Miscellaneous -- July 8, 2015

Today's EIA "energy cookie":

Over the past decade, domestic refinery output of petroleum products has grown significantly while consumption has declined, resulting in a major increase in product exports.

Petroleum product exports averaged 4.1 million barrels per day (b/d) in the first four months of the year, an increase of 0.5 million b/d over exports the same time last year.

Product imports are also higher than last year, but to a lesser extent, leading to an increase in net petroleum product exports. --- EIA

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Port Economy

[I apologize for the quality of this note. I was interrupted while writing it to play Yahtzee with the granddaughters.]

We've been back in southern California for about a week now. Out "base" is San Pedro, just west of San Pedro Harbor, home of the Port of Los Angeles and the Port of Long Beach.

Today was the first time, since arriving about a week ago, that we drove across the two bridges, across Terminal Island, to get to the city of Long Beach to visit the Aquarium of the Pacific.

I have driven that route at least once every year since 1976 (with some very minor exceptions when we were stationed overseas), and some years we drove that route numerous times each year.

Years ago, the US naval station at Terminal Island was decommissioned and the land turned over to the ports of Long Beach and Los Angeles.

I've seen the ports in good times and in bad times, but I was absolutely amazed by what I saw this time: I don't remember so many cranes, and such huge cranes. It seems that the ports have really expanded, the Los Angeles port perhaps more than the Long Beach port based on the cranes seen.

There certainly seems to be much more activity than I ever remember. There must have been at least 15 BNSF engines at the ports. I only saw BNSF engines; if UNP engines were there I missed them, but the orange and black scheme really stands out.

I couldn't find any recent press reports on expansion at the ports (though I didn't look very hard), but it really looks like they've added a lot more cranes, and dock area for shipping containers has increased. In addition, I have never seen so many containers. By March, 2015, the most recent slow down / work stoppage had ended but pundits thought it would take three months to clear the backlog. In addition, there is much more to the story, as reported at this link in the Los Angeles Times.

In addition, construction for the new bridge connecting Long Beach with Terminal Island is coming along.

So, again, the theme continues: while the Mideast implodes, and Europe is preoccupied with holding the union together, the US keeps moving along.  

By the way, with the Panama Canal widening project nearing completion, my hunch is that west coast ports are going to have to become more competitive and more reliable or they are going to lose business to US ports in the Gulf and/or along the East Coast, especially Charleston.

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Greece: "It's All Bad Luck" -- The Coyote Blog

I normally don't do this, copy someone else's blog, but this is so good, I couldn't resist, knowing that most readers probably don't pay much attention to the links at the sidebar.

One of my favorite blogs is The Coyote Blog. Today's post was particularly good; it was simply a quote, to explain Greece. The quote is from Robert Heinlein:

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people.

Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck.” ― Robert A. Heinlein

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Baltimore News

Wow, did I see what I just thought I saw on the evening news? Baltimore mayor fires her chief of police. The fired chief of police was African-American; the new chief of police appears to be Caucasian, although the latter may self-identify as African-American.

McKenzie County #1 In Entire US; Seven (7) New Permits -- North Dakota -- July 8, 2015

Active rigs:

	7/8/2015	07/08/2014	07/08/2013	07/08/2012	07/08/2011
Active Rigs	75	191	186	213	170

Seven (7) new permits --

Operators: CLR (4), Slawson (3)
Fields: Brooklyn (Williams), Big Bend (Mountrail)
Comments: the CLR permits are for a 4-well pad in 22-155-98 in Brooklyn oil field

Three (3) wells coming off confidential list Thursday:
29903, 98, XTO, Johnson 34X-36BXC, Morgan Draw TF1, ; a 15-foot target zone, t5/15; cum --
29979, SI/NC, BR, CCU Dakotan 2-7-17MBH, Corral Creek, no production data,
30183, SI/NC, Petro-Hunt, Sherven Trust 153-95-27A-7HS, Charlson, no production data,

From the #29903 file report: in-zone totals --

• MD 7589'; 85.47% -- drilled in 15' TVD target
• MD 3789'; 42.67% -- above center of target (in zone)
• MD 3800': 42.80% -- below center of target (in zone)
• MD 1290': 14.53% -- out of target zone
• 8879' -- total lateral

I did not see completion data for #29902 at time of original post.

