Thursday, February 6, 2014

Flaring; Work On Panama Canal Comes To A Screeching Halt -- Almost; Railcar Safety Lawsuits; Power Outages To Last For Days In Northeast; USPS Stocking Up On Guns, Ammo

Active rigs:

Active Rigs19118220116590

RBN Energy: expanding infrastructure at Edmonton and Hardisty due to conventional as well as unconventional oil. When you read this post, think about the effect this is having on Saudi's outlook for oil. Canadians are producing way more oil than they can ship on a daily basis; think arbitrage, just like OPEC.
Rapid growth of heavy oil sands crude production in Alberta is prompting considerable expansion of storage and pipeline infrastructure at Edmonton and Hardisty. Less well publicized is the growth in conventional Canadian crude oil production – in many cases using horizontal drilling technology. In Saskatchewan, crude volume passing though the Kerrobert hub is increasing and a large rail-loading terminal is planned to open there in 2015 to supplement existing takeaway capacity on the Enbridge Mainline. Today we conclude our analysis of Canadian storage hubs, focusing on Kerrobert.
This blog concludes our series on Canadian crude oil storage. In Part 1 we looked at increasing Canadian crude oil production and expanding pipeline capacity in the two crude marketing hubs of Edmonton and Hardisty. These hubs are the staging posts for crude oil exports to the US as well as the distribution point for diluent supplies coming into the oil sands production region.
The Bismarck Tribune

"Someone" is complaining that North Dakota is ... well, let me cut and paste the first paragraph or so --
North Dakota is losing nearly $1 million monthly in natural gas tax revenue as vast amounts of the byproduct of oil production goes up in smoke, state Tax Department records show.
About 30 percent of the state’s gas production is being burned off because development of the pipelines and processing facilities needed to handle it has not kept pace with production. Oil producers can flare gas without paying taxes on it for up to a year, but are routinely being granted waivers after that.
The lost tax revenue — often overlooked in the oil-rich state that has a more than $2 billion savings account — could help fund the $240 million set aside through 2015 to help counties experiencing rapid growth from the state’s unprecedented oil bonanza.
So many story lines here. One trivial point: the $1 million in monthly royalties is directly related to the price of natural gas; once natural gas plummets in price, later this spring, that $1 million will also plummet. And, of course, more natural gas processing will come on line by then and that will also lower the figure.

The reporter might ask where the majority of the flaring is occurring, on a percentage basis. I believe it's in the BLM-managed reservation where conservation is "job #1." Well, if not "job #1," second only to saving "extraordinary sites."

But this is the bigger story. Regardless of where the price of natural gas goes, the state is leaving much more than $1 million monthly on the table due to Legacy Fund investment goals. I have posted this before, asking to be corrected; I have not been corrected, so I assume a) no one is interested; or, b) I am correct.

It is my understanding that the Legacy Fund is not invested in equities. It remains in cash. The North Dakota legislature is concerned about the safety of the US stock market [Under President Obama, I am not surprised, but presidents come and go]. So, money coming into the Legacy Fund is put under the mattress.

The linked story says the fund now has $2 billion in it. 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. MDU pays 2.2% and could not possibly be a safer investment for North Dakotans. $2 billion x 2.2% = $44 million. Over a 12-month period = $3.6 million/month.

MDU has a history of raising their dividends yearly, so the $3.6 million would increase; if the dividends were reinvested in MDU, the figure would further increase. And, as noted, the monthly natural gas royalty will drop later this spring.

There was a headline in yesterday's Drudge Report that suggested "social media" was preventing folks from thinking analytically. I don't know. I think it was a just slow news day, and a lazy job of reporting. We've been hearing about flaring since 2007. I can expect a story on flaring at least monthly from the regional newspapers.

I still think the whole flaring issue is a red herring.  If "they" really wanted to stop flaring, all they have to do is shut down drilling. Completely. The lights would go out overnight -- literally. [This is sort of like the drought story in California: if it is as bad as the media is reporting, why are all water conservation "rules" voluntary?]

[The comment about lazy reporting is substantiated by the reporter not even getting a more recent photograph: the picture accompanying the story was taken near Parshall, ND, -- on the reservation -- on September 23, 2008. Of course, a flare is a flare is a flare. The location of the flare -- on the reservation -- spoke volumes. Not much has changed there based on recent data.]

The Wall Street Journal

The second lost decade, 2008 - 2016: more men in prime working ages don't have jobs.
Mark Riley was 53 years old when he lost a job as a grant writer for an Arkansas community college.
"I was stunned," he said. "It happened on my daughter's 11th birthday."
His boss blamed state budget cuts. That was almost three years ago and he still hasn't found steady work. Mr. Riley, whose unemployment benefits ran out 14 months ago, says his long and fruitless search is proof employers won't hire men out of work too long.
"We're poor, but we're not broke," Mr. Riley said. "We still have property. We have cars. We have some assets, we just can't liquidate them."
Mr. Riley's frustration is widely shared. More than one in six men ages 25 to 54, prime working years, don't have jobs—a total of 10.4 million. Some are looking for jobs; many aren't. Some had jobs that went overseas or were lost to technology. Some refuse to uproot for work because they are tied down by family needs or tethered to homes worth less than the mortgage. Some rely on government benefits. Others depend on working spouses.
Why do spouses (generally "wives") have jobs and the men don't?

