Odds And Ends On A Wednesday Evening Bible Study Night -- January 28, 2015

The AP is reporting:

Montana-Dakota Utilities says it plans to install more electricity generation to its power plant in Sidney, Montana, to keep up with growing customer demands.

The 19-megawatt addition would be powered by natural gas and located within the company’s Lewis and Clark coal plant.

It would be used to provide power to customers during times of peak demand and could reach full power within 10 minutes.

MDU spokesman Mark Hanson says construction costs are estimated at $40 million.

40,000,000 / 19 MW = $2.1 million / MW -- natural gas plant. Seems expensive. Maybe I'm missing something.

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Samsung: Fifth Consecutive Quarter Decline

Macrumors is reporting:

On the heels of an earnings call that saw Apple announcing record earnings, rival phone maker Samsung today announced its own results for the October to December period, reporting a 27 percent quarterly decline in earnings.

Samsung saw net profit of 5.3 trillion won ($4.9 billion), compared to 7.3 trillion won last year, marking its first annual earnings decline in three years and its fifth consecutive quarter of decline. Apple, meanwhile, announced record earnings of $18 billion, largely due to the success of the iPhone 6 and iPhone 6 Plus. 

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WEBS

Wednesday Evening Bible Study "fraternity" at Augustana College, my undergraduate alma mater (the college, not the fraternity), was the only "fraternity" not to have a sister "sorority" attached. (At Augustana there were no fraternities or sororities; in their place were "societies.")

The WEBS were the "Oakland Raiders" of Augustana College, all jocks, mostly football players, with sports scholarships.

I don't recall that this particular society accomplished much Bible study, but if I remember correctly, the drinking age for "3.2 beer" was 18 years of age. Just saying.

Global Warming Hits Arizona -- January 28, 2015

Now, I'm a believer. No longer a denier.

Global Warming Hits Arizona

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Wind

I simply find this amazing - wind energy is still no profitable after tax credits since 1992 -- how many years is that? Twenty-three (23) years and the wind energy still needs tax credits to get developers to move forward on slicers, dicers, and eyesores. Breaking Energy is reporting:

The PTC, worth 2.3 cents per kilowatt-hour of energy produced in the first 10 years of a wind turbine’s operation, was first enacted in 1992 and became a big driver for wind growth in in the 2000s, when state policies such as renewable portfolio standards began to align with the federal incentive. The most recent versions of the PTC have made projects “under construction” before the law’s expiration eligible.

The obfuscation is incredible (in bold):

The U.S. wind power industry said on Wednesday that it had a solid 2014, with 2,500 turbines capable of producing 4,850 megawatts put into operation, a big jump from 2013’s piddling gain of 1,098 MW. Plus, as the year drew to a close, nearly 100 projects totaling 12,700 MW were under construction. Pretty picture, right?

Maybe not.

“We worry about the industry going off the cliff again if we don’t get the Production Tax Credit extended as soon as possible,” said Tom Kiernan, who heads up the American Wind Energy Association.

U.S. wind walks an interesting line on the PTC, trumpeting that costs have plunged and made wind extraordinarily competitive, yet insisting that it needs the tax break to continue to grow. The glue that holds together that seemingly incoherent position is certainty – or lack thereof. The short-term nature of the PTC habitually leaves developers reacting to its coming and going, creating steep ramp-ups when it is in effect and, yes, cliffs when it expires.

I don't care one way or the other any more, now that Americans understand the issue (LOL).

Just don't put a wind turbine in my back yard. I think the transmission lines cause cancer. 

Twenty (20) New Permits -- North Dakota -- January 28, 2015

Active rigs:

	1/28/2015	01/28/2014	01/28/2013	01/28/2012	01/28/2011
Active Rigs	148	191	190	204	163

Wells coming off confidential list today were posted earlier; see sidebar at the right.

Twenty (20) new permits --

• Operators: EOG (9), QEP (5), Emerald (2), Sinclair (2), Whiting (2)
• Fields: Clear Water (Mountrail), Parshall (Mountrail), Spotted Horn (McKenzie), Bully (McKenzie), Pierre Creek (McKenzie), Green River (Stark), South Fork (Dunn)
• Comments: I track permitting here.These are the first Clear Water permits for EOG since 2012; it will be interesting to compare these new wells with the old wells.

