Tuesday Morning News, Views, And Links; CBR Keeps Rolling -- Killing The Keystone (The Gift That Keeps On Giving); At The End Of The Day, The President Supports Morsi, A Fellow Community Organizer, And The Muslim Brotherhood

Active rigs: 183

Wells coming off the confidential list have been posted. EOG has another monster well in Parshall field: 137,000 bbls in less than four months. Remember when we considered a good well to be 100,000 bbls in the first twelve months? Lynn Helms said there would be some spectacular IPs this summer.

In addition, Whiting has some very nice wells on the far western side of the state, along the Montana border, an area not generally considered to be so go, but these are some nice wells in Sioux, Harding, and Estes oil fields.

RBN Energy: another great analysis; this time more on the CBR activities in western Canada --

At least 5 large-scale rail terminals are being planned or constructed in the heavy oil sands region of Western Canada to increase the volume shipped to the US by rail from about 100 Mb/d this year to more than 550 Mb/d by 2015.

When we added up the likely demand for transport capacity and compared that against the supply of pipeline + rail capacity, we concluded that there would be more than enough capacity available.  Thus if you assume that pipeline transportation is cheaper than rail, it implies that the  rail capacity is not needed if and when pipeline projects on the drawing board are completed.  But is that accurate?  

With regard to RBN Energy's analysis of CBR_Canada, look at this Reuters article that Don just sent me: CBR_US pioneer "moving" to Canada. 

Instead, USD is shifting its attention away from the best-known U.S. shale oil plays toward Canada, announcing plans two weeks ago to help build what might be the biggest oil-by-rail terminal to serve the northern oil sands patch.

And although USD has now sold off 10 of the 14 terminals it built over the past decade or so, it has several other irons in the fire such as an offloading terminal in Washington state, inland facilities in Ohio or Alabama and possibly a Texas coast terminal.

Additional background to USD can be found here.

For the archives: comparing the cost of charging an iPhone and the cost of running a refrigerator (on an annual basis) and the carbon footprint of each. MarketWatch is reporting. The article has a lot of facts and figures. But they miss the most important statistics. Read the article; see if you can find which statistic they do not mention -- at least I did not see it.

Huge Enbridge pipeline story here: three stories in fact.

This pretty much seals it: the future of the Keystone XL. 

The Interior Department has warned that the proposed Keystone XL pipeline could have long-term, damaging effects on wildlife near its route, contradicting the State Department's March draft environmental assessment, which concluded the project would have only a temporary, indirect impact.

In a 12-page letter sent as part of the public comment on the draft assessment, the Interior Department repeatedly labels as inaccurate its sister agency's conclusions that Keystone XL would have short-lived effects on wildlife and only during the project's construction.

"Given that the project includes not only constructing a pipeline but also related infrastructure, access roads, and power lines and substations, impacts to wildlife are not just related to project construction. Impacts to wildlife from this infrastructure will occur throughout the life of the project (i.e. operation and maintenance phases)," the letter says.

This is a non-issue. We've learned two things: a) with rail and all the new pipeline, there is more than adequate takeaway; and, b) forget new pipeline routing; use existing rights-of-way. This is not rocket science and nothing to be concerned about. If you look at the map, all TransCanada has to do is increase the capacity of the Keystone, which they should have done in the first place. 

It looks like Libya is still struggling to decide whether it wants to stay in the oil export business. Bloomberg is reporting:

Libya’s state-run National Oil Corp. declared a force majeure on crude and refined product exports from [several of] the country’s ports, ...

“The above mentioned sea port terminals are closed due to Oil Security Guards who are on strike at these locations since the end of July 2013, ...

.... the force majeure, a legal clause that excuses the seller from making deliveries because of events beyond its control. Libya is currently exporting about 500,000 barrels a day, using [other ports] ...

Brent crude prices may rise to $115 a barrel in the “very near term,” Goldman said in a report earlier today, raising its three-month price forecast for the benchmark grade to $110.

Considering Brent is $109.25 today, a forecast to $110 is hardly newsworthy. In fact, Brent oil is trending down today. I think folks have factored in Libya and Iran for quite some time now. The only news in this story is the announcement of the force majeure but that shouldn't affect the price of oil all that much.

