Tuesday, April 8, 2014

Without Question, The Best "NY Times" Headline For The Year

A reader sent me the link.

Another reader summed up the story pretty well:
Starting in 2017 not another worthless on or off shore windmill or solar panel will be installed in Germany for a hundred years....unless we decide to extend the "mandate".....
Original Post/Update

I saw the headline, and said, "say what?" Germany is going broke on renewable energy. Certainly ....

Read the headline, then read the story.

This is truly incredible.

Here's the New York Times headline: Germany moves forward on renewable energy plans.

Regular readers know that Spain went broke investing in renewable energy; Germany came close. Germany did lose its competitive edge due to investing in renewable energy and it will take years to recover. So, when I read the headline that "Germany moves forward on renewable energy plans," I about fell off my Starbucks Lazy-Boy. There had been a thousand previous stories suggesting that Merkel was going to scrap renewable energy.

The article says it all. You might have to read it three or four times to really sort this out. Talk about cognitive dissonance:
Chancellor Angela Merkel’s government approved legislation on Tuesday revamping Germany’s sweeping plan to generate more than 40 percent of its energy needs through renewable resources by 2025 by slowing the rapid expansion of solar and wind parks in an effort to hold down spiraling prices.
Already, 25 percent of German energy comes from renewable resources, but that advance has come at a cost to consumers, who have borne the brunt of the surcharges that funded the expansion.
Keeping power prices in check is a key element of the government’s revised policy ....
“Restart means no longer following the illusion that the energy transformation can be achieved by expanding renewable energy as quickly as possible, ...
... an agreement with regulators in Brussels, who had challenged the exemptions on the grounds that they violated competition laws within the European Union.
The broad coalition government of Ms. Merkel’s Christian Democrats from the right and the Social Democrats from the left intends that the revisions will reboot a renewable-energy policy adopted more than a decade ago.
Energy prices have risen each year since 2000 to among the highest in Europe, and the policy could lose its popular support if the prices continue to rise.
While Mr. Gabriel said he could not promise that energy prices would go down, he said the goal of the changes was to put the brakes on further increases by scaling back green subsidies and limiting the expansion of onshore wind and solar capacity. Only 2.5 gigawatts of wind and solar can be added each year, while offshore wind expansion will be capped at 6.5 gigawatts by 2020.
Starting in 2017, the renewables market will be subject to competitiveness, and providers will no longer enjoy the guaranteed prices that have helped to spur the expansion of wind and photovoltaic since 2000.
[And then a lot about environmentalists going nuts.] 
After months of wrangling, Brussels and Berlin agreed to a deal that will see some 400 of the previous 2,100 companies forced to relinquish their exemptions. 
“If we don’t want to lose jobs, we have to make sure that our companies remain competitive,” Mr. Gabriel said. “This is about hundreds of thousands of jobs.”
A reader sums it up pretty well:
Starting in 2017 not another worthless on or off shore windmill or solar panel will be installed in Germany for a hundred years....unless we decide to extend the "mandate".....

Utica Best Shale Play In The US? Pu-leeaese....They Just Banned Fracking In Ohio


April 11, 2014: since the original post, CNBC has a headline that Ohio has just banned fracking. That's not entirely correct, but it's not far off the mark. Google the story. I will post it when the spirit moves me.

Original Post

Nice "PR" article but I don't agree that the Utica is the best shale play in the nation. Had "they" only been talking natural gas, I wouldn't have said a thing, but once they mentioned the Bakken, I had to disagree.

In addition, the cost of Bakken wells has come down from the "30-second sound-bite $10-million Bakken well."

HoustonBizJournal is reporting that Magnum Hunter is very happy with its involvement in the Utica.
The average cost to develop a well in the Utica play is between $8 million and $10 million, compared with $4 million to $6 million for the Niobrara formation in Wyoming and Colorado, $9 million for the Eagle Ford in Texas and $10 million for the oil-rich Bakken formation of North Dakota.
I guess the "$10-million-Bakken well" and "30% of all Bakken gas is flared" are with us forever.

