Monday, January 6, 2014

The Headlines Just Keep Coming -- Maximum Emergency Generation Alert For Tuesday -- Wind Turbines Need To Spin At Max Rate; President's "War On Coal" Vs Mother Nature

Perhaps the president's "war on coal" has met its match in this most recent storm. Maybe cooler (pun intended) heads will now re-think this crazy idea to kill coal plants which will result in a) blackouts; and/or, b) surging electricity rates. Forbes is reporting:
The Boston Business Journal reported this week that the entity responsible for maintaining reliability on the New England power grid, ISO-New England, has recommended against the recently requested closure of the 1,500 MW Brayton Point facility in southeastern Massachusetts in 2017
According to the BBJ, the plant owner, Equipower Resources, had notified ISO-NE in October of its intentions, stating that it was no longer economical to run the plant. After three months of review, ISO-NE determined that the plant (with three coal-fired units generating 1,055 MW and a natural gas-fired unit at 435 MW) would be needed to ensure system reliability.
The BBJ noted that a planned power line addition – the Interstate Reliabilty Project – would reduce the need from Brayton to just one unit, but that this power line may not be ready in time to meet the planned June 2017 closure date.
By its own admission, ISO-NE “does not have the authority to prevent a resource from retiring.” But, as noted in its recent press release related to the closure of the Vermont Yankee nuclear plant, it can “work with market participants to develop potential market enhancements, including a pay-for-performance mechanism that will create strong financial incentives for generators to assure that they have adequate fuel arrangements to be able to produce electricity when called upon by the ISO.”
I remember those commercials: "This is your brain. This is your brain on drugs." I sometimes wonder if the best and brightest at Harvard who are now making public policy might have been the targets of those public service announcements, based on the decisions they are making. If so, the PSAs missed their targets. By a wide margin.


I'm too busy to do much with this story, but I will post the links and maybe come back to it, but it's a huge story with many story lines.  The first story I can think of: while mainstream media is mesmerized by wind turbines to manage some crisis that may or may not exist, Mother Nature gives us a crisis we can experience in our lifetimes.

Here are the two links a reader sent me. First, Reuters is reporting:
PJM Interconnection, the power grid agency for the mid-Atlantic and parts of the Midwest, called for all electric generation to be available to meet rising demand Monday night and Tuesday as frigid temperatures grip the region.
PJM issued a Maximum Emergency Generation Alert for Tuesday to warn power-plant operators that system conditions may require them to be available to meet record demand.
Below-freezing temperatures are straining the state's electric grid, prompting calls for conservation Monday morning. There was a threat of rotating outages.
The Electric Reliability Council of Texas issued an emergency alert level 2 just after 7:15 a.m. Monday as power reserves dipped below 1,750 megawatts. By 8 a.m., the warning had been scaled down to a level 1 alert and the threat of rotating outages had subsided.
ERCOT also called on big power users to cut back on their power consumption during critical times to reduce load on the grid, a program called demand response.
"We have brought on all available electric generation and have deployed all demand response programs that have contracted with ERCOT to reduce electric use in emergency situations," said Dan Woodfin, director of system operations for ERCOT in a press release. "Conditions appear to be improving at this time and we do not expect to implement rotating outages this morning."
So far, no mainstream media op-eds or stories calling on our elected officials to "do something."

A Note to the Granddaughters 

I am back in my element. I would love to be back in academia, maybe college all over again. I'm in my T. E. Lawrence ("Lawrence of Arabia") phase. I saw the movie for the first time ever the other night in Blu-Ray. It was incredible. I had just read the Korda biography of T. E. Lawrence and the movie was an excellent recap. Yes, there were historical errors, and a bit of artistic freedom, but then, on the other hand, who really knows all the facts? Smile.

Be that as it may, I've spent the day at the Huntington Beach library reading / perusing four additional biographies and putting the story together.

