Saturday, December 13, 2014

The Road To New England -- December 13, 2014; Was It Memorex Or Was It Real? Massachusetts Setting The Pace On Wind Energy Projects

From The New York Times:
SALEM, N.H. — John York, who owns a small printing business here, nearly fell out of his chair the other day when he opened his electric bill.
For October, he had paid $376. For November, with virtually no change in his volume of work and without having turned up the thermostat in his two-room shop, his bill came to $788, a staggering increase of 110 percent. “This is insane,” he said, shaking his head. “We can’t go on like this.”
For months, utility companies across New England have been warning customers to expect sharp price increases, for which the companies blame the continuing shortage of pipeline capacity to bring natural gas to the region.
Now that the higher bills are starting to arrive, many stunned customers are finding the sticker shock much worse than they imagined. Mr. York said he would have to reduce his hours, avoid hiring any new employees, cut other expenses and ultimately pass the cost on to his customers.
There is much, much more at the link, including how prices are broken down, compared to the rest of the US, and what to expect later this winter. But this is what it's all about:
The utilities argue that they are hamstrung unless they can increase the pipeline capacity for natural gas, which powers more than half of New England. That would not only lower costs for consumers, they say, but also create thousands of construction jobs and millions of dollars in tax revenue.
The region has five pipeline systems now. Seven new projects have been proposed. But several of them — including a major gas pipeline through western Massachusetts and southern New Hampshire, and a transmission line in New Hampshire carrying hydropower from Quebec — have stalled because of ferocious opposition.
I can only assume Pocahontas is leading the opposition, but her name, interestingly enough is not mentioned in the article.


Meanwhile global warming is taking its toll on the folks next door in Vermont. The AP is reporting:
BERLIN, Vt. (AP) — About 6,000 customers were still without power in Vermont on Saturday evening, three days after a brutal storm pounded the state with heavy, wet snow and caused the worst outages in years.
Gov. Peter Shumlin and the head of the Vermont Electric Cooperative surveyed power line and tree damage by air as line crews continued to restore service to those still in the dark from outages that, at their peak, affected some 100,000 customers. Restoring power to everyone could take at least the weekend, officials said.
"It was an extremely difficult storm," said Shumlin, who said 7 to 8 inches of snow was visible from the air encasing power lines in some spots. Parts of Vermont received more than a foot of snow Tuesday and Wednesday, including 19.5 inches in Orwell.
The helicopter tour covered Stowe, Starksboro, Richmond and Hinesburg — which Shumlin said was hit hard. Green Mountain Power — the state's largest utility — said the outages are worse than those caused by Tropical Storm Irene in 2011 or a serious 1998 ice storm.
More than 1,000 people are working to clear lines, Shumlin said.
And they're enduring tough conditions. One line crew hiked through a snowy woods with 80 pounds of equipment to repair a line, which took several hours, only to have to return twice for breaks in similar spots, said GMP spokeswoman Kristin Carlson.
Washington Electric Cooperative had 1,700 members still without power on Saturday and said it would be through the weekend or even longer before the service is restored.
I believe the "global warming" town meeting scheduled for this weekend has been postponed.

This "global warming" isn't all bad news. There are some industries that like cooler weather. The Minneapolis St Paul StarTribune is reporting:
The bracing chill of a Minnesota winter doesn’t make for alluring tourism slogans, but there is an industry beyond dogsledding in which it’s a selling point: data centers.
Selling all that cold air to tech companies that need to keep towers of computers from overheating has become the work of people like Tom Lambrecht, manager of economic development services for the utility cooperative Great River Energy.

This year, after a slow start, it appears more companies have begun checking out the cold, with three newly opened data centers becoming the first applicants for a new Minnesota sales tax rebate for the industry. Seven more projects are in the queue behind them. Great River Energy, meanwhile, has searched among its membership for the best sites in Minnesota to place a new data center.
And so it goes.  So was it Memorex or was real? Was it the cold or the "new Minnesota sales tax rebates for the tech industry."  We will never know with this kind of reporting. We had to read pretty far into the article to get the note on "sales tax rebates." I normally don't read that far into an article but something sounded ... fishy? After all, it's just as cold in Massachusetts and they have a bigger IT customer base than Minnesota. Whatever.

Oh, that's right. Data centers are huge users of electricity. Huge. Go back to the top story above about the cost of electricity in Massachusetts. Folks aren't leaving Massachusetts for Minnesota for the cold. Tax rebates and costs of electricity might be more reasonable explanations. 

