Monday; Keystone "Delay" Will Impact Western Canadian Oil Sands; Toyota US Marketing Headquarters Moving From California To Texas

Reporting today:

• Cheniere Energy (LNG): -0.27; time not supplied
• Plum Creek Timber (PCL): 15 cents; after market close

Active rigs:

	4/28/2014	04/28/2013	04/28/2012	04/28/2011	04/28/2010
Active Rigs	185	187	209	174	109

RBN Energy: western Canadian oil sands, new rail regulations

Last week Transport Canada (the federal department responsible for transportation policy) directed that DOT-111 rail tank cars built prior to new safety standards proposed in January 2014 be phased out or refitted within three years.

Fifty five thousand railcars built to the new standards are currently on back-order. The directive could constrain rapidly developing Canadian crude by rail shipments to the US - currently running at about 250 Mb/d according to an April report by Peters and Company.

Increased use of crude-by-rail is driven by pipeline congestion out of Alberta - a situation the latest Keystone pipeline delay appears to make worse.    Today we review unit train options out of Western Canada.

The last episode in this series distinguished between oil sands producers that are able to deliver their bitumen crude to market direct from the production plant as pipeline quality dilbit via feeder pipelines and smaller producers that mostly do not have that luxury.

We pointed out that it is often more convenient for small producers to deliver their crude by truck to rail terminals because of the overhead costs associated with blending up their crude to pipeline specifications and securing scarce capacity on pipelines out of Alberta.

However, we also noted that such small producers are unable to justify shipping their crude on unit trains of 100 cars or more even though doing so would achieve economies of scale. Until these smaller producers are able to ramp up production and invest in improved infrastructure, they are essentially price takers. This time we look at increased unit train options available to larger producers.

Their conclusion:

Nevertheless it seems that larger oil sands producers are willing to go ahead and ship dilbit by unit train just to get their crude to market, regardless of the diluent penalty. The fact that a number of these producers have made long term commitments to Alberta rail terminals on that basis is a good indication of just how constrained the pipeline systems out of Western Canada have become. The recent Keystone decision delay underlines the reality that pipeline congestion could continue for some time. So even though the new rail car regulations will increase rail costs, producers have little choice but to pursue rail alternatives.

 The Wall Street Journal

New bid disrupts Alstom-GE deal. Stakes high for GE's Immelt in Alstom fray.

Detroit's many creditors inch toward vote on plan. The city has more than 100,000 creditors.

Democrats see doomed minimum-wage plan as an election boost.

EU, Ukraine set to sign gas deal.

Missing out of Marcellus riches.

Nearly 15 million people in New England live within driving distance of America's biggest natural-gas field, yet heating and electricity prices reached a record for the region this winter.

As states stretching from Massachusetts to Maine thaw out from bitter cold, questions linger about why New England hasn't benefited from the energy boom in the nearby Marcellus Shale. The short answer is not enough pipelines.

And the reason is an impasse between pipeline operators and power plants over how to pay for new capacity.

The problem is that pipeline operators want long-term contracts in place before they spend the hundreds of millions of dollars necessary to build a new pipeline or expand an existing one. But power companies, which buy gas to fuel generators on a need-to-have-it basis, work on a different timetable. Independent power-plant operators must supply electricity to utilities at the lowest cost possible, and utilities are restricted in the extent to which they can pass on costs to customers.

The result is that the power industry long has been wary of getting locked in to long-term contracts with higher prices than necessary.

Regulators are proposing a tax to bridge the gap. 

Microsoft browser has security flaw. I have never used IE on my personal computers. A security hole in Microsoft's IE -- the default web browser for many -- could be particularly troubling for those still running Windows XP.

The Los Angeles Times

Governor Perry with bragging rights. Toyota to move jobs and marketing headquarters from Torrance, Los Angeles, CA, to Texas.