After seeing the movie, I remarked to my wife that the director failed to make his point in the Deraa episode (in which Lawrence was tortured for two (?) days and sodomized an unknown number of times). The director, David Lean, has been quoted as saying the same thing: that if he had a chance to do it over, he would have done more with Deraa. Now that I've read a bit more and have had time to think about it, I feel that the director got it exactly right the first time. Sometimes one can over-think these things, and in general, the hunches of geniuses are the best. Lean was a genius and his hunch to film Deraa the way he did was the correct way. Anything differently would have centered the movie differently. The "Lawrence of Arabia" trailer in my mind is that of an army of Arabs on camels in full charge across the desert. A movie clip of a rape scene etched in my mind would not be what I would want.

Eight (8) New Permits; Wind Chill Temperatures In North Dakota; Active Rigs Higher In Number Than One Year Ago; All Eyes On January 22 -- Keystone XL South; Ah, Yes -- The Well-Known Polar Vortex


January 7, 2014: in the original post I noted the hypocrisy surrounding the way "warmists" treat this cold spell. In 1974, it turns out, Time Magazine blamed polar vortex on "global cooling."

Original Post
Active rigs: 186 (last year: 179)

Wind chill temperatures in North Dakota: the link is at Facebook but it will probably break. During the Green Bay-49ers game, I don't know how many saw it, but inside the television production trailer, the temperature was reported to be 65 degrees, with a wind chill factor of 63 degrees Fahrenheit. The trailers are kept cool to accommodate the computers.

Unable to find link to this story posted at Clearbrook last week (Thursday): the start of TransCanada's 700,000-barrel-per-day pipeline from Oklahoma to Texas later this month. In Clearbrook, Minnesota, Bakken oil differentials largely held on to gains made on Thursday with barrels bid at $3.15 a barrel under futures.

Eight (8) new permits --
  • Operators: KOG (4), XTO (3), Enduro
  • Fields: Pembroke (McKenzie), Garden (McKenzie), Little Deep Creek (Renville)
  • Comments: the KOG permits are for four more Smokey wells in 16-149-98. Some time ago I suggested that operators might start drilling wells heel-to-toe/toe-to-heel; it looks like KOG is doing this in 16-149-98 with the four new permits.
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Note: there may be new "shorthand" in the Bakken. "5 and 4" may mean five middle Bakken wells and four Three Forks in a 1280-acre drilling section; likewise, a "7 & 6" may mean seven middle Bakken wells and six Three Forks wells in a 1280-acre drilling unit.  If in a drilling unit other than 1280 acrem perhaps "5 & 4 - 640" for example. More to follow, I'm sure.
Producing wells completed: None reported.

Operator transfers:
  • Hess Corporation to Enduro Operating: eight (8) wells in Bottineau County
  • KOG to Triangle Petroleum: five (5) wells in McKenzie County (T150N-R101W)
  • Merit Energy to Emerald Oil: thirteen (13) wells in McKenzie County (all very old wells; in T148N-R102W) 
For investors only: three observations about the drop in the price of oil --
  • this was highly anticipated and talked about at length, especially by RBN Energy in late 2013
  • the price drop may be temporary; watch the numbers after January 22, 2014
  • dropping crude oil prices affect investors differently: PSX, a refiner, hit new highs today; and, some operators might have their quarter saved by the lower spot prices if the cold weather prevented them from getting contracted oil to the refinery; they buy the difference on the spot market 
Global Warming

This summer when we have a hot spell, or when there's another report on the devastating heat in Australia, the mainstream media will blame it on Americans use of fossil fuel.

However, when we get record-setting cold, never before reported cold-related events (like schools closing in Williston, North Dakota, because of the cold, or JetBlue canceling flights into NYC because it is too cold) it is blamed on "polar vortex." I can't make this stuff up.

Flashback: Hess Earnings Transcript 3Q13

Not proofread; still needs to be edited.

With the recent reorganization at Hess, it was interesting to re-look at the 3Q13 earnings conference call last October.

Some data points from the conference call regarding the Bakken.