By The Way, How's Cape Wind Coming Along?

This is the most recent update; Cape Wind is still in court, October 13, 2014. Apparently Cape Wind developers are taking on the US Constitution in their quest to raise the utility bills for the residents of Massachusetts.

Along the way, one might be interested to see how Massachusetts compares with the rest of the nation with regard to wind energy: #34 (North Dakota is #6; Texas, #1: and, California, #2). Massachusetts has all of 107 MW of wind energy installed, essentially single-turbine units for universities and the like. The state has 45 wind projects on-line, 83 wind turbines; and no projects are currently under construction (data is current through 3Q14, so it is very, very current -- apparently not even Cape Wind.

The narratives are always very enthusiastic; the numbers tell a vastly different story.

Having A Bit Of Fun With Google Today -- December 13, 2014

Readers, do me a favor:

We've done this before; google these five words without quotes (cut and paste is probably easiest):

china storing oil in supertankers

Then this article:

Record oil tankers seen sailing to China amid stockpiling signs

Tracking this story here.

It Shouldn't Take A One-Hour Video To Prove It's Mathematically Impossible To Pay Off The US Debt

Link here if you are interested. No, I did not watch the video. I'm waiting for the YouTube version using pennies as examples. 

Having said that, The Coyote Blog remains one of my favorite blogs. 

Not Ready For Prime-Time

This post will be up for a few minutes, and then it will be taken down. It will be up long enough for a link, and then taken down. It will be re-posted sometime in the future.

The Sky Is Falling

I'm getting a number of e-mails (more than ever before) suggesting that the US government needs to get involved.

My answer:
I don't think Saudi is going to continue giving their oil away for $50 to $60 for very long.
Saudi put themselves in a real bind.
They did this back in the 80's, I believe (I often get my history wrong) to destroy the surging US oil boom (Alaska?, I forget), and they were successful short term. They are trying it again.
I don't think they realized that oil would fall this fast and this far.
Tight oil economics is not like Alaska oil economics. Unlike the 80's, they are competing with a tsunami of US shale oil that can easily be scaled back until prices come back. And prices don't have to come back very far. Even at $75 the Bakken will do fine.
So, back to the thesis: Saudi has put themselves in a real bind: a) they are now losing $138 million / day quibbling over 640,000 bopd (Fitzsimmons said that, I believe). They have huge cash reserves, but even so, $138 million per day is not bird feed; b) the Saudi sheiks are invested in the market as much as any American (don't they practically own Citibank?), and they are seeing their equity portfolios dive in value also; c) they probably invest in what they know and they are probably overweighted in oil and oil service companies, which are plunging in share value, and, d) they are giving away their grandchildren's inheritance (they've said that many, many times).
On the other side of the coin, if they even hint at holding another meeting before the end of January, 2015, they will be seen as blinking; losing "face" in the Mideast is about as bad as losing a war.
So, they can suck up a loss of $138 million/day in lost oil revenue; see their oil and gas equity portfolios dive; or lose face. If, as the OPEC oil chief is saying that supply and demand fundamentals do not lead to $60 oil and he thinks "speculators" are driving down the price of oil, the big question is how high will those same "speculators" drive the price of oil if Saudi cuts (or even hints they will cut) production.
I might be whistling past the graveyard, but at the end of the day, free market capitalism tends to sort these things out.
Wells Waiting To Be Completed Are Increasing In Number
Director's Cut, December, 2014 -- October, 2014, Data

Slump in oil prices, Well Completions, December 13, 2014:
I've said many, many times on the blog: this is all about liquidity now, not profitability. The companies that can keep drilling, minimize production, maintain cash flow and/or liquidity, can drill wells, and delay completions.

From what I can see, early in the Bakken, drilling to TD / fracking was 50-50 proposition. But wells are getting to TD much more quickly, and with the cut back in drilling, the day-rate for rigs will drop, drillers will save huge amounts of money drilling to TD (man-hours, day rates on rigs, daily costs to BHI, SLB for wirelog, consulting geologists).

On the other hand, the fracking is getting much more expensive: a) huge amounts of sand; b) more sophisticated fracking with more stages; c) more ceramic for those who use ceramic.

I doubt the drilling to TD / fracking is 50-50 any more. I'm sure the numbers are easy to find, but I don't have the time and one might need Premium Services, which I don't have, to get the data over at NDIC.

