Thursday, June 26, 2014

Another Bakken Pipeline Announced -- Energy Transfer Partners; 1,100 Miles, North Dakota To Patoka, IL

Earlier today I posted a long note, a part of which:
Motley Fool has an article on EPD's plan to build a "Bakken-to-Cushing" pipeline but it's pretty much an advertisement for their newsletter. This is all it says about the question whether EPD will succeed:
It won't be easy, as most oil and gas producers in the region are more interested moving oil to the East and West coasts than to the storage hub in Cushing. However, there are a couple things working in Enterprise's' favor this time. Tune into the video below to find out why Enterprise may have a leg up on ONEOK and Energy Transfer Partners this time, as well as the challenges Enterprise will face in this endeavor.
Now this, from The Dickinson Press later today:
Energy Transfer Partners announced this week it has commitments from shippers to move forward with an 1,100-mile crude oil pipeline from North Dakota to Patoka, IL.
The Bakken Pipeline would transport 320,000 barrels of Bakken oil per day to Illinois, where shippers would be able to access markets in the Midwest or connect with markets on the East Coast or Gulf Coast.
The announcement comes on the heels of Gov. Jack Dalrymple’s Pipeline Summit, during which he said the state’s crude oil pipeline capacity is expected to hit 1.4 million barrels of crude per day by the end of 2016, more than double the current capacity.
Zack's article on same story:
Energy Transfer Partners LP has received approval from its board of directors to manufacture a roughly 1,100-mile pipeline (Bakken Pipeline). The publicly traded energy pipeline operator will transport crude oil from the oil producing region in the Bakken shale to Patoka, IL. Bakken Pipeline will thereafter join the partnership’s existing Trunkline Pipeline (Trunkline).  
Energy Transfer Partners added that the shippers will get the opportunity to access the Midwest and East Coast markets by transporting crude from Patoka via rail. The shippers can also use the Trunkline to carry crude to the Gulf Coast market and Sunoco Logistics Partners LP’s crude oil terminal at Nederland, TX.  

The "Collapse" (Their Word, Not Mine) Of The Economy Would Have Been Much Worse Had It Not Been For The Bakken; Go West, Young Man

When the revised 1Q14 GDP numbers came out earlier this week -- you know, the ones that showed the US economy contracted 2.9%. I remarked that the contraction would have been much more severe had it not been for the energy sector, and more specifically the shale oil industry, and even more specifically the Bakken.

Here are the numbers that back that up. McClatchy is reporting:
In 2010, East Coast states made up 38 percent of the nation’s gross domestic product, the sum of all goods and services produced. Last year, the East Coast produced 36 percent of the American GDP in dollars, while Midwest states increased by 1 percentage point to 14 percent of the national total. That’s according to an analysis by McClatchy of a report published earlier in June by the Bureau of Economic Analysis, part of the Commerce Department.
North Dakota’s gross domestic product grew 9.7 percent from 2012 to 2013, the most of any state and much higher than the national growth rate over the same period of 1.8 percent, according to the bureau’s report.
There was no way the Bakken, by itself, could have prevented the contraction in 1Q14, but it certainly prevented the numbers from being much, much worse.


Meanwhile, Rigzone is reporting that while the rest of the US is tending to "age," the midwest energy states are seeing a decline in average of its (legal) residents:
The United States is still growing older, but the trend is reversing in the Great Plains, thanks to a liberal application of oil.

The aging baby boom generation helped inch up the median age in the United States last year from 37.5 years to 37.6 years, according to data released Thursday by the Census Bureau. But a closer examination of those numbers shows that seven states — Alaska, Hawaii, Montana, North Dakota, Oklahoma, South Dakota and Wyoming — actually became younger.
Credit for the de-aging of the mainland states between 2012 and 2013 goes to the increase in oil and gas exploration in the Great Plains. The Census Bureau offered no reason for the decrease in Alaska and Hawaii.

Read more here:

Natural Gas Availability? What, Me Worry?

