Random Note On The Mideast War -- April 9, 2015

For the archives, because we're not getting much news on this war. Reuters is reporting:

At least four oil and natural gas tankers that were headed to Yemen have been diverted as chaos mounts in the country after the launch of Saudi-led air strikes last month, according to industry sources and ship tracking data.

Fighting in Yemen is scaring off shippers and has forced the country's liquefied natural gas (LNG) export plant to take one of its production plants, or trains, off line.

Several companies, including France's Total and APR Energy Plc have either evacuated staff or ceased operations due to the conflict.

Yemen's Aden Refinery was supposed to issue a tender last week to seek oil product imports for May, but has now suspended the tender process and is waiting for the situation in the country to stabilize, an industry source in Yemen told Reuters.

This is expected to weigh on profit margins for oil products in Asia and the Middle East, which have had to cope with increasing supply from new refineries, traders said.

There was a story earlier that said the Saudi air assault was not working out all that well. 

Hedging -- April 9, 2015

I mentioned this in passing earlier this morning. Here's another take on the same story. Bloomberg is reporting:

Shale drillers didn’t count on prices staying high forever. While oil traded for more than $90 a barrel last year, many bought insurance against a crash. Now that prices have plunged more than 50 percent in less than a year, drillers have started to collect. They netted at least $2.4 billion from hedges in the fourth quarter of last year, according to data compiled by Bloomberg, and they stand to collect as much as $26 billion if crude stays depressed.

The insurance—in the form of derivatives contracts—was sold by the same Wall Street banks that financed the biggest energy boom in U.S. history, including Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Wall Street passed on the risk to hedge funds, airlines, oil refiners, and utilities. “The folks who were willing to sell it were left holding the bag when prices moved,” says John Kilduff, partner at Again Capital, an energy hedge fund.

The swift decline in U.S. oil prices—to below $50 a barrel from more than $107 in June—caught the industry by surprise. Harold Hamm, the billionaire founder of Continental Resources, cashed out his company’s protection in October, betting on a rebound. Instead, crude kept falling.

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The Muscle Car Collection

Earlier today I mentioned Warroad, Minnesota, in passing. This is a video of Bob's collection of muscle cars.

Bob's Collection, Warroad, Minnesota

I've seen the Nethercutt Collection in the San Fernando Valley and the Petersen Car Museum in west Los Angeles. Memo to self: road trip to Warroad.

Enterprise Products Partners Raises Dividend -- Not Much -- But Keeps The Record Going -- April 9, 2015

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

Enterprise Products Partners L.P. EPD announced an increase in its quarterly cash distribution to $0.375 per common unit, or $1.50 per unit on an annualized basis. The quarterly distribution will be paid on May 7, to unitholders of record as of the close of business on Apr 30.

From a press release:

Enterprise Products Partners L.P. today announced the start of a supplemental binding open commitment period to determine shipper demand for incremental capacity being added on the Aegis pipeline between Mont Belvieu, Texas and the Napoleonville, Louisiana area along the Mississippi River corridor. The 270-mile Aegis pipeline system is designed to transport purity ethane from Enterprise’s Mont Belvieu, Texas liquids storage complex to petrochemical facilities in Texas and Louisiana.

The initial 60-mile segment from Mont Belvieu to Beaumont, Texas began service in September of 2014. The remainder of the Aegis pipeline will be completed in two phases, which are scheduled for completion by the end of 2015.

And then this from Zacks:

Enterprise Products Partners L.P. announced that the capacity for loading fully refrigerated, low-ethane propane has now increased to 9 million barrels (MMBbls) per month at its liquefied petroleum gas (LPG) export terminal at the Houston Ship Channel. The significant increase in loading capacity came on the back of the recently completed expansion project at the facility. The price of Enterprise units has been trending upward post announcement, and is up 1.7% a piece.

For The Archives -- Apple's PC Sales -- Apple Continues Seeing Steady Mac Sales Growth Even As U.S. PC Shipments Decline

Macrumors is reporting:

Even amid a decline in U.S. PC shipments, Apple continues to see steady shipment growth, according to new PC shipping estimates from Gartner. Apple shipped nearly 1.7 million PCs in 1Q15, up from 1.5 million in 1Q14, marking an 8.9 percent increase. Overall PC growth in the United States in 1Q15 was down 1.3 percent compared to 1Q14, with Dell and other smaller manufacturers seeing a decline in shipments.