If one includes leases, exploration costs, etc, as part of the overall cost of drilling to TD (and not part of fracking) -- to compare drilling tight wells with conventional wells, then the overall cost of drilling to TD in the Bakken has gone way done. Exploration costs and outrageous leasing is a thing of the past.

It really is interesting (based on the Bloomberg Businessweek article): shale operators are so flexible, they could drill the wells all winter while the price of oil is $40/bbl in the Bakken, but not complete any of the wells. Then, if oil moves toward $70 next summer, they frack the wells; the front-end is where they get huge production.

Bloomberg Has Two-Page Article On Shale's Relentless Attack On OPEC -- December 13, 2014


December 14, 2014Halliburton is laying off folks in the Far East.
Political turmoil from Russia to West Africa helped push 1,000 workers out of their jobs at the world’s largest fracking company.
Halliburton Co. plans to make the job cuts immediately in the Eastern Hemisphere as it strives to cope with an industry fallout brought on by oil prices at a five-year low, the Houston-based company said in a statement yesterday.
Original Post

Two-page article in this week's issue of Bloomberg Businessweek (arrived on the doorstep at 5:30 a.m.).

First article in the magazine, under "Opening Remarks" column: OPEC: Shale's Relentless Attack.

Some data points / quotes:
  • All OPEC can do is gape at the falling price of crude and contemplate the destruction of their cartel at the hands of the Americans, whom they thought they had supplanted for good 40 years ago. 
  • Energy economist Philip Verleger says shale is to OPEC what the Apple II was to the IBM mainframe.
  • Theories as to why OPEC didn't reduce quotas at its meeting in Vienna on November 27 are as cheap and abundant as crude in North Dakota.
  • "If my calculations are correct, this (Saudi's inaction) will go down as one of the worst commodity trading decisions ever," Wilbur Ross, billionaire investor and chairman of WL Ross. [Elsewhere: $138 million/day; previously posted.]
  • Shale operators are "takers," not price setters. Each operator is so small, it can increase production without pushing down the market price. And because shale wells are short-lived, producers don't have to plan far ahead.
  • The glut that's undermining the cartel today will set the stage for future shortages that could restore its influence. 
  • Cheap oil from shale already shows signs of shaking out investment in costlier technologies. Rystad Energy, a Norwegian consulting firm, estimates that oil averaging $60/bbl next year would lead to the delay or cancellation of one-third of all oil and gas projects slated for go-aheads in 2015, mainly higher-cost investments in the Alberta oil sands, the Arctic, Brazil, West Africa, and the North Sea.
Much more at the linked article.

Note which areas were not mentioned in the last bullet. 

Global Warming
Climate Change
Extreme Weather 

2014: no hurricanes (previously posted)
2014: quietest three years for US tornadoes since accurate records began in the 1950s

USA Today is reporting:
The U.S. experienced fewer tornadoes in the past three years than any similar span since accurate records began in the 1950s. Yet meteorologists aren't sure exactly why.
As this year comes to a close, about 150 fewer damaging tornadoes than average have hit the U.S. Explanations for the decrease in twisters the past three years range from unusual cold to unusual heat, or just coincidence.
Despite the calmer than average years, deaths due to twisters remain near the average of 60 each year, with 68 killed in 2012, 55 in 2013 and 42 so far this year. That pales in comparison with the 553 Americans killed by tornadoes in 2011. [Atmospheric CO2 has surged, well above 400 ppm.]
So far this year, just 348 EF-1 or stronger tornadoes have touched down across the country, marking the third-lowest number on record. 
"Unusual cold." Say what?

"Yet meteorologists aren't sure exactly why." Had the number of storms actually increased, it would have been blamed on global warming, again with no scientific underpinnings. But when "extreme weather" actually predicted by warmists does not occur, the phrases "global warming" and "extreme weather" are nowhere to be found in the article. Whatever.

A Note To The Granddaughters

It is rare for adults to get chickenpox, but it occasionally happens. It is even rarer for mothers who have been around children -- especially around children from third world countries where immunization rates are almost negligible -- to get chickenpox late in life. I assume it is very, very rare for a mother of a dozen adopted children whose vaccination history would be questionable to develop chickenpox late in life, but it happens.

Herpes simplex reactivation is very, very common, often being reactivated by a) unknown reasons; b) sunlight; c) stress.

Herpes simplex reactivation and chickenpox look very similar in the early stages. What can I say?