Thursday, July 31, 2014

Off The Net For Awhile ...

... and I just know the August NDIC hearing docket agenda will be released while I'm biking. Drats.

Something I've said repeatedly on the blog: the oil and gas industry, the Bakken boom, is affecting, for the most part, three or four counties in North Dakota: most of McKenzie; most of Williams, much of Mountrail, and a significant portion of Dunn County.

The map at this link pretty much supports that contention.

"War is a mere continuation of politics by other means"

This is really quite interesting. For Hamas, a perfect storm:
  • US-Israeli relationship at an all-time low
  • POTUS has stepped off the international stage; mostly into fund-raising in California
  • Hillary Clinton is no longer SecState
  • Current SecState is ribbonless, threw his military ribbons away, more interested in AGW
  • Israel "shocked" by extent of tunnel system
So, with all of that, the headline news:
  • Israel determined to destroy the tunnels; has pretty much 100% Israeli support (a reader very nicely pointed out he misread this -- he thought I meant the Israelis were 100% responsible for destroying all the tunnels -- no, what this shorthand said: destruction of the tunnels has almost 100% support among Israelis; Egypt is helping to destroy the tunnels. Sorry for the confusion.)
  • Israel calling up 16,000 more reservists
  • Israel asking for more ammunition from the US
We'll see what happens first: more reservists or more ammunition.

"War is a mere continuation of politics by other means."

At Least We Know Where Algore's Been
Eating Ice Cream in 58-Degree "Weather"

Link here to a CNN anchor who is losing it. I can't make this stuff up.

Free Market Capitalism 101 -- The ONEOK Press Release, July 31, 2014


August 2, 2014: former CEO of ONEOK makes comments that back up the prescient comments of a reader posted below.

July 31, 2014: see comment below which I brought up here --

OneOK is sitting on a treasure trove of NGLs and they know it. If they build fractionating plants here, much of their NGLs could go to a chemical complex built along the Missouri. That would catapult OneOK much higher, and set them up as the kingpin for the midstream industry.
Maybe a propane line to southern Minnesota or a natural gasoline (condensate) line to Alberta.
The really big pie in the sky, though, is if someone built a ethane cracker, to make ethylene, which is the building block molecule of the petrochemical complex.
OneOK doesn't recover ethane now (it stays with the methane and is burned) as the Houston market is flooded with ethane (OneOk loses money transporting ethane to Kansas and then Houston).
When OneOK starts recovering ethane, OneOK profits will go through the roof. In 2016, ethane exports begin the same way that LNG is exported. Another option is a $1 billion cracker along the Missouri north or Watford City. Pittsbugh is getting one near where Shell is building, and Pittsburgh considers it an economic salvation.
All kinds of chemical plants will locate near a cracker (polyethylene plastic plants, chemical plants etc).
I'm too tired tonight, but tomorrow, I will post the linked article above as a stand-alone post, so it's not lost. 
Original Post

1. Excluding non-profits, charities, and the like, most folks go into "business" to make a profit.
2. Risks vs benefits. Sometimes it's hard to calculate.
3. Favorable regulatory environment.
4. Find a "need"; attempt to meet that need.
5. Get really, really good at what you do.

Hopefully this will help explain ONEOK's announcement yesterday.

This is in response to a reader's comment in which he/she asked:
  • is the flaring crackdown driving ONEOK's investment?
  • does ONEOK have a de facto monopoly on natural gas processing in the Bakken?
  • does the state favor one company building all these new plants?
  • is the utility regulated? 
There are so many story lines in the ONEOK press release, I don't know where to begin.

A very minor story, but one that deserves attention: why are five of eight ONEOK natural gas processing plants located in one county in North Dakota? I've touched on it before; won't go into it again because my feedback was that I was nuts (which I probably am). LOL:
  • Grasslands, Williams, 100 MMcf/d
  • Stateline I, Williams, 100 MMcf/d
  • Stateline II, Williams, 100 MMcf/d
  • Garden Creek I, McKenzie, 100 MMcf/d
  • Garden Creek II, McKenzie, 100 MMcf/d
  • Garden Creek III, McKenzie, 120 MMcf/d -- to be completed in 2015* (ahead of schedule)
  • Lonesome Creek, McKenzie, 200 MMcf/d -- announced July 14, 2014; to be completed in 2015
  • Demicks Lake, McKenzie, 200 MMcf/d -- announced July 30, 2014; to be completed in 2016
Those are all ONEOK plants. I vividly recall the day I drove by Stateline I with my dad, touring the back roads of the Bakken. I had no idea what was being built; the local/regional newspapers were not reporting. It was completely under the radar scope. That was one of just a handful of "things" that really, really piqued my interest in the Bakken. These plants are not trivial in scope. I think there were 200 brand new pick-ups at the job site when Stateline I was being built. I think it took about a year. A lot of great paying jobs.