More On That Earlier Story About Re-Exporting Canadian Oil

Remember the original post?

Here's a bit more from The Financial Times:
Pipeline operator Enbridge said it plans to export Canadian crude oil via a US port in a move fraught with significance for energy policy in Washington.
The Toronto-listed company said it had been granted a licence to export crude produced in Canada through a subsidiary, Tidal Energy Marketing (US), confirming weeks of speculation in oil market circles. 
Canadian crude imports into the US hit a new record of 2.85m barrels per day in January. While US refineries are the main customers for this oil, Canadian producers want the option to sell these barrels onwards to other countries. 
The prospect of seeing some Canadian barrels disappear to foreign destinations will be controversial as the White House reviews the proposed Keystone XL pipeline, which would link Canada’s oil sands to refineries on the US Gulf of Mexico coast.
TransCanada, the project’s sponsor, has said Canadian oil shipped on the line will be processed inside the US. 

US law prohibits exports of domestically produced crude oil to all destinations but Canada. It allows the “re-export” of foreign-produced crude such as Canada’s as long as the oil has not been mixed with oil of US origin.
Bureau of Industry and Security data show traders in recent months have obtained licences to re-export crude assumed to be Canadian to destinations in Asia, Europe and Latin America. Enbridge is the first to publicly acknowledge plans to actually use its licence for re-export.
“We obtained the licence because one of our key strategies is to provide logistics solutions to an evolving North American crude oil supply environment that allows our customers to buy or sell where the prices are most favourable,” Enbridge said.
The company described as “small” the volumes to be exported – less than 1.5 per cent of Enbridge’s total US shipments of 2.4m b/d. Reuters first reported on Enbridge’s licence.

Active Rigs, Permits To Date, Projected Permits -- The Williston Basin, North Dakota, USA; North Dakota Close To Setting New Records In Oil -- Canola Oil; Same With Soybeans -- April 8, 2014

Three data points to think about.

Active rigs:

Active Rigs191185208173103

Permits issued to date (and corresponding date) in each of the three past years (oil and gas only):
  • 2014: 749
  • 2013: 664
  • 2012: 553
Projected number of permits for the calendar year at this point in time (oil and gas only):
  • 2014: 2,790
  • 2013: 2,473
  • 2012: 2,060
2012 was the last year of the Bakken boom, "they" say.

North Dakota Agriculture: Soybean and Canola Acres Nearing New Records

It's feels like spring and farmers are getting ready to head to the field and break some records. 
Soybean acres are estimated to be at an all time high at 5.6 million acres...which would put North Dakota in the top 5 producing states in the nation, stealing Indiana's number 4 position. 
Canola acres are also expected to be near an all time record high in the state. Farmers are expected to dedicate 1.27 million acres to the crop.
Meanwhile, Over At Apple

MacRumors is reporting:
Apple's iPhone continues to grow in popularity with U.S. teenagers, according to Piper Jaffray analyst Gene Munster's latest semiannual teen survey, which asked 7,500 teens about their device preferences. 61 percent of teens now own an iPhone, compared to 55 percent from a survey conducted in October 2013 and 40 percent in the fall of 2012.

67 percent of teens expect their next phone to be an iPhone, up slightly from October's survey. When it comes to tablets, 60 percent of teens own one, up from 56 percent in the fall. 66 percent of those own an iPad (55% full-sized, 11% mini), which is down slightly from 68 percent, with ownership shifting further towards the mini. 18 percent of teens who don't own a tablet expect to buy one in the next sixth months and of those prospective buyers, 66 percent plan to choose an iPad
Any Investor News In The Bakken? Elsewhere?

