Reminder: with all the talk of conditioning / reformulating Bakken crude oil, for those with a very, very technical interest in all this, back in September, 2013, there was
a long article on the properties of Bakken crude oil.
For newbies: I add
new links to this page.
Active rigs:
| 2/11/2015 | 02/11/2014 | 02/11/2013 | 02/11/2012 | 02/11/2011 |
|---|
| Active Rigs | 138 | 195 | 183 | 203 | 165 |
RBN Energy:
why not more storage?
It seems logical to maintain stockpiles of critically important
commodities like crude oil, heating oil and gasoline. After all, supply
can be cut off suddenly by acts of God or man, causing price spikes,
cold houses and empty gas tanks. Worries about supply interruption led
to the creation of a federal Strategic Petroleum Reserve (SPR) and
Northeast Home Heating Oil Reserve (NEHHOR) and, more recently, both
federal and state reserves for motor fuels, again in the Northeast. But
does the SPR as currently configured still make sense, given how much
has changed in crude production and flows? Should we set up heating oil
or motor fuel reserves in regions beyond the Northeast? And what about a
strategic reserve for propane—an important fuel for millions of
American homes and businesses? Today, we continue our look at the
challenges of stockpiling hydrocarbons in a changing, unpredictable
energy world.
It may surprise many readers to know that the U.S. is actually in
worse shape today as far as our reliance on crude supplies from overseas
(imports) are concerned than it was during the Arab oil embargoes of
the 1970s—in spite of the recent shale boom driven increase in domestic
production.
In May of 1973 Energy Information Administration (EIA) data
shows that U.S. crude production was 9.3 MMb/d while imports were 3.2
MMb/d. In November of 2014 production was 9 MMb/d but imports were 7.3
MMb/d – more than double what they were in the 70’s. So we remain
vulnerable to the disruptive, out-of-the-blue supply cut-offs that can
come from events as different as a Category 5 hurricane, an uprising in
the Middle East or the current U.S. refinery workers strike As we said
in Episode 1
of our series, the federal government responded to the 1973-74 Arab oil
embargo by establishing the SPR that now stores 692 MMBbl of crude at
four salt-dome sites along the Gulf Coast and reacted to spiking heating
oil prices in the winters of 1996-97 and 1999-2000 by setting up
NEHHOR, the nation’s first refined products stockpile that now stores a
total of 1 MMBbl at sites in Connecticut and Massachusetts.
More
recently, in the wake of Superstorm Sandy in October 2012, both the feds
and the state of New York started strategic reserves for gasoline and
diesel. The feds are storing a total of 1 MMBbl of motor fuel, 700 MBbl
of it at sites in New Jersey and 300 MBbl at sites in Massachusetts and
Maine; New York is storing a total of 131 MBbl, 71 MBbl of it on Long
Island and 60 MBbl upstate.
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Who Are You Gonna Believe?
Last night,
stacking rigs gave the industry "hope" (
Rigzone); this morning,
stacking rigs "doesn't mean diddly squat" (Goldman Sachs). By the way: read that second linked story -- the one coming out of Goldman Sachs -- very, very closely. Regular readers will see why I say that.
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Yemen: Example of Success -- President Obama
US, UK, and France Closed Embassies In Yemen Over The Weekend
The Guardian is reporting:
The US, Britain and France are closing their embassies in Yemen and
urging their citizens to leave the country over security concerns in the
Arab world’s poorest country, where Shia rebels finalised their power-grab last week.
Just six months ago,
President Obama was touting Yemen, Somalia as success stories. I liked the way
The Wall Street Journal characterized President Obama's foreign policy.
In fact as I'm writing this, I'm listening to radio news and the Yemen story is the top story today.
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Three Years And A Gazillion Dollars
Needed To Defeat ISIS -- The JV Team -- President Obama
That JV team in the Mideast? ISIS? ISIL? It looks like they were misunderestimated. The President says a minimum of three years and a gazillion dollars and another war will be needed to (maybe) defeat the JV team, despite A-team from Jordan finally joining the fight. Are any links needed? We'll see.
This one will do. The only phrase Chuck Todd did not use in that interview: "fathomless ignorance."
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Kennedy Mega-Storms Continue To Hit Boston
Snow is out of control in Boston.
More than 2 feet of snow piled up in parts of New England by early
Tuesday, breaking records set 37 years ago as forecasters warned still
more winter weather was on the way.
The snowfall numbers in the area are staggering. Boston's Logan
Airport measured 72 inches of snow in the last two and a half weeks. In
the last two days, the town of Norwell, which is outside Boston, got
buried in 30 inches of snow.
Boston's snowfall surpassed the Colorado ski resort town of Crested Butte.
And more is yet to come.
Schools to the north of Boston have closed until Feb. 23 and forecasters
warned that more snow was expected Thursday and again next weekend. The
Massachusetts Emergency Management Agency said that potentially
record-low temperatures and wind chills are expected later in the week.
All that time and money spent on conferences on global warming and worries that the oceans will rise 0.01 inch/decade would have been better spent preparing for these winter storms. I suppose.
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Tesla Headlines
Tesla CEO threatens firings: Chinese sales are dismal.
Tesla sold about 120 cars in China last month, one of the sources told
Reuters, well below the company's aggressive targets. Musk has
previously said he expected China sales could rival those in the United
States as early as 2015.
While Tesla sales in many overseas markets from Europe to Asia have not
met expectations - and executives have subsequently been fired or
demoted - results have fallen far short in China, a key market for
Musk's expansion strategy.
Changes time of earnings conference call. Will report earnings at 4:00 p.m. CT.
Tesla's growth is a matter of survival,
WSJ. What earnings will mean:
Although expected earnings of 56 cents for 2014 would be down from 78
cents the prior year, the result would mark a second consecutive year in
the black.
But that is on an adjusted, pro-forma basis. The company’s reported
result will be negative, as it always has been. The gap is due to
differences in the treatment of share compensation, leases and nearly $3
billion in convertible notes.
Those securities, which can be
converted into stock at various share prices, get surprisingly little
notice. The higher the stock price, currently about $217, goes over the
next six years, the more dilution of existing shareholders that occurs
as the securities are converted from debt into equity.
That’s a
high-class problem, naturally. If the stock doesn’t appreciate by at
least 160% in that time (over the next six years), though, Tesla could have to repay or refinance a
big slug of the convertible notes. It would be challenging.
True,
the stock has risen 460% over the past two years. Yet, in the past 12
months, the company produced only $158 million in cash flow. So the
success of its mass-market model and battery-producing “Gigafactory” are
necessary not just for growth but for survival.
A lot can happen between now and six years from now.
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Ms Merkel Needs To Get Her Checkbook Out
It looks like Germany may be on the hook for $3 billion if they want to keep the Ukraine from going into default.
AFP is reporting:
Kiev has requested a
restructuring of its debt to Russia but Moscow is expecting its $3
billion loan to be repaid in full this year, Russia's finance minister
said Tuesday.
"Ukraine asked
us to review the issue of restructuring its debt," Finance Minister
Anton Siluanov told Russian media on the sidelines of the G20 summit of
finance ministers and central bank chiefs in Istanbul.
Siluanov said that Russia is unwilling to defer the repayment however, expecting Kiev to comply with the deadline.
It's not like Russia has all that much oil income coming in.
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No Boots On Ground -- Never Mind
Tweeting right now:
- White House: It's time for Congress to 'step up to the plate' on authorizing military force - @Reuters
- White House: US combat soldiers on the ground may be used for hostage rescue operations - @Reuters