Hess says the company pins its growth on (and in the order they listed):
  • the Bakken (70K bopd), 
  • the Valhall Field in Norway (37K bopd), 
  • the North Malay Basin Project in Malaysia (natural gas), 
  • the Tubular Bells Field in the Gulf of Mexico, (25K bopd); and, 
  • the Utica Shale in Ohio (wet gas).
Some data points:
  • net production from the Bakken averaged 71,000 bopd in 3Q13, up 14% from 3Q12
  • full production forecast for 2013: 64,000 to 70,000 bopd
  • well cost declined 18% from a year ago, down to $7.8 million
  • Hess is selling non-core assets to transition to a focused pure play E&P company
  • Hess with planned downtime in the Bakken, 4Q13, to complete the Tioga Gas Plant expansion
  • productivity per Bakken well among the highest in the industry
  • brought 50 operated wells to production: 30 MB; 20 TF
  • full year: expect 170 wells -- 2/3rds MB; 1/3rd TF
  • Tioga CBR: 54K bopd to higher-value markets
  • Tioga Gas Plant Expansion: wet gas capacity to increase from 120 to 250 million cubic feet/day (more than double); will commence at the end of 2013 
  • a "5 and 4"configuration yields about 2,500 future drilling locations and about 1 billion bbls of  recoverable resource (Q&A)
  • because of the Three Forks, that long-term 120,000 bopd guidance is going to go up; revised guidance will be presented in the annual report (Q&A)
  • obviously with "7 and 6" those numbers go up again (Q&A)
  • Hess activity in the Bakken will accelerate: 2013 - 14 rigs; plan to increase that to 17 rigs in 2014; will step it up to 20 rigs/year and potentially higher after that
  • currently running 9 unit trains; but could increase (Q&A)
  • testing some TF second bench in 2014 (Q&A)
  • not optimistic about TF third or fourth bench; might test it in 2015, at the earliest (Q&A)
As a result of our continuing delineation in Three Forks, both the productivity and aerial extent of the formation has increased above our previous estimates. In addition, the results of our infill pilot programs and reservoir modeling have led us to believe both the Middle Bakken and Three Forks can be further downspaced. We believe that it will be economically attractive to increase the well count and the majority of our Middle Bakken acreage from 5 wells per 1,280 drilling -- acre drilling unit to 7.
Similarly in those areas where the Three Forks is perspective, we believe the well count can be increased from 4 wells per 1,280 acre drilling unit to 6. Over the next 12 months, we plan to install 17 well pads in this new configuration to obtain additional data before making a final decision to move to this tighter spacing. As we make further progress in our planning and field testing, we will provide updated guidance for production, drilling locations and resource potential.
Q&A, back to downspacing:
Our base design has been 9 wells per 1,280-acre DSU. So that's 5 wells in the Middle Bakken, and 4 on the Three Forks. So that yields effectively a 250- and 320-acre well spacing, respectively. Now based on the results of our infill pilot programs, we think that we can further downspace with minimal interference. So over the next 12 months, we're going to install tighter spacing at 17 of our DSUs, with 7 wells in the Middle Bakken and 6 in the Three Forks. So this will bring the spacing down to 180 acres in the Middle Bakken and 210 acres in the Three Forks. So again, moving from 250 to 180 in the Middle Bakken and 320 to 210 in the Three Forks.
And with further questioning, Hess says it would go even "tighter." So two points to be made: Hess will increase the number of drilling units where they move to tighter spacing (13 wells/1280) but in addition, the company is considering more than 13 wells/1280 in some drilling units.

It is interesting to note that Valhall is not working out as well as expected. When you add that to the mix, the Bakken becomes even more critical for Hess.

Of the five important plays Hess mentions above, three are oil, and two are gas. Of the three oil plays, one is not working out as well as expected and the third is just coming on line.

Then there is a very, very long response to a question regarding the lower benches of the Three Forks. I won't go through that here; best for interested readers to read it for themselves. Having said that, I cannot resist a few quotes from Hess:
Results on the Three Forks have been great. So results to date have exceeded our expectations. And in fact, our well results, coupled with the publicly available production data, show that our Three Forks acreage is among the best in the play. So a little context on where we are in the Three Forks. Regarding the benches, we do see several discrete thicker packages in certain areas of the field, where we will plan to test whether or not more than one well in the Three Forks actually can deliver superior returns.
Later in the Q&A, Hess seems to be a bit vague on just how "excited" they are about the lower benches. I've said the same thing: I think the jury is still out on how well the lower benches will do. I know Mike Filloon is very, very bullish on the lower benches. I think the jury is still out. The readers should read for themselves; I don't quite agree with Hess on this one; I think CLR would disagree, also.