KOG was up almost 5% today. Pay attention to John Paulson's small cap picks. The story lists five; here are two:
Third on the list is Oasis Petroleum Inc., with Paulson's 7.4 million shares worth approximately $348 million. He increased his stake in the $4.4 billion market cap independent oil and natural gas E&P (exploration and production) company more than seven-fold during the fourth quarter. Other shareholders include Vince Maddi and Shawn Brennan of SIR Capital Management, Paul Jasinkiewicz of Jasinkiewicz Capital Management and Anthony Giammalva of Sound Energy Partners.
Paulson's fifth largest small cap holding is Kodiak Oil and Gas Corp., in which he owns 26.0 million shares worth approximately $291 million. He is the largest shareholder of the $3.4 billion market cap company, which is engaged in the acquisition, exploration, exploitation, development and production of crude oil and natural gas in the Rocky Mountain region. Other hedge fund managers that own the stock include Ken Griffin of Citadel Investment Group, Israel Englander of Millennium Management and Phill Gross and Robert Atchinson of Adage Capital Management.
CLR was up almost 5% today. Contributor over at SeekingAlpha: nothing regular readers didn't already know.

WLL was up about 3% today. Some insider selling at WLL. Insignificant. Must have been a slow news day. Probably needed to raise some cash to pay personal federal taxes. 

CHK was pretty flat today. Not much value in CHK spinoff -- Motley Fool:
A few weeks back, the company submitted documents to spin off the oilfield services division in order to reduce corporate debt by $1 billion and allow the independent firm to better attract non-Chesapeake clients. The division primarily operates a land-based drilling fleet and hydraulic fracturing fleets that might compare favorably to combination of Helmerich & Payne and C&J Energy Services. While those two companies are trading at 52-week highs, one shouldn't expect similar peak pricing for the spinoff.
Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you may have read here or think you may have read here. 

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; Yahoo Mail Service Disruptions Today

My "Yahoo Mail Service" has been down pretty much all day. I reply to almost all e-mail; if you sent me something and I did not reply, I probably did not receive the e-mail. It appears the e-mail is all coming in, but it may be hours (even a day) late.  This site suggests Yahoo has been having some problems today.

Active rigs:

Active Rigs191185208173103

Fourteen (14) new permits --
  • Operators: Hess (8), WPX (4), Newfield (2),
  • Fields: Truax (Williams), Manitou (Mountrail), Antelope (McKenzie), South Tobacco Garden (McKenzie)
  • Comments:
Wells coming off the confidential list (mostly to DRL status) were posted earlier; see sidebar at the right.

One Mountain Divide well was canceled:
  • 27048, PNC, Mountain Divide, Ardell 36-25 1H, Divide County
One producing well was completed:
  • 25927, 1,261, Petro-Hunt, Dolezal 145-97-17A-20-2H, Little Knife, t3/14; cum --
Wells coming off the confidential list Wednesday:
  • 20910, 447, Sinclair, Nelson 2-25H, Parshall, t12/13; cum 5K 2/14;
  • 24763, 1,286, Enerplus, Catfish 148-93-15D-16H, South Fork, t10/13; cum 78K 2/14;
  • 24764, 979, Enerplus, Pumpkin 148-93-14C-13H TF, South Fork, t10/13; cum 60K 2/14;
  • 24765, conf, Enerplus, Tobacco 148-93-14C-13H, South Fork, producing, a nice well,
  • 26015, drl, MRO, Rebecca 31-26, Killdeer, no production data,
  • 26229, 470, SM Energy, Peter 4-2H, West Ambrose, t1/14; cum 12K 2/14;
  • 26404, drl, CLR, Annapolis 3-29H, Dollar Joe, no production data,
  • 26425, 325, Whiting, Lowman 44-15, Camel Hump, a Red River well, t12/13; cum 12K 2/14;
  • 26455, drl, XTO, Broderson 31X-27C, Siverston, producing,

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.]


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.


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.

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.