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McKenzie Is #1 In The Entire US

Williams #7, Dunn #10

This is pretty cool. Texas has some huge oil fields, but it looks like North Dakota has the number one oil producing county in the entire US! In fact three North Dakota counties are in the op ten.  DrillingInfo is reporting:  

Memo to self: send a note to Jane Nielson.

Memo to self: send a huge "thank you" to a reader for sending this to me. I had missed it.

And then look at this. If one thinks about it for a minute, this is really quite phenomenal:

Memo to self: send another note to Jane Nielson.

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I Can't Help It If I'm Still In Love With You, Susy Bogguss

Fourteen (14) New Permtis; Twelve (12) Wells Coming Off Confidential List Wednesday -- North Dakota, USA -- July 7, 2015

Active rigs:

	7/7/2015	07/07/2014	07/07/2013	07/07/2012	07/07/2011
Active Rigs	75	189	188	213	166

Fourteen (14) new permits --

• Operators: Hess (5), Thunderbird (3), SM Energy (3), EOG (2), Denbury
• Fields: Hawkeye (McKenzie), Ranch Creek (McKenzie), West Ambrose (Divide), Colgan (Divide), Parshall (Mountrail), Cedar Hills (Bowman)
• Comments: background to Thunderbird Resources can be found here;

An old permit (#19294 was canceled by Whiting, a BSMU permit in Billings County.

Three (3) producing wells completed:

• 22106, 530, Hess, GO-State A-158-97-3625H-1, New Home, t6/15; cum --
• 29108, 978, Hess, EN-Uran A-154-93-2215H-5, Robinson Lake, t6/15; cum --
• 29912, 801, EOG, Burke 40-1609H, Stanley, t6/15; cum --

Twelve (12) wells coming off confidential list Wednesday:

• 28760, 1,167, Hess, HA-Thompson-152-95-1720H-7, Hawkeye, t6/15; cum 5K 6/15;
• 28931, 2.016, QEP, Foreman 1-2-1BH,  Spotted Horn, t4/15; cum 34K 6/15;
• 28932, 2,472, QEP, Foreman 2-2-1BH, Spotted Horn, t5/15; cum 36K 6/15;
• 28933, n/d, QEP, Foreman 1-2-1TH, Spotted Horn, a huge well,
• 28968, 2,029, QEP, Foreman 36-25-1-2LL, Blue Buttes, t4/15; cum 29K 6/15;
• 29629, 294, QEP, Foreman 6-2-1TH, Spotted Horn, t4/15; cum 15K 6/15;
• 29634, TA, MRO, Double H 34-8TFH, Bailey, no production data,
• 29802, SI/NC, Petro-Hunt, Lovdahl 158-94-32D-29-1H, Tioga, no production data,
• 30048, drl, XTO, Marlene 42X-20F2, Blue Buttes, no production data,
• 30057, drl, SM Energy, Whitney 3-26HN, West Ambrose, no production data,
• 30109, drl, XTO, Raymond 21X-5A, Dollar Joe, no production data,
• 30184, SI/NC, EOG, Fertile 77-0905H, Parshall, no production data,

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28931, see above, QEP, Foreman 1-2-1BH,  Spotted Horn:

Date	Oil Runs	MCF Sold
5-2015	30568	37436
4-2015	3299	3404

28932, see above, QEP, Foreman 2-2-1BH, Spotted Horn:

Date	Oil Runs	MCF Sold
5-2015	35671	38733

28933, see above, QEP, Foreman 1-2-1TH, Spotted Horn:

Date	Oil Runs	MCF Sold
5-2015	36932	42843

28968, see above, QEP, Foreman 36-25-1-2LL, Blue Buttes:

Date	Oil Runs	MCF Sold
5-2015	22378	20853
4-2015	6167	3524

29629, see above, QEP, Foreman 6-2-1TH, Spotted Horn:

Date	Oil Runs	MCF Sold
5-2015	14540	9683
4-2015	447	647

Off The Net For Awhile -- July 8, 2015

NDIC site still down due to power outage.