Five (5) producing wells completed:

• 24001, 1,670, Statoil, Syverson 1-12 3TFH, Stony Creek, t12/14; cum --
• 28040, 374, SM Energy, Torgeson 2B-15HN, West Ambrose, t12/14; cum --
• 28041, 342, SM Energy, Torgeson 2-15HN, West Ambrose, t12/14; cum --
• 28042, 236, SM Energy, Torgeson 2-15HS, West Ambrose, t12/14; cum --
• 28733, 2,400, Brown 30-19 7TFH, Alger, t12/14; cum --

Wells coming off confidential list Thursday:

• 27035, 441, EOG, Parshall 60-1509H, Parshall, t81/4; cum 86K 11/14;
• 27042, 519, EOG, Parshall 46-1004H, Parshall, t8/14; cum 105K 11/14;
• 28400, 55, Enduro, MRP 18-34, Mouse River Park, a Madison well, t9/14; cum 3K 11/4;
• 28446, 297, Crescent Point, CPEUSC Getzlaf 36-25-158N-101W, Little Muddy, a Bakken well, t12/14; cum --
• 28563, drl, CLR, Bailey 6-24H1, Pershing, no production data,
• 28678, drl, CLR, Bjella 4-13H, Northwest McGregor, no production data,

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A Note to the Granddaughters

The granddaughters saw this Williston bull rider yesterday evening (January 27, 2015) at the Ft Worth Rodeo and Livestock Show: Stetson Lawrence. 

Kern County, California, Declares Fiscal Emergency Due To Slump In Oil Price -- January 28, 2015

Updates

February 4, 2015: Reuters is reporting --

Standard & Poor's Ratings Services revised the outlook for Kern County, California, to negative, after the county declared a fiscal emergency last week, citing lower oil prices.

The rating agency said it was concerned with a projected $27 million budget shortfall in fiscal 2016. By declaring a fiscal emergency, the county can access $40 million general fund reserve to cover the gap.

The third largest county in California, with a total population of nearly 900,000, Kern's pension obligations, already high, will "continue to rise for a number of years. The county is going to need to address that deficit going forward." Kern forecasts that its pension costs will increase through 2022 and has set aside portions of its reserves to account for the rising costs.

Original Post

The Los Angeles Times is reporting:

Kern County supervisors declared a state of fiscal emergency at their weekly meeting Tuesday in response to predictions of a massive shortfall in property tax revenues because of tanking oil prices.

Surging oil supplies domestically and weak demand abroad have left Kern, the heart of oil production in California, facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.

Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.

As of 2009, Kern is California's top oil-producing county, with 81% of the state's 52,144 active oil wells.

The county seat is Bakersfield.

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Chevron Grabs BP Projects in the Gulf

 Bloomberg is reporting:

Chevron Corp. is expanding its deepwater oil portfolio by assuming control of multibillion dollar projects from rival BP Plc as the U.K. company freezes wages and cuts spending in response to collapsing crude prices.

BP surrendered leadership of its Gila and Tiber oil discoveries and the Gibson exploration prospect in the U.S. Gulf of Mexico to Chevron under an agreement that also gives the U.S. company partial ownership of those assets, the companies said in separate statements Wednesday.

The deal underscores how stronger operators can benefit from new opportunities in the oil market downturn as rivals sell assets to raise cash and reduce costs.

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Sony's "Music Unlimited" Folds - Can't Compete With iTunes

Macrumors is reporting:

Sony announced on Wednesday that it will be shutting down its Music Unlimited on-demand streaming music service ahead of launching Spotify on PlayStation Music. Music Unlimited will shut down in all 19 countries it operated on March 29, 2015, with nearly all of the countries among the 41 regions that Spotify for PlayStation Music will be available upon launch, including the United States, Canada, Mexico and Brazil. 

The on-demand streaming music landscape has gone through significant change in the past three years, however, and Music Unlimited failed to remain competitive with industry leaders such as Spotify, Rdio, Pandora and Beats Music. Music Unlimited users with active subscriptions will continue to have free access to the service through the March 29 closing date.

Falling Fast -- Active Rigs In North Dakota Down To 148; Hess To Spend 18% Less In The Bakken YOY -- January 28, 2015

Active rigs:

	1/28/2015	01/28/2014	01/28/2013	01/28/2012	01/28/2011
Active Rigs	148	191	190	204	163

Harold Hamm suggested some time ago the number of active rigs in North Dakota could end up around 100.

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More On The Hess Announcement

The AP is reporting:

Oil and gas producer Hess Corp., a major operator in the North Dakota oil patch, plans to reduce spending in the region by over 18 percent this year — in part due to a steep drop in oil prices.

Hess announced this week that it plans to spend $1.8 billion in the Bakken, down from $2.2 billion in 2014.

Hess President and Chief Operating Officer Greg Hill said the company will also have fewer drilling rigs and will complete fewer operating wells.

John Roper, a spokesman for Hess, said while the declining price of oil has played a role in the company's decision, part of the changes in the Bakken are due to new technology. Roper said due to efficiencies and improvements in drilling, Hess expects to drill almost as many wells this year while running only half the drilling rigs.

