Thoughtful Discourse On Wind Energy -- Only The Brits Write So Well

For the archives.

Juan Mearns is writing:

I want to dissect some of Jennifer Webber’s statement:

We’re generating from a home-grown source

My understanding is that the majority if not all of the turbines have been imported.

which gives us a secure supply of power

Wind comes and goes with the N Atlantic weather systems: > 6GW one moment and < 0.5GW the next. It is fundamentally dishonest to describe this as secure. The security of electricity supplies is provided by natural gas, coal and imports that are cycled up and down to balance for erratic wind.

at cost we can control

According to DECC, wind is the most expensive form of electricity currently produced in the UK (Figure 3), it may well be controlled but at a fixed high cost for consumers.

rather than leaving ourselves exposed to the global fluctuation in fossil fuel prices which have driven bills up

This statement is also fundamentally untrue. It is true that high natural gas prices have put upwards pressure on electricity prices, but this past year, coal has been dirt cheap. And the UK derives roughly 20% of its electricity from nuclear, largely immune to short term moves in fossil fuel prices. So where does the truth lie?

And the conclusion:

The UK grid cannot currently run on intermittent wind that is dependent upon other, cheaper sources of electricity to provide balancing and grid stability. Wind is currently killing the power generation system it requires for its own survival and the high electricity costs this brave new energy world has created is crippling the British economy and spreading energy poverty. This is a problem made in Westminster. UK energy policy is built around the desire to reduce CO2 emissions and not to provide secure and affordable supplies of energy for its people. It is time to repeal or amend the 2008 Climate Change Act.

Quietly, Ever So Quietly ...

.... oil prices are moving back up.

And regular readers of the blog know why. What a great country!

CNBC is reporting:

West Texas Intermediate crude oil futures have surged to a one-month high on expectations for the first decline in weekly U.S. crude supplies in nearly three months as well as news that a key pipeline will begin service at the start of the year, relieving the glut of oil in the middle part of the country.

NYMEX WTI oil futures climbed more than $2 a barrel to reach a session high of $96.04 a barrel. Front-month WTI futures have not settled above the $96-a-barrel mark since Oct. 31. Brent crude oil futures rose more modestly, up about $1 to a session high of $112.70 a barrel.

News that TransCanada's 700,000 barrel a day pipeline taking crude from the main physical delivery point for the WTI oil futures in Cushing, OK, to Port Arthur, Texas, on the Gulf Coast will begin service on Jan. 3 helped to spark Tuesday's move in the benchmark U.S. oil price.

We've been waiting for this for several months now. The pipeline was originally set for the "line fill" to begin the first week of November. That week came and went without much being said. I was a bit perplexed; no explanation.

Then RBN Energy started talking about it and at least one other source said that the "line fill" should be going on as "we speak" and that the first delivery of oil down the Keystone XL South, from Cushing, OK, to the Gulf Coast should occur before the end of the year, though this story now says service will begin January 3, 2014.

This is a huge story, and it's playing out as expected.

I remember all the Texas ranchers saying that pipeline would never be built. And the Texas judge who tried to stop it.

The Passing Game

A $1-trillion fraud will be passed on to American taxpayers. This is not Fox News reporting. This is NPR reporting, and if you can't believe NPR, who can you believe? I was not going to post this story until I saw that it was an NPR story.

According to sources at Starbucks, the word is out on the street: one can put in any income amount one wants to on the website (or actually even talking to an insurance agent or to a navigator). No one will question the amount of income you claim, and the IRS will never audit it -- unless they just happen to audit your tax filing for other reasons.

But the word on the street: claim an income as low as one can without making it "too" suspicious.

NPR is reporting: 

Government subsidies to help Americans buy insurance under the health care overhaul may be vulnerable to fraud, a Treasury Department watchdog warned on Tuesday in the latest indication that troubles are far from over for President Barack Obama's signature legislation.

The rollout of the law has been hurt by canceled policies and problems with the federal website used by people to enroll in health plans, causing political headaches for the White House and for Democrats in Congress. The new problems concern subsidies that are available to low- and medium-income people who buy insurance through state-based exchanges that opened in October.

Those subsidies are administered by the Internal Revenue Service in the form of tax credits, and that's where the trouble arises.