I have said this many times on the blog: high oil prices are not the problem; it is the volatility that presents a challenge for consumers and producers. But "the Bakken" has taken the volatility out of the oil and gas market. It's nice to see Bloomberg note the same thing, something I've said often. Bloomberg is reporting:
Rising U.S. shale gas production is driving fear out of the futures market, says Goldman Sachs Group Inc., and will constrain prices for the next two decades.
Gone will be the near tripling of costs to $15.78 as in 2005 as traders remain confident the fuel will be there when needed. Natural gas will trade “largely” at $4 to $5 per million British thermal units for the next 20 years, says Goldman Sachs. Societe Generale SA sees prices at $5 through 2019. Bank of America Corp. forecasts $5.50 for 2017, while BlackRock Inc. projects $4 to $5 for the next decade.
Prices were four times more volatile in 2009 than they are today as production grows for the ninth straight year and new pipelines deliver the fuel to customers. Gas for use next winter costs 3.2 percent more than now, the smallest premium for the peak-demand period since 2000. Stockpiles will start the heating season at the lowest levels since 2008. See articles at the tag, "Road to New England."
“The market is rightfully not that worried because you have so much supply that is coming online,” Jeffrey Currie, head of commodities research at Goldman Sachs in New York, said in a June 23 telephone interview. “We have enough flexibility in the supply system.”
Natural gas futures for July delivery slid 15.3 cents to $4.40 per million Btu on the New York Mercantile Exchange, the lowest settlement since May 22. The January contract fell 12.1 cents to $4.576, and its premium over the July contract was 17.6 cents. 
Much more at the linked article.

Without question, geo-politically, the most interesting thing is that the Mideast is imploding, is at a tipping point, the price of crude oil has hardly moved, and no one in America even seems to notice impending "regime change" in Baghdad.

A big "thank you" to a reader for sending me the linked Bloomberg article.

Statoil Has Another "High IP" Well; Eleven (11) New Permits -- North Dakota

Wells coming off the confidential list Friday:
  • 26049, drl, Enduro Operating, LDCMU 4-42, Little Deep Creek, a Madison well, no production data,
  • 26662, 872, Hess, HA-Link-152-95-3526H-3, Hawkeye, t6/14; cum --
  • 26729, 1.049, MRO, Jakob 14-35TFH, Killdeer, t4/14; cum 16K 4/14;
  • 26851, drl, SM Energy, Bonner 9X-12HA, Poe, no production data,
  • 26859, drl, Hess, EN-State D-154-93-2635H-9, Robinson Lake, no production data,
Active rigs:

Active Rigs191187214170124

Eleven (11) new permits --
  • Operators: EOG (4), Hess (2), OXY USA (2), Enduro (2), Statoil
  • Fields: Parshall (Mountrail), Tioga (Williams), Manning (Dunn), Newburg (Bottineau), Alger (Mountrail)
  • Comments:
Wells coming off the confidential list were posted earlier; see the sidebar at the right.

Seven (7) producing wells completed:
  • 23091, 2,984, Statoil, Jarold 25-36 3TFH, Todd, t5/14; cum --
  • 25540, 1,744, XTO, Clarence Federal 34X-7C, Haystack Butte, t6/14; cum --
  • 25541, 736, XTO, Clarence Federal 34X-7B, Haystack Butte, t5/14; cum --
  • 25924, 55, Hess, EN-Jeffrey A 155-94-2734H-5, Alkali Creek, t5/14; cum --; fracture data not yet available;
  • 25990, 1,311, XTO, Clarence Federal 34X-7H, Haystack Butte, t6/14; cum --
  • 26841, 1,080, Hess, EN-Leo-154-94-2324H-2, Alkali Creek, t6/14; cum --

Comment: regarding, #25924 -- not sure what the story is; this should have been a better well; was this fracked at the time of the test; no frack data yet at the file report; this well is one of ten (10) wells sited on two neighboring 5-well pads.

