Thursday, May 15, 2014

North American Energy Revolution --> North American Manufacturing Revolution

This has been mentioned before. Rigzone is reporting:
America’s oil and natural gas boom has caused a rippling effect with all sectors experiencing a windfall. Energy-intensive manufacturing employment is set to increase by more than 1 percent in the United States through 2020, according to a report released by the U.S. Conference of Mayors.
Manufacturing employment in metropolitan areas has expanded by 1.7 percent per year on average over the past three years, with energy-intensive industries such as fabricated metals and machinery being crucial parts of that growth.
More than 196,000 jobs in metro areas from 2010 to 2012 were added in energy-intensive manufacturing sectors. These sectors encompass steel, iron, fabricated metals and machinery, which all have benefited from the natural gas boom, the report added.
Employment in these sectors increased by 9 or 10 percent, from 2010 to 2012, in all U.S. metropolitan areas.
“We’re all aware of the incredible impact the energy revolution is having on our national economy,” Virg Bernero, mayor of Lansing, MI, and chair of the conference’s advanced manufacturing task force, told reporters on the conference call discussing the report.
“The growing competitiveness and increase in employment from these manufacturing sectors are important to our cities and metro economies.” 
Much more at the link. 

ObamaCare: A Football Analogy

Sometime ago I saw ObamaCare as a metaphor for a football game. Here is where we stand:

  • July 19, 2015: the second half is just beginning: the Supreme Court upheld ObamaCare with first significant challenge; insurers are predicting 30% premium hikes for 2016; and Native Americans want out
  • May 15, 2014: half-time is almost over. The half-time show is quickly coming to an end. We are now hearing, as predicted, premiums are going to go up significantly in 2015. There are two story lines here: first, premiums are going up significantly in 2015. Second, some folks have only paid their first premium for 2014 (sticker shock) and now they are going to be told that their premiums will be even higher in 2015; they have not had a chance to get used to the unexpectedly high premiums.
  • April 1, 2014: half-time. The enrollment period for 2014 is "officially" over, though it's probably been extended in several states (it was extended in California). We haven't even gotten to the second half and insurers are already worried about the backlash when they announce the premiums for 2015
  • March 26, 2014: coming up to half-time, the ObamaCare "drop-dead" deadline (March 31, 2014) has been delayed two more weeks, on the "honor" system. Musings on ObamaCare to date. The administration crows that 6 million signed up, topping their target. The original target was a paltry 7 million but lowered to 6 million. During the Obama/Hillary presidential nomination content in 2008, it was said that 30 million to 46 million Americans were uninsured. ObamaCare had nothing to do with uninsured minions; it had to do with cost shifting health care costs from the CEO to the employee.
  • February 4, 2014: barely into the second quarter, and we're getting an update from the booth (CNBC, The Washington Times) -- Congress is reporting that the estimate has now tripled, the number of folks that will be locked out of the job market due to ObamaCare. The second quarter is not going to look pretty for the home team. 
  • January 5, 2014: We are underway: the second quarter. Both sides are now trotting out human interest stories, how good ObamaCare is, how bad ObamaCare is. "They" say ObamaCare is now fully executed; not quite true: the employer mandate was delayed a full year, and the individual mandate for all intents and purposes is all delayed a full year. Everyone has estimates of the number of folks who enrolled (mostly Medicaid, it appears), but the government can not even tell us how many have paid their first premium. There are occasional stories about the real metrics that are not being followed in the media (who enrolled; how many have paid). And now Forbes provides another ankle-biting article on ObamaCare: the "taxes" Americans will now pay for ObamaCare.
  • Updates, analysis of the first quarter of the ObamaCare debacle: the website rolled out in October; the chief information officer resigned in November; the chief operating officer (#2 in the chain) retired in December; federal enrollments shockingly low; overall enrollment may be less than 2 million; goal was at least 3 million at this point; insurers "need 7 million"; the ObamaCare act was necessary for the 30 million uninsured, it was said; at least 8 million have lost their coverage since October (two months); corporate mandate delayed a year; individual mandate effectively delayed indefinitely; deadlines extended; chaos and confusion; White House won't consider putting a single person (a "CEO") in charge of his biggest program despite requests of insurers, his own political party [even the quasi-governmental US Postal Service has a "CEO" that takes all the heat for problems]
  • The break between the first and second quarter. What to watch for in the second quarter: off-side penalties. 
  • The end? Obama repeals ObamaCare for 2014. The end of the first quarter: the rollout was a debacle, and now we learn that Obamacare shuns the best hospitals in the world (MD Anderson, Cedars Sinai Los Angeles, Mayo)
  • The Passing Game, the first quarter: fraudulent subsidies will be passed on to taxpayers
  • The Ground Game, the first quarter: not going well; Obama says shop around; his czar says if you want to keep your doctor, you will have to pay more; get over it;
  • Rollback: Obama says "Yes"; states say "No on rollback to canceled policies"
  • The Rollout:  ObamaCare -- the death spiral begins
  • The Prelude:  ObamaCare; no additional posting to this site as of October 24, 2013 
  • ObamaCare Cost Shifting 
  • The website and security issues
  • ObamaScare Headlines
ObamaCare Was Just A Big Political Mess

