Monday, March 30, 2015

Why Bitumin/Dilbit By Rail Is Not (Necessarily) Safer Than Bakken CBR -- March 30, 2015

A reader sent me this link. It's another dot to connect to help understand the Bakken. RailwayAge is reporting:
The chain reaction fireballs that attended the Feb. 16, 2015, derailment of a CSX unit oil train in populated West Virginia probably blinded observers to the significance of the concurrent derailment and explosions of a CN oil train in a remote and uninhabited area of northern Ontario.
Most reports treated the two events as equals, given that both trains consisted of recently manufactured CPC-1232 tank cars loaded with crude oil.
CN’s Ontario conflagration is the more disturbing of the two mishaps: The railroad reported that its train was not carrying the extra-light Bakken crude that, in a series of high-energy derailments since 2013, has proved to be explosive.
To the contrary, the CN train was laden with bitumen, the extra-heavy tarry substance extracted from Alberta’s oil sands.Undiluted bitumen alone, with a flash point of +151ºC, is considered essentially non-flammable in a derailment event and is rarely considered in safety evaluations of crude by rail. So why did the bitumen ignite and explode in Ontario’s -40ºC (-40ºF) weather?
The reason, based on research consulted by Railway Age, is that the diluent added to make bitumen flow into and out of tank cars makes the blended lading quite volatile.
This is a very important article. Often these articles are archived by/at the source.

When you get done with the article, if the Keystone XL does not come to mind.....

Active Rigs Down To 96 -- March 30, 2015; Six (6) New Permits; Fourteen (14) Permits Canceled

Active rigs in North Dakota:

Active Rigs96194188205168

Six (6) new permits --
  • Operators: EOG (3), XTO (3)
  • Fields: Parshall (Mountrail), Siverston (McKenzie)
  • Comments:
Wells coming off the confidential list Tuesday: None?

Thirteen (13) producing wells completed:
  • 27163, 634, Hess, GN-Tom Jen-157-97-0409H-1, Ray, t3/15; cum --
  • 27371, 114, OXY USA, Delvin Dukart 3-30-31H-143-95, Manning, t3/15; cum --
  • 27397, 115, OXY USA, State Knopik 3-21-16H-144-97, Little Knife, t2/15; cum --
  • 28048, 1,049, Oasis, Harbour 5501 14-5 2T, Tyrone, t2/15; cum --
  • 28178, 1,217, Hess, HA-Rolfsrud-152-96-1720H-2, Westberg, t3/15; cum --
  • 28230, 631, SM Energy, Arlene 30-31-162-98H 2XQ, Ambrose, t1/15 cum 7 1/15;
  • 28370, 1,191, Hess, AN-Brenna-153-94-3130H-5, Antelope, a Sanish well, t3/15; cum --
  • 28374, 913, Hess, AN-Brenna-LE-153-94-3130H-1, Antelope, a Sanish well, t3/15; cum --
  • 28483, 1,368, Hess, HA-Dahl-152-95-0706H-4, Hawkeye, t3/15; cum --
  • 28484, 1,387, Hess, HA-Dahl-152-95-0706H-5, Hawkeye, t3/15; cum --
  • 28729, 121, OXY USA, Delvin Dukart 5-30-31H-143-95, Manning, t3/15; cum --
  • 28730, 288, OXY USA, Delvin Dukart 6-30-31H-143-95, Manning, t3/15; cum --
  • 29219, 1,643, BR, CCU Golden Creek 44-23TFH, Corral Creek, t2/15; cum --
Fourteen (14) permits canceled:
  • CLR: six (6), McKenzie (5); Divide (1), including two Holstein Federal permits and two Hendrickson permits
  • Corinthian: five (5), all in Bottineau County
  • Oasis: two (2), both in McKenzie
  • Whiting: an Oyhus Federal well

Public Service Announcement -- March 30, 2015; Pakistan Sending Troops To Saudi Arabia As Yemen Implodes

I assume most (maybe, all) readers are aware of this site, but if you are not, this is another good site on the net.

If you ever have trouble with your e-mail provider, e.g., Yahoo or Gmail, simply google "Is yahoo mail down" or "Is Gmail down." It's a great site.

This was a screenshot from a few seconds ago after Google reported a Gmail outage -- which appears to have been resolved:

Oh, Why Not?