Gartner estimated total PC shipments in the U.S. during 1Q15 at 13.9 million, down from 14 million last year.

During the quarter, Apple captured 12 percent of the market, up from 10.9 percent in the year ago quarter. Apple is positioned as the third largest PC vendor in the United States, and continues to trail both HP and Dell when it comes to market share.

It's all about the "Apple Eco-System." You buy the best iPhone. Then you upgrade to the new retina laptop. Then you get the watch. Then you get a new iPhone. Rinse. Repeat.

By the way, one doesn't upgrade to a new Apple produce because one has to -- they last "forever." One upgrades because one can.

Can't wait to read the comments at the linked Macrumors article.

Independent Operators Doing Their Part To Cut Oil Production In The US -- April 9, 2015

CNBC is reporting that oil companies are cutting back. A screenshot from the article as it was posted at 5:25 p.m. CT, April 9, 2015:

Genscape seems to have some data that many of us don't have, suggesting that six companies cutting back in just four on-shore plays in the United States could result in a cut of "about 373 million bopd."

For newbies: the US, Russia, and Saudi Arabia each produce about 10 million bopd.

Let me now when/if CNBC corrects this typo.

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For The Archives

This matters not at all to me, but it is interesting. Don sent me the link. USA Today is reporting:

Private equity firm Blackstone and Wells Fargo are close to a deal buy a real-estate portfolio valued at a whopping $30 billion from General Electric, according to a person with knowledge of the deal.

An agreement on the transaction -- part of GE's bigger plan to return to basic manufacturing -- could be reached as soon as Friday.

The sale, which includes warehouses, factories, malls, apartment buildings and other commercial properties spread across the globe, could mark the largest real estate sales since before the financial collapse. In 2007, Blackstone acquired Equity Office Properties Trust for $39 billion.

GE, known for lightbulbs and ovens, has been aggressively winding down its financial business, including loans and investments, in an effort to simplify its business and boost the stock price.

If the deal goes through, it will continue a period of dramatic change for GE. The company has been remaking itself for years to get out of banking and back into manufacturing.

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

Ten (10) New Permits -- April 9, 2015

Active rigs:

	4/9/2015	04/09/2014	04/09/2013	04/09/2012	04/09/2011
Active Rigs	93	191	188	209	173

Wells coming off the confidential list Friday:

• 26390, drl, BR, CCU North Coast 41-25TFH, Corral Creek, no production data,
• 26837, 1,234, WPX, Wolf Chief 27-34HC, Mandaree, t3/15; cum 9K 2/15;
• 26935, drl, CLR, Kuhn 7-13, Camp, no production data,
• 28748, 355, Hunt, Smoky Butte 160-100-18-19H-1, Smoky Butte, t12/14; cum 18K 2/15;
• 28916, drl, Hess, EN-VP and R-154-94-2536H-4, Alkali Creek, no production data,
• 28985, drl, CLR, Bismarck 7-9H, Brooklyn, no production data,
• 29385, drl, Petro-Hunt, State 159-94-25B-36-1H, East Tioga, no production data,
• 29387, drl, SM Energy, Ralph 1-17HN, Colgan, no production data,

Ten (10) new permits --

• Operators: Statoil (5), EOG (3), Whiting (2)
• Fields: Alger (Mountrail), Parshall (Mountrail), Sanish (Mountrail)
• Comments:

Seven (7) producing wells completed:

• 24745, 1,916, MRO, Melvain Fox USA 14-4TFH, Moccasin Creek, t2/15; cum 11K 2/15;
• 28046, 1,470, Oasis, Holmes Harbour 5501 14-5 2B, Tyrone, 4 sections, t2/15; cum 10K 2/15;
• 28075, 3,255, MRO, Anthony USA 23-14H, Moccasin Creek, 2.5 section-long horizontal; 1005 within the middle Bakken; 93% within MOC geology defined target interval; gas max at 1,300 units; 3,840 acres drilling unit; 23,148 feet TD; t2/15; cum 38K 2/15 28 days)
• 28076, 3,255, MRO, Hale USA 23-14TFH, Moccasin Creek, 2.5 section-long horizontal; Three Forks, 100% within the Three Forks Formation; 69% within the MOC geology defined target interval;  gas units very, very low; a 1 - 5' intermittent flare near the end of the lateral; 23,148 feet TD; t2/15 cum 11K 2/15 (only 16 days)
• 28228, 871, SM Energy, Overland 20-17-162-98H, Blooming Prairie, t1/15; cum 22K 2/15;
• 28678, SI, CLR, Bjella 4-13H, Northwest McGregor, 4 sections,
• 28813, 939, SM Energy, James 16-35H, Camp, t1/15; cum 41K 2/15;

Idle Chatter -- April 7, 2015

Headline, WSJ, front page, “Money & Investing” Section: “Oil Slides as Supplies Soar.”

