Friday, March 8, 2013

Editorial or News Story?

After 35 years of losing money in solar, BP calls it quits.

When you are "rolling in dough," like Google, Microsoft, Apple, and others, and you need a) some tax credits; and, b) some good PR, you might as well play around with solar.

But when you are getting socked with ever-increasing fines for an oil spill, you need to cut your losses and start making some money.

As far as energy companies in the solar business, Enbridge has the largest solar play in all of Canada. The engineering professor sounds like he doesn't understand business. Businesses are in the business of making money for their owners. Owners generally don't care what business they are in as long as they are making money, so that crazy talk about oil companies putting themselves out of business if they really got successful with solar is just that: crazy talk.

The linked article? Hard to figure out if it's a news article or an editorial. All most folks need to know is that BP is getting out of solar after trying to make it work for 35 years. That speaks volumes.

By the way, how is First Solar doing these days? Back in 2008, a share of First Solar was trading for $300. Today First Solar is trading for $26. As recently as July, 2011, it was trading for $133, but ever since it's just been heading downward. For 4Q12 it earned $1.74/share, but for the year (2012), First Solar lost $1.11.

And so it goes.

Disclaimer: this is not an investment site. Do not make any financial decisions based on what you read here. Based on my experience as one who has been investing for 30+ years, I can say with some confidence that had you bought 100 shares of FirstSolar back in 2008, and still held those shares, you would be ... unhappy.

Nice To See Today -- Strength of the US Dollar, Price of Oil


March 11, 2013: The original post noted that the price of oil rose despite a strengthening dollar, something generally not seen. A couple of folks asked about reasons for the strengthening dollar which was not the point of the post, and I don't plan to go down that road. However, today CNBC has an article on the reasons behind the stronger dollar. It's pretty light on any significant analysis but it is what it is. For those who are interested. 

Original Post

Two items from Yahoo! In-Play today --

2:30PM Dollar Jumps to Seven Month High: 10-yr: -14/32..2.051%..USD/JPY: 95.87...EUR/USD: 1.3009: The U.S. Dollar Index surged to session highs near 82.90 following this morning's jobs, and despite giving up some of its gains still remains on track to close at its best level in seven months. Action has held between 82.70 and 82.90 following the strong report as neither bulls nor bears have been able to gain control at the level.

2:29PM Crude oil futures are surging higher here and just pushed above the $92 level; Apr crude is now +0.4% at $91.92/barrel  

Five (5) New Permits -- The Williston Basin, North Dakota, USA; Chesapeake Cancels A Permit

Active rigs: 186 (steady)

Five (5) new permits --
  • Operators: Whiting (2), BR, XTO, CLR
  • Fields: Elidah (McKenzie), Arnegard (McKenzie), West Capa (Williams), Lindahl (Williams), Bicentennial (Golden Valley)
  • Comments:
Wells coming off confidential list were posted earlier; see sidebar at the right.

Producing well completed:
  • 22252, 603, Oasis, Delta 6093 34-15H, Gros Ventre, t12/12; cum 2K 1/13;
Permit canceled:
  • 22160, PNC, Chesapeake, Wolf 17-135-96 A 1H, Three Forks, Wildcat, Hettinger County

More LPG Export Capacity -- Houston

Oil & Gas Journal is reporting: increased LPG capacity -- Houston Ship Channel

Data points:
  • EPP has started ops at its HSC LPG export terminal
  • low-ethane propane, butane, isobutene
  • from 4 million bbl/month to 7.5 million bbl/month by 2016
  • additional docks for more expansion
  • EPP looking at possibility of 10 million bbl/month as early as 2015
  • sourced from EPP's Mont Belvieu complex as well as other national pipelines
  • EPP is building two new NGL fractionators at Mont Belvieu
  • the expansion of the Panama Canal, scheduled to begin ops in 2Q15, as complementary to its expanded LPG export dock; improving access to Asian customers
  • Targa Resources, the Vitol Group, and COP are all involved in separate expansions also along the US Gulf Cost NGL export capacity

Little By Little We're Getting There: LNG Corridors

I'm finally getting around to posting this; sorry for the delay.