The Boston Globe is reporting:
Solar energy projects across much of Massachusetts could come to a halt Monday because of faster-than-expected growth since last summer.
Under state law, utilities can only hook up so many solar energy projects to their systems under the so-called “net metering” cap, which limits the amount of excess power utilities have to buy back from solar installations. In the part of the state served by National Grid, that limit may be hit today or tomorrow, which would force companies in the solar industry to rapidly readjust.
As of 1 p.m. Monday, 99.9 percent of the utility’s net-metering cap has been reached for private-sector solar projects. 
The public sector installation cap already has been surpassed, with nearly 10 megawatts of solar projects waiting in line. Other utilities are further away from their caps.
Over the past week, about 20 megawatts of solar power applications were approved in parts of the state served by National Grid, said Ryan Fahey, an employee of the Cadmus Group, Inc. which tracks how much capacity remains under the state’s net metering caps. 
Much, much more at the link.

It begs the question. If solar energy is so great, why is the state that elected Pocahontas limiting the amount of solar energy that can be hooked into the state electrical grid?

Pakistan Sending Troops To Saudi Arabia

Just announced on talk radio.

Sledding In Dallas

EIA Will Now Track And Report CBR On A Monthly Basis -- March 30, 2015

From the EIA:
For the first time, EIA is providing monthly data on rail movements of crude oil, which have significantly increased over the past five years.
The new data on crude-by-rail (CBR) movements are fully integrated with EIA’s existing monthly petroleum supply statistics, which already include crude oil movements by pipeline, tanker, and barge.
“The new crude-by-rail data provides a clearer picture on a mode of oil transportation that has experienced rapid growth in recent years and is of great interest to policy makers, the public, and industry,” said EIA Administrator Adam Sieminski.
“EIA expects that the new data it has developed using information provided by the U.S. Surface Transportation Board (STB) along with data from other third-party sources and our own survey data, will provide key insights into oil-by-rail movements, including shipments to and from Canada,” he said.
“We welcome the cooperation of the STB as well as Canada’s National Energy Board in making these data accessible.”
EIA is initiating the new series with monthly data from January 2010 through the current reporting month, January 2015. CBR activity is tracked between pairs of Petroleum Administration for Defense District (PADD) regions (inter-PADD), within each region (intra-PADD), and across the U.S.-Canada border.

Largest Volume Increase Since Record Keeping Began In 1900 -- 2014 Liquid Production -- EIA

EIA blurb for the day:
U.S. crude oil production (including lease condensate) increased during 2014 by 1.2 million barrels per day (bbl/d) to 8.7 million bbl/d, the largest volume increase since recordkeeping began in 1900.
On a percentage basis, output in 2014 increased by 16.2%, the highest growth rate since 1940. Most of the increase during 2014 came from tight oil plays in North Dakota, Texas, and New Mexico where hydraulic fracturing and horizontal drilling were used to produce oil from shale formations. --- EIA
Memo to self: send note to Jane "there might be some oil there" Nielson:
Frequent Internet users are getting emails about the Bakken Formation in North Dakota and Montana, supposedly a great oil bonanza just waiting to be tapped if only nasty enviros would let it happen. The emails and websites say that Bakken would solve all our petroleum “needs.” (What, me worry about  global warming?)
Don’t believe it. There’s some oil to be gotten out of Bakken, and it’s going to be exploited. But the “bonanza” is nothing but hype.
And never updated. Wow. That posting is almost ... cute.

I was wrong. She did update that posting but I had never seen her update until today. Back in 2011, Jane Nielson tried to claw her way back from her "cute" posting:
Our blogs on the Bakken Formation of Montana and North Dakota, and other “tight” or “bound” petroleum-bearing units, have addressed the fantasy that such shale oil and gas sources will provide the United States (and in some versions, the WORLD) an unending energy bonanza. The unfavorable comments tend to contain put-downs, some couched in a rather personally antagonistic tone. This tends to happen when the commenting parties lack the data to back them up. The comments generally miss the mark, however.
We do NOT say that the U.S. has no extensive oil fields able to keep on producing petroleum for U.S. consumption, nor have we implied that some of the known fields are not currently economic. We do say that the aggregate production will not make up for the steep production declines at a majority of the oil fields that once fueled the U.S. economy and military. As a result, as long as the U.S. economy remains tied to petroleum, we will continue to rely on imports from Canada and beyond.