The question is not how low will oil go, the question is why is oil not already at $20/bbl?

The bigger question: why is gasoline still more than $2.25/gallon? We should be well below $2.00 in a rational world.

*********************************

Idle Chatter

A young man at Starbucks asked me this morning how low I thought oil would go, or whether we have seen the worst. He was concerned because he has many close friends on their way out to west Texas to work in the oil fields. They have jobs but are already concerned about being laid off.

The young man who asked the question is an independent contractor/home builder. He had just returned from Warroad, MN — quick, why would a home builder visit Warroad? A free lifetime subscription to the “MillionDollarWay” who comes up with the correct answer first. But I digress.

He mentioned that they can’t build houses fast enough out in in west Texas to support the oil and gas industry. He mentioned that an individual is paying $80/night for a motel room. I was ready to tell him that at the height of the Bakken boom, folks were paying $320 for a room in Williston. Then he told me that the $80/night was for one person sharing a room with three others.

So, back to the question: how low will oil get, or whether we have seen the worst.

Readers know my stock answer: predicting the price of oil is a fool’s errand. However, let’s approach the issue from the prospect of the oil worker, his friend, and the prospect of the investor, me.

DISCLAIMER.

First, the worker, the blue collar worker. The bad news first: truck drivers will feel the pain first.

Now the good news: fifty percent of America’s oil comes from fracked oil. And much of the other fifty percent is coming from legacy wells, which means the percentage of America’s oil going forward will come from fracked fields.

There are a gazillion tight oil plays in the US. But at $50 oil, only three matter: the Bakken, the Permian, and the Eagle Ford. Of the three, the Eagle Ford is looking more and more like an also-ran. The Eagle Ford is huge for some operators, but for America, it’s all about the Bakken and the Permian. The EIA says the Permian is bigger; others said it would be the Bakken. The jury is still out (I think the Permian will win those bragging rights). But it doesn’t matter. For the blue collar oil worker: the Bakken or the Permian.

For the investor, the above holds. Additional thoughts. Whether we are in a trading range at $50-oil and holds, or whether it gets to $40 or $20, at some point, oil will hit a low, the “Hillary re-set.” From that point on, an investor’s dream.

DISCLAIMER.

On-shore rigs are being stacked; they can be back up in 90 days. Off-shore CAPEX is being cut by the majors; off-shore doesn’t turn on a dime. Didn’t we read just yesterday that it takes months to get a permit in the Gulf of Mexico — and that’s for those who already have the leases — but one can get a permit in North Dakota in days.

But that’s just the beginning; From spud to production, 90 days in North Dakota if the price is right.

At any price, it would be six months or more off-shore, I assume. (A reader just wrote to say the GOM Jack/Malo well: 12 years.)

But there’s more. Cracks in OPEC are starting to be reported. Saudi Arabia announced higher prices for the second month in a row just a couple days ago. Saudi’s oil minister says he is willing to raise prices if everyone else does also (does he understand free market capitalism?). Libya is openly calling for an increase in the price for OPEC oil. Add Iran to the chorus: Iran says the "no-production-cut" policy is not working."

I have listed the reasons in an earlier blog why I think Saudi is eager to raise the price of oil. As John Goodman's character in The Big Lebowski said, Saudi has entered the world of pain. I feel strongly that Saudi Arabia miscalculated how far the price of oil would fall when it made its now-legendary announcement last summer. Last summer there were no news stories about Yemen or ISIS threatening Saudi Arabia. Earlier this week President Obama said he would ship weapons and military supplies to Saudi Arabia as fast as he could. Someone has to pay for those weapons and supplies. Fifty-dollar oil buys a lot fewer F-15s than $100-oil.

As an investor, I’m interested in the independent operators that are NOT penny-stock-companies. I don’t know anything about the operators in Texas; my knowledge is limited pretty much to North Dakota. I’m not interested in talking about XOM, COP, CVX — for all practical purposes, they are like the utility stocks. I’m talking about companies like EOG, CLR, and WLL and there are many others. For investors it seems it’s pretty simple: a) pick the survivors; and, b) buy when oil hits the “Hillary reset.”

