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Tuesday, January 20, 2015

Seaway Pipeline Completed -- Bringing Canadian Oil To Every Refinery In The Texas City, Houston, Beaumont, And Port Arthur Regions -- January 20, 2015

Huge story. Bakken.com is reporting:
It was a day of celebration on Friday as Canada-based Enbridge and Houston-based Enterprise Products began the delivery of Canadian tar sands crude oil to the Houston area through a new pipeline system. The Seaway Pipeline system twin loop and the new Flanagan South pipeline connect in Cushing, Oklahoma, with the newly constructed Seaway loop delivering up to 450,000 barrels of Canadian crude per day.
Currently, about 250,000 barrels per day arrive in Freeport.
Enterprise executive vice president and COO Jim Teague called the effort a “heck of a marriage” between Enbridge with its Canadian crude “supply aggregation” and Enterprise with its “distribution system” to every refinery in the Texas City, Houston, Beaumont and Port Arthur regions.
The Seaway Crude Pipeline is a 50-50 joint venture between Enterprise and Enbridge. The Seaway system includes a 500-mile, 30-inch diameter pipeline. On May 17, 2012 Enterprise and Enbridge completed a project to reverse the flow direction of the pipeline, allowing it to transport crude oil from Cushing, Oklahoma hub to the vast refinery complex along the Gulf Coast near Houston.
The “loop” portion of the pipeline was completed in 2014, and was designed to run parallel with the existing Seaway Pipeline from Cushing to the Gulf Coast. The additional loop is expected to more than double the Seaway’s capacity to 850,000 barrels per day.
The Keystone XL was originally scaled to flow a maximum of 700,000 bopd. 

Reader Questions Selling / Buying Acreage In The Bakken -- January 20, 2015; The UK Could Be Out Of Natural Gas By April

 Updates

Later, 7:47 p.m.: one reply posted over at the discussion board; should be helpful. 

Original Post
 
A reader has a question about selling / buying acreage in the Bakken right now, over at the Discussion Group.

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In Other News

US State Advisory.

Someone must have noted that Christiane Amanpour is flying into Tripoli later this week.

Or even worse, John Kerry is due to arrive in Tripoli to sing the duet, "You've Got A Friend" with James Taylor.

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And, Still, In Other News

Bakken.com is reporting:
Even though this winter has provided areas around the world with above-normal temperatures, serious concerns regarding the United Kingdom’s natural gas supply have arisen.
The U.K.’s natural gas storage has hit its lowest level since 2011.  As of January 16th, the storage unit’s natural gas inventory was at 3.34 billion cubic meters.  Some are fearing a repeat of winter 2012-2013 when freezing air and a higher demand for heat almost emptied the entire natural gas storage reserve.
According to Bloomberg, these events helped increase natural gas prices in the U.K.  On January 16th, the February U.K. natural gas contract price was 45.75 pence a therm, equivalent to $7.13 per million British thermal units.

Polyethylene Production Plants -- For The Archives

New polyethylene production plant in Mexico.
Braskem-Idesa is building a new integrated polyethylene production plant in Mexico. The project, named Ethylene XXI, will be the largest private petrochemical facility in Mexico.
It is being built in the city of Nanchital in the municipality of Veracruz, in south-east Mexico. It will produce 1.05mt of polyethylene a year from ethane.
Braskem-Idesa is a joint venture between Brazilian petrochemical company Braskem and a Mexican petrochemical group, Grupo Idesa. Braskem and Idesa respectively hold 65% and 35% interest in the joint venture.
The purpose of the project is to reduce the gap between Mexico's local polyethylene production and demands, which are currently being met by importing one million tonnes of polyethylene every year.
Alberta, Canada
Nova Chemicals Corp., Calgary, is nearing completion of a $1.4-billion (US) expansion that will make its Joffre petrochemical site in central Alberta the largest ethylene and polyethylene complex in the world, according to the company.
Once the project's ethylene and polyethylene plants begin operating, Nova Chemicals will become North America's third-largest ethylene producer (7.8 billion lb/year capacity) and fifth-largest polyethylene producer (3.5 billion lb/year).
The largest new facility is a $750-million Ethylene 3 plant (E3), which will be the world's largest ethane cracker (Fig. 1). When E3 comes on stream in August, its annual rated production capacity of 2.81 billion lb of ethylene will complement the 3.4 billion lb from the Ethylene 1 (E1) and Ethylene 2 (E2) plants, which began operating in 1979 and 1984, respectively.
The nearby Polyethylene 2 plant (PE2) will be the world's largest solution polyethylene plant and the first commercial facility to use Nova Chemicals' Advanced Sclairtech, a catalyst and process technology that creates various grades of high-margin products.
The PE2 plant will begin commercial operation in early 2001 and will have an initial annual production capacity of 850 million lb of polyethylene. The existing 16-year-old Polyethylene 1 plant (PE1) produces up to 1.2 billion lb of linear low-density polyethylene.