For Investors Trading; Japan's Fossil-Fueled Generation Was Up A Whopping 20% In 2012; World Soccer Cup Behind Ukraine-Russia Cease Fire


June 28, 2014: in the original post, it is noted that wind farms in California have a license to kill up to 5 eagles/year; the feds allow 15 eagles/year. But no slack is given to individual white men taking eagles on a reservation. The Bismarck Tribune is reporting:
A federal judge has ordered a North Dakota man to pay $6,000 in restitution and fines for illegally trapping an eagle on the Standing Rock Indian Reservation.
Investigators say Tyrell Bateman was attempting to snare coyotes on land where he wasn’t authorized to hunt. The eagle was caught in one of the traps northeast of Selfridge on Jan. 5. A witness took photos of the bird before releasing it.
If I read that correctly, the eagle capture was unintended, and it was released, apparently well enough to fly off.  He should have pulled an "Elizabeth Warren," saying he was a Native American.

Original Post 

How's that war on coal going? The EIA is reporting:
Japan's use of fossil-fueled generation—the combined amount of electricity generated from natural gas, oil, and coal—was up 21% in 2012, compared to the level in 2011 after the Tohoku earthquake and related tsunami that led to the destruction of Tokyo Electric Power Company's Fukushima Daiichi nuclear power plant and subsequent outages at other plants.
Following the accident at Fukushima, all reactors in Japan were required to perform computer-simulated stress tests to confirm their continued ability to operate safely in the event of a natural disaster. As reactors shut down for regularly scheduled maintenance or refueling, stress tests were performed and submitted to the Japanese Nuclear and Industrial Safety Agency for review and acceptance.
On May 5, 2012, the last of Japan's 54 nuclear generating reactors was shut down for scheduled maintenance and stress tests. Only two reactors, Ohi Units 3 and 4, have restarted since the accident, and they are scheduled for an outage later this year.
Speaking of the war on coal, it looks Minnesotans can start getting ready to pay more for electricity: the EPA will do a "do-ever." It will re-assess two 1970s-vintage coal-burning plants to see if they are contributing to haze over two national parks somewhere in the vicinity. The StarTribune is reporting
The U.S. ­Environmental Protection Agency has agreed to reassess whether coal burned at Minnesota’s largest power plant is reducing visi­bility at national parks in Minnesota and Michigan.
If the environmental agency decides that emissions from Xcel Energy’s Sherco power plant in Becker, Minn., cause haze, it could mean costly pollution control upgrades or early retirement of two 1970s-era coal-burning units there.
But I think Minnesotans are well-off in the big scheme of things -- certainly they don't have the Guatamalan problem the Texans have -- and this shouldn't be much of a hardship.

Trading at 52-week highs: EPD, NBR, NOV, OKS, PSXP, SLB.

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.

The morning started out a little "concerning," should we say with the triple whammy (the RBN Energy story, ChevronTexaco profit-taking, and then the market falling in general along with the price of crude oil) but after coming back home from the local sports restaurant after watching the Germany-USA soccer match, all seems fine with the world. The market is recovering a bit, and the US advances to the next round where everything starts over. We are in the soccer equivalent of the "sweet 16" where it's now single elimination, win or go home.  I didn't realize this until during the noon hour: the Ukraine-Russia ceasefire, no doubt, was timed so adversaries could watch the World Cup. The governor of the state of New York gave state employees an extended lunch break today.

Nothing like SLB hitting a new high -- and doing it with an "exclamation point" -- to put me in a good mood. And it may not be over. Barron's suggests SLB might have a 70% upside:
Schlumberger guided earnings to grow at a 17-20% [compound annual growth rate] to $9-10/sh by 2017, ahead of our current estimate of a 15% [compound annual growth rate]. However, the company’s estimates are based on just a 6% industry spending growth level, which is about in line with our long-term expectations of 4-6%.
Schlumberger has historically converted 30% of its EBITDA or 75% of [earnings per share] into free cash flow, meaningfully above that of its peers, while trading at a free cash flow yield of 2-4%. 
Currently shares are trading at the high-end of the range making valuation compelling. Applying a conservative 3.5% yield to the company’s 2017 EPS estimate of $9-10/sh, its 75% free cash flow conversion and discounting it back 2 years at 10%, we arrive at our new $168 price target. If Schlumberger is able to bring this growth 6-12 months forward and its free cash flow yield approaches its historical 3% average, we arrive at our $200 bull case.
RW Baird has also SLB's price target from $117 to $130.