Ha, that’s the rub. The “Hillary reset.” I’m not a market timer. Nothing more to say on when to invest.
Survivors? I think most readers can figure out the “for-sure” survivors, and maybe guess correctly on the “maybe” survivors.

One more component. I think we are through the worst psychologically. Operators are learning how to cope; some will survive; some won't. The price of oil could certainly fall but the cracks in OPEC are starting to appear. It looks like the US is using about 400,000 bbls more gasoline daily compared to a year ago. 

This is all idle chatter. This and $1.89 will get you a cup of coffee at a local Starbucks. Unless you have a "free" one coming.

First Generation Volt Comes To An End -- April 9, 2015

Idle chatter regarding the Shell story buying BG:

There is more than one story about Shell’s acquisition of a “natural gas” company; pundits see Shell’s transition from an “oil” company to a “natural gas” company as something of a surprise.

Tea leaves: with the news yesterday about a further assault on coal (Bloomberg, Sierra Club) and now this (Shell transitioning to be a “natural gas” company, or at least a different mix) suggests that the transition from coal to natural gas is a bigger story than a lot of us may realize.

 ***********************************

Chariots On Fire Not So Hot

From the print edition of today's WSJ: GM Unplugs First Generation Volt Production

GM will halt production of the Chevrolet Volt electric car for the summer to whittle down about seven months of unsold inventory and smooth the way for the next generation of the plug-in hybrid sedan.

The first Volt went on sale in 2010 with high expectations, but sales have been lackluster amid low gasoline prices and the release of more capable electric models from competitors. GM has sold about 60,000 Volts to date, far below initial company forecasts.

New model (2016):

• sleeker design (for going faster)
• up to 50 miles range (wow)

Other data points:

• GM sold 1,874 Volts during the latest three-month period, equivalent to the number of Silverado pickups sold in a day (and GM Silverado does not sell as many as Ford’s F-150) 
• Volt stocks are enough to last 210 days 

Great news for folks who want to feel good about saving the environment: this is an opportunity to buy a Chevrolet Volt at cost — maybe less.

From Yahoo!Finance:

“The failure is five or six years after this car’s come out you didn’t know exactly what it was,” Yahoo Finance’s Rick Newman notes. “GM, as it has done many times, over-hyped [the Volt] from the beginning, made it sound as if it was going to transform the automotive industry. It did nothing of the sort. It’s a niche vehicle at best."

The failure? Let's start with the range: 35 miles.

See also this post.

Natural Gas Fill Rate; Gasoline Demand -- April 9, 2015

Natural gas fill rate (a dynamic link): 15.

Gasoline demand (a dynamic link):

North Dakota PCS Approves Two New Pipelines In Western North Dakota -- April 9, 2015

The Dickinson Press is reporting:

The North Dakota Public Service Commission on Wednesday approved siting permits for two pipelines in McKenzie County, one for oil and one for natural gas liquids.

Hiland Crude LLC received approval for a 12-inch diameter, 13-mile-long crude oil line in McKenzie County, which will parallel and interconnect with the company’s existing Market Center pipeline system, according to the PSC. It will increase the capacity of the system by 65,000 barrels per day. The $10.5 million project will transport oil from smaller gathering systems and truck facilities to other rail and pipeline destinations.

Should take a few more trucks off the road.

And this natural gas pipeline:

Commissioners also approved a permit for a 4.4-mile, 6-inch diameter NGL pipeline to transport gas liquids from the Hay Butte Gas Plant to ONEOK Partners’ Bakken NGL Pipeline. The $1.8 million pipeline, owned by Caliber Midstream Partners and located about 7 miles southwest of Alexander, has already been installed but was initially intended as a gathering line, which wouldn’t require PSC approval. But now as a transmission line planned to carry up to 21,000 bpd, it required the agency’s OK. 

There must be a fine, fine line between a gathering line and a transmission line. To the surface owner, it probably looks about the same: 4.4 miles long, 6-inch diameter, six feet under.

More On The Taxable Sales And Purchases, North Dakota, 4Q14 -- The Boom Is Over -- Atlantic Monthly; Which Sector Did The Best? Utilities

Read this post first for this to make sense. 

4Q14 taxable sales and purchases.