Reporting Wednesday -- January 21, 2015; Transcript Of Tonight's SOTU Speech

New permits --
  • Operators: MRO (6), Missouri River Resources (2), Petro-Hunt (2)
  • Fields: Reunion Bay (Mountrail), Squaw Creek (McKenzie), North Tioga (Burke)
  • Comments: Circling the wagons. It was clear that Bakken operators began circling the wagons on Monday, January 19, 2015; Missouri River Resources has three permits in North Dakota; the ones today are #2 and #3; their first permit (#4168) was awarded in 1966, now AB;
One well was released from the confidential list today; it was posted earlier.

Well name change: CLR canceled two permits (Florida Federal and Alpha 7-14H) and Oasis is changing targets on four wells, including eliminating a "Hanover Federal T2" well and targeting the middle Bakken instead.

Two (2) producing wells were completed:
  • 27361, 855, Emerald, Talon 7-9-4H, Charbonneau, t12/14; cum --  
  • 27918, 1,167, Petro-Hunt, USA 153-95-4B-9-1HS, Charlson, 4 sections, t12/14; cum --
Active rigs:


1/20/201501/20/201401/20/201301/20/201201/20/2011
Active Rigs161187187202163
  
Wells coming off the confidential list Wednesday:
  • 26309, 1,040, Hess, LK-Alwin-147-97-1324H-4, Little Knife, t12/14; cum --
  • 26532, 1,508, Newfield, Rolfsrud State 152-96-29-32-1H, Westberg, t11/14; cum 22K 11/14;
  • 28594, drl, Zavanna, Simmental 2-11 4TFH, Long Creek, no production data,
  • 28640, A, CLR, Boise 3-24H1, Brooklyn, no IP; s6/14;
  • 28741, drl, XTO, Johnson 24X-31A, Siverston, no production data,
  • 28798, 52, Enduro, SSU 22-11H, Stoneview, a Stonewall well, t11/14; cum --
  • 28814, 918, CLR, Brooks 2-4H1, Pembroke, t12/14; cum 2K 11/14;
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During the holidays, we visited the San Pedro (California) Marine Mammal Care Center, and saw their new addition to the "hospital" being built. The Press Telegram is reporting:
San Pedro’s Marine Mammal Care Center is set to open its new 300-square-foot enclosure Thursday.
And it’s coming just in time.
This year looks to be a repeat of 2013 and 2014, when starving sea lion pups turned up on beaches in large numbers, taxing the center’s space and resources. Actually, thus far, 2015 seems even worse.
For comparison, by this time last year, the center had admitted 24 animals, said David Bard, executive director of the Marine Mammal Care Center at Fort MacArthur in Angels Gate Park. So far this year, he said the center has brought in 48 animals for treatment.
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Now, Back To The Bakken

See disclaimer.

Dividends:
SLB increases it's quarterly dividend from 40 cents to 50 cents. Back in 2011, the dividend was 21 cents. 

Reporting tomorrow:
KMI, expectation 34 cents, after market close,
XLNX, expectation 61 cents, after market close,



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Bakken Economy

The Dickinson Press is reporting that Baker Hughes and Halliburton will lay off "thousands." I'm not sure if that qualifies as news.