North Dakota Sixth-Graders Trump College Business Students

One of the top stories over at Yahoo!Finance right now: Fargo, ND, sixth-graders school college business students on investing:
A class of sixth-graders from North Dakota has schooled some of the best college business students in the country on the stock market.
It started as a competition between the regular and advanced math classes at Fargo's Oak Grove Lutheran School, where Dave Carlson was teaching his students about handling money through two online investment companies. Unbeknownst to the middle school investors, one of the companies was at that time holding a university challenge that offered a $5,000 first prize to the investment club with the most profitable basket of stocks.
While Virginia-based McIntire Investment Institute won that contest with an 18.5 percent return, Carlson's regular math class yielded a nearly 22 percent gain and trounced all the university clubs on a return-since-creation basis.
Move over Berkeley, Cornell, Columbia, NYU and USC. You've been beaten by Carlson's Math Minions.
They probably over-weighted their basket with KOG. 

When she enters 5th grade, I will hire my younger granddaughter as my investment adviser. The older granddaughter schools me on math and science. 

First Casualty In War On Coal -- James River Files For Bankruptcy; Goodnight, Moon

24/7 Wall Street reports:
The natural gas revolution claimed its first coal-mining victim after markets closed Monday night. James River Coal Co. filed for Chapter 11 bankruptcy protection as it tries to find either investors or buyers.
Without the EPA regulations, coal is/was still cheaper than coal. Natural gas made a huge difference, but this all about the administration's war on coal.


Goodnight, Moon, Shivaree


Goodnight, Moon, Audrey Hepburn

How Incredible Are These Shale Plays? 16 Wells In 960 Acres -- And None Of Them Will Be Dry

The shale energy stories never cease to amaze me. When I started the blog, I had no idea where the blog was headed. My only purpose was to use the blog to try to understand the Bakken. In the process, it has helped me put into perspective the other shale plays.

Look at this note from the Whiting presentation regarding their play in the DJ Basin, specifically the Niobrara A and B:
Our 27L pad is targeting the Niobrara “B” zone while our 27K pad is testing both the Niobrara “B” and “A” zones. Both pads are located in our Razor area and are testing a 16‐well per 960‐acre drilling spacing unit pattern. Initial results from both pads are encouraging with early results from both “B” and “A” zone wells tracking our typical 400 mboe type curve.

Someday Soon, Judy Collins

For Investors Only

I remain surprised: oil is back up over $101. Who would have thought?

From Platts: Saudi supply fell to 9.53 mil b/d in March from 9.9 mil b/d in February, according to Gulf source.

Samson Oil & Gas provides weekly operations update: Co advises that the Rennerfelt #2-13H well has flowed at 825 BOPD. The flowback on the Rennerfelt #1-13H will start tomorrow.
  • The flow back of the Rennerfelt #2-13H well is in progress and the last measured oil rate of 825 barrels per day. 
  • Production from Sail and Anchor has been re-established and the well is performing as expected. 
  • The fracture simulation treatment of the Rennerfelt 1-13-H is completed and the well will be flowed back over the next few days. 
  • Frontier 24 is drilling the Matilda Bay #2 well and is currently at 11,569 feet. This well is planned to be drilled to total depth of 16,127 feet and then the rig will skid back to the Matilda Bay #1 well to drill the lateral and run the production liner. 
  • Production is lower for March due to the Earl, Sail and Anchor, and Little Creature wells being shut-in for off-set well fracture stimulation operations
  • In addition, several of the vintage North Stockyard wells were shut in for operational reasons which are expected to be rectified in the near term.

Takeaway Capacity In The Bakken -- Rail Still Required

This is a very interesting graph from Whiting's most recent presentation.

There are several story lines in this one graph. The one that strikes me the most is how constrained the Bakken is without rail. In round figures, it appears that the current pipeline capacity would only meet half the current needs. In the out years it gets worse, especially when one considers, the proposed pipeline may not be approved.

Why Not 100% Solar In Hawaii? Hawaii Is Making Synthetic Natural Gas


April 8, 2014: I took another look at this linked article regarding imported LNG to Hawaii: where it is coming from; who is shipping it.
Original Post

I don't get it. Why not 100% solar in Hawaii?