% change year-over-year

• Bismarck: $512 million (a paltry 1.6% increase)
• Dickinson: $380 million (a huge 15% increase)
• Grand Forks: $338 million (less than the anti-growth city; actually decreased slightly)
• Minot: $439 million (a 3% increase)
• Fargo: $773 million (a respectable 4% increase)
• Watford City: $83 million (an incredible 63% increase, 7 years into the Bakken boom)
• Williston: $1.002 billion (it is what it is)

% change year-over-year

• Cass County: $891 million (a paltry 4% increase)
• Burleigh County (Bismarck): $516 million (an even more paltry 2% increase)
• Grand Forks County: $349 million (actually decreased; -1.5%)
• Stark County (Dickinson): $408 million (huge -- 15% increase)
• Ward County (Minot): $460 million (a paltry 3% increase)
• Williams County: $1.279 billion (11% increase; it is what it is)

Did I mention that we are into the eighth year of the North Dakota Bakken boom?

From the Jamestown Sun:

Overall, North Dakota saw a 16.7 percent increase in taxable sales with the city of Bottineau seeing the largest increase at 567 percent. The next largest increase was Watford City with a 66 percent increase in taxable sales.

The only sectors of the North Dakota economy that saw declines in taxable sales between 2013 and 2014 were construction and education, health care and social services.

Taxable sales of utilities saw the biggest increase at 89 percent.

I wonder if a new million-dollar intersection traffic light in Bottineau accounted for the city's $567% increase in taxable sales and purchases year-over-year?

Disclaimer: there may be factual and typographical errors on this page. I did not double-check it. If errors are noted or found, I will correct them when I get around to it. If this information is important to you, go to the source. The comments in parentheses are mine and mine alone. Do not take them out of context. Don't pay any attention to them. Did I mention 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. Do not make any travel plans based on what you read here. Do not make any relationship changes based on what you read here or what you think you may have read here.

Too Much News To Post -- April 9, 2015

Wow, I'm in a good mood, I don't even know where to begin.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

The stories are coming so fast and furious, one cannot keep up. Some data points, off the cuff, possibly some factual errors, probably some typographical errors, and most certainly inappropriate exuberance, and way too much schadenfreude.

1. North Dakota's state taxable sales and purchases surged in 4Q14 despite slump in oil prices. Williams County trounced Cass County; Williston stomped on Fargo; Watford City -- despite years of growth, in the middle of the Bakken sweet spot -- saw a 62% increase in taxable sales and purchases (forgot if that was sequential, or year-over-year; doesn't matter -- it tells me where the action is).

2. The natural gas midstream business, and perhaps the oil midstream business -- pipelines, gathering facilities, processing plants -- is surging. It can't be stopped. The reporters in the mainstream media reporting on solar, wind, and the demise of coal are missing the biggest story of the century -- the North American energy revolution. RBN Energy has another huge story on the Marcellus. A reader sent a 30-second soundbite last week telling us just how big the Marcellus was. Plains All American (PAA) announced that they will increase their dividend. Williams Partners doubles down in the Utica.

3. Early earnings: surprise -- some are beating expectations -- including Alcoa -- 11th month in  a row they beat expectations. One of my favorite stores -- the only place I have my photographs printed -- Walgreens beat expectations; will close 200 stores.

4. Jobs report: first time claims surge by 14,000 today and mainstream media finds way to spin a "good news" story out of that. However, the increase in new claims is nowhere near the number expected due to the slump in oil prices.

5. The stock market continues to climb a wall of worry.

6. US and Iran are on opposite sides in Yemen. President Obama will spin this after he gets off the golf course; Sec State John Kerry making a speech on global warming; the Kennedys taking their grandchildren out to Kenmare, ND, to see the snow (14 inches in one day); and out to California where a whopper of a snow storm hit Sierra Nevada mountains just after Governor Jerry Brown had photo op of no snow pack in that exact area.

7. The lakes have been rising in north Texas; we are in for at least a week of rain, here in DFW area.

8. Oil companies have a $26 billion lifeline. See also this post in case that link breaks.

9. It looked iffy for awhile, but Bakken operators are still on track to get that 2-year tax break.

10. Unreported story: all the crude oil storage facilities going up around Williston.

11. Filloon's article on Whiting's potential for re-fracking. If you haven't read that article, you are missing a great article.

12. The COP transcript that came out yesterday was incredible. You think spacing at 320-acre was incredible; you haven't seen anything yet.

