Saturday, May 17, 2014

Human Interest Story For Williston Residents; US Olympic Swimmer WIth Williston Ties To Swim For Stanford; ATT To Announce Deal For DirecTV

Sent to me by a reader, this is a very, very nice story. ESPN is reporting:
Olympic champion swimmer Katie Ledecky plans to swim for Stanford after she graduates from high school next year.
The 17-year-old from Bethesda, Maryland, announced her commitment Thursday. She is a junior honors student at Stone Ridge School of the Sacred Heart in her hometown.
Ledecky will join Olympic champion Missy Franklin in the San Francisco Bay Area.
Ledecky won the 800-meter freestyle as a 15-year-old at the 2012 London Olympics, where she was the youngest member of the entire U.S. team. A year later, she won four gold medals and broke two world records at the world championships in Barcelona. She was chosen the 2013 FINA world swimmer of the year.
Ledecky swims for her high school team and trains at Nation's Capital Swim Club in Washington under coach Bruce Gemmell.
Ms Ledecky is the granddaughter of Dr Ed Hagan, one of the original family practice physicians in Williston. In another time and place, he would have lived among the gods on Mt Olympus, at least in my young mind. One needs to have grown up in rural North Dakota in the 1950's to know, I suppose. Perhaps hyperbole. Perhaps not.

According to the reader who sent me the link, there is another Williston connection: Ms Franklin's coach is a grandson (and son) of Williston residents, also. I could have some of this wrong; it's hard to keep the genealogy straight. But one gets the point. A lot of reasons for Willistonites to be proud.

For Investors Only: ATT

A year ago, back in March, 2013, I got into a discussion with my son-in-law. That discussion evolved into a stand-alone post on "the next big thing," specifically Netflix, completely unrelated to the Bakken. I didn't want to lose track of that story, and similar stories; thus, a page linked to "the big stories" was born.

This evening, I was curious how Netflix was doing. My son-in-law thought Hulu would win out over the long run over Netflix; he may be correct. But in the process I became aware of something I was previously unaware of regarding ATT: a onetime Hulu suiter, Peter Chernin, has just agreed to invest $500 million with ATT to form/start-up a new streaming network.

ATT is also in the news for another reason. Reuters is reporting:
AT&T is close to announcing that it will buy the No. 1 U.S. satellite TV operator DirecTV, according to people familiar with the matter, in the second potentially transformative deal to jolt the U.S. television industry this year. The No. 2 U.S. cellular operator, which also has some TV and broadband services, has been in active discussions to buy DirecTV for nearly $50 billion, or low to mid-$90s per share, and has been working to finalize a deal in coming weeks.
I assume the other "transformative deal" Reuters is talking about is the pending Comcast-Time Warner Cable deal. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you may have read here.

Note: just as I completed that note on ATT above, I googled the "deal" to see where it stood. According to USA Today, it's a done deal. ATT will announce the deal Sunday. Of course, it needs government approval. This will be in the news for quite some time.

A Graphic Of The New Underpass To Be Built Under The Existing Bypass "West" Of Williston

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.

Oil Productivity Per Rig In The Bakken, Eagle Ford, Permian, And Niobrara


March 30, 2018: update here.
Original Post

Regular readers are very aware of the impressive effectiveness of the new rigs and the new completion processes in the Bakken.

Don caught this very, very interesting graph, worth a 1,000 words, as they say. Note: this is production per rig, not per well.

This is from Investor Village:

There are several story lines here but the graph pretty much speaks for itself. One nice thing about the graph: it starts in 2007, the year in which I consider the beginning of the North Dakota Bakken boom (the Bakken boom began in Montana in 2000).