"The IRS' existing fraud detection system may not be capable of identifying (Affordable Care Act) refund fraud or schemes prior to the issuance of tax return refunds," said the report by J. Russell George, the Treasury inspector general for tax administration. "The IRS reported that the long-term limitations of its existing fraud detection system include its inability to keep pace with increasing levels of fraud," the report said.

Eight (8) New Permits -- The Williston Basin, North Dakota, USA; Hess, KOG, And Emerald Each With A Nice Well; Zenergy Transfers ~ 170 Wells To Oasis

Active rigs: 192

Eight (8) new permits --

• Operators: MRO (4), BR (2), CLR, Oasis
• Fields: Gros Ventre (Burke), Barta (Billings), Reunion Bay (Mountrail), Keene (McKenzie), Wolf Bay Dunn)
• Comments:

Wells coming off the confidential list were reported earlier; see sidebar at the right.

Zenergy transferred about 170 wells to Oasis. 

Wells coming off confidential list Wednesday:

• 24735, 981, Hess, LK-Pohribnak 147-96-16H-5, Cedar Coulee, t10/13; cum 36K 10/13;
• 24900, 2,328, KOG, Smokey 2-17-5-2H,  Pembroke, t9/13; cum 25K 10/13;
• 24922, drl, Emerald, Caper 1-15-22H, Boxcar Butte, a nice well;
• 25145, drl, Hess, HA-Mogen-152-95-0508H-5, Hawkeye, no production data,
• 25420, drl, Hess, CA-Halverson 154-95-0409H-6, Hofflund, no production data,
• 25563, drl, KOG, P Evitt 154-98-13-12-24-14H3M, Truax, no production data,

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

24735, see above, Hess, LK-Pohribnak 147-96-16H-5, Cedar Coulee:

Date	Oil Runs	MCF Sold
10-2013	22828	0
9-2013	12788	0

24900, see above, KOG, Smokey 2-17-5-2H,  Pembroke:

Date	Oil Runs	MCF Sold
10-2013	22752	26363
9-2013	1423	0

 
24922, see above, Emerald, Caper 1-15-22H, Boxcar Butte:

Date	Oil Runs	MCF Sold
9-2013	6932	0
8-2013	10889	0
7-2013	18295	0
6-2013	14391	0

Oasis To Issue An Addiitonal 7 Million Shares of Common Stock

Oasis Petroleum announces public offering of 7 mln shares of common stock: Co announced that it has commenced an underwritten public offering of 7,000,000 shares of common stock. Oasis intends to use the net proceeds of this offering to repay outstanding borrowings under its credit facility and for general corporate purposes. Citigroup Global Markets Inc. is acting as the sole underwriter for the offering.

This will bring outstanding shares from current 94 million to about 100 million.

The Bakken Natural Gas Story Gets Bigger And Bigger

Disclaimer: I do not understand natural gas all that well. There may be errors in the way I describe things below, but this is how I understand the natural gas situation in the Bakken.

A reader sent me a new natural gas item from ArgusMedia with regard to ONEOK. The story was dated December 3, 2013, so it is fairly current.

The information below in red is from the new article; my own notes remain "in black."

Recall that ONEOK recently announced another $700-million natural gas gathering/processing plant in the Bakken.  If I'm reading the ArgusMedia report this is just the tip of the iceberg, as they say. From the report:

The Bakken line expansion comes in addition to a $2bn-3bn backlog of unannounced projects, according to Oneok executives. 

This is sort of like, according to our sources, ONEOK will soon announce another investment of $2 - $3 billion in the Bakken. One word: wow. 

Some data points from the report, some are well-known to regular readers but some of the data is new. I think I will start with the basics and the "old" and move to the "new." Again, the new stuff from the ArgusMedia article is in red.

1. Unlike crude oil, natural gas must be processed before it is put into "the regional/national pipeline system."

2. Unlike crude oil, natural gas is pretty much dependent upon pipelines and processing plants before it can be moved to where it is needed. A lot of Bakken crude oil makes its final destination on trucks, rail, barge, in addition to pipeline.

3. The North Dakota Bakken is an oil play. It is not a natural gas play. Natural gas is, in the big scheme of things, a hassle for the operators.