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For The Archives: Tonight's SOTU Transcript


"Superloops" And Bullet Trains -- Welcome To The 21st Century .... And Back To The Future For Jerry -- January 20, 2015

I am re-posting this. This is quite amazing. Think about this. A 90-year-old governor wants to feel the thrill of a 19th century railroad baron -- he must be reading Ayn Rand -- and pushes forward with a $100-billion trans-continental state railroad that no one seems to want and no one can afford.

Meanwhile 25-year-old entrepreneurs see the need for a "super-loop" of fiberoptic cables, switches, routers, uninterruptible power supply, batteries, solar energy, to transmit data between downtown Los Angeles, Hollywood, West LA (UCLA), South LA (USC), the San Fernando Valley (another unnamed industry that uses a lot of bandwidth), the Silicon Valley, San Marino, and San Francisco.

So where would be the best place to build this multi-billion-dollar-state-of-the-art data switching center? Maybe Fresno. Or Paso Robles. Or San Jose. Or maybe Gilroy, the garlic capital of the world. But no, the data centers are in Nevada (Las Vegas and Reno).

Yup, while Jerry Brown looks to the past to build a railroad, the young entrepreneurs are building "superloops" to transmit data for the above-named locations for these customers (and many others): eBay, Xerox, Zappos, Amazon, DreamWorks, Shutterfly and the U.S. government.

RENO, Nev. -- The largest lithium battery factory in the world is getting a new neighbor at an industrial park east of Reno -- the world's biggest data center.
Las Vegas-based Switch plans to invest $1 billion in the 3 million square foot "supernap" center. It will be built on 1,000 acres at the Tahoe Reno Industrial Center, where Tesla Motors currently is building its $5 billion gigafactory to make batteries to power its electric cars.
Gov. Brian Sandoval announced the plan in his State of the State address Thursday night along with a $1 billion expansion of Switch data space in Las Vegas.
"This will make Nevada the most digitally connected state in the nation,"says CEO. The company operates two data center facilities in Las Vegas, providing security, power and cooling for stacks of thousands of servers owned by more than 1,000 clients that include eBay, Xerox, Zappos, Amazon, DreamWorks, Shutterfly and the U.S. government.
Switch's "supernap" project includes the development of a 500-mile fiber optic network it calls a "superloop" that will connect Reno, Las Vegas, Los Angeles and San Francisco and dramatically increase the speed of information traveling between the cities.
California could have been the most digitally connected state in the union. Instead it will have a railroad that begins in Fresno. 

Tuesday, January 20, 2015; RBN Energy -- Part 2 -- Pricing

Tweeting now: Oilfield services company Schlumberger buys 46% of Russian Eurasia Drilling Company for approximately $1.7 billion.

Active rigs:


1/20/201501/20/201401/20/201301/20/201201/20/2011
Active Rigs161187187202163

RBN Energy: Pricing, Part 2.
There was no open outcry trading on the CME NYMEX yesterday because of the MLK holiday but after rallying on Friday U.S. crude prices resumed their descent here in electronic trading and the London ICE Brent contract lost $1.40/Bbl to close at $48.77/Bbl. Unsurprisingly the Baker Hughes oil drilling rig count is down by 209 (13%) since December 2014 as producers take a hard look at their production budgets. Yet production is still expected to increase in the short term – in part because the rigs that are left will focus on “sweet spots”. In today’s blog “It Don’t Come Easy – Low Crude Prices, Producer Breakevens and Drilling Economics – Part 2” Sandy Fielden looks at the assumptions behind RBN’s IRR and breakeven scenario analysis.
These articles are eventually archived for subscribers only.

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Arizona, New Mexico, Nevada, Texas

The Los Angeles Times is reporting: In 2013, only 46 manufacturing operations started or expanded in California, compared with 253 in Texas.
"There's a fresh look at the whole country," said Rothrock, president of the California Manufacturers & Technology Assn. "Unless you're forced to be in California for some reason, increasingly it's hard to find reasons that you have to be here."
California's high costs for land and energy are preventing the state from grabbing its share of companies relocating production back to the U.S. from overseas markets such as China. 
Although California is responsible for about 11% of the nation's manufacturing production, the state has accounted for only 1.8% of investment in new or expanded manufacturing across the country since 2001. That compares with 6% in the 1980s, according to economic development data purchased by the association.
I would assume the shale oil boom in Texas accounted for many of the 253 new or expanded manufacturing operations in Texas last year.