The Star Advertiser is reporting:
Hawaii Gas has brought its first containerized shipment of liquefied natural gas to Hawaii.
Crews from Hawaii Gas utility began processing the shipment at Honolulu Harbor Monday, using special equipment to convert the LNG back into its gaseous form for use by the utility's customers.
The shipment is part of a Hawaii Gas program to provide a backup to the synthetic natural gas it makes at its plant in Campbell Industrial Park. The 40-foot tank shipped from California contains 10,000 gallons of LNG, or the equivalent of about 12 percent of what Hawaii Gas produces per day in synthetic natural gas. Hawaii Gas expects to ship in one container every two to four weeks.
The state Public Utilities Commission on March 6 approved Hawaii Gas to bring LNG to Hawaii using three shipping containers. Company officials said they plan to seek PUC permission later this year to bring in more containers.
Hawaii Gas' long range plans call for working with Hawaiian Electric Co. and others to bring in large amounts of LNG in specialized ships that could be used for power generation. LNG could be used to generate electricity for 30 percent to 50 percent below what it costs by burning oil, a Hawaii Gas official said.
But why aren't they going 100% solar? Add a little wind to be really politically correct. 

Whiting's Most Recent Presentation; Games People Play -- A Note About The Granddaughters

From Whiting's most recent presentation.

Notes to the Granddaughters
This is for the family.

Last night the granddaughters (ages 7 and 10) found "Bananas" lying around. I don't know if anyone knows how to play the game, but after drawing the first 21 tiles, the goal is to complete one's own crossword with all the tiles before anyone else. If unable to play, one draws more tiles from the pool. The photo below is our second game, just the two of us, the seven-year-old and me. She won.

I was still working on my crossword puzzle when Olivia showed me her 21-tile winning crossword. (I was interrupted to help the older one with her homework -- logging on to my computer -- she knows the password but I like to enter it, just in case -- that's why my crossword puzzle was not that far along. Her math teacher sends homework out over the web.)


While the older granddaughter worked on her homework, the younger one, after beating me at "Bananas" asked to play chess.

I obviously don't play my best, but I don't play to lose. I used to give her advice, but she says she doesn't want any advice from me because she says she might have a strategy and I won't know what it is, so my advice won't be helpful. Smile.

In the game yesterday, it was pretty evenly matched, and then not paying attention, I lost my queen. It was not on purpose. I wasn't paying attention and she took advantage of it. Wow, was she happy! At that point, I got serious, deciding I would play to win. Losing the queen really was not that big a set back -- there was no way I could be beat by her.

But then, sure enough, she worked hard at it, and beat me. I really got a kick out of how well she did it. The end looked like this:

My white king is in check by the black rook across the board. The white space to the "north" is blocked by her queen (a pawn reached the last row).  I can't take her queen with my white rook because it would still leave her king in check. Likewise, I can't move my white rook to block; she will take it with her black rook. I was quite surprised.

By the way: one of the best investments ever was a $29.99 drawing board from Hobby Lobby. It would have been difficult to play "Bananas" directly on the carpet. 

Lots Of News Today: CO2 For Fracking -- Don't Hold Your Breath; Kashagan -- On The Rocks; US Natural Gas For Europe? Don't Hold Your Breath

Actions have consequences. On the road to New England. The New Hampshire Business Review discusses the high cost of energy in New Hampshire.
Ask Greg Biederman, CEO of Nylon Corp of America, about the natural gas spikes this past winter.
The Manchester firm – which employs about 50 workers – uses the gas to fuel manufacture of those cords you find in weed-whackers and for thin, clear membranes used to protect insulation of multiple wires.
His energy bill (which also includes electricity) rose from $1.8 million to $2.5 million in two years. That’s primarily because of the cost of natural gas, which has risen 30 percent from last winter. The amount Biederman pays for the actual gas remained about the same – about $4 per BTU, according to the breakdown his supplier, Sprague Energy, provided to him. But transmission costs increased to as high as $91 per BTU.
And as the demand for natural gas increases, “we are going to have the same problem year after year,” said Biederman. “It’s going to be astronomical. There is a real power crisis coming to the Northeast. If it spreads to electricity, it’s going to price us out of business.”
Comments not necessary. Except one: I still bet New Hampshire votes for Hillary if she runs.