Hill said Hess feels confident its leases in the Bakken can be productive and profitable in 2015.

Early April Fool's Joke But President Obama Could Go Down As First African-American President To Open Atlantic Seaboard To Oil Drilling -- January 28, 2015

The AP via Rigzone is reporting:

The Obama administration floated a plan Tuesday that for the first time would open up a broad swath of the Atlantic Coast to drilling, even as it moved to restrict drilling in environmentally-sensitive areas off Alaska.

The proposal envisions auctioning areas located more than 50 miles off Virginia, North and South Carolina, and Georgia to oil companies come 2021, long after President Barack Obama leaves office. For decades, oil companies have been barred from drilling in the Atlantic Ocean, where a moratorium was in place up until 2008.

"This is a balanced proposal that would make available nearly 80 percent of the undiscovered technically recoverable resources, while protecting areas that are simply too special to develop," Interior Secretary Sally Jewell said in a statement.

The plan, which covers potential lease sales in the 2017-2022 time frame, drew immediate reaction from Capitol Hill, where Sen. Lisa Murkowski, R-Alaska, called it a war on her home state, and where Northeastern Democrats were expected to outline their objections later Tuesday to drilling in the Atlantic Ocean. 

This is actually very clever. Open up areas of federal waters that are not economical to drill at $35/bbl, knowing that oil companies will never drill, and then saying that it's in return for "fencing" off Federal waters where operators would definitely be interested in drilling.

Also at Rigzone, Kemp talks about 2015 production:

Some analysts have forecast the drop in rig counts will cause production to peak in the first six months of 2015 then begin to fall in the second half of the year. I count myself in this camp.

Other analysts predict production will remain steady or continue to grow, albeit much more slowly than the 1 million barrel per day (bpd) increases recorded in 2013 and 2014.

In practice, the differences are smaller than the two sides imply. Most forecasters put the change in daily production between December 2014 and December 2015 at less than 250,000 bpd, whether up or down.

For example, the U.S. Energy Information Administration (EIA) predicts output in December 2015 will be just 90,000 bpd higher than in December 2014.

That would be a marked slowdown from the 1.28 million bpd increase between December 2013 and December 2014 or the 790,000 bpd increase between December 2012 and December 2013. At a rough approximation, most forecasters expect U.S. production to be flat in 2015 - after two years of 1 million bpd growth, during which time North American shale producers were the marginal suppliers to the world oil market.

So, if there's a ban on exporting US oil, how can North American shale producers be the marginal supplies to the world oil market? It's a trick question.

Much more at the link.

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At Least It's Hard To Catch

Measles epidemic reaches Chicago.

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National Flag Of ISIS Saudi Arabia

On the web now, learning Arabic:

If the administration is interested in seeing how this works, we don’t have to look farther than our good allies in Saudi Arabia, where the national flag features an inscription of the Islamic creed – “There is no god but God, Muhammad is the messenger of God” – which is neatly underlined by a sword. This, I think is fair to say, may insinuate that a coupling of violence and faith is indeed possible in modern religion.

 The National Flag of Saudi Arabia

And some folks in Washington had trouble with the Confederate flag. LOL. 

Fargo Riding The Bakken Crest, January 28, 2015

Inforum is reporting:

The value of new construction in the Fargo-Moorhead area didn’t just set a new benchmark in 2014, it more than doubled the old record set in 2013, according to building permit numbers released Tuesday by the Home Builders Association of Fargo-Moorhead.

The total value of construction in the metro area reached nearly $1.4 billion last year, compared to about $662 million in building permit value recorded in 2013, which was the previous high point.

The number of building permits issued in the metro area last year – 4,436 – was the highest number issued since 2008 and up 8 percent from the 4,118 permits handed out in 2013.

More at the link.

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US BLM Riding the Bakken Crest

The Dickinson Press:

The U.S. Bureau of Land Management has collected more than $4.2 million from the sale of oil and gas leases.  In total, the seven separate leases, which were placed on bid, covers more than 1,700 acres in North Dakota.  The state of North Dakota is expected to share nearly half of the profits from those leases and the royalties produced, according to the BLM news release.  Leases bought through the BLM are awarded on a 10 year basis or as long as the lease is producing at paying quantities.

Rigs In ND Down To 153; NE NGL - Daunting For The Producers "Forever" -- January 28, 2015

The winds are dying down off Cape Cod: link here.  Click anywhere on the map to see real-time wind speeds. Also, delete all the symbols/numbers after "orthographic") from the URL (=-90.86,39.66,764) and the entire earth will show up. You can spin the earth around to whatever location you want to observe.