I was just learning about all this. I was inappropriately excited. A reader wrote me to tell me to settle down; in the big scheme of things, these were very small plants compared to the processing plants in Qatar. LOL. Qatar. Like I want to go there.

Qatar. Pronounced "Kotter." Sort of. Closer to "cutter."

Welcome Back Kotter Theme Song

Answers to those questions:
  • is the flaring crackdown driving ONEOK's investment? No, profits drive ONEOK's investment
  • does ONEOK have a de facto monopoly on natural gas processing in the Bakken? No
  • does the state favor one company building all these new plants? No
  • is the utility regulated? Yes and no ("everything" is regulated; but profits are not regulated for these plants, as far as I know, unless you consider tax burden a type of "regulation")

Williston Airport Traffic Up 250% Over Two Years -- WSJ -- July 31, 2014

The Wall Street Journal is reporting:
Williston, N.D.
A double-wide mobile-home trailer that used to serve as an elementary-school classroom is now the airport terminal. A conference room is the Hertz rental counter. And there is no baggage carousel, just a small counter where baggage workers pile luggage.
Sloulin Field International Airport here wasn't built to be one of the fastest-growing airports in the world, but it is now. Traffic last year was 254% higher than just two years earlier. Airlines fly in with jets weighing twice as much as what the runway was built for. And when the parking lot is full, cars are left in ditches and on the sides of roads.
"It's hard to even call it an airport," said Kenneth Dransfield of White Springs, Fla. "And it's super expensive." He bought a ticket home to Florida seven months in advance and paid $1,200.
The Bakken oil bonanza has brought jobs and wealth to western North Dakota. With that have come workers and airlines to transport them. Small cities that used to have just a handful of turboprop commercial flights now have regional jets in and out all day long, and some have larger Boeing and Airbus planes popping in, too. Planes are packed, fares are high and airports are scrambling to find ways to grow more.
Most U.S. small cities and towns bemoan sharp reductions in airline flights, making it harder for their communities to attract new factories and businesses without jet service. But if there is oil, airlines will find all kinds of ways to get in and out of tiny airports.
The best thing about the Williston International Airport: one can walk to it from the back porch of the house where I grew up. If it still has a back porch. 

It would be nice to see Jane "Yes, There's Some Oil There" Nielson fly out to Williston.

Reason #163 Why I Love To Blog; Natural Gas Fill Rate -- July 31, 2014

Yesterday I posted a link to a story on the natural gas "fill" story.

That post will take you to this link over at Investor Village. (This will save you one click).

Until this week, I had no idea how much natural gas was injected into storage every week, and if the truth were known, I did not care.

But now that I am following the "Road to New England," the natural gas weekly fill rate has become very, very interesting.

It appears, that in round numbers, the industry needs to inject 100 billion cubic feet of natural gas into storage every week to meet this winter's expected demand. Don sent me the number for the most recent week: 88. That's the net change: previous week plus newly injected minus withdrawal.

I don't know. Is "88" good? It's less than 100.

Dynamic link here


Warning: graphic, probably R-rated.

I can't view this at the moment due to technology issues, so I really don't know what's all in the video. Parental discretion advised.

Crazy 88s, Kill Bill

A Note for the Granddaughters
This is really cool. Four of us went to a very nice Japanese restaurant on Pacific Coast Highway last night. It's a most genuine Japanese restaurant. It has all of six tables, if that, and seats maybe 16 people at tables (another 8 at the sushi bar). It could probably seat one or two more but it would feel really claustrophobic. There were about eleven people at tables plus six at the sushi bar. 

We go there at most once each time we visit Los Angeles. 

I had forgotten, but was reminded, the hostess speaks no English (or very little English -- perhaps as much English as I speak Japanese). The waitress is, I think, fluent in English. Hard to say. 

It reminded me of the real deal, the real mom-and-pop restaurant when I visited Japan many, many years ago. 