The link is to a Westport Innovations press release. Westport Innovations identifies itself as the global leader in natural gas engines. Of note, the company offers 15-liter natural gas engines for the heavy-duty trucking market.

Others will be interested in the financial statement. This is why it interested me: it helps bring me up to date on natural gas corridors in the United States and in Europe:

The growth in natural gas infrastructure has been significant in 2012 compared to 2011.
Clean Energy Fuels has been actively developing the America's Natural Gas Highway with liquefied natural gas (LNG) and compressed natural gas (CNG) fuelling stations at strategic locations along major interstate trucking corridors
Shell and its affiliates have signed a memorandum of understanding with TravelCenters of America to sell LNG to heavy-duty road transport customers in the U.S. through TA's existing nationwide network of full-service fuelling centres. 
Other fuel providers such as Encana, FortisBC, and Gaz Metro have built permanent LNG refueling stations for Westport 15L fleets
New fuel providers such as Blu, have built two LNG stations in Utah. 
In addition, Conoco Phillips has expressed interest in building a small-scale natural gas liquefaction facility to manufacture up to 100,000 gallons per day of LNG to supply truck fleets in Dallas-Fort Worth, Texas.
A combined effort by major European gas companies, vehicle manufacturers and natural gas vehicle (NGV) associations have resulted in the Blue Corridor initiative to expand the NGV fueling station network in Europe. This 16 million Euros project is funded by the European Commission and 28 project partners.
In addition, in January, the European Commission announced an ambitious package of measures to ensure the build-up of alternative fuel stations across Europe. The proposal includes that by 2020, refuelling stations for trucks are installed every 400 km along the roads; and that by 2020 and 2025, LNG refuelling stations be installed in all 139 maritime and inland ports, respectively, on the Trans European Core Network.
I can't speak to Westport itself, but the buildout of American and European LNG corridors is exciting. Little by little, maybe we're getting somewhere. 

A Note To The Granddaughters: Closing the White House to Tours Due To Financial Hardship; 2% Cut in Spending


March 13, 2013: something does not ring true here. I would assume protecting the president is pretty high on the list of federal priorities. But the 2% federal spending cut -- due to the sequester -- means that the Secret Service had to furlough some folks. And by furloughing those folks, they had to cancel White House tours.

Then, on top of that, the president of the most powerful nation in the world does not have the "power" or authority, to either a) exempt the Secret Service; b) find other places to make the spending cuts; or, c) direct that White House tours will continue, though perhaps limiting them to five days/week rather than six. Something does not ring true here. The Weekly Standard is reporting:

President Obama says he's not the one who canceled the White House tours. He made the comments in an interview with ABC News.
"[O]ne more question about the spending cuts," said the interviewer from ABC News. "You’ve been takin’ a lotta heat for this cancellation of the White House tours. They get– the Secret Service says it’s costs about $74,000 a week. Was canceling them really necessary?"
"You know, I have to say this was not– a decision that went up to the White House. But th– what the Secret Service explained to us was that they’re gonna have to furlough some folks. What furloughs mean is– is that people lose a day of work and a day of pay," Obama said, in response.
"And, you know, the question for them is, you know, how deeply do they have to furlough their staff and is it worth it to make sure that we’ve got White House tours that means that you got a whole bunch of families who are depending on a paycheck who suddenly are seein’––a 5% or 10%– reduction in their pay. Well, what I’m asking them is are there ways, for example, for us to accommodate school groups– you know, who may have traveled here with some bake sales. Can we make sure that– kids, potentially, can– can still come to tour?"
Wanna bet the tours are back on by the end of summer?

March 10, 2013: There may not be enough money in the budget for White House tours, but there is apparently more than enough money for a 50th bash for vegan Michelle.

March 9, 2013: I just got back from watching Steven Spielberg's Lincoln. Wow. It truly puts Obama's decision to close the White House to his fellow Americans in perspective. Wow, wow, wow.

Original Post

My younger granddaughter is working on synonyms and adjectives.

Arbitrary. Capricious. Mean. Petty. Short-sighted. Presidential. Unfortunate. Bizarre. Unthinking. Bunkeresque. Miserly. Idiotic. (We don't allow the granddaughters to use the word "stupid.")