Reuters via Rigzone is reporting:
Carbon dioxide, used for years to force crude oil out of old wells, likely will not replace water in fracking anytime soon because of technical challenges and limited infrastructure, says General Electric Co , which is studying the issue under a $10 billion research program. 
The delay means energy companies will continue to use more than 2 million gallons of water for each fracked well, equal to baths for some 40,000 people, stressing water supplies in arid American states and likely delaying fracking's expansion to western China and other water-stressed regions. 
The inconvenient truth is that American golf courses use way more water than oil companies.

Reuters via Rigzone is reporting:
Output at Kazakhstan's huge Kashagan oilfield may fail to restart this year if test results expected in May show cracks in the offshore part of its pipeline network, Kazakh Oil and Gas Minister Uzakbai Karabalin said on Monday.
An inspection of the pipelines is under way and "suspicions have emerged" of microcracks in those laid in the Caspian Sea, Karabalin told reporters.
Kazakhstan, Central Asia's largest economy and the second-largest post-Soviet oil producer after Russia, is pinning hopes for future prosperity on Kashagan, whose recoverable reserves are estimated at 9 billion to 13 billion barrels of oil.
Production at the offshore deposit, the world's biggest oil find in 35 years, started in September but halted in early October after the detection of gas leaks in the $50 billion project's pipeline network.
Sorta puts the Bakken in perspective. 

Natural Gas And Europe

As you read this story, ponder the cost of natural gas in the US had it not been for the Bakken. 

The New York Times is reporting:
As congressional pressure builds on the Obama administration to quicken gas exports to Europe to reduce its dependence on Russia, it may be tempting to gaze upon a marshy, alligator-infested Louisiana inlet of the Gulf of Mexico.
There 3,000 workers are installing a huge set of turbines, pipelines and refrigeration units, building a terminal that will send American natural gas around the world by the end of next year. By 2017, the facility built by Houston-based Cheniere Energy could handle roughly a sixth the amount of gas that flows from Russia to Europe every day.
The Cheniere plant will be part of a new surge of liquefied natural gas supplies coming from not only the United States but also Australia, Africa and the Middle East. That surge, perhaps along with increased production in Europe itself, promises to keep the Continent flush with non-Russian natural gas at the end of the decade.
But for the short term, the United States can offer little hope for Europeans eager to diversify their gas sources as Russia occupies Crimea and may threaten other parts of eastern Ukraine.
Much, much more at the link. A huge "thank you" to a reader for sending me the link.

Other Stories

The Washington Post is reporting that some Europeans are demanding that Europe start fracking for natural gas. Won't happen in my investing lifetime. These guys are nuttier than Obama.

This is pretty cool. Koch Industries, with more than 2 million acres in western Canada, may be the biggest lease-holder in the heavy oil that US refiners need. Or so The Washington Post reports. Who's to know. But if so, it's pretty cool.

Tuesday, April 8, 2014 -- One More Week Before Tax Deadline

Oil futures: $101. That surprises me; the trend seemed to be turning to the downside the last couple of days.

Warning: Flood advisory issued for Stark County, parts of Billings and Dunn counties. 

Food is inexpensive, but I did not realize this about housing. I've always said that the best deal in America is the price of food. Now, despite all the stories about the high cost of housing, I learn that taxes Americans pay is more than what they pay on food and housing -- combined.  I think the article says more how good Americans really have it.