Likewise, in the Q&A, there's a nice bit about CBR.

There's also some good information on pricing regarding Hess' Bakken oil. It's quite enlightening and quite optimistic.

They were a bit vague on "cash cost" in Q&A and I will let the readers sort it out for themselves:
... just to give you the same guidance is that on the cash cost, which includes production and severance taxes in there, the Bakken is slightly below our portfolio average there from all-in cash costs there. Going forward, we're looking at -- we're continuing to add information there. Obviously, you know we've got the whole, we're looking at the midstream and the marketing up there in North Dakota. So it's something we'll still be considering as we move forward to provide that information.
A nice reminder for folks: when the gas plant shuts down for a week or so (as part of the expansion project), a bit more gas will be flared in North Dakota -- one should expect to see that in late November, early December.

Bakken Oil Output Threatened; The Headlines Continue -- Global Warming -- Oil Output From North Dakota To Texas Threatened; Cold Ocean Off California Destroying The Ecosystem

The guys in Frankfurt (as in Germany) tell me that the oil companies are not able to function in North Dakota due to the cold weather. Reuters is reporting:
The severe cold weather sweeping across the mid-United States is threatening to curtail booming oil production as it disrupts traffic, strands wells and interrupts drilling and fracking operations.
Weather stations across the U.S. Midwest recorded some of the coldest temperatures in two decades this weekend, with many schools closed and flights delayed. Arctic cold air is also spreading across Texas on Monday with temperatures expected to drop to single digits in the morning.
Output in North Dakota, the second-largest oil producing state, usually ebbs in winter as producers scale back on drilling and well completion services such as fracking, which pumps a slurry of water, sand and chemicals into wells.
But analysts are bracing for a possibly worse than usual impact on output from the state, that could affect operations of companies such as Continental Resources, Marathon Oil and Hess Energy. The companies did not immediately reply to questions about operations on Monday.
"It is so cold that they cannot produce at full capacity, if at all. That should support prices," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
I suppose that's what the Germans thought in WWII when they launched the Ardennes Offensive in the middle of winter (December, 1944 - January, 1945) -- that Americans couldn't function in cold weather. The Germans lost the Battle of the Bulge to the Americans.

The concern about oil output, I guess, explains why oil continues to fall in price. LOL.

Global Warming
A Note to the Granddaughters

I do not recall, ever, seeing headlines like the ones we are now seeing from across the United States. A sampling:
  • oil production is threatened from North Dakota to Texas
  • the average temperature in the US hit 15 degrees (and slightly lower)
  • the south pole (where that research team was stranded/frozen in) is WARMER than Chicago
  • the Indianapolis mayor has banned driving
  • JetBlue will halt all flights to/from Boston, New York, New Jersey
  • American Airlines is now canceling flights due to frozen fuel supply, cold employees
  • Texas grid pushed to edge
  • power demand soars
  • Arctic birds seen in Florida (I think the snowy owls are smarter than our own president)
These headlines are in addition to the striking stories posted yesterday. Those stories were posted to the granddaughters, posted below the photo of the Hollywood sign.

This is an interesting story which will be missed by most: the sardine industry has "crashed" off California. The Los Angeles Times is reporting:
To blame is the biggest sardine crash in generations, which has made schools of the small, silvery fish a rarity on the West Coast. The decline has prompted steep cuts in the amount fishermen are allowed to catch, and scientists say the effects are probably radiating throughout the ecosystem, starving brown pelicans, sea lions and other predators that rely on the oily, energy-rich fish for food.
If sardines don't recover soon, experts warn, the West Coast's marine mammals, seabirds and fishermen could suffer for years.
Hold that thought.

Remember the "warmists" telling us that global warming would result in ocean warming, disrupting the ecosystem there.