The adjective I like best for this decision: audacity.

Mandatory 2% cut in spending at the White House resulted in only one change: White House tours canceled. Just in time for spring visits by school children.

The link is to a mainstream media outlet. It is not a link to a far-right fringe website. It was Bloomberg that noted that: the only change at the White House with the mandatory 2% spending cut: cancel White House tours.

One wonders what sophomoric staffer came up with that idea.

Someone noted that even during the darkest hours of the republic (an oft-cited cliche), President Abraham Lincoln kept the White House open during the Civil War. I suppose this will go down as another first for this president: closes "America's house to Americans.

I wasn't going to post this link, and then I saw the picture of the Waverly, Iowa, elementary students holding up a sign asking Mr Obama to reconsider.

My hunch is those Waverly, Iowa, students are learning some new adjectives and synonyms today, also. "Stinker" comes to mind.

A Note To The Granddaughters

It is another coincidence that I am reading the final chapters of Nathaniel Philbrick's Mayflower. In the epilogue, Philbrick notes:
With the outbreak of the Civil War a few years later, the public need for a restorative myth of national origins became even more ardent, and in 1863 Abraham Lincoln established the holiday of Thanksgiving -- a cathartic celebration of nationhood that wold have baffled and probably appalled the godly Pilgrims.
Be that as it may, the fact that President Lincoln found a way to raise the spirits of Americans during the Civil War speaks volumes and speaks volumes why Lincoln will never be forgotten as one of the greatest, if not the greatest, presidents ever. When one reads that passage after reading the story of the Mayflower, the Pilgrims, the Pokanokets, King Philip's War as told by Philbrick, one just knows that Abraham Lincoln never, never would have closed the White House to Americans.

Wow, the more one thinks about that single act ... a sad day for America. I wonder if this is the first time the White House has been closed for purely financial reasons?

Friday Morning Links After The Opening Bell; The Fed With Regard To The Market: We Like What We See -- Paraphrasing

In Progress
WSJ Links

Section D (Arena):

Section M (Mansion): never read

Section C (Money & Investing): 
  • Gas futures set 2013 high; no link; story everywhere
Section B (Marketplace):
  • Michigan says battery maker can't transfer tax credit; Michigan won't allow A123 Systems to transfer more than $125 million in state tax credits to its new owner, a Chinese company. I hope that's not a surprise for the Chinese. But something tells me that's not the case. Snookered.
Section A:
  • Op-ed: jumping the sequester; jumping the shark; White House overplayed its hand when it closed America's house to Americans; not going to go over well; something tells me Michelle will miss all the attention; will find money somewhere in the budget; of course, less tourists, less folks trampling all over her garden
  • Op-ed: busted for browsing; I know what the WSJ is trying to say, but their argument suggests the author has never tried to install a "new" or "different" browser on an old PC with an old operating system.
Miscellaneous Links Throughout The Day

Reuters is reporting:
The Federal Reserve is considering jettisoning a plan to eventually sell off the massive haul of bonds it is now buying, a politically defensive strategy that would have the added benefit of supporting the economy for years to come.
In what would be a revision of their blueprint for the eventual tightening of monetary policy, Fed officials have said they could simply allow the trillions of dollars in securities they have bought through three rounds of quantitative easing to mature.
Fed Chairman Ben Bernanke and other officials have said a decision not to sell the mortgage and Treasury bonds would only add about a year to the process of returning the central bank's balance sheet to a more normal size of around $1 trillion, probably around 2020. It is worth some $3 trillion now, and could swell to near $4 trillion by year end.
The Fed's response to the bull market: we like what we see. 

New Technology Saves 7 Days In Drilling Time

NDIC says it takes about 20 days to reach total depth.  It looks like about five days to reach vertical depth and fifteen days to reach  total depth from there. I don't read many well files, but of those I read, it doesn't seem like all that many wells are reaching TD in 20 days. I still use 30 days as a general rule of thumb. (The guys and gals in the field are probably laughing.)