The Daily Ticker is reporting: Obamacare "wasn't fundamental change at all, just a big political mess."

Actually, the "talking head" is quite wrong. ObamaCare is/was a fundamental change, and it is a big political mess.

Ten (10) New Permits -- The Williston Basin, North Dakota, USA; 2 Of 3 Bakken Wells Going To DRL Status -- Awaiting Fracking

Wells coming off confidential list Friday:
  • 25777, drl, Statoil, Lloyd 34-3 3H, Sandrocks, no production data, 
  • 26234, 2,524, QEP, Moberg 2-18TH, Grail, one section, t11/13; cum 68K 3/14;
  • 26378, drl, KOG, P Vandeberg 154-99-1-1-12-15H3, Stockyard Creek, no production data, 
Active rigs:

Active Rigs191194210173114

Ten (10) new permits --
  • Operators: XTO (5), Oasis, Hess, Enduro, Whiting, Welter,
  • Fields: North Fork (McKenzie), Haystack Butte (Dunn), Baker (McKenzie), Antelope (McKenzie), Mohall (Bottineau), Sanish (Mountrail),
  • Comments: Welter Consulting has a permit for a wildcat in Renville; this is the third North Dakota permit for Welter Consulting; their first two wells in North Dakota were dry, back in 2012 and 2013; Welter Consulting appears to be out of Billings, MT;
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Five (5) producing wells completed:
  • 24984, 2,154, Statoil, Jack Cvancara 19-18 6H, Alger, t4/14; cum --
  • 24985, 1,831, Statoil, Jack Cvancara 19-18 7TFH, Alger, t4/14; cum --
  • 26071, 860, Hess, BL-Iverson 155-95-1819H-5, Beaver Lodge, t4/14; cum --
  • 26112, 800, Hess, EN-Chamley 156-93-0508H-2, Baskin, t4/14; cum --
  • 26350, 726, Hess, SC-Berner-157-99-1918H-1, Lone Tree Lake, t4/14; cum --  
American Eagle canceled a permit:
  • 27544, PNC, Lorelei 2-1-163-101, Colgan, 

ObamaCare: Big Increases in Premiums and Deductibles Coming in November

The Fiscal Times is reporting:
The Obama administration postponed a portion of the employer mandate in the Affordable Care Act in order to avoid paying the political consequences of a market disruption in the group insurance sector. If new premium pricing proposals from insurer filings in the states of Virginia and Washington come to pass, the White House may have no way out of accountability for their health-care reform folly.
When Obamacare first rolled out last fall, the failure of the federal and state exchanges were only the first signs of disaster. Premiums spiked upward in both the individual and group markets, and insurers raised deductibles and narrowed provider networks to save themselves money. Millions of people lost their existing insurance plans in the individual market, and many ended up in plans that either didn’t fit or cost far more than they spent in the past.
Remember, this is being posted in "mainstream media": YahooNews.
Now that insurers have seen the composition of their new risk pools under Obamacare, they have to calculate their new pricing levels for state and federal regulators. The pricing jump for 2014 was more speculative, based on the presumed demographic composition of incoming enrollees. The pricing proposals from Virginia and Washington indicate that the new enrollments made the risk pools riskier than first thought.
Rate-proposal filings in the state of Washington show the four largest insurers proposing average increases across their plans ranging from 8.1 percent to 11.2 percent in a single year. Jonathan Wu of Value Penguin analyzed the proposals and concluded that the insurers tried betting on success, and came up short.
“What is troubling about the data is that among these insurers, there is clearly an issue with the premiums offered in the first enrollment period,” Wu writes. Noting that the four companies offered the lowest prices in the market this year, their enrollment numbers are not surprising, but their consumers may get a less-pleasant surprise by the end of the year.