And, at least according to Google, the site that controls the stories we read, that was the last we heard from Ms Jane.

I wonder if Ms Jane knows that after 30 years of advocacy and a gazillion dollars in subsidies, grants, and tax credits, solar, when rounded to the nearest whole number, provided the US zero percent of its energy needs in 2014.

By the way, doing that quick search brought me to this site. Enjoy.

And another "by the way," by the way, OutRunChange is still running. And a great site. 

Market Shenanigans -- March 30, 2015

I look askance at anyone who suggests the stock market is not "run" by computer algorithms.

How else does one explain the 300-point rise in the market today? Nothing has changed. Whether or not the Iranian deal is signed is a crap shoot, although it is obvious President Obama and SecState John Kerry are willing to sign anything to declare victory (wasn't that the John Kerry on Vietnam: "just leave and declare victory"?).

Greece is still the same, but if it was on the back burner a few months ago, it's not even in the kitchen today, as far as pundits are concerned. One can find a story on Greece today but it's not easy. Before his election, the new Greek leader said he would no longer accept any free cash from Germany; this past week he has been scrambling to get that cash to pay the bills.

I now understand why Obama favors Shi-ite Iran over the Sunnis, his own heritage.

Disclaimer: this is not an investment site. Do not make any investment, financial, relationship, travel plans, or religions decisions based on what you read here or what you think you may have read here. You might have better luck with palm readers in New Orleans or astrologers in west Hollywood (or is it West Hollywood?).

The market is surging, up 300 points, and Tesla continues to fall. It's down a percent in early trading. I think the oil companies are doing even better than that. Shoot, even First Solar is doing better, up about 1.5% in early trading.

Apple is starting to announce the process in which to get an Apple watch. On launch day, one cannot simply walk into an Apple store and buy a watch. One has two options: a) order on-line; b) set up an appointment on-line to meet with a Apple employee at a pre-arranged time in an Apple store.

The in-store reservations are scheduled for 15 minutes for the least expensive watch, and 30 minutes for the $10,000 - $17,000 watch. I had planned to buy the $17,000 watch but could not imagine being bothered by an Apple salesperson for 30 minutes.

There are several reasons for the AppleWatch buying process. Most importantly, it is hoped that this will minimize returns. More importantly, perhaps, it will also eliminate the television coverage of no one standing in line outside the Apple stores on the day of the AppleWatch launch. The AppleWatch story is not going to be anywhere near the iPhone sales volume. This process makes it almost impossible for pundits/analysts to get any clue to how many watches are actually being sold. The AppleWatch has nothing to do with volume or the "bottom line" at this point: it's all about the moat. The entire AppleWatch line widens the moat, but the top end defines Apple as a fashion company, separating it from the also-ran technology companies. Yes, it's a big deal. Apple is up about 1.5% almost 2% in early trading. 

EPD is up a percent. ENB flat (barely green). I don't follow the Bakken companies much any more -- as far as the stock market is concerned, for two reasons. First, too depressing. Second, and more more importantly, I'm waiting for the dust to settle, or as others might say, the Hillary re-set. We haven't see the re-set yet. Current prices for Bakken operators that trade publicly have no connection with reality at this point. Too much in flux.

This past week "they" said the railroads would be under pressure. UNP is up 1.5% today.

Over the weekend I started reading the 50th Anniversary issue of Berkshire Hathaway's annual report. Glossy golden cover. I didn't read much; seemed to be more of the same. The little I read suggests Charlie Munger saved Warren Buffett's hide forty-some years ago, but I probably mis-read.

The most interesting thing that came out of the BRK annual report was the fact that Warren Buffett never gave up, and that he was dealing with very small amounts of cash (relatively speaking) compared to where he is today. That alone speaks volumes; it couldn't have been all luck.

Anyway, enough of this. I don't watch television, so I have no idea what CNBC is saying to explain the 250-point surge. I see that Yahoo!Finance attributes it to ... drum roll ... more stimulus talk ... in Asia.

Wow, gazillions in stimulus -- some irony here -- a transfer of wealth -- all those governments printing money to put into the economy to keep the rich people rich.

Back to the market -- investors in Madison Square Garden have done very, very well.

Remember, this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here. 

Oh, that's right. I was going to say that after reading a few pages of the BRK's 50th anniversary issue of annual reports, I went back to reading Dan Jones' new book, Wars of the Roses, which reminds me. Quick: what's #2 on the Wall Street Journal's hardcover non-fiction list?