13. Auto sales this year projected to hit records. EV sales sinking.

14. I still predict US will set gasoline demand / consumption record over this year's 3-day Memorial Day weekend.

15. Apple Watch demand is expected to exceed supply at launch. LA Times: "early Apple Watch reviews are mixed." Yup: some say "incredible." Some say "awesome." Everyone says they need one. LOL.

16. It's a fool's errand to predict oil prices, but if I had the time I would post some thoughts on the current price of oil, but the hyperbole would cause some folks to spew coffee out their nose.

17. Drudge headline: Hillary stumbles in Iowa. But what does it matter. The Dems will crown her -- after all, it's her turn; and the GOP will nominate a John McCain-Sarah Palin redux. In Iowa, not-a-snowball's chance-in-hell Rand Paul beats Hillary, 43 - 42. Or is it Rand Paul. Speaking of names, by the way, best name for a race horse: Hoof Hearted.

18. Saudi is in bigger trouble than folks realize.

19. Oil and gas investors should see a huge 2017, possibly a huge 2016.

20. Chicago credit may be cut to junk.

21. Boston Globe: are we going to kill Tsarnaev or not? What a great country. I'm waiting to see how Pocahontas weighs in. [I did not think Pocahontas would touch this one. I was very, very wrong. On April 9, 2015, the Boston Globe is reporting that Pocahontas is against the death penalty for Tsarnaev. Okay. She's right but probably for the wrong reasons.]

22. Yemen rebels advance near key gas terminal; Iran want truce. Shiite Muslim Houthi rebels seized partial control of a provincial capital that is the gateway to Yemen’s main natural gas export terminal, residents and officials reported Thursday, as the Saudi-led air war entered its third week. Sec State says US "won't stand by"; warns Iran.

23. This is April, isn't it. Freeze warnings for southern California issued.

24.  And there it is, the market just turned green.

25. Apple will announce a significant dividend increase.

26. Now, to go mail my federal tax return. No state income taxes in Texas. By the way, I think I found the "funniest" line in the instructions for one of the IRS forms: "this form is very complicated to fill out; you don't have to complete it; the IRS will do it for you." LOL. My hunch: a lot of North Dakotans know which form I'm talking about.

Thursday -- April 9, 2015

Active rigs:

	4/9/2015	04/09/2014	04/09/2013	04/09/2012	04/09/2011
Active Rigs	91	191	188	209	173

RBN Energy: More On Marcellus Midstream

The fast-growing need for natural gas processing and fractionation capacity in the Marcellus/Utica is creating tremendous opportunities for midstream companies. But determining which assets to develop and when to develop them is complicated by the volatility of hydrocarbon markets, and by the fact that the region has only minimal NGL storage capacity. In today’s blog, we continue our in-depth review of NGL-related infrastructure in the Upper Ohio River Valley with a look at Blue Racer’s existing and planned assets there.

The Utica and Marcellus regions have become a real hot-spot in the natural gas and natural gas liquids (NGL) world in the past four years. As we said in Episode 1 and Episode 2 of our series, natural gas production in Pennsylvania, West Virginia and Ohio now approaches 20 Bcf/d—five times where it stood in 2011. And as interest in the Utica and Marcellus areas west and south of Pittsburgh soared over that same period, gas processing capacity has rocketed too, from 600 MMcf/d to 7.6 Bcf/d. NGL production from those gas plants now exceeds 245 Mb/d, and an ever-increasing amounts of those mixed or “y-grade” NGLs are being fractionated locally into ethane and other NGL purity products. In Episode 3 we started our deep dive into the Marcellus/Utica’s midstream infrastructure with a discussion of the eight major pipelines that move natural gas through and out of the region; and in Episode 4 and Episode 5 we considered the gas processing plants, de-ethanizers and C3+ fractionation facilities MarkWest has been developing. (For more on what de-ethanizers, C3+ plants and fractionators do, see Episode 5.) Then, last time in Episode 6, we described the ethane and C3+/Y-grade pipeline interconnections between MarkWest’s eight (and soon nine) gas/NGL complexes in southwestern Pennsylvania, northern West Virginia and eastern Ohio, and their links to third-party pipelines that take NGLs out of the region. We also explained how the elements of MarkWest’s “machine” work together to ensure smooth operation, even in the event of NGL-takeaway disruptions that could otherwise be very troublesome in a region without much NGL storage capacity to take up the slack. The fact that we devoted three blogs to describing MarkWest’s gas processing, fractionation and NGL pipeline assets reflects the company’s unquestioned big-dog status in the Marcellus/Utica midstream sector.