The sardine "crash" is not due to a warming ocean. Although no one knows for sure, some think the "crash" may be due to a cooling ocean:
One factor is a naturally occurring climate cycle known as the Pacific Decadal Oscillation, which in recent years has brought cold, nutrient-rich water to the West Coast. While those conditions have brought a boom in some species, such as market squid, they have repelled sardines.
Now back to the story. Are you still holding that thought? Remember all those concerns about global warming and the polar bears? The main prey for polar bears is the seal. Fewer seals due to a cooling ocean and few polar bears, I suppose. It's very possible the "sardine" crash won't have any effect on the seals eaten by polar bears but I couldn't help but see the irony.


By the way, along with "you can keep your doctor, you can keep your insurance," President Obama on November 1, 2013:
"Excessively high temperatures" are "already" harming public health nationwide, Pres. Obama declared on Nov. 1, 2013, two months before today's assault by record low temperatures.
In his executive order on climate change, Obama warned that too much rain - and not enough rain - also dictated that executive action against climate fluctuations.
Too much rain? Tell that to the Californians who are experiencing their worse drought ever. The San Jose Mercury News is reporting (this was posted just a week ago):
The driest year on record is turning the golden hills of California to dust, drying up wells, pastures and cash reserves in a season that is traditionally lush and generous.
The official drought map of California looks as if it has been set on fire and scorched in the center. The Bay Area has pulled out its umbrellas only few times this year. Normally, December offers a reprieve, delivering at least a storm or two. But the jet stream that usually pushes rains across our landscape remains up in the Pacific Northwest, allowing a warm and dry high pressure system to linger overhead.
Records are being broken all over the state, according to the National Weather Service. San Jose has only received 3.8 inches since January, well short of its 14-inch average. Oakland is even drier -- 3.39 inches this year, compared with its 22.8-inch average. The last time it was this dry in San Francisco was in 1917, with 9 inches. This year, the city has had less than 6 inches.
By the way, don't equate arid with temperature. The coldest place on earth, the Antarctic, is considered a desert.

Again, this is a note to my granddaughters. For the archives.

Renewable Energy

States are turning against electric cars as revenue begins to fall (predictable). The Daily Caller is reporting:
States are quickly learning that promoting electric cars is coming with a high price tag. Colorado has joined a growing number of states that are imposing fees on electric and alternative vehicles to recover “lost” gas tax revenues.
As of this year, Coloradans driving electric, alternative fuel and high-efficiency vehicles will pay a $50 registration fee to capture more revenue from vehicles that use less traditional gasoline. This is part of a growing trend by which states are looking to recoup declining gas tax revenues as vehicles become more fuel efficient and drivers buy more electric vehicles.
Colorado is one of at least five states that have special fees on hybrid and electric vehicles — Colorado, Nebraska, North Carolina, Virginia and Washington. Earlier this year, Oregon lawmakers were discussing a bill that would impose a fee on electric cars and those getting 55 miles per gallon or better.
Actually that opening line is minimally accurate. That opening line conveniently leaves out a whole bunch more. The opening line should read: taxpayers are quickly learning that promoting renewable energy is coming at a huge price tag.

Radioactivity Surges Off California Coast
Related to Japanese Nuclear Accident?
Health Officials: no concern over fact that radiation levels have increased 500% along California beaches

InfoWars is reporting
Health officials in California are attempting to brush off public concern after a viral Youtube video showed a large increase in radiation levels on a coast side beach last week.
The video, which has garnered nearly half a million views, shows radiation levels over five times above the normal background level, prompting fears over the ongoing Fukushima disaster.
But if there is even a hint that fracking might cause contamination in drinking water, the Californians are all over it. But, hey, a 500% increase in radiation along "our" California beaches -- "we" don't even want to talk about it.

