Oil Is UP Almost 2%; Now Over $102.00; More On The Hawaii LNG Story

I don't have access to television business news so I don't know to what the talking heads are attributing the rise in the price of oil. It is not the strength/weakness of the dollar. It's hard to believe it is due to news of better global economic news. That pretty much leaves a) a continued drawdown at Cushing; and/or, b) saber-rattling in the Mideast and in the Ukraine. It was noted that Saudi released less oil than usual in March (I believe it was). [Later, 7:01 p.m. central time: it appears I'm wrong -- the experts said the 2% rise was all about a) a sharply lower dollar; and, b) a sharp rise in Mideast tensions. Okay.

So, let's look at the "sharply lower dollar": it dropper ... drum roll ... 0.0383%. That's rounded to 0.045%. Four-hundredths of one percent. That's sharply lower. I don't understand currency, that's for sure. Four-hundredths of one percent is a sharp change in direction. Okay.

And I still don't think the tensions today -- anywhere in the world -- were all that different than yesterday. Okay. Whatever.]

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By the way, my "Yahoo Mail" account has been down all morning. I am not receiving any in-coming mail.

If you sent me something for the blog, I did not receive it. Post "sad face" here.

I assume it is an "Yahoo" glitch that will eventually get sorted out.

I did place an alternate e-mail address under my profile at the sidebar at the right.

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Earlier I posted a note about Hawaii beginning to import liquified natural gas. In that linked article, it was said 10,000 gallons was brought in. An update, and a question/comment.

First, an update: back on March 19, 2014, Hawaii Gas said it might start importing LNG for several Hawaii islands:

Hawaiian Electric Co. expects to begin shipping in liquefied natural gas in containers as early as in 2016 as a replacement fuel for power generation on Oahu, the Big Island, Maui, Molokai and Lanai, which may substantially lower fuel costs while helping it to comply with more stringent environmental regulations, according to a recent a request for proposals obtained by Pacific Business News.

Hawaiian Electric, a subsidiary of Hawaiian Electric Industries, said the effort includes Hawaii Gas on a plan to bring in bulk shipments of LNG. 

"To help lower our customers’ electric bills with a cleaner fuel than oil as soon as possible, a containerized LNG option may be an effective near-term option until a bulk LNG terminal can be built,” Hawaiian Electric spokesman Darren Pai told PBN.

The RFP calls for the supply and delivery of up to 800,000 tons per year to be supplied by containerized shipping for a term of up to 15 years, starting in late 2016 or early 2017. Hawaiian Electric said that it hopes to submit a proposed contract to the Hawaii Public Utilities Commission for approval by August.

The question/comment: from an investor's point of view, it might be interesting to know who is shipping the LNG and more specifically (than just "California") where the natural gas is coming from. SRE is up significantly today in trading, but almost all oil and gas companies are up with news that oil is now above $102/bbl, so the fact that SRE is up may not indicate much.

However, there are probably not many California companies that can meet the RFP for 800,000 tons per year. 

From the earlier linked article, which sheds no light on the source or the shipper:

“We’re working with multiple suppliers,” Hawaii Gas President and CEO Alicia Moy told PBN recently, although she declined to specify which supplier is brining the LNG in or exactly where it is shipping the fuel from. “It’s been a long road [and] we’re excited about it. It will mean so much to the state if we can bring it in large quantities.”

I don't know how accurate this source is, but it is said that, approximately, one gallon of natural gas weighs 3.5 pounds. It varies on the make-up of the natural gas; assuming it is mostly methane, the weight is about 3.5 pounds per gallon.

The earlier article: 10,000 gallons x 3.5 pounds = 35,000 pounds in that one shipment.
35,000 pounds / 2,000 pounds = 17.5 tons, rounding gives 20 tons
800,000 tons / 20 tons = 40,000 times that first shipment / 365 days = 100x/day that first shipment.
Disclaimer: I often make simple typographic and arithmetic errors; I do this just to get an idea of the size of the first shipment and the size of the RFP.