Much, much more at the linked article. See next post.

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Tax Incentives Bring Jobs To Nevada

RENO, Nev. -- The largest lithium battery factory in the world is getting a new neighbor at an industrial park east of Reno -- the world's biggest data center. Las Vegas-based Switch plans to invest $1 billion in the 3 million square foot "supernap" center.
It will be built on 1,000 acres at the Tahoe Reno Industrial Center, where Tesla Motors currently is building its $5 billion gigafactory to make batteries to power its electric cars.
Gov. Brian Sandoval announced the plan in his State of the State address Thursday night along with a $1 billion expansion of Switch data space in Las Vegas. "This will make Nevada the most digitally connected state in the nation,"says CEO.
The company operates two data center facilities in Las Vegas, providing security, power and cooling for stacks of thousands of servers owned by more than 1,000 clients that include eBay, Xerox, Zappos, Amazon, DreamWorks, Shutterfly and the U.S. government.
Switch's "supernap" project includes the development of a 500-mile fiber optic network it calls a "superloop" that will connect Reno, Las Vegas, Los Angeles and San Francisco and dramatically increase the speed of information traveling between the cities. 
This is really interesting. Private enterprise needs a "superloop" to carry information between Los Angeles, Silicon Valley, Hollywood, and San Francisco. The obvious place to locate the data center would be somewhere in California, perhaps Fresno. So, where does it go -- a couple hundred miles to the east. Meanwhile, Jerry Brown is looking to the 19th century model to build a new trans-continental state railroad. LOL. 

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Background Reading Before Tonight's SOTU
The Article Will Help Explain Why The President Wants To Raise Your Taxes (Again)

USA Today is reporting that US workers are being'squeezed' by health insurance costs:
State-by-state analysis also shows that in every state over the course of a decade, the cost of employer-provided health care still grew faster than incomes.
That, in turn, had led to workers footing a bigger share of the costs of their health insurance.
In fact, employee contributions to their insurance costs have risen by as much as 175% since 2003 in some cases — with workers in the south having the biggest cost burden.
The report comes after years of slow growth in overall health-care costs on the heels of the 2008 financial meltdown, and as the effects of President Obama's health-care reform law, the Affordable Care Act, are being felt. The ACA contains several provisions designed to slow the rate of health-care cost growth.
The report notes that from 2010 to 2013, on the heels of the ACA's passage, 31 states and the District of Columbia saw a slowdown in the growth of premiums charged for health insurance for workers. Twelve of those states saw at least a three-percentage-point decrease in the rate of premium inflation.
But from 2003 through 2013, in all states, the price of employer-provider insurance premiums grew quicker than the pay for the workers there.
 The president will propose higher taxes to help subsidize his "affordable care" premiums.

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Income Stagnation
Why President Obama Wants To Raise Your Taxes (Again)

The New York Times is reporting that there is little modern precedent for the income stagnation seen during the Obama adminisration:
Even as job growth has picked up in recent months, wages haven’t grown much more quickly than inflation. As a result, the government’s official statistics suggest that the typical American household makes no more than the typical household did in the final years of the 20th century.
That’s remarkable. There is little modern precedent for a period of income stagnation lasting as long as this one. Official records don’t exist before World War II. But the best estimate is that the Great Depression may be the only other modern time in which incomes for most households in the United States have grown so slowly — or not at all — for so long.
The great wage slowdown has several main causes: globalization, which has forced Americans to compete with hundreds of millions of poorer workers from around the world; technological change, which allows machines to replace human labor in new ways; the slowdown in American educational attainment, even as the rest of the world has continued to become more educated and more highly skilled; and the shifting balance of economic power, away from workers and toward companies and their executives.
This comes after a gazillion dollars in stimulus, most of which went to Solyndra.  

ObamaCare, new EPA rules, and thousands of new regulations across all sectors were inadvertently omitted by The New York Times as the main reasons for wage stagnation. We should see a small one-line correction to this story buried on page 7 of next Friday's weekend edition.