Thursday -- April 16, 2015; Unemployment Claims Surge; Far Exceeds Expectations; Previous Week Revised Up

SLB reports today after market close. 

Active rigs:

	4/16/2015	04/16/2014	04/16/2013	04/16/2012	04/16/2011
Active Rigs	92	184	186	204	175

RBN Energy: more on the Marcellus.

Growing volumes of natural gas liquids (NGLs) produced in the Marcellus and Utica need to find a market – inside or outside the region.  Getting them to outside markets involves transportation by pipeline, rail, truck or barge. Local demand is either from traditional “legacy” customers that consume propane, butane and natural gasoline or from new ethane-consuming projects such as proposed ethylene crackers. What’s already been done to address the demand side of the NGL equation, and what’s being planned?  Today, we conclude our series on NGL infrastructure in the Upper Ohio River Valley with a look at where all those NGLs will be heading.

NGL production in the Marcellus and Utica is expected to top 800 Mb/d within a year or so and may top 1 MMb/d or even 1.2 MMb/d by the 2020 if the recent pullback in drilling is reversed. Given that it can be challenging to store NGLs (ethane in particular) and that the region has little in the way of NGL storage capacity, the increasing supply of NGLs from southwestern Pennsylvania, northern West Virginia and eastern Ohio needs to “join together with demand” (as our series title has been hinting at). Of course some ethane can be “rejected” into the natural gas, but there are BTU limits to pipeline-quality gas—and besides, gas/NGL producers would prefer to sell their ethane to petchem producers, assuming the price is right. The question is, where will the demand for Marcellus/Utica-sourced NGLs come from? Local crackers? Gulf Coast crackers? Export markets?   All of the above?

The last pieces of the region’s NGL puzzle are takeaway capacity and local consumers, whose combined receipt of NGLs needs to roughly match the volumes being produced (minus any ethane being rejected into outlet gas). First, let’s look at pipelines. There are a total of seven existing or planned NGL takeaway pipelines out of the Marcellus/Utica, some ethane-only, some capable of moving batches of ethane and other NGLs, and one planned system focused on moving mixed or “Y-grade” NGLs.

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Briefly

North Dakota natural gas plant expansion: Bakken.com is reporting:

The North Dakota Public Service Commission is deciding on a proposed expansion of the Little Missouri Gas Plant in McKenzie County.

State regulators say Targa Badlands LLC has submitted an application to expand the facility to four gas processing units, at a cost of about $140 million.

Kinder Morgan: will raise its quarterly dividend to 48 cents a share, up 6.7% from the previous dividend of 45 cents. The new dividend will be payable May 15 to shareholders of record on April 30. The energy pipeline company said it remains on track to pay an annual dividend of $2 a share, which would imply an increase in its quarterly dividend to 50 cents a share. Also, expect more acquisitions.

Netflix: shares "explode" after unexpected subscriber growth -- Business Insider.

Hillary suffering from "Brian Williams" syndrome -- invents her grandparents' immigrant history.

News embargo continues:

• Ebololand
• ISIS and Mideast implosion
• Ukraine war
• Russian ships in English Channel

Greece "drop dead date" now April 24th (earlier, April 9th).

The real story? Reuters is reporting:

Russia's Lukoil was asked to sharply reduce output in Iraq this year and earlier after the country's exports were disrupted by bad weather and quality issues.

"We've got the letter to curb our enthusiasm," Ravil Maganov, who is in charge of Lukoil's upstream division, told reporters.

Regarding Lukoil's production at the huge Iraqi West Qurna-2 oilfield, Maganov said: "We were restricted to 250,000 barrels per day (bpd) due to weather and level of sulphur, we are dealing with the problem."

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Spin

Jobs: claims surge another 12,000, but Bloomberg sees only good news --

While a Labor Department report in Washington Thursday showed jobless claims increased by 12,000 to 294,000 in the week ended April 11, readings this low are typically consistent with an improving job market. The median forecast of 50 economists surveyed by Bloomberg called for 280,000. The total number of people currently receiving benefits was the lowest since 2000.

So:

• expectations: 280,000
• 280,000 would have been a decrease from previous week
• instead, it's an increase
• and, a huge increas

and, Bloomberg sees nothing but good news. Wow. 

More:

Estimates in the Bloomberg survey for jobless claims ranged from 260,000 to 300,000. The Labor Department revised the prior week’s reading to 282,000 from an initially reported 281,000.

The four-week average of claims, a less-volatile measure than the weekly figure, was little changed at 282,750 compared with an almost 15-year low of 282,500 in the prior week.

It would be interesting to see who forecast 260,000. Must have been joking. Or smoking.

This comes on top of the 14,000 surge in new claims last week; these past two weeks completely "erase" the anomalous / strange report of April 2, 2015.

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Apple

Apple Watch pre-orders likely exceeded 2.3 million; they sold out in six hours. 

Apple clarifies:

Apple Watch orders will continues to be taken exclusively online through May and deliveries will begin April 24 as planned. Apple is limited to on-line puchases of the Apple Watch because of "high global interest combined with [their] initial supply...[they] expect this to continue thorough the month of May."

More:

With no walk-in purchases of the Apple Watch available at Apple Stores until at least June, and product reservations for in-store pickup not available yet, it would appear that the Apple Watch's upcoming April 24 launch day could be quieter than usual. The long lines that typically accompany an iPhone launch, for example, could be a lot shorter than usual at many Apple retail stores around the world.

Fortunately, disappointed customers can rest assured that Apple's iconic lineups will not be going away forever. Ahrendts ensured in her memo to retail employees that not all Apple products will launch the same way as the Apple Watch, adding that both Apple and its customers love the long lines and that there will be many more of them to come in the future.

And yes, Ms Ahrendts is back-pedaling on her feelings about Apple lines. Give her a break. She's new to Apple. She's used PCs all her life.

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A Note To The Granddaughters On Why The Apple Watch Will Do Well

One of the books I'm currently reading -- for the second time -- is On the Origin of Tepees, Jonnie Hughes, c. 2011, which I picked up on my last trip to the Bakken. I bought it at Books on Broadway, perhaps the best bookstore west of the Missouri-Mississippi until you get to Powells in Portland, Oregon.

From pages 90 - 91:

Then, from 1865, appearing in the stores on Main Street, a unique addition: the Boss of the Plains, a hat made back east by one J. B. Stetson. It fitted the Wild West like a glove. It was shaped like some of the existing western creations, but it was much better made, crafted form quality fur felt, which ensured that it was entirely waterproof; and most important, it was new. The townfolk clamored for it. An elegant, civilized western hat -- with a great name!

Buyers wanted to be "bosses of the plains."

Compared with the other hats in circulation, the Boss was pricey -- at least a half a month's wage to a cattle driver -- but because it was pricey, it became a status symbol; and because it became a status symbol, it was extremely desirable. Within only a few months every frontiersman and cattle driver had to have one.

The Apple Watch watch has begun; social media sites are noting celebrities wearing the new Apple Watch. Sort of proves the point.