In Virginia, two insurers control 86 percent of the market, and both propose steep increases in 2015 premiums. Anthem, which has 113,614 of the roughly 170,000 enrollments, wants to boost prices by an average of 8.5 percent next year, while CareFirst wants a hike of 14.9 percent.
All five insurers in the Virginia exchange want price hikes, with only Kaiser’s proposal falling below an 8.5 percent increase. If the Obamacare experience in these two states provides any indication, Wu writes, “then consumers might need to brace themselves for rate hikes in the coming months.”
The Affordable Care Act. 

HUGE: Maryland's Cove Point LNG Export Facility Gets FERC's Green Light


September 29, 2014: announced; FERC says Dominion can start construction of the Cove Point LNG-export terminal

Original Post
Dominion welcomes favorable FERC environmental assessment of Cove Point LNG export project: Co welcomed the release of a federal environmental assessment that finds the natural gas export project proposed for its existing Cove Point LNG facility in southern Maryland can be built and operated safely with no significant impact to the environment.

For Investors Only: May 15, 2015. Tough Day For Bulls

Not a good day to look at the market, so I won't check individual stocks. It might be a buying opportunity.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. I follow the market because it helps me understand the Bakken and it puts the Bakken in perspective.

Six companies announced increased dividends or distributions including Anadarko Petroleum (previously posted). Anadarko's increase was significant, from 18 cents to 27 cents. KeyCorp's dividend increased from 5.5 cents to 6.5 cents.

Very few companies traded at new 52-week highs today. Windstream (WIN) was one of them.

Dunkin Brands announced that it has signed a master franchise agreement with Coffee & Brands Sweden AB to begin developing Dunkin' Donuts restaurants across Sweden.

New York Times: "Our journalism advantage is shrinking."  Well, duh.

Pennsylvania Supreme Court: cops no longer need warrant to search cars.

5 of 8 Wells Going To "Drill" Status In The Bakken; Have Been Drilled To Total Depth, But Waiting For Fracking To Be Completed

Look at all the wells from yesterday's daily activity report that went to DRL status:
  • 25598, drl, HRC, Fort Berthold 147-94-2B-11-3H, McGregory Buttes, no production data,
  • 25853, 1,203, EOG, Wayzetta 34-2829H, Parshall, t12/13; cum 147K 3/14;
  • 26266, drl, Petro-Hunt, Van Hise Trust 153-95-28D-21-5H, Charlson, no production data,
  • 26341, drl, HRC, Miller 157-101-12D-1-3H, Otter, no production data,
  • 26437, 2,124, BR, CCU Corral Creek 11-28TFH, Corral Creek, nt4/14; cum --
  • 26457, drl, XTO, Broderson 31X-27D, Siverston, no production data,
  • 26795, 493, CLR, Snider 1-21H1, Ukraina, t3/14; cum 2K 3/14;
  • 26878, drl, XTO, FBIR Guyblackhawk 24X-27H, Heart Butte, no production data,
In the most recent Director's Cut, I believe there were about 635 wells waiting to be fracked. Regular readers know what this is all about. It is not due to lack of frack spreads (teams/resources). Most of it is operational-driven (pad drilling) and spring road conditions. It will take care of itself going forward. For folks looking for work, for trucks, for roughnecks, I see it as a huge "positive." For the farmers who have to use the roads this summer, it's going to be another tough summer in the Bakken.

USAF Searches For Alternatives To Russian Rocket Engines -- Wow! Who Would Have Guessed; Obama Legacy

Market drops another 130 points: Wal-Mart's 1Q14 sales growth was the weakest in five years.  Not to worry: Wal-Mart is blaming it on the harsh winter that "kept customers from visiting our stores."

Active rigs:

Active Rigs190194210173114

The Wall Street Journal

Nervous investors pile into bonds.

A high-stakes US-Russian plan for destroying Syria's chemical weapons is in jeopardy on several fronts. I assume US sanctions on Russia did not help.

Well, duh. Many state governments were pulled out of the recession by a surge in tax revenue from their residents' stock-market gains. But that money spigot has slowed, leaving budget holes and debates over the reliance on the wealthy just as many governors face re-election.

The nominee for the government's top health-care job told a Senate panel the federal health agency should use the full extent of the law to recover funds deemed misspent on state insurance exchanges. Perhaps, she should start with fund misspent at the Federal level.

Bill Clinton says wife's health is great -- despite six months it took to recover from a "concussion" and, oh, yeah, that blood clot to the brain.

It looks like China will win the battle over the disputed oil between China and Vietnam. Wasn't that what the war was all about in the first place? Looks like the US bet on the wrong horse in that war also. Or, perhaps better said, Vietnam was fighting the wrong enemy.