Annual limit on eagles in California now set at five/year. The AP is reporting:
Agency Director Daniel Ashe said the permit encourages development of renewable energy while requiring the wind company to take steps to protect eagles from turbines and power lines. The move will help California reach its goal of producing one-third of its energy from renewable sources by 2020, he said. 
Or, alternatively, "the permit encourages the killing of eagles while promoting a energy source with no redeemable qualities." Whatever. As long as SLB doubles over the next year, President Obama can do whatever he wants with his eagles. After all, it's his base that promoted all this. I don't have a dog (or an eagle, for that matter) in this fight.

Motley Fool has an article on EPD's plan to build a "Bakken-to-Cushing" pipeline but it's pretty much an advertisement for their newsletter. This is all it says about the question whether EPD will succeed:
It won't be easy, as most oil and gas producers in the region are more interested moving oil to the East and West coasts than to the storage hub in Cushing. However, there are a couple things working in Enterprise's' favor this time. Tune into the video below to find out why Enterprise may have a leg up on ONEOK and Energy Transfer Partners this time, as well as the challenges Enterprise will face in this endeavor.
I can't remember posting my thoughts on the "dividend play," but someone else has noticed the same thing. The Daily Ticker is reporting:
As businesses, Ford Motor Corp., Intel Corp. and Pepsico are about as similar as pickup trucks, memory chips and Funyuns. But in the stock market, these disparate companies are treated as nearly interchangeable — like savings accounts at different banks — based solely on how much cash one share of their stock kicks off in a year. They are just a few of the many motley members of the 3% Club. 
There is now an extraordinary crowding of big U.S. stocks around the 3% dividend yield level, a threshold that seems to exert a gravitational pull as investors bereft of easy sources of income bid up equities until they yield just a bit more than the 10-year Treasury note. (A stock's yield, calculated as the annual dividend payment divided by price, falls as shares climb.) 
But too many investors may implicitly be betting that these bond-like stocks will act like stocks in a low-rate bull market, and like bonds in an equity downturn. It won’t likely work out that way. If the stock market remains strong, these are unlikely to be the areas that continue to thrive. If it hits the skids, such stocks will not offer much of a buffer.

I posted/linked the original WSJ article earlier, but it never hurts to get a second opinion when it comes to medicine. Bloomberg's View suggests that ObamaCare's prognosis is getting dimmer:
A nightmare for Affordable Care Act supporters has been the possibility that only the sick would be left to purchase insurance through its exchanges, driving premiums up and insurers out. While the law’s boosters have been quick to dismiss the possibility that such a so-called death spiral could occur, data published in the Wall Street Journal suggest that this chain of events may not be so far-fetched after all.
The findings are significant not just for what they say about how Obamacare is working now, but also for their impact on the political debate over its future.
At its base, the data show that people insured through the law’s exchanges have higher rates of serious medical conditions. Of the enrollees who have seen a doctor or other health-care provider in the first quarter of this year, 27 percent have significant medical problems, including diabetes, cancer, heart trouble and psychiatric conditions. That rate is substantially higher than that for patients in nonexchange market plans over the same period. And it’s more than double the rate of those who were able to hold onto their existing individual market insurance plans after President Barack Obama was forced to allow them to keep them.

A Note to the Granddaughters

This is a sad story: I see that Ms Abigail Jones Feder, JP Morgan's fixed income security executive has passed away at 51 years old, no doubt at the top of her game. I didn't know this Abigail but I knew another Abigail, a woman who at one time was the love of my life. I met her when we were both well past high school. We had come from very different backgrounds: she, East Coast, urban and urbane, intense; me, Midwest, rural and rustic, naive. She, died, also, at the top of her game at age 57, after a fairly long illness, some years ago. Life, for many, is way too short. Only the good die young. 

