. "Your claim is so wrong that I don't know where to start," replied one geneticist. The sequence has since been unpublished.

[How does one "unpublish" something? But I digress.]

So, how did this suit turn out? According to today's WSJ, the National Institutes of Health (NIH) said Wednesday it reached an unprecedented agreement to protect the privacy of the family of Henrietta Lacks.

The NIH has set up a committee to decide who will get access to Henrietta Lacks' DNA. Under the agreement two descendants of Ms Lacks will serve on this six-member panel with scientists to review proposals from researchers seeking to sequence the DNA of cell lines derived from her tumor. Some 74,000 scientific papers have been published based on experiments performed with her cells.

Personally, I think the two descendants on the panel should be given honorary medical degrees, given a salary commensurate with their honorary degrees, and a signing bonus for every research project approved to use her cell lines. Reading Ms Skoot's book will help one understand the reasoning for this suggestion.  Speaking of which, what is going on with A-Rod's suspension?

I guess it's not enough that bombs are ravaging one's neighborhood, but now "inflation is ravaging Syrian consumers." Probably only in the "better" neighborhoods.

The Egyptian military says time is up, vows an end to the protests. Apparently John Kerry has left the region.

It looks like Mr O'Bama won't be sharing a Bitburger pilsner with Mr Putin any time soon.

There is a nice editorial on "how Al Qaeda made its comeback." I doubt anyone reading this blog, least of which, me. But it was predictable when the O'Bama administration considered Al Qaeda no worse than a criminal upstart and treated them as such. If one recalls, during the transition from Bush to Obama, the war on terrorism was won.

Best story of the day in today's WSJ: rail project unearths London tales. The archaeology aspect is interesting, but what I found exhilarating was the extension of London's light rail system.

The so-called Crossrail route, due to open in 2018, will travel through London's West End on its way east to Canary Wharf and beyond. At a cost of £14.8 billion ($22.7 billion) and involving more than 30 miles of new train and passenger tunnels, it is Europe's largest construction project.

Just think what a trillion dollars in stimulus money could have done for the US five years ago. Wow.  $25 billion / 30 miles = about a billion dollars per mile.