Active rigs:

Active Rigs195185208173103

RBN Energy: Diluent and bitumen.
Growing Canadian production of oil sands bitumen requires diluent to blend it to pipeline flow specifications. The resulting demand for diluent exceeds local Canadian supply from plant condensate production (aka, natural gasoline) – leading to imports from the US of more than 150 Mb/d in 2013 – a figure expected to grow to 460 Mb/d by 2018. That expectation for future import growth is based on the assumption that Canadian condensate supplies would remain relatively flat at about 140 Mb/d. But could the developing Duvernay gas shale play in Western Alberta turn those estimates on their head? Today we investigate the consequences for US condensate demand.
Canadian demand for light hydrocarbon material used as a diluent to reduce the viscosity of oil sands bitumen - allowing the resulting “dilbit” blend to flow in pipelines - is expected to increase significantly over the next 4 years as bitumen production takes off. The green shaded area in the figure at the linked story represents Canadian demand based on the typical requirement to blend raw bitumen with 30 percent diluent  – doubling from just over 300 Mb/d in 2013 to more than 600 Mb/d in 2018. The only constraint on these demand levels would be the large scale development of crude by rail transport that reduces diluent demand to less than 20 percent – but the extent of this development is still unclear.  We don’t have big time railbit volumes baked into the forecast below. 
When we last looked at sources of supply for diluent back in December 2013 the conventional wisdom was that local Canadian production would peak at about 140 Mb/d and then stay flat over the next four years. The result would be a rising need for Western Canadian bitumen producers to import diluent supplies from overseas – rather neatly coinciding with a growing surplus of such materials in the US.
Diluent supplies are typically sourced from one of the three main branches of the condensate family, namely lease or field condensate produced at the wellhead when liquids rich natural gas is brought to the surface, plant condensate (aka natural gasoline or pentanes plus) produced by natural gas processing plants and naphtha produced from petroleum refining. [Canadian producers also use light synthetic crude oil (SCO) produced by upgrading bitumen as a diluent.] As we explained in "Like a Box of Chocolates – The Condensate Dilemma," supplies of all of these condensate range materials in the US are increasing faster than demand can keep up – providing a ready surplus to supply Canadian needs.

Lease condensate production from US shale basins such as the Eagle Ford in South Texas is already over 1 MMb/d - headed to at least 1.6 MMb/d by 2018. US natural gasoline production will increase from about 340 Mb/d in 2013 to almost 570 Mb/d in 2018.   Refinery naphtha production is also expected to grow rapidly because more lease condensate and very light shale crudes are being processed by US refiners, and those feedstocks yield a greater percentage of naphtha range products.  Those lighter feedstocks must be run in the US because of the ban on lease condensate exports to countries other than Canada. In fact US midstream operators are busily building or planning splitters to process excess lease condensate and export the largely naphtha output. [We detailed four such projects in an earlier blog; and, since that blog Magellan have firmed up their plans to build a splitter in Corpus Christi and Targa have added their name to the project list with plans for a 35 Mb/d splitter in Channelview, TX.] In the meantime US demand for condensate is shrinking because petrochemical plants are using lighter ethane instead of natural gasoline as feedstock and because refineries are getting more naphtha range materials from shale crude and don’t need to blend in as much natural gasoline to produce motor gasoline.
As a result of this imbalance in supplies with the US having a surplus of diluent materials and Canada a deficit, US midstream operators have been busily building out often-complex distribution channels to deliver condensate to Western Canada. We have written blogs on at least three of these routes to market. One involves shipping Eagle Ford condensate from South Texas to Louisiana by barge then up the Capline pipeline to Chicago to connect with the Enbridge Southern Lights condensate pipeline to Edmonton.
A second route is for Eagle Ford condensate to travel by pipeline to Houston then join the Explorer pipeline to Chicago where it will connect with Southern Lights or the soon to be opened rival Kinder Morgan Cochin pipeline to Edmonton. The Explorer pipeline also ships plant condensate supplies from Mont Belvieu on the same route. A third route being developed is for growing condensate supplies from the Utica basin in Ohio and Pennsylvania to be shipped to Chicago and then to Canada.
But now a new wildcard is entering the picture in Canada that threatens to upset the happy diluent balancing act between the US surplus and the Canadian deficit. That wildcard comes in the shape of the Duvernay shale play in Western Alberta.
See rest of linked article for the story. 
The Wall Street Journal

Is this why oil is back up over $101? The top story -- pro-Russian sentiment swells in the Ukraine.  Before John Kerry gets all self-righteous, he may want to have a conversation with Condi Rice about the history of Russia.