4. Unlike Texas, North Dakota did not have a robust infrastructure for handling the "little bit of natural gas" thought to be present when the boom began back in 2007.

5.  Although there was limited natural gas processing capacity in North Dakota prior to the boom, it was ONEOK that saw the potential.

6. Prior to the boom, North Dakota had several natural gas processing plants with a total capacity of about 230 million cubic feet per day. Between 2007 and this year, ONEOK built five and expanded one natural gas processing plant (each about 100 million cubic feet per day capacity) and recently announced a 7th, the Lonesome Creek plant which will have capacity of 200 million cubic feet per day as part of the recently announced $700 million project. With this project, ONEOK will have capacity for 800 million cubic feet per day of natural gas processing under its belt.

7. It appears the "region" in the Bakken that most needs natural gas processing capacity is the reservation; the tribal chiefs are considering building a natural gas processing plant on their land.

8. ONEOK gathers that processed natural gas and ships it south on its Oneok Partners' new Bakken shale y-grade NGL pipeline. That pipeline is running at roughly half of its 60,000 b/d initial capacity as producers in the region wait for new gas processing plants and other infrastructure to be completed. 

9. The ONEOK Bakken Shale Y-Grade NGL Pipeline delivers natural gas to is Overland Pass NGL line in northern Colorado for onward delivery to fractionators at Conway, Kansas. That pipeline is currently running at 30,000-35,000 bbls/d. [Does anyone yet see the problem here?]

10. As noted above, the current Bakken Shale Y-Grade NGL Pipeline has a capacity of 60,000 bbls/day. The BSYNGLP will need a capacity of 135,000 bbls/day by the end of 2014 (one year from now) and up to 160,000 bbls/day by the end of 2015, two years from now to accommodate just Lonesome Creek. [Could one come up with a 200 million cubic feet/day = 160,000 bbls Y-grade natural gas as a conversion factor? A factor of 1250? If so, ONEOK will have 800 million cubic feet of natural gas processing which converts to 640,000 bbls. The Overland Pass NGL line is currently running at 30,000 to 35,000 bbls/day. Hmmm.....]

11. Oneok is planning the next phases of its Bakken y-grade line expansion, which will boost capacity to 135,000 b/d by the end of 2014 and to 160,000 b/d by 2015 to accommodate Lonesome Creek. Here is the quote from the ArgusMedia article:

“We need the 135,000 b/d to be on line by the end of next year, because the 60,000 b/d is not enough. We will not fill that when it comes on line, but that is just the next incremental expansion,” Sheridan Swords, senior vice-president of Oneok's NGL segment, said.

“The 160,000 b/d will need to be on line to capture the Lonesome Creek [production] when it comes on line.”

But there is more. 

That 160,000 bbls/day will need to be on line to capture the Lonesome Creek production when it comes on line, but..... but .... but... the Lonesome Creek won't reach full capacity until 2018. 

The article ended with this:

Oneok continues to seek opportunities in crude transportation and logistics, despite an unsuccessful open season last December for a proposed crude line from the Williston basin to Cushing, Oklahoma.

“Acquiring our way into crude is certainly a possibility and something we are considering,” said Terry Spencer, Oneok's president and chief executive-designee, noting that the company is primarily interested in pipelines and storage facilities.

Hmmmm....acquiring our way into crude oil.....

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

Here are the locations of the natural gas processing plants in North Dakota, prior to the boom (a PDF will open).

The Buckeye Story Has Been Updated ...

... see this post.

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A Note to the Granddaughters

Ah! My day is complete. Besides being a most beautiful, sunny, warm, calm, dry day in Dallas-Ft Worth area, I received an advance copy of Max Tegmark's Our Mathematical Universe: My Quest for the Ultimate Nature of Reality, with a publication date of January 7, 2014.

Last night on the way home from swimming, I was talking to my ten-year-old granddaughter. It was dark and we were looking for the moon. We found the evening star, so the clouds were not an issue, but we didn't find the moon.

I suggested to my granddaughter that the stars would be lonesome "tonight" (last night) -- no moon to talk to. And then we talked about extraterrestrial life. I suggested out loud that it would be very, very lonely to think "we" might be the only life in the universe, this life on earth. I talked to her about The Privileged Planet and how some scientists are coming to the unsettling conclusion that as time goes on and there is no evidence of life anywhere in the universe, "we" may be, in fact, alone.