Ukraine is close to civil war.

Air Force searches for alternatives to Russian rocket engines. This is amazing, a huge story. Obama legacy. Again. Several story lines here. It's bad enough the US isn't even making its own rocket engines any more but the nation depends on the Russians. What's wrong with that picture?

New York Times replaces top editor: the woman was "too pushy"; demanded "equal pay for equal work" ... for herself. Previously posted.

Heard on the street: Ukraine crisis is pushing Russia closer to striking a long-awaited deal to sell natural gas to China which now has leverage on price.

In Chess, Obama More Than Meets His Match; Russia Will Export MORE Natural Gas Each Year Than The US Has In Storage -- This Is Not Trivial; This Is A Game Changer; The Big Story Here: While The US Dithers, The Rest Of The World Keeps Moving On


May 23, 2016: Russia overtakes Saudi Arabia as China's leading supplier of crude oil -- EIA. 

November 16, 2015: look at the previous entry, dated July 1, 2015, just a few months ago. Now, the tea leaves suggest it's going to be a war of attrition between Russia and Saudi Arabia

July 1, 2015: is Saudi Arabia moving closer to Russia, now that the US has said it no longer will provide security for Saudi Arabia?

June 25, 2015: Russia becomes #1 supplier of crude oil to China; China falls to third place, below Angola. 

December 31, 2014: Platts -- China's November Russian crude imports hit record high

October 2, 2014: "Putin on his game face": shrugging off sanctions. I think he knows the EU, especially Germany and Italy have more to lose than Russia with the sanctions. 

June 16, 2014: Russia halts natural gas supplies to the Ukraine.

May 29, 2014: Ukraine says "nyet" to Russian proposal that the country actually pay its outstanding bills. 

May 26, 2014: isn't this interesting? Ukraine, which we were all told was broke (financially), has found make up all the back-payments it owes for Russian natural gas. AP is reporting:
A proposed solution to a dispute over Ukrainian natural gas debts to Moscow would see Ukraine's gas company pay $2 billion to Russia's Gazprom this week and trigger talks on the price Kiev should pay for future deliveries as it tries to avert a supply cutoff ...
...  "we are not done" but said he is optimistic of an agreement.
The proposal calls for Ukraine's Naftogaz to make an initial $2 billion payment to Gazprom on Thursday to settle part of Kiev's outstanding bills for gas delivered between November and March.
It looks like this chess game is all but over.

May 24, 2014: Russia may speed up the completion of that landmark Russia-Chinese natural gas pipeline. Reuters is reporting:
Russia's President Vladimir Putin said on Saturday a route to supply gas to China via western Siberia may be implemented faster than the eastern route.
"The second project, if Chinese partners are positive towards it, may be implemented even faster than the eastern one," Putin said on Saturday.
State-run Gazprom has yet to build a pipeline to carry 38 billion cubic meters of gas annually to China from 2018 through East Siberia. Russia and China have agreed a $25 billion prepayment under a supply deal.
Gazprom had planned to supply a further 30 billion cubic meters of gas per year to China through the western route. Putin said on Saturday the possible amount of gas for this route has yet to be decided.
May 20, 2014: priced at $9.50 to $10.00 per mcft. Other data points:
Russia is set to close a natural gas supply deal with China that Russian Prime Minister Dmitry Medvedev says will be 30 years, and valued around $400 billion. 
The pipeline will cost $22 billion and carry 1.34 trillion cubic feet of natural gas per year. If all goes well, Russia will begin supplying China with gas in 2019. It will carry 25 percent of China's current gas consumption, though by 2019, the proportion could be closer to 10 percent. 
As for the cost that has caused all of the negotiation trouble, Russia will charge China $335 per thousand cubic meters, or $9.50 to $10 per thousand cubic feet. Gazprom charges Europe an average of $380.50 per thousand cubic meters, so China is getting a good deal. Right now, China pays Turkmenistan $10 per thousand cubic feet. 
May 19, 2014: John Kemp, over at Rigzone, has a very long essay on the Russian-Chinese natural gas pipeline deal (I forgot to capture the Rigzone link; this link to Economic Times is the very same story):
Most evaluations of the bilateral relationship begin by reciting the historical border disputes, rift between Mao Zedong and Nikita Khrushchev, opening to China by Richard Nixon, and the perennial problem of reaching an agreement on gas pricing. But these are all essentially backward looking and ignore the growing community of interests between the two countries.
The case for a closer bilateral relationship on energy, trade, security and diplomatic issues is compelling. In the energy sphere, the two countries are an almost perfect match: the world's largest net energy exporter and its second-largest net energy importer (2011) with a long land border.
China is already Russia's largest single trading partner, with bilateral trade flows of $90 billion in 2013, and the two neighbours aim to double the volume to $200 billion by the end of the decade, according to Xinhua, China's official news agency.
The Obama administration's strategic pivot towards Asia and shifts in the energy market are pushing China and Russia closer together as both react to fears of encirclement and energy security.
Even without the crisis over Ukraine, Russia has been depending too heavily on oil and gas exports to Europe, leaving it vulnerable to pricing disputes with customers, pipeline disputes with transit countries, falling European demand and shifts in European energy policy.
Europe accounted for 80 percent of Russian oil exports in 2012, while just 18 percent went to Asia, according to the U.S. Energy Information Administration. Most of Russia's gas exports went to European countries in 2012, with just 19 percent delivered to Turkey. 
Relying so heavily on customers in Europe makes no sense strategically or commercially. Just as consumers need a diverse source of suppliers, producers need the security that comes from having multiple customers. Russia continues to export almost all of its oil and gas from east to west through pipelines built in the 1960s and 1970s at the height of the Cold War, even though the predominant flow of energy in the world economy is now from west to east as a result of the industrialisation of Asia and the shale revolution in North America.
Later, 12:52 pm central time How big was the Russian-Chinese natural gas deal? Let's look. A big "thank you" to Don who provided the research links. First, the deal itself:
Experts expect the agreement to include a 30-year delivery contract between Gazprom and CNPC for 38 billion cubic meters of natural gas per year, with the potential to expand the annual capacity to 61 billion cubic meters. If the deal can be inked next week, construction for the pipeline will likely begin by the end of the year, and with operations beginning in 2018 [before the Keystone XL is even started].
Now, from the our own EIA, weekly natural gas storage report:
Of the 57 states of the United States of Obama, the "lower 48 states" have this amount of working gas in underground storage: 1,160 billion cubic feet.