NYSE brought down / to a halt due to "technical glitch."

United Airlines grounded for about two hours worldwide due to "technical glitch."

Wall Street Journal reporting a "technical glitch."

Meanwhile, Apple presses on -- will set new record. The WSJ is reporting:

Apple Inc. is preparing for a larger initial production run of its next iPhones, betting that even modest hardware changes will entice consumers to upgrade handsets and outstrip demand for the larger-screen phones that it released last year.

Apple is asking suppliers to manufacture between 85 million and 90 million units combined of two new iPhone models with 4.7-inch and 5.5-inch displays by Dec. 31, according to people familiar with the matter. The screen sizes are the same as in the iPhone 6 and iPhone 6 Plus.

By comparison, Apple last year ordered a then-record initial production run of 70 million to 80 million for its first larger-screen iPhones.

Tea Leaves: We Have A Deal; Nothing About The Bakken; Microsoft's Gobbledygook On Its Smart Phone; Joins The Zune; Syrian Army With Really Nice Uniforms -- July 8, 2015

As predicted (back on June 21, 2015), Greece won't let that $8.1 billion slip away. Not only that but Greece suggested extending the two-year bailout to three years. The Wall Street Journal is reporting:

Greece formally asked for a three-year bailout from the eurozone’s rescue fund Wednesday.

The letter is a first step toward fulfilling a demand by international creditors to come up with tougher measures in return for desperately needed financing that could keep the country from bankruptcy and even worse economic turmoil.

It says Greece will put in place tax-reform and pension-related measures by the beginning of next week, though it doesn’t go into detail. Greek Prime Minister Alexis Tsipras said his government would present more concrete measures on Thursday by a midnight deadline.

I always said that Greece should simply promise that it would comply with reforms but not go into specifics. $8.1 billion for some vague promises. And a reminder, which seems everyone continues to overlook, Greece remains in default to the IMF.

Fool me once, shame on you. Fool me twice, shame on Europe.

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Meanwhile In Los Angeles: Crime Surges

The Los Angeles Times reports:

For the first time in more than a decade, overall crime is up in Los Angeles through the first six months of the year, rising by about 12%, according to a Times analysis.

The increase has continued despite the city's efforts to stem the crime surge, which followed consecutive declines since 2003.

At the time, [Police Chief Charlie] Beck stressed that the incoming Metro officers had more progressive training and a different mission from the aggressive operations of the past. The new plan, he said, wasn’t to make more arrests. Instead, the increased officer presence was designed to send a message that the LAPD was nearby and ready to respond.

Los Angeles police motto: when seconds count, the LAPD is only minutes away.

And minimizing arrests seems to be the answer, taking a page from the Baltimore play book: give them space to destroy.

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NASA's Mars Rover Opportunity Video

The Los Angeles Times has a nice 8-minute video of NASA's Mars rover Opportunity traversing the red planet from 2004 to 2015, eleven years to complete 26.2 miles.

I assume the cameras are mounted on the front and the rover is moving forward. If so, it's hard to explain the tracks ahead of the rover, for example at 1 minute, 24 seconds into the video and many, many other examples. Very likely, that track was made by the press team that was sent in advance to film the rover.

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Apple Phones Clobber Samsung Phones In China

At least according to this article by a contributor to Seeking Alpha.

In calendar Q1 Apple's revenue for Greater China grew by 71% year-over-year to $16.8 billion. The sales growth in China accounted for over 56% of Apple's total revenue growth for the quarter.

Based on the expectations of prominent Apple analysts such as Katy Huberty and Steve Milunovich, Apple is likely to post another extraordinarily strong quarter.

Expectations are for iPhone unit sales of better than 50 million and total revenue of about $48 billion. Clearly Apple is on a totally different trajectory than Samsung, with iPhone unit sales up over 40% y/y and total revenue up by over 28%, if these expectations are met.

Kantar Worldpanel smartphone OS market share data indicates that most of this growth occurs in China.