Amazing! The World's Largest Off-Shore Wind Farm: Second Phase Is Scrapped -- Migratory Birds To Blame

The Guardian is reporting:
Expansion plans at one of the world's largest offshore windfarms have come to a sudden halt, with the owners blaming concerns about migrating birds for the interruption.
The London Array will not proceed to its planned second stage, meaning it will be about a third smaller than originally proposed. The windfarm's power output will be about 630MW instead of the more than 1GW that had been the target for more than five years.
The news is the latest in a series of blows to the UK's renewables industry, which include the decision by the German company RWE npower to drastically scale back its UK ambitions.
Mike O'Hare, general manager of the consortium behind the London Array, which is in the Thames estuary, said it would take until 2017 to know whether additional turbines at the farm would affect the habitat of red-throated divers. That made the construction of additional turbines unfeasible, the consortium decided.
He said: "In the absence of any certainty that phase two would be able to go ahead, our shareholders have decided to surrender the Crown Estate agreement for lease on the site, terminate the grid connection option and concentrate on other development projects in their individual portfolios."
The windfarm, which was opened officially by David Cameron in July, has 175 turbines and occupies around 40 square miles in the Thames Estuary north of Ramsgate. It has enough capacity to power two thirds of the homes in Kent.
An "interruption" suggests that the project will get back on track. Unlikely.

The big, big story line: this was published back on February 19, 2014. I follow the news -- and especially renewable energy news fairly closely -- and I was not aware of this "latest" development. It is interesting that US mainstream media did not report it. We get all the other news -- like a North Dakota man cited for marijuana possession as a top "trending" story but we never heard about the largest wind farm in the world being cut back significantly. Unless I missed it somehow, and that's possible, of course.

The other big story, of course, is that this comes on top of the study that has just been released suggesting that both France and the UK will run out of fossil fuel resources within five years. The UK runs out of natural gas in three years -- Hillary will just be starting her first term as president. Of course, Mr Obama won't look for ways to help one of our closest allies; he will see that LNG exports from Maryland go the way of the Keystone XL. Nowhere.

Wow! Talk About A Wake-Up Call; Britain And France Will Run Out Of Fossil Fuel In Five Years Unless They Frack; Knight To F3


December 25, 2014: Russia vs the US, the oil story and chess

December 23, 2014: Russia, four ex-Soviet nations sign economic pact.

September 1, 2014: Putin orders construction of that huge natural gas pipeline between Russia and China to commence. This order comes right at the height of the Ukraine-Russia-EU energy story. 

August 7, 2014: Putin bans agricultural imports from EU, US and other countries that placed sanctions on Russia. Specifically:
The Prime Minister Dmitry Medvedev said at a televised cabinet meeting yesterday that Russia’s retaliatory ban covers all imports of meat, fish, milk and milk products, fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. It will last for one year.

July 30, 2014: it's Putin's move. The US/EU announced new sanctions. Morgan Stanley analysts think Putin will cut off natural gas to Europe.

July 23, 2014: sounds like the Europeans are cheating; Putin is on to them; willing to "watch and wait"; not aggravate things at the moment. It's possible Putin's threats are making Europe think twice about doing this; caught at "cheating," the Europeans are reducing the amount of natural gas they are providing the Ukraine.

July 13, 2014: Mr Putin and his chess games -- the Ukraine, the Mideast, and, now, Central America. 

July 8, 2014: if you scroll down at this post, one can see how Putin continues to win this chess match. 

July 3, 2014: ever since I started comparing global politics between Vladimir Putin and Barack Obama to a chess game (now two chess games: the Ukraine AND Iraq), readers have been sending me links to show how "right" I was. This quote was attributed to Mr Putin; whether it is accurate or not, here it is:
Negotiating with Obama is like playing chess with a pigeon .. the pigeon knocks over all the pieces, craps on the board, and then struts around like it won the game." -- Vladimir Putin, undated, unsourced.
Later, 8:24 p.m. central time: readers may have noticed I've reported that a fair number of energy companies have recently declared increased dividends or dividends for the first time in quite some years. It was just something I noticed; no statistical analysis to see if accurate. Interestingly, the lead story in this week's issue of Bloomberg Businessweek, "Choosing Profits Over Productivity," which according to the writer/editor: "Bottom line -- productivity growth is stalling while companies spend their $2 trillion cash hoard on buybacks and dividends." Wow: saying exactly what I thought I was seeing. It's a nice two-page article. The authors spend a fair amount of time discussing the obstacles or the headwinds businesses have had to contend with the past several years ... and yet, the authors do not mention the #1 headwind: ObamaCare. The 800-pound gorilla.