The conversion factor of billion cubic feet to billion cubic meters is 0.0283168. So, 1,160 billion cubic feet of US natural gas is equal to 32.847 billion cubic meters.

The Russians promise to deliver 38 billion cubic meters each year with potential to expand to 61 billion cubic meters. The first number, 38, is 16% more (38 = 32.847 x 1.16) than the total amount the US has in storage in the "lower 48 states." Russia has the potential to export twice as much natural gas as the US has in storage in the lower 48 states. (There are different ways to calculate the difference, but suffice it to say, Russia will export more natural gas to China than the US has in reserve. Every year. For 30 years. By the way, this tells me that the DOE cannot, in any meaningful way, cut back on fracking; we do so at the risk of "hanging ourselves" economically.)

By the way, the 1,160 billion cubic feet that the US has in storage is below the 5-year historical range, according to the EIA. 
Yes, this Russian-Chinese agreement was huge. I think Putin planned to do it all along; he was just waiting for the right moment.  

Sanctions = right moment.
Original Post

Heard on the street: Ukraine crisis is pushing Russia closer to striking a long-awaited deal to sell natural gas to China which now has leverage on price.

This story is the big story of the day, perhaps the week, and long-term it may represent one of the biggest stories of the century, the energy merger between Russia and China. Notwithstanding all the global warming talk, this merger is a bigger story than global warming, and few Americans will even notice. Fewer will care.

It is ironic then that R. James Woolsey's op-ed piece on the same subject is already DOA. I scanned the op-ed but his proposal to bring the price of crude oil down to $60 a barrel is ludicrous. He starts out with one data point: Russia needs $117 per barrel of oil to balance its budget. And from there, connecting a gazillion dots, no doubt, he somehow gets to $60/barrel as the right price of crude. To "destroy" Russia, or at least Putin.  A quick scan of the article does not mention Saudi Arabia. The princes need $100 oil to "be happy." And, even Canada, some folks say, requires $70 oil for its western Canadian heavy oil.

The bigger story, of course, is that the Crimean was part of a huge chess game.

The chess game began with Putin's brilliant handling of the Russian winter Olympics, an opening "knight" move to "F3." The Crimean was a pawn. Eastern Ukraine was perhaps another knight. Latvia is a pawn en passant. Losing Germany as an ally on sanctions, that's worth at least a loss of a knight for the US. The Chinese-Russian natural gas pipeline was at least a loss of a rook for the United States, possibly even worth the queen. The loss of Russian rocket engines was a bishop loss for Russia, but that was more than made up for by the Chinese-Russian hegemony, worthy of castling early.