When we left the restaurant, I noted two little mounds of what-appeared-to-be salt on small little round dishes, one dish on either side of the door, outside the restaurant. I had not seen those before, and surprisingly none of the others I was with had noticed that before despite frequent visits there. None of us knew the significance.

Google to the rescue: the third paragraph at this link.
Another example of salt in the daily culture was shown to me by our local sushi man when he was cleaning and prepping his restaurant for the day. Standing in the entry way by the sliding door under the noren, Japanese awning, he was splashing water and sprinkling salt liberally on the sidewalk.  I learned that this is an act of purification.  A practice still common today is the little cone-shaped mounds of salt on little dishes on the ground by the threshold of a restaurant, shop or even a residence.  It means the place has been purified and it hopes to attract customers.  This can often be seen at Japanese sushi restaurants not only in Japan but all over the world.  Next time you go to a Japanese restaurant have a look to see if they practice this tradition.  If so, you will know they are authentic!

Williston, Minot, Dickinson (In Reverse Alphabetical Order) Qualify For Oil Funds -- July 31, 2014

The Bismarck Tribune is reporting:
Currently, three cities qualify for the hub city status: Williston, Dickinson and Minot.
Williston is listed as having 63.9 percent oil field employment, 38.9 percent in Dickinson and 12 percent in Minot.
Hub cities are eligible for $375,000 annually for each partial or full percent of its workforce employed in the oil and gas industry. School districts in hub cities are eligible for $125,000 for each partial or full percentage point.
Job Service North Dakota was required to update its numbers as part of House Bill 1358, which passed during the 2013 session. HB1358 includes a formula outlining allocations of oil and gas gross production tax allocations to various political subdivisions.
How in the world Alexander, Parshall, Dore, and Watford City were not named "hub cities," I suppose we will never know. I assume 100% of workers in Dore and Parshall work in the oil industry, except perhaps for those repairing roads and replacing windshields.

And, of course, they would not be needed if it weren't for the oil industry.

Refineries Setting All-Time Records -- July 31, 2014; Breaking News: Blackberry Collaborates With Microsoft

Active rigs:

Active Rigs194180208184143

RBN Energy:
Ever since US crude production began to increase in 2009 after 40 years of decline from its peak in 1970, refineries have been processing higher crude volumes.
This summer (2014) crude processing volumes have been higher than at any time since the Energy Information Administration (EIA) began keeping records in 1982.
Abundant supplies of reasonably priced crude in all regions as well as low refinery fuel costs are giving US refiners good reason to crank up their output. So much so that in the Midwest refinery output reached over 100 percent of capacity early in July. Today we describe the refining bonanza and how things might change in the not too distant future.
During the week ending July 11, 2014, US refineries processed 16.6 MMb/d of crude - the highest level ever recorded by EIA.
This increase in refinery processing comes at a time when domestic demand for refined products produced by refineries has actually been declining due to  two main factors – (1) renewable fuel standards replacing gasoline with ethanol and (2) greater auto fuel economy.
So, where does that leave us? Where are "we" headed? For the rest of the story, go to the linked article. Without question, RBN Energy provides the best education on the oil and gas industry, day in and day out, without requiring a paid subscription, a password. There are no ads at the site. It is quite remarkable. 

I wish such a site existed 40 years ago. Oh, that's right. Algore had not yet invented the internet. My bad.

Humor for the Day

See if you can find this story on your own through googling. It's such a huge story, I was unable to find it again through googling. I had to go back to where I thought I saw it earlier this morning.
Blackberry: BBM now available for Windows phone users: Co announced a collaboration with Microsoft (MSFT) to bring BBM to Windows Phone 8 and higher.
Savvy investors probably saw this coming. Back on Jun3e, 29, 2012 (yes, two years ago; some things move slowly in Silicon Valley), Business Insider was reporting:
RIM's death throes continue...
Reuters reports hearing from sources that RIM's board is currently weighing several extreme options including switching to Microsoft's mobile operating system (the Nokia move, which has failed), or selling off its network business, a key part of the company.
RIM announced a greater quarterly operating loss than expected on Thursday, and revealed that it is once again delaying the release of the Blackberry 10 phone, this time until 2013.
Now, the company's board is reportedly considering giving up on its own operating system and adopting Microsoft's instead. In fact, Reuters reports that Microsoft's CEO Steve Ballmer recently approached RIM about this idea. For the time being though, RIM is still hoping to develop and release the Blackberry 10 operating system.
I can't make this stuff up.