Monday, Monday -- August 4, 2014

Active rigs:

	8/4/2014	08/04/2013	08/04/2012	08/04/2011	08/04/2010
Active Rigs	193	179	206	182	141

Comment: today we are at 193 active rigs. This past week KOG said they were down to four rigs but by the end of the year they will be back up to seven rigs -- that would put us close to 197 ...

RBN Energy: NGL economics.

US natural gas liquids (NGL) production is growing fast, and surplus volumes are moving to export markets.  NGL production from natural gas processors increased from 1.7 MMb/d in early 2009 to 3.0 MMb/d this year (2014), and it is expected to continue growing to 4.5 MMb/d by 2019. Despite the important role of NGLs, these markets are not well understood, both due to their complexity and the unique aspects of their production, transportation, storage and use.  One of the most misunderstood aspects of NGL markets – the extraction of NGLs from natural gas, is the subject of RBN’s latest Drill-Down Report.  In today’s blog we’ll look at highlights of the report which reviews the basics of natural gas processing, current NGL markets, an outlook for NGL production, the health of NGL processing as measured by the Frac Spread, and a detailed review of RBN’s gas processing economics model.

Gas processing economics is founded on basic knowledge about the conversion of hydrocarbons from one state to another--gas to liquid, and liquid to gas--and about how much energy (that is, how many BTUs) a given amount of liquid or gas contains. NGLs enter a gas processing plant as a raw gas stream, and are extracted from the gas and converted to liquids. They exit the plant as liquids and then are sold in liquids units--gallons or barrels. At every stage in the process, the gases or liquids have a measurable energy content. In the report, we take you through, step-by-step, beginning with the conversion of the gaseous NGLs in a particular raw gas stream (with its chemically specific, percent-based mix of ethane, propane etc.) into liquid NGLs. Then we factor in a specific plant’s processing capacity and its efficiency in removing ethane and the other NGLs, and then plug in natural gas and NGL prices to calculate a useful estimate of the economic uplift provided by removing all five NGLs—or, as an alternative, the uplift (often greater, in today’s market) of rejecting the ethane into the gas. Our MQQV model (available for download with the Drill-Down Report) is not simplistic, but it is relatively simple to understand, and—like that good breakfast we described—satisfying. There is real value to gaining a solid understanding of natural gas processing economics, and this is the best tool we have come across yet to accomplishing that.

Again, the linked article is another great article.

The Wall Street Journal

Divisions in Gaza leadership hamper truce. Sort of like divisions in the GOP, I suppose.

California plans bullet train without more Federal aid. Taking the road to New England.

Libya warned earlier today that eight fuel tanks caught fire amid heavy fighting near Tripoli's international airport between rival militias.

Not much. 

For Investors Only

Report today:

• MRO, at 89 cents, easily beats 75 cents, expected;
• MDU, 29 cents, in-line;
• PXD, $1.35, beats by 7 cents;