My granddaughter replied: "Yes, perhaps in this, our, universe, life only occurs on earth. But there are likely many other (parallel) universes."

Ah, yes, I had forgotten about parallel universes.

Chapter 1 in Max Tegmark's book opens immediately with the Schrödinger equation and multiple universes. It's going to be a great book. I will need to read it just to keep up with my granddaughter.

Reuters Was Hoping For A Bigger Story: Not Only Were The Tank Cars Empty, There Were No Injuries -- Derailment Due To Third Party; Increasing Derailments Ever Since President Obama Killed The Keystone XL?

Reuters, with a "New York" byline is reporting:

Several empty crude oil train cars derailed in North Dakota on Sunday, rail company BNSF Railway said on Monday, the latest in a string of "crude-by-rail" accidents that have prompted calls for stricter safety regulations in North America.

Nine cars of the train, traveling westwards, derailed near a town called Selz in central North Dakota after a truck crashed into it, BNSF said, adding that no injuries were reported.

Transporting crude oil by train has become increasingly popular especially from North Dakota's Bakken shale oil formation, where the unexpected surge in production in recent years has outpaced any expansion of the pipeline network.

But as ferrying crude by rail jumped to around 770,000 barrels per day (bpd) now from just 23,000 bpd in 2009, so has the potential for accidents.

If Reuters weren't/wasn't so politically correct, the third paragraph would have read:

Transporting crude oil by train has become increasingly popular across North America ever since President Obama and his activist environmentalists killed the Keystone XL. 

For those who were wondering, and I was not, Selz, North Dakota (wiki):

Selz is a census-designated place and unincorporated community in Pierce County, North Dakota, United States. Its population was 46 as of the 2010 census. 

Selz is about 60 miles southwest of Devils Lake, North Dakota, well outside the Bakken oil patch.

It is unknown at this time whether anyone from Selz, North Dakota, has been able to access the ObamaCare website. 

In Fracking, Sand Is The New Gold -- But Regular Readers Of The Blog Already Knew This

Somehow I missed this from The Wall Street Journal yesterday: in fracking, sand is the new gold:

Energy companies are expected to use 56.3 billion pounds of sand this year, blasting it down oil and natural gas wells to help crack rocks and allow fuel to flow out. Sand use has increased 25% since 2011, according to the consulting firm PacWest, which expects a further 20% rise over the next two years.

In Wisconsin, the source of white sand perfectly suited for hydraulic fracturing, state officials now estimate more than 100 sand mines, loading, and processing facilities have received permits, up from just five sand mines and five processing plants operating in 2010.

Three letters: E. O. G.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.

If anyone can find a better single aggregator of Bakken news than "the milliondollarway.blogspot" that is ad-free and subscription-free, please let me know. I would like to link those sites to the sidebar at the right.  

If You Like ObamaCare, You Will Love This Story On Renewable Energy --

The Los Angeles Times is reporting:

As states, led by California, race to bring more wind, solar and geothermal power online, those and other forms of alternative energy have become a new source of anxiety. The problem is that renewable energy adds unprecedented levels of stress to a grid designed for the previous century.

Green energy is the least predictable kind. Nobody can say for certain when the wind will blow or the sun will shine. A field of solar panels might be cranking out huge amounts of energy one minute and a tiny amount the next if a thick cloud arrives. In many cases, renewable resources exist where transmission lines don't.
"The grid was not built for renewables," said Trieu Mai, senior analyst at the National Renewable Energy Laboratory.

The frailty imperils lofty goals for greenhouse gas reductions. Concerned state and federal officials are spending billions of dollars in ratepayer and taxpayer money in an effort to hasten the technological breakthroughs needed for the grid to keep up with the demands of clean energy.

Making a green energy future work will be "one of the greatest technological challenges industrialized societies have undertaken," a group of scholars at Caltech said in a recent report. The report notes that by 2030, about $1 trillion is expected to be spent nationwide in bringing the grid up to date.

And, of course, that $1 trillion will all be paid for by consumers. See Forbes. This answers the question why electric rates are rising even as natural gas is falling in price. One can thank the current administration for one more hidden tax that we will all be paying long after the president is out of office. 