And just as this news comes out that Apple phones are clobbering Samsung phones, it's not much better for Microsoft which announced it will cut 7,800 jobs, mostly from phone unit. 

Microsoft said on Wednesday that it would eliminate up to 7,800 jobs, more than 6 percent of its work force, in a major overhaul of its struggling smartphone business.

The company also said it would take a $7.6 billion accounting charge related to its acquisition of Nokia’s handset operations, a clear acknowledgment that Microsoft’s foray into the mobile hardware business had borne little fruit.

While Microsoft will not stop making smartphones, the company’s chief executive, Satya Nadella, said on Monday that Microsoft would no longer focus on the growth of its own smartphone business, instead emphasizing the expansion of the broad “ecosystem” of products, including mobile phones, that ran its Windows software.

“I am committed to our first-party devices, including phones,” Mr. Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention.

Gobbledygook for "we're screwed." Exactly what does that mean, "focus our phone efforts." Oh, cut 8,000 jobs.

The Wall Street Journal's take on Microsoft and smartphones. 

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President Obama Spent $500 Million To Train Syrian Army

Recruited 60 soldiers.

$500 million / 60 = $8 million /  soldier.

But they have really nice uniforms. I can't make this stuff up.

For those folks who still support President Obama, they simply are not paying attention.

Wednesday, July 8, 2015

It looks like the NDIC site might be temporarily down. [11:40 a.m. Pacific Time, NDIC site back up]; [Update, 8:06 a.m.: Yes, here it is. An MDU power outage hit Bismarck --

A power outage in North Dakota's capital on Wednesday brought down computer servers that provide data used to track myriad output statistics across the second-largest U.S. oil producing state.

The outage means the state's daily drilling rig count - a closely watched number that can offer guidance on future oil production - is not available. The count stood at 76 on Tuesday, near where it has been for several weeks.

Global warming: it's a religion -- Nobel-winning physicist. 

Giaever ridiculed Obama for stating that “no challenge poses a greater threat to future generations than climate change.” The physicist called it a “ridiculous statement” and that Obama “gets bad advice” when it comes to global warming.

“I say this to Obama: Excuse me, Mr. President, but you’re wrong. Dead wrong,” Giaever said.

Giaever was a professor at Rensselaer Polytechnic Institute’s School of Engineering and School of Science and received the Nobel Prize for physics for his work on quantum tunneling. Giaever said he was “horrified” about the science surrounding global warming when he conducted research on the subject in 2012.

Ironically, just four years earlier he signed a letter with more than 70 other Nobel winners saying the “country urgently needs a visionary leader” and that “Senator Barack Obama is such a leader, and we urge you to join us in supporting him.”

But by 2011,  Giaever left the American Physical Society because it officially stated that “the evidence is incontrovertible … [g]lobal warming is occurring.” The Society also pushed for reducing greenhouse gas emissions.

“Global warming really has become a new religion,” Giaever said. “Because you cannot discuss it. It’s not proper. It is like the Catholic Church.

"There’s been no global warming for the last 17 years or so (based on satellite records), weather hasn’t gotten more extreme and that global temperature has only slightly risen — and that’s based on data being “fiddled” with by scientists."

Yes, Starbucks here in San Pedro raised the price of a tall ("small") black coffee from $1.75 to $1.95. That would mean the $1.85 coffee in Grapevine has gone up to $2.10.

Here in southern Californa, the city of Anahiem announced a decision to consider a tax on tickets for theme parks. Disneyland negotiated a 30-year moratorium on any tax on the park; in return Disneyland promises a $1 billion program to upgrade the parks, build a multi-story parking garage, and improve surrounding streets to improve traffic flow.

Key paragraph in this Business Insiders story from Reuters' Mike Kemp:

If U.S. shale drillers — the world's new 'swing' producers — can still turn a profit at below $60 a barrel, then the fall in long-dated oil prices may be rational. If not, as some bullish market analysts worry, then lower prices could be choking off new supplies the world may need as soon as next year.

Active rigs:

	7/8/2015	07/08/2014	07/08/2013	07/08/2012	07/08/2011
Active Rigs	75	191	186	213	170

RBN Energy: Crude Inland Barge Traffic Tumbles As Differentials Narrow.