Thursday, June 26, 2014; Militants Take Large Natural Gas Field Outside Of Baghdad; Ready To Pounce On Baghdad's Water Supply; Jobs Report Unremarkable

Foul! US Supreme Court rejects President Obama's recess appointments. US Supreme Court rejects President Obama's recess appointments. I guess the entire last four years will require a "do-over."  Actually the whole story is a moot story; doesn't amount to a hill of beans. Much ado about nothing.

[There could be more typographical errors than usual today; I will gradually clean up the posts.]

Active rigs:

Active Rigs192187214170124

RBN Energy: RBN Energy provides background, insight, analysis to this week's story about the US lifting the four-decade ban on oil exports.  Unfortunately RNB posts are generally only available for a short period of time before they disappear, and become available only by subscription. Memo to self: post saved.

Jobs report: hard to find it this morning. No wonder, same ol', same ol'.  Down 2,000 to 312,000. The number of people actually receiving benefits inched up by 12,000 to 2.57 million. But the small increase comes after the level fell to a six-year low in the previous week. The four-week average, a less volatile measure, rose 2,000 to 314,000.

Doesn't look good for the home team (not that anybody is watching or cares; right now it's all about the US-Germany soccer game): militants take "gas field" town; Maliki calls parliament into session.  Reuters is reporting:
Militants took a town an hour from Baghdad that is home to four natural gas fields on Thursday, another gain by Sunni insurgents who have swiftly taken large areas to the north and west of the Iraqi capital.

The overnight offensive included Mansouriyat al-Jabal, home to the gas fields where foreign companies operate, security forces said. The fighting threatens to rupture the country two and a half years after the end of U.S. occupation.
Militants preparing to take Baghdad's water supply. Link here. The militants have been studying their 12th century medieval history.

The Wall Street Journal

US Supreme Court: President Obama and NSA cannot search cell phones without warrants.

US economy collapses; shrinks by most in five years. It's been quite awhile since we've seen the word "collapses" (their word, not mine) used in context with the economy; and this comes during the "recovery" and after a trillion dollars (give or take a few unaccounted-for billions) of stimulus. Stock market is down this morning. Lots of profit taking.

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.

New cross-border franchise for entrepreneurs? "Stash" houses. International youth hostels for America's next generation.

A leading advocate for immigration legislation declared the long-moribund effort is dead for the year, publicly voicing what many others have said privately. To me, it looks like immigration reform has occurred through executive action and/or inaction.

Doubts grow over Ukraine cease-fire. Most such "civil war" cease-fires are simply opportunities to regrop and re-stock.

 The US isn't the only one with migrants flooding the borders. Italy seeks EU funds as migrant flood rises. Where are these migrants coming from? North Africa.

Oil exports ruling roils industry. Link here. In addition, see RBN Energy  post/link above.This thing is not settled. I have very "bad vibes" about this whole thing.

Butter: Americans now love it; one of the great comeback stories. Hey, it's summer, corn-on-the-cob and lots of butter.

The headline doesn't say they will be recalled and I'm not interested enough to look but now GM finds air bag problem in the Cruze: 33,000 of its 2013 and 2014 Chevrolet Cruze compact cars were equipped with air bag inflators that were assembled with the wrong part.

Diane Sawyer to step down at ABC anchor; it's hard to believe she is 68, or thereabouts.

Toyota speeds rollout of fuel-cell cars; it will begin selling a fuel-cell sedan in Japan by next March for about $70,000. Deliveries to US and Europe to follow. 

The Los Angeles Times

Buzz Aldrin sells Wilshire Corridor condo.
A Note to the Granddaughter

Our younger daughter asked if we saw any Awestar Ministry teams at the DFW airport last night (or, more precisely, early this morning). My reply: 
It was very, very busy at the airport last night, but we were at the Spirit Terminal, "miles" away from the airlines that Awestar is likely to use (American, United, etc). I did see welcome signs for "Heavenly Delegates" so either "angels" are now flying "Spirit" airlines -- that's seem appropriate, I guess -- or there's a religious conference in town.