Oh, that's a hoot. I didn't see this until I scrolled down. The very next story: Kerry and the military at odds over Syria. I am blown away: Kerry is pushing for more US military action in Syria; the military is asking for restraint. LOL. Kerry: more US military action in Syria. Sort of like the "silent war" in Cambodia or whatever it was for which he threw his medals (except the "most valuable" one) over the White House fence.

Credit-card debt drops again. Americans shed more credit-card debt in February, the latest sign of consuer caution about broowing and spending since the recession. Comment: I wonder how much this has to do with the Target hack. I haven't used a credit card in Target since the security breach, and seldom visit any more.

Long-term unemployment benefits back on the table? Senate says yes.

Maryland lawmakers approve "gradually raising" the minimum wage to $10.10 an hour. Legalizes marijuana.

Experiment: ATT considering cutting land lines to an Alabama town.

Inside America's fracking boom: fracking has revolutionized the energy industry and changed geopolitics. But what does the process of removing natural gas and oil from rock actually look like?

The Los Angeles Times 

Can anyone recall a more boring NCAA championship basketball game?  A blowout would have been more entertaining. As it was, UConn toyed with the Kentucky.

The Dickinson Press

Flood advisory issued for Stark County, parts of Billings and Dunn counties. 

A couple of oil stories (pipelines and refineries) but linked earlier. 

Fracking In North Dakota Revolutionized The US Energy Industry -- WSJ

Inside America's fracking boom: fracking has revolutionized the energy industry and changed geopolitics. But what does the process of removing natural gas and oil from rock actually look like?
Energy companies have come to North Dakota because when they frack the Bakken, light sweet crude oil comes out of the rock. The wells here produce a bit of natural gas also, and no one wants to wait around for a connection to a gas pipeline, so they flare it off.
At night, the onyx sky flickers with gas being burned off. Mr. Byington oversees the movements of the couple dozen coverall-clad workers. His directive is simple enough: force more than one million gallons of liquid into the Irene Kovaloff under enough pressure to crumple the toughest car Detroit can turn out. When Mr. Byington and his crew have finished, this section of the Bakken will be filled with thousands of tiny fractures, smashed into pieces like a shattered dinner plate.
The Irene Kovaloff, a recently drilled, long, and narrow hole in the ground, went straight down 2 miles until it reached the Bakken Shale, and then made a gradual 90-degree turn and continued for another two more miles. Before workers transform the Irene Kovaloff into a producing oil well, they must make sure everything is secure.
Some workers spend their shift outside, smelling musty diesel and pulling their hoodies tight to keep out the cold. Another group heads climbs into a temperature-controlled trailer called the data van. They take off their hard hats and strip down to T-shirts under their coveralls. There is a coffee urn and a car stereo bolted into a wall panel. On a recent night, Pink Floyd's "The Dark Side of the Moon" accompanied a frack.
Mr. Byington heads inside. Inside the van, several workers with large headsets sit in gray swivel chairs bolted to the floor. They work at a long desk, with computers and monitors displaying pressures, volumes, pH balances, and a dozen other measurements. The van feels a bit like a NASA command center. But rather than clean-cut engineers, the workers are scruffy. There is an assortment of beards and mustaches, and hair spilling out from under baseball caps. The North Dakota oil field has boomed so quickly that certain basic necessities—an appointment with a barber included—are hard to find. 
The story continues at the link.

Also, an author promoting his book: fracking has made the US the envy of the world when it comes to energy. One hundred wells/day are being fracked.