So, as I see it right now: Russian has lost a couple of pawns and a bishop, and has two knights on the attack, in the center of the board, and has already castled. The US has lost several pawns, a knight, and a rook, or possibly the queen.

USAF Searches For Alternatives To Russian Rocket Engines -- Wow! Who Would Have Guessed; Obama Legacy

Air Force searches for alternatives to Russian rocket engines. This is amazing, a huge story. Obama legacy. Again. Several story lines here. It's bad enough the US isn't even making its own rocket engines any more but the nation depends on the Russians. What's wrong with that picture?

The Wall Street Journal is reporting
America's little-known reliance on Russian technology to launch its most sophisticated spy satellites into space has emerged as a major issue in a burgeoning dispute between private space companies. After a series of launch failures in the 1990s cost the Air Force six satellites, the military began searching for a reliable, cheap alternative to its existing rocket engines.
The Clinton administration at the time was pushing to strengthen ties with Moscow, and the U.S. opted to use Russian-made engines that were then considered sophisticated and reliable space technology.
Another Obama legacy.  He's had six years to work the problem that the Clintons started. But at least we know Hillary's health is great.

Bakken Crude Is Highly Volatile -- Front Section Of WSJ

Front section of The WSJ: data released by a lobbying group for oil refiners confirmed that crude from the Bakken shale in North Dakota is very volatile and contains high levels of combustible gases.

First-Time Unemployment Claims Drop To Seven-Year Low; Pre-Recession Levels


May 17, 2014AP is reporting:
Unemployment rates fell in nearly all U.S. states last month, and half the states now have rates below 6 percent. The figures are a sign of widespread, if slow, improvement in the nation's job market.
Unemployment rates fell in 43 states in April.
Hiring wasn't the whole reason rates fell in many states: Fewer Americans also looked for work. The government doesn't count those out of work as unemployed unless they are actively hunting for jobs.
Many of the states with low unemployment are small. North Dakota continues to have the lowest rate nationwide at 2.6 percent. That's the same as the previous month and down from 3 percent a year ago. Vermont's rate of 3.3 percent is the next lowest.
But some larger states are also seeing improvement. Texas' unemployment rate fell to 5.2 percent in April from 5.5 percent in March. Employers added 64,100 jobs last month, the most of any state.
Rhode Island reported the highest unemployment rate at 8.3 percent, followed by Nevada at 8 percent. Both states saw significant improvement, with Rhode Island's rate falling from 8.7 percent and Nevada's from 8.5 percent.
Based on the comments, it sounds like most readers don't believe these figures.

Original Post

Now that inflation is ticking up, and long-term benefits have run out, people have to get back to work. Jobless claims hit seven-year low. is reporting: Reuters is reporting:
New applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April, pointing to a firming economy.
The economy's outlook was further brightened by other data on Thursday showing factory activity in New York state expanding at its quickest pace in nearly four years in May.
Analysts miss again:
Initial claims for state unemployment benefits declined 24,000 to a seasonally adjusted 297,000, the Labor Department said, offering fresh evidence the jobs market was strengthening.
That was the lowest reading since May 2007 and brought claims back to their pre-recession level. Economists had forecast first-time applications ticking up to 320,000 last week.
The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 2,000 to 323,250.

This is the question readers need to be asking themselves. Analysts had expected claims to tick up to 320,000 (a gain of 1,000, from 319,000 the week before). So, the analysts were off again, this time by 25,000. One has to ask the question: how can the analysts be off by so much? I know the analysts have trouble with the "human factor," predicting how many folks will voluntarily drop out of the labor market, quit looking for work, but that statistic (the number of folks who drop out of the labor force) should not affect "first time claim applications." If indeed this is a trend, we've had two months, of fewer first time claim applications, it's a great sign for the economy. My hunch is that we have probably moved to a new number about which to oscillate. Up until recently that number was 320,000. Perhaps the new number is 300,000.

Is This A First? Definitely Not Bakken Crude Oil This Time

Is this a first? I have never heard of this before, a crude oil pipeline bursting inside city limits, resulting in knee-deep crude oil. The Wire is reporting:
A broken oil pipe leaked 50,000 gallons of oil over a half-mile area in Atwater Village, a suburb of Los Angeles, early Thursday morning, and oil is now reportedly knee-deep on some streets.
Atwater Village is up near Glendale, across the freeway from Griffith Park.

A reader did the math:

50,000 gallons = 6684 cubic feet.

A half-mile square area is 2,640 feet by 2,640 feet.

