The Chinese Are Going To Love A Fossil-Free Future -- March 29, 2015

Some nice data points for fossil fuel. Remember: solar energy consumption was zero percent (when rounded to the near nearest whole number) in 2014. This was a 1.7% increase over the prior year. There are two ways to make money on solar energy: a) through tax credits; and, b) being paid to make speeches on solar energy.

Anyway, here's the WSJ take on a fossil-free world: http://www.wsj.com/articles/donald-j-boudreaux-fossil-fuel-free-is-no-country-for-the-poor-1427493369.

The article is full of data points. This is a typical observation:

For hundreds of millions of desperately poor people in China, energy-fueled industrialization is the best hope for a better life. Asking the Chinese government to reduce carbon emissions means asking them to commit millions of their people to poverty, condemning them to a hand-to-mouth lifestyle. “Many people think that China should take the lead for driving the clean [energy] revolution,” Wang Yi, a climate-change expert at the Chinese Academy of Sciences, told a United Nations forum on sustainability in 2012. “But China is facing a lot of challenges.”

The same could be said of India. 

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Yada, Yada, Yada

Disclaimer: this is not an investment site. Do not make any investment, financial, relationship, or travel decisions based on anything you read at this site or anything you think you might have read.

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ONEOK Hits A Speed Bump

SeekingAlpha article. To newbiews: SeekingAlpha articles are generally archived at the source. 

Bakken and Three-Forks drilling economics are largely based on the price of oil. Crude produced from the Bakken and Three-Forks formations have been fetching a steep $10-$15 discount to WTI, which has exacerbated the decline for oil producers in the region. The number of oil rigs operating in North Dakota has been more than cut in half over the past year, and now sits at 98. This is the lowest number since March 2010. North Dakota's oil production fell from its all-time high of 1.23 million bo/d in December 2014 to 1.19 million bo/d in January 2015.

Low natural gas, oil, and NGLs [natural gas liquids] prices took a huge toll on ONEOK Partners LP's distribution growth prospects. ONEOK Inc, the general partner, had to also reduce its growth guidance as distributions from ONEOK Partners [the MLP, master limited partnership] are going to come in much lighter than previously expected.

Originally, ONEOK Partners was forecasting to generate $1.31 billion-$1.47 billion in distributable cash flow [DCF, the cash left over after costs that an MLP can distribute to unitholders] this year. That was reduced to $1.08 billion-$1.26 billion when management updated ONEOK Partners' guidance in its Q4 2014 earnings release.

Slightly higher gathering and processing volumes mitigated only a portion of its exposure to lower prices. Natural gas liquids prices, especially for butane and propane, trade in tandem with oil prices. When oil fell, so did NGLs prices, which negatively impacted ONEOK Partners' commodity and differential based operations.

• After ONEOK Partners' sharply lowered guidance, its distribution isn't on solid footing and will have to be supported by debt.
• Low NGLs and condensate prices stemming from low oil prices took a big swipe out of ONEOK Partners' distributable cash flow.
• ONEOK Partners is guiding for its distribution coverage ratio will range between 0.87x-0.97x this year as its DCF stays flat.
• ONEOK Inc on the other hand plans to post a dividend coverage ratio of 1.21x and will generate $105 million in FCF in 2015.
• After its guidance update, I'm far less bullish on ONEOK Partners as an income investment and prefer ONEOK Inc due to its dividend coverage ratio. 

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Slowing Trains Down

I can't remember if I posted this article. I don't think I did. The link was sent to me by a reader -- as are most great stories that get linked at the post. Thank you.

The Dickinson Press is reporting:

BNSF began a move Wednesday to have all of its oil trains reduce speeds to 35 mph through all municipalities with 100,000 or more more residents. The speed reduction is temporarily in place until its customers phase out DOT-111 tanks cars from service, BNSF spokesman Mike Trevino said Saturday. Phasing out of the older cars, which will be replaced by CPC-1232 railcars to meet federal safety standards, is expected to begin in May, and BNSF hopes to complete the process by the end of the year. When that happens, BNSF will reconsider the speeds.

The shipping companies, not BNSF, own the cars, so the railway company has to wait on its customers to make the transition to the newer cars. The move was a voluntary part of an agreement with the U.S. Department of Transportation.

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Bill Nye, The Science Guy

IceAgeNow is reporting:

“The answer is to do everything that we possibly can, all at once,” says Nye. “More efficient electricity. More efficient transportation… More efficient cities. More efficient farms. Raising the quality of life, especially women and girls.”

You’ve more than doubled the number of people burning and breathing the atmosphere in the last two decades, I mean, that’s your problem. So we need to reduce the human population… by the way, war is completely ineffective, ebola will not do it.”

I have not verified if that is an accurate quote or if it taken out of context. If accurate, he must have been off his meds. If accurate, hopefully he is never hired by Germanwings.