Later, 6:09 p.m. central time: I inferred from a reader's note (that I received in response to the original post below), that Mr Obama walks on water, and that I should stick to science. To those who think I should stick to science I refer you to the cover of the most prestigious general "science" magazine out there, The National Geogrpahic. Ground to torch, the Statue of Liberty stands 305 feet, one inch high. I am not aware of any "scientist" who argues that the water level will rise as high as depicted on that cover.
Original Post

Presidents come and go. It's hard to believe we won't have a more pro-growth president following the current debacle five years from now. Even Hillary with half-a-cerebrum could do better than what we've been through the past six years. [Don't take this out of context: perhaps President Obama has been the best president this country has ever had; I don't know; only history will tell. All I know is he does not appear to be a "pro-growth" president, and some folks would consider that "good." So this is not a rant about President Obama. The comments have to do with the future of energy despite who is in office.] 

Five years from now, North America should be the energy center of the universe. The Verge is reporting that France and Great Britain will both run out of fossil fuel within the next five years. Other sources suggest that Norway has already started seeing its production fall. 

Talk about a wake-up call from the linked article (that article loads very, very slowly for me; it can also be found at The Independent):
The UK is set to run out of its oil, coal, and gas supplies in a little over five years, a new report had claimed.
The research from the Global Sustainability Institute has said that other European countries are facing similar shortages and that many nations will become entirely dependent on energy imports in the next few years.
The UK has 5.2 years of oil remaining, 4.5 years of coal and three years of gas before completely running out of fossil fuels, says the institute, which is based at Anglia Ruskin University.
France is reportedly even worse off, with less than a year’s worth of fossil fuels in reserve, while Italy has less than a year of gas and coal and a single year of oil.
"The EU is becoming ever more reliant on our resource-rich neighbours such as Russia and Norway, and this trend will only continue unless decisive action is taken,” said Dr Aled Jones, the director of the institute.
"It is vital that those shaping Europe's future political agenda understand our existing economic fragility.”
It's very possible (hopefully) we will look back on the two lost decades (2000 - 2020), as the period when the US oil and gas industry was getting its ducks in order, despite all the obstacles Washington (DC) put in front of the industry during the terrorist-decade (2000 - 2008) and the anti-US-growth decade (2008 - 2016). By getting its ducks in order, I mean building the infrastructure needed to maximize its massive energy resources.

Back to that article about Europe running out of fuel. If one was running out of energy resources, wouldn't a responsible government want to maximize other alternatives? This speaks volumes about the "practicality" of renewable energy:
The Government has recently announced cuts in its subsidies for large-scale solar farms from next April, two years before they were projected to end, and the Conservatives have said they will not subsidise new onshore wind farms if they win the 2015 general election.
If the London Array (off-shore wind) is such a success, why don't the Brits want to replicate it? 

It speaks volumes about the success of the Bakken laboratory:
Ministers are instead hoping that a combination of shale gas - extracted by fracking - and new oil finds in the North Sea will be able to plug the coming deficit.
A Note to the Granddaughters

This may be one of the funniest things to have occurred to me personally with regard to the blog.

As regular readers know, my life revolves around our two granddaughters. My commitment to them as a grandfather/caretaker/nanny/mentor/whatever is 24/7.

Because of the older one, I am re-learning physics, math, biology (particularly Linnaeus classification) and astronomy (to some extent).

Because of the younger one, I am learning to play the guitar and enjoy (sort of) soccer.

And, because of both of them, but mostly due to the younger one I am learning to play chess again.

The other day I used chess as an analogy, writing:
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. 
I really didn't know much about chess strategy, just the basic rules on how to play the game.

Fast forward one week. Today I am in the Southlake, TX, community library. I have just finished re-reading Mike Reynolds' biography of Ernest Hemingway. I re-stock it and then look for another book to read. On "display" by the librarian I pick up Nate Silver's The Signal and the Noise: Why So Many Predictions Fail -- But Some Don't.