So, 6,684 cubic feet = 2,640 x 2,640 x (feet deep)

Solving for "feet deep" = 6,684 / 6,969,600 = 0.00096 feet

0.00096 feet x 12 inches / foot = 0.01 inch.

Short-kneed people, the writer noted.

More likely, the reporter couldn't estimate one-half square mile.

Or more likely, the reporter was watching the workers in a hole digging to get to the burst pipe.

Obama's Sanctions: Russia Cinches Huge Natural Gas Pipeline Deal With China; Forget The EU

Sanctions? Russia scores huge natural gas pipeline deal with China. Business Insider is reporting:
China and Russia are set to cement their energy alliance next week with an expected agreement to build a natural gas pipeline between the two nations that would secure a huge new market for the world's largest energy producer and provide a guaranteed energy supply for China's growing economy as both nations face confrontations with the West.
The deal, which the two countries negotiated over the last decade, is expected to be signed when Russian President Vladimir Putin visits Beijing next week.
The deal between Russia's Gazprom and China's state-owned energy giant CNPC was confirmed by sources in the Russian energy sector, according to a note from the Eurasia Group, a consultancy.
Current geopolitical conditions resulting from Russia’s ongoing crisis in Ukraine appear to have aligned the two super powers in such a manner favorable to finally concluding the deal. 
There are so many story lines in this short article, but I think the biggest story line is this is all part of Obama's Legacy. 

RBN Energy Must-Read: More Pipeline Capacity For Rocky Mountain Region; Canadian And US

RBN Energy:
New crude pipeline capacity being added in the Rockies to ease congestion will compete directly with rail terminals built or planned in the region. Some of these rail terminals are purpose built to take barrels off the pipelines for delivery to West Coast refiners or perhaps to facilitate blending of heavier Canadian grades with lighter shale crudes. The competition between pipelines and rail in the region underlines a key accomplishment of the post-shale crude distribution system - the advent of greater choice for producers. Today we describe growing rail alternatives in the Rockies.
In Part 1 we described the congested pipeline situation in the key Rockies pipeline hub at Guernsey, WY that developed in the past 3 years as new crude production in the Bakken, the Rockies and Western Canada converged in the region. At present, pipeline capacity into Guernsey is greater than outgoing capacity to Wood River, IL on the Spectra Platte pipeline. If local refineries in the Rockies do not soak up surplus crude then the mainline out of Guernsey becomes oversupplied and shippers need to find alternative routes to market. Three new pipeline projects are expected online this fall to relieve that pipeline congestion. These are the Hiland Partners Double H 50 Mb/d pipeline from North Dakota and Montana into Guernsey, the True Company Butte Loop pipeline that will flow up to 110 Mb/d from Baker Montana to Guernsey and the Tallgrass Energy partners 230 Mb/d Pony Express pipeline from Guernsey to Cushing. Then last week (May 7, 2014), after we posted Part 1, in an analyst call, Spectra Energy Partners discussed the possibility of building a twin to their existing Express-Platte pipeline system from Hardisty, Alberta through Guernsey to Wood River that could double the flow of Canadian oil through the Rockies (see Figure #1 below). That development could increase Rockies congestion in the future but no details are available yet. In this episode we look at the growth of rail loading takeaway capacity that competes with the new pipelines and compare the two transport alternatives.
We have previously reviewed takeaway capacity from the Rockies in our Bananarama in the Niobrara series a year ago (April 2014) when we looked at both pipeline and rail developments. We also detailed rail terminal developments in the region a month earlier as part of our Crude Loves Rock’n’Rail survey. What follows is an update on the status of these rail terminal developments. Table #1 at the linked article summarizes the larger crude rail loading terminals developed so far, or on the drawing board to come on line this year or next. These terminals between them offer as much as 483 Mb/d of rail loading capacity in Colorado and Wyoming.
Much, much more at the linked article with great graphics, tables. 

Almost 70% Of North Dakotas Want To Remain North Dakotans -- Gallup Poll

From The Grand Forks Herald via The Williston Wire:
Beth Gilbertson moved to Shelly, MN, several years ago from Devils Lake where she grew up because that's where her husband farms, she said. But if she could, she'd just as soon farm in North Dakota, she said.  
"Sometimes when you're born and raised in a place, you just don't ever leave," she said.
Gilbertson is among the 69 percent of North Dakotans who prefer to stay put, some of the highest rates among the states, according to a recent Gallup poll. About 30 percent say they want to leave.  Many North Dakotans remember when people here couldn't wait to leave, Gilbertson said recently.
Also from The Williston Wire:
Watford City's first fast food restaurant with a drive - through opened its doors recently.  Ruben Hooper, the Director of Operations for Professional Restaurant Group (PRG), is excited to be a part of the opening.  "I feel that we are very in tune to the needs of the cities that are going through an oil boom," states Hooper.  PRG also owns successful Taco John's restaurants in neighboring  Montana, Idaho, Minot, Dickinson and Williston - the Williston restaurant is the busiest Taco John's in the nation.