But there is a lot more important midstream development going on in the Marcellus/Utica. A major player in the region concentrating primarily on the Utica is Blue Racer Midstream. The company is a joint venture of Caiman Energy II and Dominion formed in December 2012 to own, operate, develop and acquire midstream assets in the Utica Shale and certain adjacent areas in the Marcellus Shale. As part of the formation of the company, Dominion contributed most of its gathering and processing assets in the region, including Dominion East Ohio’s existing rich gas gathering network, other portions of its gathering system, Dominion’s Natrium Extraction Plant and a Dominion Transmission pipeline connecting Natrium to the Dominion East Ohio gathering system. Blue Racer (named for a fast-moving snake found in the Midwest) calls its interconnected network in the region the “Super System,” and can use this system to gather and process natural gas, fractionate NGLs and deliver residue gas and purity NGL products to multiple locations. Blue Racer’s aim is to both provide that end-market optionality and—through the connectivity between its facilities—to give its producer customers a high degree of operational reliability, even if an NGL takeaway pipeline is shut down unexpectedly. Let’s run through Blue Racer’s assets in the region using RBN’s new Pipeline GIS map-building system.

Truly Incredible -- Who Wudda Thought? -- April 9, 2015; Bottineau's Taxable Sales Jump Almost 600%; Watford City Up Over 60%

XNET is reporting:

North Dakota's taxable sales and purchases significantly increase.

Tax Commissioner Ryan Rauschenberger says the combined sales and purchases in October, November and December of 2014 were just over 7.9 billion dollars, a 16.7% increase.

He says it may be because of our mild winter.

Shoppers were able to get out every weekend and oil exploration had few delays due to weather.

The top 3 cities with the largest increases in taxable sales and purchases are Beach at 31%.

Watford City went up by 62%, and Bottineau alone jumped 567%.

"The strong taxable sales and purchases that occurred in the 4th quarter are really indicative of how ND is doing well even with the lower oil price that we're in. We're still seeing that we're coming in above forecast. Even in the early part of 2015, we're actually still seeing sales tax coming in pretty strong," Ryan Rauschenberger, ND Tax Commissioner says.

From the state's website:

Of the 50 largest cities in North Dakota, the highest percent increases for the fourth quarter of 2014 (compared to the fourth quarter of 2013) were as follows:

• Bottineau – Increase of 567.39 percent
• Watford City – Increase of 62.60 percent
• Beach – Increase of 31.21 percent
• Stanley – Increase of 29.12 percent
• Lincoln – Increase of 17.02 percent

Counties with the highest percent increases for the fourth quarter of 2014 (compared to the fourth quarter of 2013) were as follows:

• Bottineau County – Increase of 347.67 percent
• Dunn County – Increase of 80.62 percent
• Sioux County – Increase of 77.12 percent
• Slope County – Increase of 57.80 percent
• McKenzie County – Increase of 54.61 percent

The PDF statistical report is at the state website.

Jobs -- April 9, 2015; New Applications Rise 14,000 Last Week -- Great Spin

The prediction:

Economists forecast that weekly applications increased to a seasonally adjusted 280,000, according to a survey by the data firm FactSet. That would reverse much of the previous week's sharp decline, when applications fell 20,000 to 268,000.

The number:

Fewer Americans applied for unemployment benefits over the past four weeks than at any time in almost 15 years, signaling underlying strength in the labor market even as hiring cooled last month. From mid-March through the seven days ended April 4, jobless claims averaged 282,250 a week, the lowest since June 2000, a Labor Department report showed Thursday in Washington. Applications over the latest week climbed by 14,000 to 281,000. The median forecast of 45 economists surveyed by Bloomberg called for 283,000.

The Labor Department revised the prior week’s reading to 267,000, matching the lowest since April 2000, from an initially reported 268,000.

No states were estimated last week and there was nothing unusual in the data, a Labor Department spokesman said as the report was released to the press.

This is incredibly interesting: it suggests the downturn in the energy sector is nowhere as bad as anticipated. Just one of many story lines.

However, note the spin: the lede was all about the "average" -- something I had never seen before. Of course, if the average was the lowest level seen in 15 years it should have been the lede, but hidden in the report: applications actually by 14,000 last week, which is a pretty healthy rise -- considering the gazillions in stimulus and eight years into the recovery.