Until I picked up the book I knew nothing about Nate Silver. According to the book jacket, "Nate Silver is a statistician, writer, and founder of the New York Times political blog Silver also developed PECOTA, a system for forecasting baseball performance that was bought by Baseball Prospectus. He was named one of the world's 100 Most Influential People by Time magazine."

In chapter 9, Silver talks about statistics, probability, and the "rage against machines." The chapter deals with computers programmed to play chess. He spends several pages on IBM's Deep Blue computer taking on world chess champion Garry Kasparov, the top-rated chess player in the world from 1986 until his retirement in 2005. Or more precisely, Garry Kasparov challenging IBM's Deep Blue.

Now, remember, my notes written a couple of days ago: "The chess game began with Putin's brilliant handling of the Russian winter Olympics, an opening "knight" move to "F3."

Here on page 270 of Silver's book, the first time I had ever opened this book:
Kasparov's goal, therefore, in his first game of his six-game match against Deep Blue in 1997, was to take the program out of database-land and make it fly blind again. the opening move he played was fairly common; he moved his knight to the square of the board the players know as 'f3.' 
Wow. I did not know that this particular opening move "was fairly common." The only reason I used it as an example was because it derived from the three lessons I learned from reading about chess while teaching our younger granddaughter (three lessons she understands well):
  • control the four center spaces of the board
  • get one's knights into action quickly
  • castle early
But I have to say, I nearly fell off my chair in the library when I came across that passage in Silver's book.


By the way, reading Nate Silver's book has a much more practical benefit for me. I often remind folks that the Million Dollar Way blog is not an investment site. No one should make any investment decisions based on anything they read in the blog. For me personally, I never planned on using the blog to help me invest. But somewhere along the line two things evolved: first, it became clear that to understand the Bakken, one had to follow the money; and, second, to follow the money, meant blogging and reading about the Bakken day in and day out.

To insure this does not become an investment site, I will end it there.

Saturday Morning -- May 17, 2014

Cottonwood oil field has been updated.

It's a busy day for me today with swimming and a soccer tournament for the granddaughters, so I posted the top stories for the week earlier (scroll down).


This story is now tracked here

Later, 5:57 p.m. central time: The Washington Post has a better update regarding the snags that the Southern Co Kemper County clean coal facility has hit (the article hit the internet one hour ago -- a big "thank you" to the reader):
Last November, Energy Secretary Ernest Moniz rode an elevator to the top of the 11-story scaffolding surrounding Southern Co.’s new coal-fired power plant here and gazed out over the Mississippi flatlands. Below him lay a new lignite coal mine, new storage facilities and a glimmering maze of steel.
The beauty of it all was this: Sixty-five percent of the plant’s carbon dioxide, a greenhouse gas released by all coal-fired power plants, would be captured, carried through a 62-mile-long pipeline and injected into old oil reservoirs to boost output of precious crude. The carbon dioxide would remain buried in the ground, where it would not contribute to climate change. That would make this the first U.S. power plant designed to include commercial carbon-capture technology.
Six months later, the future has been postponed. Southern’s advanced coal plant, already running over budget and behind schedule when Moniz visited, has suffered new setbacks. On April 30, Southern said the Kemper plant would not open until May 31, 2015 — a year behind the original target. And while Moniz says that “we’re going to need not 10, maybe 100 more of these plants across the country,” it might be a triumph to finish just one.
The only thing the Kemper power plant is burning now is money. The plant has suffered almost every kind of cost overrun, beset by bad weather, labor costs, shortages and “inconsistent” quality of equipment and materials, and contractor and supplier delays. Southern said in April that it was raising the projected cost of the plant by $235 million, to a total of $5.5 billion, more than double the original estimate.
Every month of additional delay will cost about $25 million, Wall Street analysts estimate. So far, the company has eaten about $1.6 billion in losses because of cost overruns. “It’s been a bitter pill to swallow,” Fanning said in an interview during Moniz’s visit.
The weather? In Mississippi? This is interesting: "...  suffered almost every kind of cost overrun, beset by bad weather, labor costs, shortages and “inconsistent” quality of equipment and materials, and contractor and supplier delays ..." These seem like very mundane problems. Sounds like the project manager needs to be held accountable; nothing insurmountable here, and yet, the Bloomsberg article below suggests it was "technical problems" that cause the delay. These are simply mundane, everyday problems that a good project "manager" should be able to "manage."