Reporting today:

• American Electric Power (AEP): forecast 51 cents; misses by 2 cents; fourth-quarter profit of $191 million.On a per-share basis, the Columbus, Ohio-based company said it had profit of 39 cents. Earnings, adjusted for non-recurring costs, came to 47 cents per share.
• Hess (HES): forecast 29 cents; before market opens; misses by 5 cents; reported a fourth quarter net loss of $8 million after crude prices fell. Net loss per share was 3 cents, compared with profit of $1.9 billion or $5.76 a year earlier. Per share profit excluding some items was 18 cents, 5 cents below the average estimate
• Murphy Oil Company (MUR): forecast 31 cents; huge beat; profit of $2.10 per share. Earnings, adjusted for non-recurring gains, were 39 cents per share.
  The results exceeded Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 25 cents per share.
• Qualcomm (QCOM): forecast $1.25; shares fall sharply after guidance; the company cut its forecast fiscal 2015 adjusted earnings to $4.75 to $5.05 a share, on revenue of $26 billion to $28 billion. Wall Street projects adjusted profit of $5.21 a share, on revenue of $27.81 billion for fiscal 2015. Qualcomm had previously forecast adjusted profit of $5.05 to $5.35 a share on revenue of $26.8 billion to $28.8 billion. For the recent first quarter, Qualcomm posted net income of $2 billion, or $1.17 a share, up from $1.9 billion, or $1.09 a share, a year ago. Revenue grew to $7.1 billion, from $6.6 billion last year.

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More Apple

Of course I can never get enough Apple news. Here's another story from Financial Times, "Apple reports largest profit in history of mankind."

Apple reported the largest net income of any public company in history in the three months to December, as record iPhone sales of 74.5m units beat even the most bullish Wall Street forecasts.

“Demand for iPhone has been staggering, shattering our high expectations,” said Tim Cook, chief executive. “This volume is hard to comprehend.”

Apple has now shipped more than 1billion iPhones, iPads and iPods running its iOS operating system that launched in 2007.

Apple’s net profit grew 37 per cent to $18bn, topping ExxonMobil’s previous quarterly record of $15.9bn in 2012, according to S&P Dow Jones Indices. 

A reader told me that Apple's market cap has gone up over $40 billion overnight. He also noted that there are very few companies that are worth $40 billion and it's unlikely (m)any have gone up $40 billion in 24 hours.

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Back to the Bakken

Active rigs:

	1/28/2015	01/28/2014	01/28/2013	01/28/2012	01/28/2011
Active Rigs	153	191	190	204	163

RBN Energy: Natural gas in the northeast; daunting for producers.

The NYMEX gas futures curve for 2015 was sitting right at $3.00/MMBtu yesterday (January 27, 2015) as colder weather has halted it’s recent slide. This still puts outright prices in the Northeast gas forward curve in dangerous territory for producers – very close to breakeven levels – through 2015 and not much higher even beyond this year.

With NGL prices no longer supporting drilling activity for many producers in the region, the gas forwards market is becoming a bigger factor in signaling producers’ drilling prospects. Today in Part 3 of our Forward Curve Series, we continue our look at Northeast forward curves, with a focus on the Dominion South Point price hub, its historical shape and the fundamentals behind where it stands now.

When added back to the underlying Henry Hub futures curve, these discounts in the Dom S forward curve translate to an average outright price of $1.85/MMBtu for the balance of 2015 and an average barely above $2.00/MMBtu for 2016.

In fact, the current forward curve does not show outright prices at Dom S reaching $3/MMBtu on an average annual basis until at least 2019, and even then just barely.

These values out that far in the forward curve are no doubt daunting for producers in the region looking to do better than breakeven on their drilling costs. Market consensus as seen in the curve shows the new trend of negative pricing deepening in the next two years, pounded by continued production growth and limited takeaway capacity, with producers essentially at the mercy of weather-related demand in the region to help soak up the excess supply, at least until 2017-18.

Both the Transco Z6 NY and the Dom S forward curves show some semblance of support by 2018, when the annual peak shifts up to near minus $0.50/MMBtu and the lows also jump to near minus $1.00/MMBtu. This slight uplift coincides with the in-service dates for pipeline projects that the market is expecting to provide relief for the pent-up supply congestion in the Northeast.

But the curve still does not return to anywhere near pre-Marcellus/Utica levels. The market’s perceptions of the Northeast market as represented by the New York and Dom S hubs have broken from historical trends and the forward curves have been permanently reshaped. There is no going back.

But that’s not the end of the Northeast story. More big changes are afoot that will again reshape the forward curves, from new infrastructure to capitulating oil prices. For instance, once new pipe capacity is available to seek out new demand markets, the Northeast will be vulnerable to yet a new dynamic – downstream demand swings and competing supply. The next blog in the series will wrap up our look at Northeast forward curves with a summary of the major drivers to watch.