Data from the Energy Information Administration (EIA) shows that inland barge movements between the U.S. Midwest and the Gulf Coast increased 10 fold between January 2011 and October 2013 to nearly 160 Mb/d in response to soaring crude production and pipeline congestion.

Since then barge traffic on the Mississippi River (the main waterway between the two regions) plunged 80% to 27 Mb/d in April 2015 – the latest month reported.

Today we explain why.

We last reported on the inland barge market in March 2014 as part of a blog series on the Jones Act. According to Kirby Corporation – the largest owner – there are 3,705 inland tank barges in the U.S. These barges move crude oil, condensate, refined products, NGLs and petrochemicals along 12,000 miles of navigable inland waters – mostly along the Mississippi River system but a growing number along the Gulf Intracoastal Waterway (GIWW) between Corpus Christi and Texas and Louisiana Gulf Coast refineries. The inland barge market is distinct from the coastal barge market that involves larger ocean going articulated barges (ATB) with over 140 MBbl cargoes. Inland barges are smaller – ranging in size from 10 MBbl to 30 MBbl.

We described these vessels in Part 1 of our “Good Year For the Barges” series. The smaller 10 MBbl barges are more commonly used in the upper Mississippi and Illinois River where the water draft (depth) is shallower. Barges are normally chartered-out as “unit tows” consisting of two to three barges and a towboat, under term contracts for 1-5 years or for shorter terms in the spot market. Inland barges are subject to the terms of the 1920 Merchant Marine Act – known by the industry as the Jones Act (see The Sea and Mr. Jones). The Jones Act is a federal statute requiring that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. Because of the regulations, operating expenses are higher for Jones Act vessels (as much as 2.7 times non-flag alternatives according to a U.S. Maritime Administration (MORAD) study in 2011). Subscribers to RBN’s Backstage Pass service can download a copy of the 2014 “Rock The Boat” Drill Down Report that describes the impact of the Jones Act on the crude oil market.

Brits cut corporate tax. Tweeting now:

UK Budget: Benefit cap to fall from £26,000 to £23,000 in London and £20,000 in the rest of the country; inheritance tax threshold to rise to £1 million; corporation tax to be cut to 18% by 2020, chancellor announces - @BBCBreaking

For The Archives -- Enbridge (EEP) Assets -- July 7, 2015

For the archives. Some of Enbridge (EEP)'s assets:

Enbridge’s Lakehead system transfers over 60% of the Canadian oil output into the U.S. This unique position helps the partnership to capitalize on the growing Canadian oil sands production. Moreover, Enbridge holds 35% share in the Texas Express pipeline and the Ajax project. This increases the partnership’s natural gas liquids handling and raises the prospect for significant growth.

Enbridge’s Liquids segment is also poised to benefit from increasing production in the Bakken Shale and Canadian Oil Sands regions, as well as higher revenues from Alberta Clipper. The partnership plans to increase crude takeaway capacity in the Bakken and to enhance the shipping of crude eastward to the upper Midwest and Canada refineries.

However, Enbridge’s midstream natural gas business is sensitive to changes in natural gas supply, demand fundamentals and commodity cycles associated with gas processing margins. Furthermore, with the expansion of its natural gas gathering and processing business, Enbridge has increased its risk exposure to commodity prices.

Meanwhile, the update on Pipeline No. 3 is simply depressing no matter how much everyone wants to spin a positive story. Note: this story is very, very new, posted July 3, 2015. 

As the CEO of Canada’s largest pipeline company and backer-in-chief of the Northern Gateway, the 54-year-old isn’t about to win certain popularity contests, especially in British Columbia where the pipeline is set to link Alberta crude to big, hulking oil tankers destined for Asia.

The $6.5-billion Northern Gateway proposal to take as much as 525,000 barrels per day of Alberta crude to Asian markets via the West Coast, is a lightning rod for many who believe its construction would spell doom for the environment.

Read the rest of the story at the link: it's going to be much more expensive, and the tea leaves suggest it won't get built at all, regardless of sunk costs.