Health care and renewable energy sort of reminds me of Vietnam's legacy, The Best and The Brightest:

The focus of the book is on the erroneous foreign policy crafted by the academics and intellectuals who were in John F. Kennedy's administration [Harvard University, like current president], and the disastrous consequences of those policies in Vietnam. The title referred to Kennedy's "whiz kids"—leaders of industry and academia brought into the Kennedy administration—whom Halberstam characterized as arrogantly insisting on "brilliant policies that defied common sense" in Vietnam, often against the advice of career U.S. Department of State employees.

I can already see the 2035 book, O's Best and Brightest, with this review written in 2036:

The focus of the book is on the erroneous domestic policy crafted by the academics and intellectuals who were in Barack O'Bama's administration, and the disastrous consequences of those policies now facing the average American. The title referred to Obama's "whiz kids"—community organizers and academic pinheads brought into the O'Bama administration—whom Halberstam, Jr., characterized as arrogantly insisting on "brilliant policies that defied common sense" in both health care and energy, often against the advice of career bureaucrats, businessmen, and Bakken operators.

"This Once Proud And Prosperous City Can't Pay Its Debts. It's Insolvent. " -- Largest Public Bankruptcy In US History

Detroit: eligible for bankruptcy. AP is reporting:

Detroit is eligible to shed billions in debt in the largest public bankruptcy in U.S. history, a judge said Tuesday in a long-awaited decision that now shifts the case toward how the city will accomplish that task.

Judge Steven Rhodes turned down objections from unions, pension funds and retirees, which, like other creditors, could lose under any plan to solve $18 billion in long-term liabilities.

But that plan isn't on the judge's desk yet. The issue for Rhodes, who presided over a nine-day trial, was whether Detroit met specific conditions under federal law to stay in bankruptcy court and turn its finances around after years of mismanagement, chronic population loss and collapse of the middle class.

The city has argued that it needs bankruptcy protection for the sake of beleaguered residents suffering from poor services such as slow to nonexistent police response, darkened streetlights and erratic garbage pickup — a concern mentioned by the judge during the trial.

Detroit: largest public bankruptcy in US history; occurred under President Obama's watch.

GM was the fourth-largest corporate bankruptcy in the US; occurred under President Obama's watch. 

For Investor's Only; ERF Reports Excellent Numbers -- Due To The Bakken; Samson Oil & Gas Provides Update On Stockyard Creek Operations East Of Williston

From a reader: how to "play" the shale oil boom, from Forbes. Seven years too late, but, I suppose, better late than never. The boom began in Montana, 2000, and in North Dakota, 2007, and now we see, in 2013, an article in Forbes, how to play the shale oil boom. The big story is not "how" to play the boom, but the fact that Wall Street is finally waking up to what's happening in "fly over" country.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or what you think you may have read here. 

ERF:

Enerplus Res Fd Trust raises annual production guidance for 2013: Co announces that based upon continued strong operational performance during the months of October and November, we are increasing our annual average production forecast for 2013 to 89,000 BOE/day from 87,500 BOE/day. Production volumes during the fourth quarter are expected to average ~92,000 BOE/day due primarily to higher natural gas production.

In addition, the Board has approved the capital program for 2014 which includes the following highlights:

• Co expects to deliver 10% production growth in 2014, targeting annual average production between 96,000 BOE/day and 100,000 BOE/day.
• Crude oil production is expected to grow by 12%, resulting in a production mix of 48% crude oil and natural gas liquids and 52% natural gas.
• Capital spending is planned at $760 million, up 11% from 2013, with two thirds of our program directed to crude oil projects.
• Based upon our forecast exit volumes, capital efficiencies have significantly improved in 2013 to under $30,000/BOE/day. Co expects to achieve similar capital efficiencies in 2014.
• Co expects a reduction in both operating costs and general and administrative costs per BOE.

Production Growth 

We expect continued growth from our U.S. oil properties at Fort Berthold where production will increase by roughly 15% in 2014, driving our light crude oil volumes to represent 67% of our total oil production. Natural gas liquids are expected to be ~4% of total production. Our total corporate natural gas production is expected to average just over 300 MMcf/day next year, up 7% from 2013, with the majority of the growth attributable to the Marcellus.

As a result of the growth in production from our Bakken/Three Forks and Marcellus properties, over 50% of our corporate production volumes will be attributable to our U.S. assets. Our production mix is expected to remain at 48% crude oil and natural gas liquids and 52% natural gas. With the acquisition of additional interests in the Marcellus combined with the growth in our earlier stage plays in North Dakota and the Wilrich, our corporate production decline rate is expected to marginally increase to 25% in 2014 from 24% in 2013.

Samson Oil & Gas:

Oil & Gas provides Oil and Gas advisory on its North Stockyard program (SSN) 0.43 : Co provides update on its North Stockyard project, Williams County, ND

Blackdog 3-13-14H (SSN WI 25.03%)
The Blackdog well drilled to the kick off point at 10,768 feet, continued to drill the curve, and landed in the Middle Bakken at 11,691 feet measured depth, 11,341 feet true vertical depth. 7" casing was then run and cemented at this depth. Preparations are currently being made to begin drilling the 6 inch lateral. The frac of this well is tentatively scheduled for December 15th.This well will be a middle Bakken lateral and is the infill location between the Rodney 1-14H well (SSN WI 27.18%) and the Sail and Anchor 1-13-14HBK well (SSN WI 25.03%).

Coopers 2-15-14HBK (SSN WI 27.7%)
The 22 stage plug and perf stimulation treatment is expected to commence on December 2nd. Over the weekend, the frac equipment was set up on location and the sand was delivered to the site.

Tooheys 4-15-14HBK (SSN WI 27.7%)
A clean out trip was run to the liner top and a cement bond and caliper log run. The 7 inch casing was pressure tested and a ball pumped to open the first stage sleeve in preparation for the fracture stimulation expected on to commence on December 8th, following the Coopers frac. The completion configuration is a 24 stage sliding sleeve.

Little Creature 1-15-14HBK (SSN WI 27.7%)
A cement bond and caliper log has been run in this well and a 4 inch frac string run. The first frac stage has been perforated on tubing in preparation for the stimulation. The completion configuration is a 35 stage cemented liner. Fracture stimulation is expected to commence December 20th, following the Blackdog 3-13-14 frac. 

STOP! If You Haven't Read Today's RBN Energy Post, Do It Now ....

... the link is here.

The Keystone XL South Is Complete, Getting Ready For The "Line Fill" -- A Most Incredible Success Story; How The Bakken Changed Everything

This is a huge story. Maybe the most important story of the month, but it's only the third of the month. Don't hold your breath.

RBN Energy provides an update on Keystone XL South. If that link breaks, a snippet will always be here.

For newbies:

• the Keystone XL was to bring heavy crude oil from Canada, across the border in Montana, through North Dakota, through Cushing, to the Gulf Coast where the refineries are
• the glut of oil at Cushing was pushing down the price of oil; relieving that glut was just one benefit of the Keystone XL
• the refineries along the coast are optimized for heavy oil (Canadian oil) not Bakken light oil
• the President killed Keystone XL 1.0; wouldn't permit the "XL" pipeline to cross into the US
• TransCanada pressed on, building the southern leg from Cushing to Canada
• the Montana governor got in on the act; didn't want to approve the XL crossing his state (it's funny -- during those days, it seems, North Dakota was "going it alone")
• there were a lot of stories in the mainstream media saying Texan ranchers would never allow the Keystone XL to be complete in Texas; so much background noise; everyone has a price
• the southern leg is completed; the company had expected first flow to begin first week in November
• "line fill" delayed to first week in December; company says flow to begin by end of December, 2013
• what to watch for: price of Bakken with completion of southern leg
• RBN Energy will call this Cushing to Gulf Coast Keystone XL South the "CRM" 

Some related posts:

• the Keystone XL South is not fully subscribed, November 16, 2013
• Keystone XL South almost complete; the "line fill" projections, October 2, 2013
• they should have called it a different name, May 11, 2013
• is the price of Bakken crude tied to the Keystone XL, February 24, 2013
• TransCanada XL South temporarily halted by Texas judge, December 11, 2012

What could have been?  How the Bakken changed everything. From the linked RBN Energy article:

A big part of the supply challenge upstream from Cushing is that the delayed Keystone XL pipeline from Hardisty was supposed to feed crude into Cushing that would flow into the MPC all the way to the Gulf Coast. When the Keystone XL is built it will carry 830 Mb/d of crude from Canada and (via an “on ramp” in Montana) the Bakken. That pipeline is now delayed until at least 1Q 2016 if it receives a presidential permit. So in the circumstances it’s not surprising that producers who originally signed up to ship barrels on the complete Keystone XL pipeline may not be able to take up capacity on the Cushing leg only. Compelling evidence that MCP is undersubscribed came earlier in November when TransCanada launched an Open Season seeking additional shippers on the pipeline. That solicitation meant that there is still space available on the pipeline for long-term shippers. The challenge for those shippers will be securing supplies in Cushing. That’s reason number 2 why the MPC will not start out at full capacity.

So many story lines. But have to move on. 

Must-Read For Tuesday: Keystone XL South Has Been Completed, Ready To Begin The "Line Fill" -- Expediting Bakken Oil To The Coast

Active rigs: 192

RBN Energy:  Keystone XL South is complete, ready for the "line fill."

So far in 2013 around 645 Mb/d of new crude oil pipeline capacity has opened up to ship supplies to the Texas Gulf Coast. Early this month (December) line fill starts on the largest new capacity addition to date – the 700 Mb/d Keystone Gulf Coast Pipeline. The new pipeline runs from Cushing to Port Arthur and will carry mostly Canadian heavy crude. Today we wonder if all that crude will find a home.

The first episode in this series described 4 MMb/d of current and planned expansions to crude transportation capacity into the Texas Gulf Coast region. Our analysis showed that the new incoming light crude capacity will exceed Texas Gulf Coast demand by somewhere north of 0.5 MMb/d by the end of 2015. In episode two we described how some of these excess crude supplies would move east on the reversed Ho-Ho pipeline. In episode three we looked at how shippers could divert supplies away from Texas Gulf Coast congestion. This time we consider the impact of the Keystone Gulf Coast pipeline.

One of the more confusing features of the Keystone Gulf Coast Pipeline is what to call it – the name seems to change in real time. That is probably due to a desire to disassociate the southern Gulf Coast section of the pipeline from delays in permitting the Canada to US Keystone XL pipeline. Owner and operator TransCanada most recently set up a subsidiary to operate the pipeline called Marketlink LLC and it should now apparently more properly be called the Cushing Marketlink Pipeline so we will go with CMP as an abbreviation.

The 36-inch-diameter CMP runs 485 miles from Cushing, OK, to Nederland, TX. The line will have an initial capacity of 700 Mb/d with the option to expand to 830 Mb/d. It is almost ready to commence operations but before that can happen it has to be filled with oil – a process known as “line fill”. We described how line fill works and provided a formula to approximate the volume of oil required back in May 2012. According to that formula CMP requires 3.5 MMBbl of line fill. Marketlink LLC has said the first pipeline deliveries will be made before the end of 2013. The company is also constructing a 48-mile Houston Lateral pipeline (orange line on the map) that will run from the Liberty pumping station to East Houston and should be online by the end of 2014 with 130 Mb/d capacity.

So much more at the linked story, including maps. I will probably do a stand-alone post on this later. 

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

 The "Caca" Continues

Yesterday I posted a screenshot of a "bronze plan" that meets the ObamaCare requirements. Anthem Blue Cross/Blue Shield codes it: "caca." Today, I see the headline story in The New York Times -- front page, top right, lead story -- "As Hospital Prices Soar, a Single Stitch Tops $500."

On a quiet Saturday in May, nurses in blue scrubs quickly ushered the two patients into treatment rooms. The wounds were cleaned, numbed and mended in under an hour.

“It was great — they had good DVDs, the staff couldn’t have been nicer,” said Emer Duffy, Orla’s mother. 

Then the bills arrived. Ms. Singh’s three stitches cost $2,229.11. Orla’s forehead was sealed with a dab of skin glue for $1,696. “When I first saw the charge, I said, ‘What could possibly have cost that much?’ ” recalled Ms. Singh. “They billed for everything, every pill.” 

ObamaCare was not mentioned. No, there are no cost controls under ObamaCare. The stories will only get worse. 

For the archives.