This is an interesting list: Wall Street Journal's sixteen books for spring, 2015: it includes ... drum roll...Daniel Yergin's The Prize. It's an old book; maybe it's been updated with a new introduction or forward or epilogue. I still have my old copy and read a little bit of it Saturday. The Japanese attack on Pearl Harbor was all about oil. I might post a bit of that later; very enlightening. How the Japanese failed at Pearl Harbor.

Oh, back to that #2 hardcover, non-fiction book. It's also #2 on the New York Times best-seller list:
published by the South Dakota State Historical Society, Pioneer Girl, by Laura Ingalls Wilder. The writer's biography, the source of her Little House on the Prairie, completed in 1930 and never published, is annotated by a biographer.

Monday -- More Of The Same -- March 30, 2015

Active rigs:

Active Rigs97194188205168

RBN Energy: WTI-Brent split.
This is the latest in a long running occasional series covering the ongoing relationship between U.S. domestic benchmark crude WTI and its international counterpart Brent. Historically (prior to 2010) these two crudes of similar (light sweet) quality enjoyed a close pricing relationship governed by the U.S. need to import light sweet crude to meet domestic demand – with Brent trading at a slight discount to WTI mostly reflecting freight costs. Huge increases in domestic light crude production from shale have changed the relationship over the past four years – including a WTI discount to Brent averaging $18/Bbl during 2012 as new production was stranded at Cushing. That prompted construction of a lot of new pipeline capacity from Cushing to the Gulf.
As new domestic supplies reached the Gulf Coast market – home to 50% of refining capacity and a traditional center of light crude imports - the U.S. reduced its dependence on crude priced against Brent in the international market. The result was that Brent prices disconnected from WTI at the Gulf Coast during 2013. This new situation was confirmed by the behavior of a third crude, LLS – the Gulf Coast light sweet crude benchmark. Instead of tracking Brent – as they had previously, LLS prices began to track WTI meaning that the Gulf Coast market for light crude had become domestic instead of international. We last posted a blog specifically about the WTI/Brent spread back in June 2014. At that time Brent prices were disconnected from the Gulf Coast market and a glut of domestic supplies kept LLS trading close to WTI. At that time of course, (early June 2014) crude prices were over $100/Bbl and the market was in backwardation – meaning futures market prices were lower than prompt month cash on expectations that excess supplies would exceed demand.

With the Cushing market once again oversupplied and a big stockpile weighing on the market WTI is likely to continue trading at a discount to both Brent and LLS. That should be good news for beleaguered rail shippers in North Dakota who have suffered because tighter differentials reduce the netbacks for crude-by-rail transportation versus pipeline alternatives. Otherwise any stronger recovery in crude prices is still largely dependent on higher market demand soaking up the current surplus. Except that is - for support for crude prices from another corner – a weaker U.S. dollar. We’ll take a closer look at the relationship between oil prices and the greenback later this week.

US oil glut story grossly exaggerated? Source for this story -- OilPrice; article by Leonard Brecken.
Even using the EIA’s own data, production is up some 500,000 per day since October or 3.5M per week. So how can more than two times that be added to storage while gasoline demand accelerates to 5% year over year from low single digits? Refinery maintenance is part of it, yes, as well as seasonality as people drive less in absolute terms, so as production continues this would explain storage adds, but to this magnitude?
On a side note I was shocked to see that current storage utilization of oil isn’t even a record; unimaginable given that we are led to believe we are running out of storage! In any event, the seasonal effects will wane considerably in April into May as it always has.
This article seems to be somewhat at odds with RBN Energy. I post this story for the archives; I don't put a lot of stock into the article.

OMG! Oil Executives Met With Geologists

This story interests me not at all -- considering the source and the somewhat dubious headline -- but I'm linking it because if I don't I will have any number of readers sending me the link. The story has to do with oil executives meeting with geologists following the flurry of Oklahoma earthquakes that some were associating with disposal of waste water by-product from fracking. Bloomberg is reporting at Yahoo!Finance

The President's Bracket

In the Final Four, he got two of four. And he's an expert.

Meanwhile, I know nothing about college basketball, follow it not at all, and I got three of four correct in the Final Four. Just saying. [I filled out the bracket at the ESPN website.] And to the best of my knowledge, no one in the world predicted a perfect-64 bracket.