Bloomberg is reporting: more problems for Japan -- another leak at the Fukushima nuclear plant --

Tokyo Electric Power Co. reported another breach of the defenses it has built at the Fukushima nuclear plant in its more than two-year struggle to stop leaks of radioactive water into the soil and sea.

Just weeks after the utility backtracked from earlier statements and acknowledged radiated water was flowing into the Pacific Ocean at a rate of 300 tons a day, it has found another leak from a storage tank.

Prime Minster Shinzo Abe weighed in on the disaster response this month, signaling that Tokyo Electric alone isn’t up to the task. The government has yet to say what other measures it’s considering to contain the worst nuclear disaster since Chernobyl, including bringing in foreign expertise.

Sort of makes the concerns by the Secretary of the Interior regarding the Keystone XL pale in comparison. 

WSJ Links

Heard on the street: E&P investors fear the oil party hangover; oil-company stocks disconnect from the crude price --

Near-month crude-oil futures on the New York Mercantile Exchange have rallied almost 17% since the start of June. Goldman Sachs added fuel to the fire Monday by raising its Brent forecasts for this year. For much of the summer—indeed, most of the year—stocks of exploration-and-production companies have done even better than oil prices.

But even as oil prices have held up this month, E&P stocks have been drifting lower; shares of Exxon Mobil and Chevron have seen even sharper falls.

The reason? Exuberant oil prices, like exuberant partyers, ultimately foster their own downfall.

Estimates for the level at which oil prices start causing people to curb consumption—"demand destruction" in industry parlance—necessarily mix art with science. Doug Terreson at ISI Group puts it at about $125 a barrel for Brent, about 13% above the current price.

This is what I've been saying for quite some time: how long these high prices have been sustained --

But demand could fall back well before oil prices hit that level. While Brent is still below 2008's all-time peak north of $145, things look different when you look at 12-month average prices. These matter because it is sustained oil-price strength, rather than just a brief spike, that drains consumers' wallets.

Rolling average Brent prices first peaked in October 2008, but they have been sustainably above that level since the fall of 2011. Priced in other currencies, Brent averages look even more expensive. In euros, they are a fifth higher than in October 2008. In Indian rupees, the rolling average is now more than one-third higher.

 US manufacturing: Cummins to provide diesel engines for Nissan's Titan pickup trucks. Huge.

Front page, headline story: "allies thwart America on Egypt" --

The U.S.'s closest Middle East allies are undercutting American policy in Egypt, encouraging the military to confront the Muslim Brotherhood rather than reconcile, U.S. and Arab officials said.

The administration's support for the Muslim Brotherhood should not come as any surprise. The stories, however, coming out of the EU seem to be changing and confusing. Yesterday, the headline story said the EU wanted the military to stop the shooting.

The Obama administration first had sought to persuade Egyptian military leader Gen. Abdel Fattah Al Sisi not to overthrow the elected government of President Mohammed Morsi and then to reconcile with his Muslim Brotherhood base.

Gen. Sisi has done the opposite—orchestrating the president's overthrow and a crackdown in which over 900 people have been killed since Wednesday—reflecting his apparent confidence in the Egyptian government's ability to weather an American backlash, U.S. and Arab officials said.

I guess this would have been like Abraham Lincoln asking US Grant/WT Sherman to stop their actions in the south and reconcile with General Robert E. Lee.

And later in today's edition: Egypt clash leaves Obama little middle ground; US has little role to play in epic struggle between those backing secular and Islamic rule. 

Why is the Obama administration having so much trouble finding middle ground in the Egyptian crisis?

Simple: Egypt has become the leading edge in an epic struggle now under way across the Middle East. This struggle isn't between Sunni and Shiite Muslims. It's between those who want secular governments and those who want Islamic governments, and this may be a defining moment.

The lines between these two camps have been drawn in the streets of Cairo, and they are hardening. That's why the search for some artful position in the center is so difficult. The middle ground is fast washing away.

This is the backdrop for the rapidly emerging debate in Washington over whether to continue U.S. aid to Egypt while its military leaders fiercely crack down on the Muslim Brotherhood.

I predict that Obama will decide to withhold military aid to Egypt (he supports the Muslim Brotherhood as a community organizer) and Saudi will step in to fill the void.

Update on Detroit. I could care less, or maybe I couldn't care less (the idiom is confusing) but I track Detroit here, so I feel compelled to link this story. It will be interesting to see how the court rules. To say the least.