A reader sent this story; it's very technical but worth reading even by a layman. High points:
  • international conference; held in Amsterdam
  • Forbes 500 oil services company: Weatherford
  • Bakken used as a laboratory (again)
  • new steering technology
  • compared two wells
  • well #2: horizontal rate with old technology: 31 feet/hour
  • well #1: horizontal rate with new technology: 38 feet/hour
  • well #2: length of lateral using old technology: 8,956 feet (failed to meed planned TD)
  • well #1: length of lateral using new technology: 10,217 feet
  • well #2: 8,956/30.67 = 292 hours of actual drilling with old technology
  • well #1: 10,217/38.08 = 268 hours of actual drilling with new technology
Conclusion of the article:
As a result of the smoother wellbore, the operator had a trouble-free casing run in Well #1. The system consistently achieved more than 93% rotation in the lateral in both wells. This was a significant improvement from previous wells, which achieved roughly 70% rotation. On the first well, sliding time was reduced from 30% to 8%, saving seven days of rig time and the associated drilling costs.
As drilling progressed, these wells required frequent directional updates, due to formation faults. Consequently, this required many target changes for geosteering. ROPs in the first Bakken well were higher than the second well, since more time was spent sliding to correct the well path on #2 without TBS technology. Use of TBS technology on Well #1 enabled the operator to have precise steering control and drill a smoother wellbore. The second well reached TD early, due to an inability to overcome high frictional forces in the lateral leg.
From the linked article, this is the technology:
To improve performance in these [Bakken] laterals, operators have been looking for a while now, for an economic alternative to rotary steerable systems (RSS’s), while still retaining their basic benefits.

Lead author Wendell Bassarath said that a new system to achieve 3D directional control was developed to improve drilling efficiency, using targeted bit speed (TBS) technology. The system uses a conventional positive displacement motor with a bent housing and an MWD tool that mimics many of the features offered by an RSS. The steering technique was achieved by accurately modulating the flow of the drilling fluid through the drillstring.

This allowed rapid variations in the drilling parameters to accurately control the bit speed along the desired toolface setting. If wellbore objectives could not be achieved in rotary mode using TBS technology, then the mud motor could be oriented in a conventional manner to follow the well plan.

Friday Links, News, and Commentary

Oil imports: I can't get there from here
The other day, the AP reported that oil imports into the US surged by 12.3%, January, 2013, over December, 2012.

I looked at the EIA numbers and I can't get there (that big a surge in imports). I posted my thoughts at the original post. The 12.3% surge represents significantly more than what Canada and Saudi have historically provided. US imports from Saudi declined significantly in December, but even if Saudi's numbers were brought to recent highs, that would still be well below what is needed to account for the surge. Canadian imports are at all-time highs; it's hard to believe the Canadians could make up the difference.

It will be interesting to see the EIA numbers for January, 2013 and where the "surge" came from -- which countries provided the "surge" in oil imports. 
Jobs data: 236,000 new jobs; unemployment rate 7.7%
Posted prior to data being released:  Speaking of surges, the market has been on a tear this past week. This has resulted in huge interest in today's job numbers. The Fed has established a "new normal" for "full employment": 6.5%. At current rate of "job expansion," we won't get there until 2Q18.

Data point: 208,000 jobs per month -- the average monthly rate for the best year of job creation in the 2000s.

BNY Mellon forecast: 170,000 new jobs
Consensus: around 160,000 new jobs
January, 2013: 157,000 new jobs

Unemployment rate for teenagers: 25% (rounded down). Time to raise the minimum wage.
Speaking of a "new normal"
Prior to the Obama administration, the US never had an official work week. With ObamaCare, that changed. The US now has an official work week. Full time is considered 30 hours/week. Common sense suggested ObamaCare would have an effect on jobs; a suggestion that proponents denied. It turns out that ObamaCare is, indeed, affecting jobs, and sales. That "fact" is reported in the non-partisan Federal Reserve Beige Book (if one argues that the Fed is partisan, note that the "bad news" reported by the Fed is "an Obama Fed." Regardless, the US has a new official work week: 30 hours, another "new normal."
Coal: another new normal
Another "new normal": the end of coal as we know it in the US. RBN Energy updates all the regulatory headwinds affecting coal