Monday, Monday

Active rigs:

Active Rigs18617919816478

RBN Energy: Part III in our series -- analyzing the concerns voiced by some as to whether the natural gas renaissance is real and sustainable, with plenty of natural gas at reasonable prices. In Part I we tackled the history of industry regulation before the shale era. In Part II we developed a reasonable demand scenario out to 2025. [Why does our scenario go out to 2025? See the box insert for an explanation.]  Demand estimate of 92.5 Bcf/d represented an upward adjustment of 15.5 Bcf/d over EIA’s 2013 estimate (77 Bcf/d). EBN Energy knew EIA’s demand estimate was balanced with supply at reasonable, stable prices (real, constant-dollar prices staying below $6.00 until the mid-2030s, and even nominal prices staying below $6.00 into the mid-2020s). Our initial goal in this episode was to determine whether our higher total demand estimate could be met without gas prices jumping higher.

I am Fanboy #3.

Over the weekend my daughter and I visited the high-end South Coast/Costa Mesa mall on two separate days. I specifically went back to look again at the new 4K/Ultra HD  monitors offered at the Sony store. I used the opportunity to visit the Apple store twice, the Microsoft store twice, and the Sony store twice. The clarity of the 4K/Ultra HD monitors is truly incredible. Sony 4K/Ultra HD players are sold separately. They are not inexpensive, but even the $1,000 monitors can be financed over time, and some financing for some units will go out four years.  The Sony webpage refers  to these at Ultra HD but everywhere else (including inside the Sony store) the term "Blu Ray" is used. This, no doubt, has to do with licensing.

But I completely missed this: Apple quietly retired optical drives (CD and DVD drives) from all their computers except one. Apple is not promoting the one laptop that still has an optical drive but it is clear that Apple is retiring that technology. I seldom use my DVD drive, but I am glad I have it. Something tells me that I will keep this MacBook Pro a lot longer than originally planned simply because it has an optical drive. A bit of me thinks that Apple moved too quickly retiring optical drives, but according to my daughter my other computer companies are going the same route. I occasionally, rarely like to "rip" my own CD for cross-country trips, but I have to admit I don't see the young crowd using CDs any more. They are building their song list on iTunes and then transferring them to their mobile devices (or building their song list on their mobile device to begin with).

Global Warming
Record-Setting Cold Grips Chicago

Even NBC is reporting that it's cold outside, something the mainstream news media probably just hates to report:
Temperatures in the wake of a stubborn weather pattern that dropped several inches of snow could be summed up in a single word: brutal. At 7 a.m., O'Hare International Airport recorded a temperature of -15, breaking a record low of -14 set on this date in both 1894 and 1988. By 8:30 a.m., the official Chicago temperature had dipped another degree, to -16.
With the wind chill factored in, Monday's temperatures were predicted to be in the -40 to -50 degree range and even lower across the Fox Valley. A Wind Chill Warning that began at 6 p.m. Sunday was scheduled to remain in effect until noon Tuesday.
There's also a possibility the Chicago area could set a new record for the coldest high temperature. The all-time lowest high temp was -11 on Jan. 18, 1994, and Dec. 24, 1983.
The Wall Street Journal

Is the economy set to take off? Watch these five (5) factors: -- not going to post -- way too geeky, wonky -- nothing helpful, nor actionable.


Amid national outbreaks of measles, whooping cough and other preventable diseases,
Colorado officials might make it harder for parents to exempt children from vaccinations for school and day care. Colorado is one of 48 states that allow such exemptions for reasons of personal belief or religion—often requiring little more than a parental signature on a form.
In the 2012-2013 school year, about 4.3%, or 2,900 children, were excused from required vaccinations, one of the highest percentages of kindergartners in the nation.But a surge in cases of whooping cough in the state and a spike in measles across the country has the Colorado Department of Public Health and Environment weighing new rules.
One possible change would require parents to receive counseling or education on the benefits and risks of vaccination before they can opt out for nonmedical reasons. 
Won't make any difference; folks who don't want their children to get vaccinated will gladly take the courses and argue their points. And probably convince more to stop getting the vaccinations in the process. After all, this is the state that also legalized pot.

On another note, there must be something else going on. If only 4% are not getting their "shots," herd immunity should protect them. My hunch: the numbers are being under-counted, and there is an inconvenient truth who is not getting their vaccinations.