New Road Construction In Williston -- Underpass Under US Highway 2 -- Connecting 18th Street And Bison Drive; May 15, 2013


August 26, 2014: update and video here

Later, 6:33 p.m. central time: A reader sent me this (a huge thank you).
This is the graphic of the new underpass under the bypass which used to be "west" of Williston.

This is an incredible interchange/underpass  -- I am quite impressed. Note that in addition to the underpass itself, there is a 3/4 interchange at 18th Street.

This is going to be a real headache during construction, but my hunch is that the engineers have come up with some great detours, based on my recent experience at the "new" four-mile corner under construction now. But with much of Williston west of the bypass now, and the hospital on the east side of the bypass there was little choice. I remember Grand Forks grappling with a similar problem decades ago when the hospital was on one side of the tracks and a large segment of the population was "trapped" on the other side.
 Original Post

From The Williston Wire:
The North Dakota Department of Transportation, Park Construction and SRF Consulting Group would like to notify all motorists of the Williston area of the upcoming construction project on US Highway 2 which will affect the intersections of 9th Ave North West, 18th Street West and Box Elder Street.  An underpass will be constructed on US Highway 2 which will connect 18th Street West to Bison Drive. During this construction traffic will be routed on to a temporary bypass along the west side of US Highway 2.
I think this is the intersection on "the bypass" just north of Marquis Plaza on the west side of the bypass and Mercy Medical Center on the east. 

This is quite a big deal.

Combine that with the huge construction project west of Williston at the 4-mile corner and one really gets the feeling that things have really changed in just a couple of years. It's really quite incredible how fast these projects are moving along -- again, the boom did not really begin in Williston until 2007, it finally took hold in 2010, perhaps, and in those three or four years, folks had to "imagine it," convince local citizens of the need; get city/county approval; plan; raise funds, and now start building.

Direct Flight Williston-To-Houston Roundtrip On United Airlines; Also Bismarck To Chicago, Dallas -- American Airlines New To Bismarck

The Williston Wire is reporting:
Senator John Hoeven has announced that United Airlines will add daily United Express service from Williston to Houston beginning August 19 with one daily roundtrip on a 50-seat regional jet.  United began Williston service to Denver in November 2012 with three daily roundtrip flights and added a fourth roundtrip flight in November 2013.
Also from The Williston Wire:
Another airline will fly out of the Bismarck Airport.  American Airlines will add direct flights to Dallas-Fort Worth and Chicago's O'Hare International Airport starting October 2.  "This takes our air transport to the next level," Bismarck Mayor John Warford said.  Flights will depart from Bismarck daily, leaving for Chicago at 12:45 p.m. and leaving for Dallas-Fort Worth at 7:20 a.m. Return flights will leave Chicago for Bismarck at 9:50 a.m. and leave Dallas-Fort Worth for Bismarck at 3:45 p.m.  

Triangle Petroleum Acquires 46,100 Acres; $120 Million

Triangle Petroleum acquires Williston Basin Properties for ~$120 mln: Co announces entered into two separate definitive agreements to acquire Williston Basin properties, and received bank commitments for 100% financing of the acquisitions, including a new senior secured second lien term loan facility.

Acquisition of Williston Basin Properties

  • Signed two separate definitive agreements to acquire approximately 46,100 net acres (46% operated) in a contiguous area of Williams County, ND and Sheridan County, MT: 
  • 1,175 Boepd of current production 
  • 4,450 MBoe of net proved reserves with a PV-10 value of approximately $110 million based upon internal estimates as of April 30, 2014 
  • Total consideration of approximately $120 million, net of estimated purchase price adjustments and sale of acquired salt water disposal well to Caliber Midstream Partners, L.P. 
Triangle, pro forma for the Acquisitions (approximate): 
  • 135,237 net acres in the Williston Basin 
  • 91,767 net acres in the core Williston Basin, 57% operated 
  • 9,575 Boepd of production 
  • 46,500 MBoe of net proved reserves, based upon internal estimates as of April 30, 2014
Back-of-the-envelope calculations:
  • $120 million / 46,100 acres = $2,600 / acre
See also: