Friday, December 6, 2013

Week 49: December 1, 2013 -- December 7, 2013 (National Pearl Harbor Remembrance Day)

I'm posting the subject line just to remind me to do this tomorrow.

Almost 900 men on one ship, the USS Arizona; sort of puts things into perspective
Update on status of 2011 NDIC oil and gas permits
Update of status of 2010 NDIC oil and gas permits
Update of status of 2009 NDIC oil and gas permits

Story of the month

Story of the week


Natural gas



For investors


For Investors Only -- Statoil On The Move

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

I don't invest or trade in Statoil (never have, probably never will) but Statoil really seems to be a company on the move. Today, two stories to show how big it is getting. Look who Statoil is partnering with.

Both stories come from Rigzone.

First, Statoil and Rosneft:
Russian energy firm Rosneft and Norway's Statoil agreed to set up a joint venture to assess the viability of shale oil production in Russia's Samara region, the firms said on Friday.
Second, Statoil and Exxon:
Statoil ASA and Exxon Mobil Corp. have announced a fifth gas discovery in Block 2 offshore Tanzania.
The discovery is of between 2 and 3 trillion cubic feet of gas in place in the Mronge-1 well. The firms said that the discovery brings total in-place volumes in Block 2 to between 17 and 20 Tcf. Mronge-1 was drilled by the Discoverer Americas (DW drillship). The site is located some 13 miles north of the Zafarani discovery and is at 8,200 feet.
Idle chatter. I don't know a billion dollars in one-dollar bills would look like. Likewise, I don't know what a trillion cubic feet of natural gas means. I don't know what the recovery rate is and I don't know how much natural gas is used by the United States in any given year.

But just for grins, ONEOK will have natural gas processing capacity of about 800 million cubic feet per day in North Dakota with their recent announcement. Let's see what twenty trillion cubic feet means.

20,000,000,000,000 / 800,000,000 = 25,000 days = almost 70 years of activity for the ONEOK facilities in North Dakota.

Our National Emblem Gets Thrown Under The Bus. Thirty Years Should Just About Do It; Bringing These Beautiful Birds To Brink Of Extinction

Just when you thought the President couldn't do anything more stupid than he has done in his first five years, he manages to surprise you once again. Never sell this president short for selling out.

From an environmental point of view, I have trouble thinking of anything that could possibly be worse: the President of the United States bowing to General Electric, to allow unlimited numbers of bald eagles to be killed by wind turbines over the next thirty years. Easily, four generations of Americans will get to see this slaughter. This ends the Endangered Species Act, as we know it. It lasted forty years, and then President Obama was elected.


December 8, 2013: The Los Angeles Times simply calls dicing and slicing eagles a bit of "leeway" for General Electric and the wind industry. If The Los Angeles Times does not care, does anyone?  

Original Post

NBC is reporting:
Under pressure from the wind-power industry, the Obama administration said Friday it will allow companies to kill or injure eagles without the fear of prosecution for up to three decades
The new rule is designed to address environmental consequences that stand in the way of the nation's wind energy rush: the dozens of bald and golden eagles being killed each year by the giant, spinning blades of wind turbines. 
If the Sierra Club has no objection to the wind industry decimating bald and golden eagles, and probably bringing about the demise of the California condor and the whooping crane, I certainly won't prolong the discussion. [It should be noted that the president continues to dither on making a decision on the Keystone XL. My hunch is that this won't help the Keystone XL. You can't screw the environmentalists over and over and over and hope to keep the base.]

This is a watershed event. For the first time in this administration, technology and big-money corporations have won out over environmentalists. And it's not a small issue: these are bald eagles, golden eagles, condors, whopping cranes: birds that even people like me can relate to.

For the environmentalists this is very, very bad news. It will be hard for a jury / judge to find an oil company negligent for killing a single migratory duck that happens to fly into a waste pond.

Finally, projects that have been held up due to endangered crustaceans may now get the go-ahead. The administration's decision will probably be a one-off, but sympathetic judges to big projects will use it as precedent. After all, if it's okay to give full immunity to unlimited bird kills, it's hard to defend the snail darter.


Take My Breath Away, Berlin

Limbic system: USAF flight surgeon meets Yorkshire, England

Update On The Delta Airlines Refinery, Trainer, Pennsylvania, Outside Philadelphia

CNBC is reporting:
Sky-high fuel costs have made cost-cutting, not growing market share, the mantra for many airlines. One of Delta's riskier cost-cutting moves, buying an oil refinery, looks like it's starting to pay off.

Delta bought the refinery, which is in Trainer, Pa., just outside of Philadelphia, in 2012 for $150 million as a way to hedge against its biggest expense, jet fuel costs.
But after losing a combined $136 million in the previous nine months, the Trainer refinery turned a profit for the first time in the third quarter, bringing in $3 million.
As a result, the price Delta paid for a gallon of jet fuel dropped 5.4 percent to $2.97 during the quarter. Though its overall fuel costs increased 3 percent, which Delta attributed to an increase in flying capacity.
Delta has said the oil refinery purchase could save the airline as much as $300 million a year in fuel costs, which accounted for 32 percent of operating expenses in the third quarter.

Ten New Permits -- The Williston Basin, North Dakota, USA; BR Reports Two Big Wells; Statoil Reports Two Big Wells (All Four Make "High IP" List; Hess And Oasis With Three Good Wells

Active rigs:

Active Rigs19318220016566

Ten (10) new permits --
  • Operators: Petro-Hunt (4), XTO ( 3),  Whiting (2), HRC
  • Fields: Estes (McKenzie), Harding (McKenzie), Marmon (Williams), Stoneview (Divide), Siverston McKenzie)
  • Comments: XTO has a permit for a wildcat in Williams County; Petro-Hunt has permits for a 4-well pad, the Watterud pad in Stoneview oil field, 14-160-95, Divide County
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Seven (7) producing wells were completed:
  • 23735, 2,974, BR, Bryce 11-5MBH,Westberg, t11/13; cum --
  • 23739, 2,895, BR, Bryce 34-8TFH, Westberg, t11/13; cum --
  • 24007, 3,315, Statoil, Jake 2-11 6H, Last Chance, t11/13; cum --
  • 24008, 2,420, Statoil, Jake 2-11 5TFH, Last Chance, t11/13; cum --
  • 25028, 1,061, Hess, EN-Sorenson A 154-94-0211H-6, Alkali Creek, t11/13; cum --
  • 25340, 896, Oasis, Andrea 5502 44-7T, Squires, t11/13; cum --
  • 26133, 1,060, Oasis, Burleson 5502 41-7B, Squires, t11/13; cum --

We Knew It Was Bad; We Just Didn't Know How Bad

Imagine if there was a 10% chance that the Apple computer you ordered on-line was shipped to the wrong address.

Imagine if 10% of your Amazon orders never arrived.

Imagine if 10 out of 100 google searches crashed your computer.

My hunch: you would quit buying Apple products on-line; you would avoid Amazon; and you would use Yahoo search. Although with all I order from Amazon, I probably wouldn't even notice if 10% of my ordered products didn't arrive. Especially if Amazon broke up the bulk deliveries to individual packages. But I digress.

But that's the official error rate for the Obamacare website -- the entry portal to ObamaCare, the portal that does not yet let you pay for your product.

Ten percent.
"We believe nine of 10 transactions are being successfully transmitted," the Centers for Medicare and Medicaid Services, or CMS, spokeswoman Julie Bataille said at a news briefing.
And this is not some Fox News celebrity reporting this: it's highly-respected Bloomberg quoting highly-respected Julie Bataille of the highly-respected Centers for Medicare and Medicaid Services.

As opposed to Ms Sebelius.

But you now what's really scary? It's that THEY DON'T KNOW.

They "believe" -- sort of like religion -- they "believe" that nine of ten transactions are being successfully transmitted.

And then think about this: I would assume any good marketer would "lie" just a little bit, exaggerating just a little bit that things were actually better than they were. That's why the "10%" is probably not quite accurate. It's probably the best-case scenario.

Can you imagine Apple's Ted Cook: "We believe nine of ten transactions are being successfully transmitted. You might want to try H-P or Dell where they are getting close to 99% success."

Can you imagine Amazon's Jeff Bezos: "We believe nine of ten packages are being successfully delivered, but if the FAA approves our drones, we think we can get that to nine-point-five."


That's the good news. Here's the bad news. All those enrollments in October and November. Twenty-five percent (25%) will end up being tossed, will be do-overs. The problem: who knows which ones are in the 25% error box -- yours, mine, your friends, relatives?

This is worse than we were let on to believe. I think most folks just thought there were problems accessing the site. Now we find out that even if thought you had enrolled, there's one chance out of four your form is in the ether somewhere, or attached to someone else's form, or sent to who knows where.

The Washington Examiner is reporting:
After refusing for weeks to detail the extent of back-end problems with, the Obama administration on Friday said a technical bug affected approximately 25 percent of enrollments on the federal exchanges in October and November.
Those technical bugs, separate from the troubles consumers had experienced accessing information on the website during the first two months, are posing a significant new problem for those who signed up and are expecting insurance coverage come Jan. 1.
One in four of those applications either did not get transferred to insurers, were transferred in duplicate form, or had major errors in information shared.
 It is amazing the chief architect of this debacle still heads HHS.

By the way, note the time that article was published: 4:48 pm so that it would conveniently missed the Friday evening news. Don't fret. Most people now watch Fox for news and they will talk about this all weekend. 

XOM, Buffett, And Why

There are two articles that are "kind of fun" to read -- discussing Buffett's 40-million-XOM share purchase.

The first one focused on the wrong questions: did Buffett repeat his mistake (the well-known COP story)? It can be found over at SeekingAlpha. I found the article rather unenlightening; the contributor focused on the past.

The better of the two articles focused on the why? I agree with the contributor's answer. Street Authority over at Yahoo!Finance is reporting:
Exxon's shares are actually close to all-time highs, and a similar or better entry price could have been had for a long time.
The "Why now?" part of the Exxon purchase stumps me -- but I think I've got a pretty good idea about the why.
It is all about the price of oil. I think Buffett expects it is going to rise over the medium and long term.
The reason I think that is because Buffett's longtime business partner, Charlie Munger, said so.
Of course, Munger didn't tell me that directly. But he did tell anyone who happened to come across a roundtable presentation that the Berkshire vice chairman participated in.
Munger's one of the most rational thinkers in the entire investment world, and he's almost always on the same page as Buffett.
Munger had this to say about future oil prices:
"Oil is absolutely certain to become incredibly short in supply and very high-priced. The imported oil is not your enemy, it's your friend. Every barrel that you use up that comes from somebody else is a barrel of your precious oil, which you're going to need to feed your people and maintain your civilization. The way to do that is to go very slow in producing domestic oil and not mind at all if we pay prices that look ruinous for foreign oil.
"The oil in the ground that you're not producing is a national treasure ... It's not at all clear that there's any substitute [for hydrocarbons]. When the hydrocarbons are gone, I don't think the chemists are going to be able to just mix up a vat and create more hydrocarbons. It's conceivable that they could, I suppose, but it's not the way to bet. We should spend no attention to these silly economists and these silly politicians that tell us to become energy-independent."
This is actually old news. I've actually the blogged the very same thing, and regular readers may remember the post. 

But this article fails to mention something that is even more important to everyone affected by the oil and gas industry (and that would just about be everyone in the universe except those living under the Geico rock). There is one thing that might be more important to the oil industry than rising prices: price stability, or at least less severe volatility.

Regular readers of the blog have now seen several sources (neither of the two linked on this post) that suggest "Bakken" shale has changed "everything." One thing "Bakken" shale changed is a steady source of oil to help minimize / prevent price shocks coming out of the Mideast. Of course, if the Keystone XL had not been killed by President Obama, America's energy security would be even more secure. But I digress.

My thoughts: Buffett saw minimal downside risk to price of oil; at worse, slowly increasing price of oil, keeping pace with the global economy and the "peak oil" bogeyman. But most of all, he saw stability. Having bought BNSF, he probably spent a fair amount of time bringing himself up to speed on the Bakken.

A Note to the Granddaughters

I always thought the Big Bang WAS the beginning. That was "so yesterday."
  • There were problems with the earliest stages as described by THE "Big Bang" theory. 
  • Something called "Inflation Theory" has solved "all" the serious problems of the Big Bang theory. 
  • The theory explains "cosmic acceleration" which nabbed a 2011 Nobel Prize. Cosmic acceleration is the doubling of the size of our universe, not every split second, but every 8 billion years. 
  • Inflation theory says that our Universe grew much like a human baby -- an accelerating growth phase, in which the size of the universe doubled at regular intervals, and then was followed by a more leisurely decelerating growth phase (just as the last trimester of a human fetus is growing less fast than it did in the first trimester).
  • What we call our Big Bang wasn't the beginning but the end -- of inflation in our part of space -- and inflation typically continues forever in other places.
  • Inflation generically predicts that our space isn't just huge, but infinite, filled with infinite galaxies, stars, and planets, with initial conditions generated randomly by quantum fluctuations.

Those six data points are almost verbatim from a new book on physics. I have an advance copy; it will be published January 7, 2014. It is Max Tegmark's Our Mathematical Universe: My Quest for the Ultimate Nature of Reality.

This is a very, very difficult book to read, and its target audience includes college students, hard-core readers of popular science, and physicists. Different audiences are directed to read different parts of the book.

Despite the title, there are no mathematical equations except the ubiquitous  E = mc2, at least to speak of. Even without the mathematical formulas the book is very, very difficult to read, or at least to comprehend. The author writes it in language one can easily understand (assuming one is proficient in English) but the topic almost defies comprehension. Wrong. The topic defies comprehension.

I know there are a few readers of physics in the audience, but I doubt many are up to speed. You will enjoy this book. Watch for it. But be forewarned: it is very, very difficult. I think the best thing will be to plow through it and then go back and re-read it. The author does a great job of providing a summary of each chapter. The data points above are the summary points of chapter 5, "Eternal Inflation."

The "Big Bang" was not the conception, it was the delivery.

It Won't Be Only The Bakken Affected By Cleon ...

... the Texas Permian is also gonna be affected.

Platts is reporting:
This week the winter storm, with the Weather Channel-bestowed named of Cleon, waved a snowy wand over the US’ north and midsection, which eventually migrated to the East Coast.   The result was a number of Permian-area facilities hit by power outages and ice that affected the basin’s production–a natural, obvious consequence of such weather.   Now Cleon is back, in the form of another Arctic blast that is currently swooping down on the US, with its eye fastened on a broad area that again includes the Midcontinent and parts of the Permian.
Permian operators Pioneer Natural Resources, Energen Resources, and smaller operators Laredo Petroleum and Legacy Resources have all reported impacts from Cleon, although currently not quantified, to their Q4 production.
Pioneer, echoing some of the other companies, said the severe weather “significantly” affected its production and drilling operations. These impacts were mainly felt in three operations: the Spraberry/Wolfcamp horizons in the Permian, South Texas’ Eagle Ford Shale and North Texas Barnett Shale combo plays.  
The company’s Spraberry/Wolfcamp operation, in the eastern Permian, “has been especially hard hit as heavy icing and low temperatures have resulted in extensive power outages, facilities freeze-ups, trucking curtailments and limited access to production and drilling facilities,” Pioneer said in a November 27 press release.
And if they can't get their contracted petroleum to the refineries, they will have to buy Venezuela oil on the spot market. Or something.

Fantasy Oil League Investing

Disclaimer: this is not an investment site. Do not make any investment decisions on your own. Listen to Jim Cramer. Oh, wrong disclaimer. Sorry. This is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

But if you want to play Fantasy Oil Patch Investing, click here
My third category would be for the timid investor, one who wants to make a little money in the oil market, but not bet the farm.
The Milquetoast investor wants mainly blue chip stocks, ones with great dividends and little downside, which can often exclude volatile oil industry shares.
For this investor I would put together an ETF of major oil companies from the US, Canada, the UK and Norway. I would throw in a couple of big service companies and some larger E&P companies with proven output.
Then I would hedge the whole thing by adding a large oil price element that is controlled by a clever trading algorithm.
The algo would turn on a dime and go short when oil prices are dropping (for more than, say, a couple of hours), then reverse itself when they go back up. This provides instant, and practically constant, balance to your portfolio, but necessarily constrains profits.
Still, even the Milquetoast ETF would let an investor get close to the excitement of the oil industry without getting his hands dirty– or having to sleep in an RV in 40 degrees below zero weather (think North Dakota).
The story is done "tongue-in-cheek," but if you read it closely there are some interesting bits of trivia that confirm my thoughts on the Niobrara.

This Platts article is much better than it might seem. I recommend it be read two or three times. Slowly.


That's all ice in the parking lot. 
Outside Snowbucks, Grapevine, TX.
December 6, 2013
28 degrees 

For Investors Only

Well, the market did it -- broke through 16,000 again, rising more than 185 points. When it was up 128 points earlier today, I thought there was a small chance it could get back to 16,000 but I didn't really think it would. Everyone complains when the programmed computers take the market down -- the death spiral -- but the same thing happens, albeit not as often -- on days like this. Programs start taking over, taking us to new heights. Until a day trader -- the butterfly flapping its wings -- starts to sell.  

Nice update on COP's strategic plan at Motley Fool: selling Nigerian assets to fund major shale move; is counting on $100 oil.

Enbridge raised its dividend 11%. Zack's is reporting. At SeekingAlpha, seven (7) stocks providing positive feedback with higher dividends. Enbridge is the first one listed. MarketWatch contributor calls Enbridge Energy Partners the most compelling play in the MLP space.  And the EPA will put lives of blue collar men at risk dredging in the middle of winter. Meanwhile, the EPA bureaucrats in Washington will have snow-days throughout the 2013 - 2014 winter.

PSX is on the move. PSX announces new $2 billion share buyback program. Will hike spending 40% next year

PSX surges to yet another 52-week high. XOM is trading near it's 52-week high. 

ConocoPhillips announced a 2014 capital expenditures budget of $16.7 bln for continuing operations; reaffirms production target: Co announced a 2014 capital expenditures budget of $16.7 bln for continuing operations. Investments during 2014 will target the company's diverse portfolio of global opportunities. Approximately 55 percent of the budget is allocated toward North America and 45 percent toward Europe, Asia Pacific and other international businesses.

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

Phillips 66 announces new $2 bln share repurchase program: Co's Board has approved a new $2 billion share repurchase program, consistent with the company's strategy to grow shareholder distributions. Since the third quarter of last year, Phillips 66's board of directors has authorized a total of $5 billion in share repurchases and raised quarterly dividends from 20 cents per share to 39 cents per share. The company has repurchased $2 billion of its shares as of October 2013.

From Platts: EPP begins Appalachia-to-Texas ethane line fill.
Enterprise Products Partners LP (EPP) began injecting ethane into the Appalachia-to-Texas Express (ATEX) pipeline in late November and will continue through this month. The company expects commercial service to begin January 2014. The 1,230-mile ATEX pipeline starts in Washington County, Pa., and is, or will be, connected to four fractionators in the Marcellus-Utica shale region, including the MarkWest Houston plant in Pennsylvania and Cadiz plant in Ohio, the Blue Racer Natrium plant in West Virginia, and the Utica East Ohio Scio plant. 

ATEX will have an initial capacity of 125,000 b/d, expandable to at least 265,000 b/d. Firm ship-or-pay transportation agreements with 15-year terms support the project. About 65,000 b/d of those contracted volumes are expected to move initially, ramping up to more than 130,000 b/d transported beginning in 2018.
ATEX ends at EPP’s Mont Belvieu, Tex., complex, which has more than 100 million bbl of NGL and petroleum liquid storage, more than 750,000 b/d of fractionation, and an extensive NGL distribution system. EPP says with the addition of its Aegis ethane pipeline now under construction, ATEX will link Marcellus-produced ethane to every existing ethylene production facility in the US and provide supply security to support construction of new crackers currently planned for the Gulf Coast.

Flexibility Of Blogger As Good As One's Imagination -- Conference Presenters Listed On Sidebar Under Conferences; Oasis On Sale -- Bret Jensen

Bakken operators that will be presenting next week at the Wells Fargo Energy Symposium have been linked at the sidebar at the right, under conferences.

A big "thank you" to Don for sending these to me. The presentations will eventually show up on the websites of the various operators if you can't find them elsewhere.

The pdf is also here.


There are a handful of contributors over at SeekingAlpha that I enjoy. Bret Jensen is one of them.

Today Mr Jensen has an update on Oasis.
Oasis Petroleum is an independent exploration and production company that engages in the acquisition and development of oil and natural gas resources in the Montana and North Dakota regions of the Williston Basin. With its recent purchases of ~160,000 net acres, the company now has almost 500,000 net acres in this key energy producing region.
Part of the decline was triggered by a just announced secondary offering. The company will issue some 7mm new shares. It should be noted the new shares will amount to just ~8% of the company's overall float. The proceeds will be used to retire debt which will lower interest expense as well. A lot of the company's debt was taken on to significantly expand the company's acreage in the Williston region of the Bakken formation.
Oasis is also operating from a position of strength. The company has beat on top and bottom line expectations in each of its four quarterly reports delivered in 2013. The median price target on Oasis held by the 26 analysts that cover the firm is $59.50 a share, ~30% above the current stock price.
It is easy to see why analysts hold Oasis in high regard. The company is tracking to double its earnings this year to ~$3 a share. Analysts believe earnings will increase more than 25% on consensus in FY2014 as well. The stock goes for just over 12x forward earnings, which is a significant discount to its five year average valuation (21.7).
This is huge. I thought Oasis issued 7 million new shares to help pay for their recent acquisition of Zenergy assets. But if that's accurate, and I assume it is, to use the proceeds to retire debt and lower interest expense as well is ... well.... that's incredible. That says a lot about operators using / needing cash to maintain their drilling plan.


Sweet Jane, Lou Reed
Limbic system: Jimi Hendrix meets Bruce Springsteen.

Back Up To 193 Active Rigs In North Dakota

Unlimited Liability: A Reporter Must Have Read The Blog

The Mandela story become the Obama story; again, another icon and it's all about him. I can't make this stuff up. The Los Angeles Times is reporting:
Speaking before  reporters Thursday, Obama recounted that “the first thing I ever did that involved an issue or policy or politics” was a college protest against apartheid.
I would study his words and his writings.
The day he was released from prison it gave me a sense of what human beings can do when they’re guided by their hopes and not by their fears,” Obama said.
Obama’s admiration has largely been from afar.
They met once — in a Washington hotel room in 2005 when Mandela was on a speaking tour. At the last minute, a Mandela associate arranged a meeting between the aging icon and the newly elected young senator from Illinois. Obama has rarely spoken publicly of that day. After Obama was elected president, Mandela kept a photo of the encounter in his office.
It looks like President Obama spent more time with his uncle "the White House" did not know about than the amount of time the president spoke with Mr Mandela (fifteen seconds for a photo-op). 

But I digress. That was not what I was going to write about. I was going to write about something else. I got distracted, and now I forget. Oh, here it is. I uploaded it earlier, and fortunately the window is still open. Yahoo!Finance/U-Express is reporting:
"Uh-oh." That's the sound being uttered in doctors' offices and hospitals across the country as medical providers realize they're getting stuck with another bottomless Obamacare bill. While the White House desperately tries to pivot from the havoc wrought by the "Affordable Care Act," its hidden regulatory bombs keep exploding.
I heard about the latest problem this week from an eye doctor friend who received a letter from a Colorado-based insurer informing her that she's essentially on the hook for Obamacare's payment grace period for debtors. The optometrist is bracing for a flood of similar letters from other insurers. Like countless other independent providers, she's extremely concerned about the potential liability, uncertainty and fraud the rule imposes on her business.
Here's the raw deal: The Affordable Care Act created a 90-day grace period before insurers can drop patients who fall behind on premiums. So, delinquents who obtain tax-subsidized health insurance through an Obamacare health insurance exchange have three months to settle up their bills prior to their policy being canceled. As written, the law puts insurers on the hook for the grace period.
Not to worry. Doctors, clinics, and hospitals are not neophytes. Non-emergency medical care will need to be paid for in advance. They will let the patients get reimbursed by the insurance company, which of course will never happen. In the big scheme of things, there is very little emergency medicine compared to all the elective crap that can be pushed into the next quarter.

At the end of the day, it's the insurers themselves that have the unlimited liability (once the annual deductible is met).  We will start seeing those stories next July. July 25th, Friday. Count on it.

My Sweet Lord: Worse Ice Storm In Years Developing -- For The Warmists And The Archives

Where folks will be spending the weekend, this icy weekend:

Blue Hotel, Chris Isaak
Another great song to play loudly, especially the instrumental portion at the end. 
Limbic system: Willie Nelson meets David Lynch.

AccuWeather is reporting:
An ice storm will continue to affect millions of people into Friday and threaten to cut power for hundreds of thousands from northern Texas to western Kentucky.
Travel by vehicle or foot will be dangerous during and after the storm, due to icy roads and falling trees and power lines. The power could be out for days in hard-hit areas. In some locations hit by ice, temperatures will dip into the single digits and teens in the storm's wake, causing wet and slushy areas to freeze solid and adding to the hardship for those without heat.
A Note to the Granddaughters

This was the e-mail I sent my wife (who is out in southern, sunny California for the holidays). I wrote this from a Starbucks northeast of Ft Worth, TX:
I woke up late, getting up about 7:15 a.m.
I woke up to what looks like 2 inches of snow. It is 28 degrees.
I rode my bike into Snowbucks. The coffee shop should be filled by now but I was the second person here ... so I got my usual seat.
It is incredibly easy to ride through the snow; there is almost no traffic.
However, in the parking lots, and the intersections, the snow changes to two inches of very, very dense, maybe four inches deep of SLUSH. Inexperienced riders would not be able to ride in the slush. I can ride through some of it; but have to walk through some of it. It is too thick / dense to move through. [I did not have snow tires; and if I had, it would be too much trouble to change -- maybe front tire.]
Absolutely no wind, so it feels very, very mild. Everything is shut down in Dallas. Everything canceled.
Kiri's husband is stranded in Calgary, Alberta, Canada -- the airport is closed. So he won't come home this weekend. Kiri is off today, but she goes in Saturday and Sunday.
I will be with Arianna and Olivia all day both days. I will spend the day in kitchen teaching Olivia to cook. We are going to do vegetarian dishes, lots of broccoli, three-bean salads, green bean casserole, etc.
No more precipitation forecast; the slush will become deep ruts as cars drive through it all day. I will have coffee and breakfast here at Snowbucks. Then halfway home, stop at McDonald's for lunch, and then home, maybe get to Sonic across from where we live for dinner.
The stuff about teaching Olivia to cook vegetarian is an inside joke; she does all she can to avoid anything green.

My Sweet Lord: We Can't Put An Oil Pipeline Across Nebraska, But We Can Truck Yellow Cake Uranium Across Nebraska

My Sweet Lord, George Harrison

The Keystone XL was killed by President Obama because of concern about a pipeline spill over the Olgallala Aquifer, but we can use the president's highways to ship uranium waste across the same aquifer by truck. No protests. No outrage. No Sierra Club. My sweet lord.

WyomingTrib is reporting:
Ur-Energy's Lost Creek uranium facility made its first shipment this week, sending 35,000 pounds of yellowcake uranium to an Illinois conversion plant.
The shipment came seven years after the in-situ uranium recovery site north of Rawlins was first proposed.
The mine soon expects to be shipping two to four truckloads a month, said Wayne Heili, president of Casper-based Ur-Energy, the company that owns and operates the sites. Each truckload weighs 35,000 pounds.
"There was a certain amount of enthusiasm about seeing that first shipment leave the site," Heili said. "It is not every day you see a company succeed in its long-term goals."
Uranium prices have slumped in recent years. The $130 per pound prices of 2007 are gone, replaced by today's average of $36 per pound on the spot market. Long-term contracts for yellowcake are slightly better, averaging $50 per pound.
A big "thank you" for Don to point out this bit of irony. The yellow cake will go barreling down I-80 across Nebraska -- the entire state --  all 500 miles of it.

My Sweet Lord: Sven Needs To Meet Sven

Active rigs: 191

Job watch: on NPR this morning, I heard the unemployment rated dropped to 7%, lowest in 5 years. Of course. This might be a better analysis, at CNS. The main point of the article, as Drudge points out: 41% of the new jobs were government jobs. Who cares? In fact, government jobs are some of the best jobs available (East Coast pay scale; great benefits; no ObamaCare worries; great pensions). Congress did not authorize more money to be paid for government workers; this was already in the budget (somewhere) and the positions were always there, or they might be new positions put on the books over the past six months, but jobs are jobs.

The market appears not to care where the jobs are. Jobs are jobs.

[Later, this article was posted: it would have been nice for Drudge to post this also to be a bit more fair and balanced. The Los Angeles Times is reporting:
Big gains in factory and construction jobs last month have experts optimistic that the labor market is starting to produce enough higher-paying jobs to fuel stronger economic growth.

"It's not just the quantity of the jobs but the quality," Diane Swonk, chief economist at Mesirow Financial, said of Friday's Labor Department report of a surprisingly strong 203,000 net new jobs added in November.
Of those hires, manufacturers accounted for 27,000, the most since March 2012 and a sharp increase from October's 16,000 new jobs.]
I see the market is up big in early morning trading. What is oil doing? Approaching $98, up slightly today. Pretty incredible. I don't know about you, but I don't see a whole of difference between $98-oil and $100-oil but we will still get analysts writing stuff like this:
Growth-oriented exploration companies that have taken on excessive debt are more likely to be takeover candidates, because "outspending cash flow is unsustainable. The party will end with a pullback in commodity prices," says Sven Del Pozzo, an energy analyst at IHS Herold. U.S. oil prices, near $97 per barrel, have fallen almost $10 in recent months.
Sven at IHS Herold needs to meet Sven in the Bakken

For newbies, there was a report not too long ago that this is the longest stretch of sustained high prices for oil. Has anyone noticed: no sudden spikes from $150 to $70? The price of WTI has remained remarkable stable between $90 and $110. Do folks recall the money lost by operators through hedges/derivatives during those periods of severe volatility. Everyone -- mineral owners, operators, oil service companies, consumers, prefer stable prices over severe volatility. Even high sustained prices allow folks to plan. Albeit with a "sad" face (except for mineral owners and operators who hedged correctly).

For newbies, this is how I understand this works. An oil operator in the Bakken contracts with a refinery in Philadelphia to deliver 60,000 bbls a day of light, sweet oil. If an unexpected cold spell interrupts the Bakken flow, and the Bakken operator is unable to deliver 60,000 bbls/day to the refinery, the Bakken operator wil have to buy oil on the spot market. If the contract called for the refiner to pay the Bakken operator $75/bbl and the Bakken operator needs to buy $110 Brent oil on the open market, not a good picture.  Again, I could be way wrong on this but this simple model helps me understand how Bakken operators can lose money even if the price of oil is spiking to $150.

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

So, back to the market. Yes, everything I am interested in is green. Nice.

Here's the unemployment report:
U.S. employers hired more workers than expected in November and the jobless rate fell to a five-year low of 7.0 percent, which could fan speculation the Federal Reserve could start reducing its bond purchases this month.
Nonfarm payrolls increased by 203,000 new jobs last month, the Labor Department said on Friday.
The unemployment rate dropped three tenths of a percentage point to its lowest level since November 2008 as some federal workers who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.
Economists polled by Reuters had forecast payrolls rising only 180,000 last month and the unemployment rate falling to 7.2 percent from 7.3 percent.
We all know the numbers are massaged, but as more supporting data comes in, the general trend becomes somewhat clearer. These are the tea leaves in my Snowbucks tea this morning:
  • US net household worth hits an all-time record high; ninth consecutive quarter of rising household worth
  • car sales up huge in November
  • housing is back in California -- strong
  • first time unemployment claims (yesterday) down significantly
  • unemployment rate (today) down 0.3 points
  • strength of dollar changes day-to-day, but price of WIT oil is trending up
  • 3.6% 3Q13
  • gasoline demand is up (but ...)
  • Wal-Mart trading at all-time highs
I guess I am an eternal optimist. I can find all kinds of bad economic news, but the data points above are encouraging. 

The market has pulled back significantly (?) the last several days. I attribute the sell-off mostly to mutual funds locking in their 26% gains the past 12 - 24 months. Talking heads I assume attribute much of it to the likelihood of "tapering." "Tapering" will turn out to be a one-time buying opportunity for nimble traders (of which I am not). Once the news is out that "tapering" will start there will be a sell-off; the market will find a new floor; and the market will then respond to the data points noted above.

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

Here's the gotcha. The nimble traders have already figured out that "tapering" will start sooner than later if the data points above are confirmed next month. The nimble traders figured that out; "tapering" is "old news." We saw the pullback this past week -- "tapering" is a given. The GS traders figured that out two months ago. In October they acted.

Here's a great example of one journalist who missed the gotcha: writing before the numbers came out, he/she said that a great jobs report could sink stocks. Great jobs report came out and the market is up 150 points, nearing its all-time high. 

If the "numbers" are strong in January and February, they will take precedent over the announcement that Ms Yellen will begin/has begun tapering. The trick is to figure out how many points in the market can be attributed to Mr Bernanke printing money. I think 500 points. But for argument's sake, let's say a thousand. We traded over 16,000 a few days ago; we dropped to 14,775 or thereabouts in early October.  The math is easy to do. [Yes, I know professionals follow the S&P, and not the DOW, but I grew up with the DOW, not the S&P -- old habits are hard to change.]

My sweet lord:

My Sweet Lord, George Harrison

Canola and Quinoa

Wow, I love to blog. This is an incredible story.

When I started blogging back in 2007, I knew almost nothing about the oil and gas industry.

I remember all the grief I used to get from folks telling me I did not know canola from quinoa. Which was true.

I remember blogging that at some point in the distant future, remember this was back in the 2007 - 2009 time frame, the US might be in the position to export oil. I was immediately beat over the head by folks telling me that there the US did not allow oil to be exported. I checked the CIA Factbook and, in fact, the US did export some oil every year, and, actually, significant amounts. I blogged that the law banning US oil exports is so full of loopholes, the oil and gas industry will find ways to export oil.

So, today here it is. Vindication! Whoohaa! I do know canola from quinoa.

RBN Energy is reporting:
Could the US end up exporting 700 MMb/d of crude to Canada by the end of the decade? Despite static domestic refinery demand and a growing production surplus, Canadian imports of crude increased this year. How could that be? The reason for this apparent anomaly is that East Coast Canadian producers are getting better prices exporting their crude anywhere but the US rather than competing at home against cheaper imports from South Texas and North Dakota. Today we explain some unintended consequences of the US crude export regulations.
This is a complex explanation so hold on to your hats as we walk through what is actually happening today and could increase dramatically in the future – the import of cheap US crude into Canada to replace similar grades produced locally that are being exported elsewhere for higher prices. Our story starts - with government regulation in the shape of the US crude oil export rules.
We have previously detailed these rules administered by the Bureau of Industry and Security that dictate US produced crude and/or lease condensate cannot be exported (see Fifty Shades Lighter the Lease Condensate Export Problem). The export ban applies to all countries except for Canada and to all US crudes except for limited quantities of California and Alaskan production. One consequence of the ban would seem to be somewhat lower prices for some US light crudes. That is because US refineries are not configured to handle the preponderance of light crude from greatly expanded domestic shale production, so supplies are beginning to outstrip refinery demand. That in turn is causing US crude prices to move below overseas levels, in part because the surplus cannot be exported to compete in international markets.
I'm sure Harry Reid is already looking into this.

Speaking of which, I don't know about you, but does anyone find this strange that the law of the land is ObamaCare and Harry Reid can simply exempt his staff from complying?

It's one thing for the president to pick and choose which laws and which parts of laws to enforce, but once federal senators and Congress-people start doing it, it seems it moves to a different level. I just find that strange how a senator can simply exempt his staff from following the law. I didn't read the details, and perhaps the law allows wide discretion. I will know more when Nancy Pelosi exempts the entire state of California from participating. 

Apple Takes #1 In Survey; First Time To Take Top Spot In History Of This Survey; Beats Perennial Leader Dell As Well As HP And Acer

Macrumors is reporting:
According to new a survey done by market research firm Parks Associates, Apple desktops have become the most sought after desktop computers this holiday season, beating out longtime holiday desktop leader Dell and other competitors such as HP and Acer. This marks the first time that Apple products have taken the top spot in the history of the survey, as the company was ranked 3rd in the category in 2011 and 2nd in 2012. The Apple TV also remained at the top spot for the most sought after streaming media device, topping the Roku TV.