Tuesday, May 26, 2015

Active rigs:

	5/26/2015	05/26/2014	05/26/2013	05/26/2012	05/26/2011
Active Rigs	82	191	186	214	173

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Another Great Bakken Analysis By RBN Energy 

The analysis will be archived at the source, by the source. As usual, great graphics at the RNB Energy blog.


RBN Energy: how Energy East will compete for Bakken oil.

The latest estimates from North Dakota show production edging up in March 2015 after a two-month decline. But the heady days are over for the moment - in the wake of lower crude prices - as even optimistic forecasts project flattened growth. Meanwhile combined rail and pipeline crude takeaway capacity out of North Dakota are already far higher than production – but new projects like the TransCanada Upland pipeline continue to be pitched to shippers. Today we describe how that means producers defecting from existing routes.

Recap

In Part 1 of this series we outlined the latest crude takeaway project in the Permian Basin – a 540 Mb/d pipeline between Midland and Sealy, TX - announced by Enterprise Product Partners (EPD) at the end of April. Although the EPD pipeline has signed up shipper support, those shippers are likely to be defectors from existing pipelines, because the incremental capacity does not appear to be justified by forecast production estimates. In Part 2 we turned to the most recent crude takeaway project announced in North Dakota – the TransCanada Uplands pipeline - that will offer at least 220 Mb/d of capacity for Bakken producers to ship crude north of the border to Canada.

An interconnect with the TransCanada Energy East pipeline at Moosomin in Saskatchewan will then allow those barrels to flow east to refineries in Eastern Canada and potentially all the way to the Atlantic Seaboard by 2020. Like the EPD Permian project, the proposed TransCanada Upland pipe will add more pipeline takeaway capacity from North Dakota than current production estimates justify.

In fact – in the Bakken, most crude is still shipped by rail (although the balance is moving towards pipelines) and when you add rail capacity to the current and planned pipelines – the total is almost double RBN’s “Growth” production scenario by 2020. This time we describe how the Upland pipeline could compete head on with an existing Enbridge project as well as with imports to Eastern Canada coming from the Eagle Ford in South Texas and rail shipments to U.S. East Coast refineries.

Summary

So our analysis suggests that the Upland pipeline link to Energy East makes a lot of sense for Bakken shippers because it opens up new markets in eastern Canada and a potentially cheaper access route to East Coast refineries.

The Energy East pipeline is planned to be quite large (1.1 MMb/d) and so it should be possible to expand the Upland “Bakken on-ramp” beyond the initially planned 220 Mb/d if justified by demand.

As we have seen, Energy East has the potential to displace quite a lot of Bakken barrels currently shipping by rail. The Energy East route also seems to offer a better route to Quebec refineries than the Enbridge alternative Line 9 reversal. But lets return to the theme of this blog series – whether the new pipeline capacity is need to have or “nice” to have? Our “stack” chart in Part 2 showed there is more than enough capacity when rail and pipeline are combined.

And because the planned pipeline capacity in North Dakota will exceed crude production sometime in 2017 by our estimate, the Upland capacity is not strictly needed. However TransCanada should be able to attract defections – certainly from rail but also from other pipelines. That is because existing pipeline routes out of North Dakota are largely headed to competitive refining centers at the Gulf Coast.

For Bakken producers the less competitive (and therefore more attractive) markets are East and West Coast refineries that can currently only be reached economically by rail. The TransCanada Upland project has the potential to attract those barrels away from rail. So if Upland and Energy East get built there is likely to be a lot of excess pipeline capacity out of North Dakota to the Midwest and Gulf Coast. At least until the pace of production growth takes off again in North Dakota.

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Quickies

Orders for durable goods drop 0.5% in April. The AP's lede paragraph: still optimistic. Ignore the durable goods data; focus on "a category that reflects business investment [which] posted a second increase, a hopeful sign that his key sector is starting to revive [after a gazillion dollars in stimulus]. When the durable goods data was released, futures on the Dow went up from 22 on the upside to 45 on the down side. 

US new home sales, prices rise sharply in April.

Greek funding talks have stalled. Hey, we have the entire month of June to solve this problem.

Venezuela spiraling into economic chaos. Those who can are switching to US dollars. 

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Baltimore Update

May 26, 2015: bloodiest weekend yet in Baltimore -- CBS Baltimore. Over the weekend, 28 shot, 9 dead. 

It’s the deadliest month Baltimore has seen in more than 15 years. More than two dozen shootings over the holiday weekend alone have city police working around the clock. 

Now, leaders hope community members come forward to help stop the violence.

There have been 108 homicides in the city this year. City police are now putting together mini task forces to hit hot spots throughout the city.  

I wonder if the mayor agrees that the police need to be involved, or if it's just better to give these thugs a bit of space to maim, kill, and destroy.

On May 8, 2015:

The Boston Globe is reporting:

What’s more, a disproportionate chunk of the money that the city has goes to its most pressing need: public safety. While cities like Boston and New York capitalized on dramatic declines in crime to fuel urban renaissances over the past three decades, Baltimore continues to suffer from chronically high levels of violence. In 2016, Baltimore will spend about $130 million more than Boston will on policing. This makes sense and it doesn’t — Baltimore had 235 homicides in 2013. Boston had 40 that year. (Baltimore's population is slightly less than that of Boston.)

Sort of goes back to the same questions that need to be asked in Milwaukee. 

So, how are things going? In today's Baltimore Sun:

The city has experienced 100 homicides this year, compared with 71 at this time last year, the police department said. It's the fastest the city has reached 100 homicides since 2007. Last year, the city reached the mark on July 4. Nonfatal shootings are up more than 70 percent with at least 19 people shot on Tuesday and Wednesday.

100 homicides in 140 days (through May 21, 2015) = x homicides in 365 days; Baltimore is on track for 260 homicides in 2015. 

The mayor says she has faith in the police department to turn this around.

One comment: Sort of goes back to the same questions that need to be asked in Milwaukee.

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Same In Chicago

Chicago, not to be outdone by Baltimore, reported 12 deaths, 43 wounded over the long holiday weekend.  It sounds like many of the victims were sitting in SUVs when another vehicle pulled up alongside, a shooter got out, and shot the occupants in the SUV.

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Manhattan, Too

The NY Post is reporting:

Murders are way up so far this year in Manhattan.

Sixteen people were killed around the borough between the first of the year and Sunday.

Over the same period last year, the figure was 11. That’s an increase of about 45 percent.
Shootings in the borough have also soared.

There have been 50 “shooting incidents’’ since January 1, compared with 31 in the same time period in 2014 — an increase of about 38 percent. Some of these “incidents’’ involved more than one victim.

The number of shooting victims nearly doubled, from 33 to 61.

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Fake Classes In Los Angeles School System

The Los Angeles Times has an interesting op-ed about Los Angeles city school system putting some students in "fake classes." I remember something similar when I was a substitute teacher in the San Antonio area. The state is looking to abolish the practice as well as: prohibiting two other practices schools use to disguise their scheduling deficiencies: sending students home early and signing up a handful of them as teachers' "assistants."

I was often surprised by the caliber of the students that had been selected to be teachers' assistants. I can tell from the editorial the writer has never taught high school.