Original Post


The Bloomberg weekly has a short little article on the "true cost of clean coal." It is interesting that when Bloomberg realizes how expensive "clean energy" is, the editor writes:
Costs matter, too. Should [local] ratepayers bear so much of the cost of developing a new technology, when it's the country and the world that benefits?
I'm not exactly sure "who" benefits and why, but the editor is finally getting close to the real question: what good does it do if the US cuts back on CO2 emissions unilaterally?

The short article is quite interesting; quite helpful with some data points.

In an earlier post, back on March 24, 2014, I noted the current cost to build new energy plants:
  • Solar: $3 million / MW
  • Wind: $2.5 million / MW
  • Natural gas: $865,000 / MW
It's nice to see Bloomberg confirm these numbers in a general sense (again, numbers rounded):
  • Southern Company, Kemper County, MS, clean coal: $7 million / MW 
  • nuclear energy: $5,500 million / MW
  • new modern natural gas plant: $1 million / MW
Bloomberg notes that Kemper's ratepayers will see a 22 percent increase in their utility bills. Mississippi is not exactly where people are most able to afford higher utility bills. Just think: the Mississippi folks are doing this to make Florida retirees and Connecticut millionaires feel better thinking they are doing something for global warming.

Other trivia from the article: Southern recently delayed by a year the date it expects to become operational, due to technical problems (it will be interesting to see if that date is again delayed); the project's initial (2006) price tag of $1.8 billion has "risen" to $5.2 billion. It wouldn't surprise me one bit to see this thing mothballed before it ever becomes operational. If it's $5.2 billion now, and it's delayed another year, one wonders the final "real" cost. It's hard for me to believe that those championing the project are eager to give us the real estimated cost.

By the way, there was a lot of talk at one time that China would be using "clean coal technology." Does anyone really believe that China will be using "clean coal technology" if it costs that much.

Interestingly, and telling, Bloomberg does not mention the cost of solar and wind, maybe not as expensive as "clean coal," but certainly much more expensive than natural gas or "conventional coal." If "costs matter," as the editor suggests in the article, then solar and wind energy certainly belong in the discussion.

It's interesting that nuclear is mentioned; except for a couple of recent announcements regarding nuclear plants in the US, one can consider nuclear energy an unlikely option in the US in the foreseeable future.

The Wall Street Journal
Government Motors to pay maximum penalty for killing at least 13 people because of faulty ignition switches: $35 million. This year GM posted a pre-tax profit of $466 million, down from $1.8 billion a year ago.

And that was all I found interesting in the Journal today. I don't review the op-ed page or the non-business sections of the Journal on the blog, as a general rule. I read those sections later, at my leisure, though I doubt I will have much time for leisure today.

The Los Angeles Times

California's income will be about $2.5 billion higher than Gov. Jerry Brown predicted in his latest budget, according to the Legislature's top financial advisor — surprise cash that Democratic lawmakers will almost certainly use to challenge the governor's call for continued austerity.
The healthier stock market and increasing property values will bring in the higher tax revenue, nonpartisan Legislative Analyst Mac Taylor said in his own projection Friday.

The Dickinson Press

Top "trending" story: man cited for marijuana possession.  And that tells me things aren't so bad in the oil patch.

Bakken crude not the problem, industry-commissioned study finds. The problem: trains leaving the tracks. Well, duh, what did you expect?

The Financial Times

The Department of Veterans Affairs (VA) is facing mounting evidence that some of the hospitals it runs have been keeping two sets of books to make it look as if they were reducing waiting times to see a doctor.

More damning, the department is investigating the claims of a whistleblower doctor in Arizona that dozens of patients at one hospital died while they were languishing on a hidden waiting list without ever being given an appointment.