 Mortgage rates hit lowest level in three months.  That can be interpreted two different ways. I don't see it as good news unless one is buying/selling a house. For the other 99% in the United States, this is a bad news story.

Snow and frigid air make a mess of air travel. More than 50,000 flights have been canceled this winter, due to global warming climate change extreme weather. 

The GOP is looking to raise pensions for military veterans as part of the looming debt limit compromise. What a great country.

Argentina and Venzuela face inflationary crises. Regular readers are well aware of this. Warmsthe cockles of my heart. But Argentina is taking a page from the Obama economics handbook: Argentina is set to unveil a new inflation index next week have economists disputed the official figures, though no one knows whether it will match economists' expectations. Sort of like how our own administration changes the definition and indices of leading economic data.


Wow! Work on the Panama Canal expansion project has pretty much come to a standstill. Work to expand the Panama Canal has virtually halted, and the group in charge of construction said the projects is on the "brink of failure" after talks to resolve $1.6 billion in cost overruns broke down. Sounds like a banana republic, like the one located between Maryland and Virginia.


Lawsuits shine spotlight on railcar safety.
Now, at a time when a series of train derailments have raised alarms over rail safety, two major railroads are battling the contractors in court. They are charging that, in some cases, the contractors created hazards by failing to do repair work properly.
The two sides are also fighting over who should be blamed for derailments caused by broken axles and thus bear the cost of damages. Railroad operator Union Pacific Corp. has sued both Progress Rail Services Corp., a unit of Caterpillar Inc., and Greenbrier Cos., the owner of a rival repair service, over what it alleges was inadequate work that led to several derailments in the past few years.
BNSF Railway Co., another big railroad, has sued Progress Rail on similar grounds over a December 2010 derailment near Jamestown, N.D. Representatives of Progress Rail and Greenbrier declined to comment on the suits, which both companies are contesting in court. Despite the litigation, Progress Rail is "a valued supplier," a BNSF spokesman said. Both Progress Rail and Greenbrier said they follow railroad-industry standards in doing their repair work.
More data dribbling out from the Target security breach. It appears hackers targeted vulnerabilities in retailers' checkout systems. Will, duh. Where was Homeland Security? Where was the NSA? And, yet to come, the investigations of HHS contracting the ObamaCare website out to Belarus software engineers.


More lenders (i.e., banks like Bank of America) are introducing fees on checking accounts, just as consumers and business are pouring record amounts into the most basic of banking services. 
The trend marks the steepest annual drop in the percentage of banks and other financial institutions offering free checking since 2010, and follows a trend of less-generous deposit accounts since the recession. Besides higher costs, consumers have fewer options to choose from as most banks have shifted from offering as many as 20 different checking accounts to a maximum of eight, according to the Moebs survey.
twenty different checking accounts? Say what? Probably only a concern for Bakken billionaires.


Sochi: it will look good on television, but it will be a disaster.

The Los Angeles Times

Power outages could last for days in storm-battered Northeast.

Hundreds of thousands of electricity customers in parts of Maryland, New Jersey and Pennsylvania waited for power to be turned back on as states fought to clean up Thursday from the second major storm this week.
Up to a foot of snow fell in parts of the Northeast on Wednesday, still reeling from the first storm at the beginning of the week. Schools have been closed in many areas, as have businesses and government offices. The cold coated many power lines with heavy ice that brought them down.
As its peak, nearly a million people were without power in storm-socked states. Pennsylvania had the most outages, with about 849,000 customers hit. As many as 3,500 utility workers worked feverishly to repair the damage, according to PECO, the utility. Despite successes, work remained to be done.
Remember: this is not climate change, this is simply the weather. This summer, when we have some sweltering days at the Bronx Zoo, that will be global warming.

NBC yanks Michael J. Fox. I lost a lot of respect for him when ... well, I'll leave it there.

GM disappoints investors. 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.

Salt shortage leaving many communities "out in the cold." Cute. That would be fun phrase to diagram: "out in the cold." Must be a tough idiom for foreigners to learn.


US Postal Service to buy large amount of firearms, ammunition
Ironically the Postal Service isn’t the first non-law enforcement agency seeking firearms and ammunition.
Since 2001, the U.S. Dept. of Education has been building a massive arsenal through purchases orchestrated by the Bureau of Alcohol, Tobacco and Firearms.
The Education Dept. has spent over $80,000 so far on Glock pistols and over $17,000 on Remington shotguns.

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