Ten (10) New Permits -- North Dakota, July 13, 2015

Active rigs:

	7/13/2015	07/13/2014	07/13/2013	07/13/2012	07/13/2011
Active Rigs	72	190	186	215	177

Wells coming off the confidential list Tuesday:

• 28963, 777, Hess, LK-Erickson-147-97-1102H-3, Little Knife, t5/15; cum 16K 5/15; 
• 29655, drl/NC, Newfield, Olson 152-96-30-31-3H, Westberg, produced 12K in first 13 days while on DRL/NC status;
• 30217, drl/NC, XTO, Thompson 44X-20A, Blue Buttes, no production data,

Ten (10) new permits --

• Operators: CLR (4), Hess (3), XTO (2), EOG
• Fields: Willow Creek (Williams), Alger (Mountrail), Siverston (McKenzie), Parshall (Mountrail)
• Comments:

Hess canceled one Vacahl permit in Mountrail County.

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Reported As "Dry Wells" 
But Not Necessarily "Dry" In The Usual Sense Of The Word

This is interesting: EOG reports four dry wells:

• 27759, Parshall 157-2127H, 
• 29822, Fertile 75-0905H, 
• 30185, Fertile 78-0905H, 
• 99188, Liberty 22-12M,

Also, add:

• 30386, Fertile 66-0410H, 

According to the e-mail dated April 28, 2015, EOG no longer plans to drill #27759 based on test resutls on TF wells in the Parshall field.

In addition, #29822, #30185, and #29188, were all dropped from the drilling program to accommodate larger inner-wells spacing. All of the wells listed above (except #29188) had P&A procedures submitted. All four wells had surface casing set, but were not drilled below surface casing due to changing EOG priorities. #29188 is a monitoring well and was never planned to be a producer.

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Off The Net For Awhile

So, how many of those ultra-expensive watches did Apple sell in the first three quarters of this year? 1,875.

Macrumors is reporting:

Apple has also sold 1,875 Apple Watch Edition models to date, at an average price of $13,700, according to Slice Intelligence. The 18-karat gold Apple Watch models, seen on the wrists of celebrities such as Beyonce, Drake, Kanye West, Katy Perry and Pharrell Williams, cost between $10,000 and $17,000 in the U.S. 

$25 million. 

Why I Love To Blog -- Reason #325,684 -- July 13, 2015

On July 7, 2015, I posted:

In case folks forget, Greece is still part of the EU. Free, unfettered travel is allowed between and among all EU countries. We won't see streams of Greeks storming the barriers trying to flee to Germany, they will simply drive up the road. It is all agreed that regardless of how this plays out, Greece will not exit the EU in less than two years; it will take that long for the process to play out. A lot can happen in two years.

It won't be just the Greeks streaming to Germany. The AP is reporting:

The number of people applying for asylum in Germany more than doubled to almost 180,000 in the first half of the year, officials said Monday, acknowledging that police are struggling to keep tabs on everyone who enters the country.

Official figures showed that 179,037 asylum applications were filed in the first six months of 2015, the vast majority of them first-time requests. Last year, 77,109 applications were filed during the January-June period.

Many Syrians, Iraqis and Afghans who arrive on Europe's shores by boat try to continue their journey to Germany or Scandinavia. In the past, Germany has criticized countries such as Italy for failing to properly register refugees as EU rules require.

But German weekly Der Spiegel reported at the weekend that border police in parts of Bavaria had given up trying to take the fingerprints of all refugees. Quoting a senior police union official, it reported that police in Passau - on the border with Austria - are letting between 250 and 300 people enter the country each day without proper registration. 

Border police chief Dieter Romann told reporters in Berlin that his officers aren't always able to fingerprint all new arrivals within the 48-hour maximum time limit allowed by law. The migrants are told to report to the next reception center, where they can be processed, but there is no way of verifying that they do.

Monday, July 13, 2015

EIA "energy cookie":

The front-month futures price for crude oil benchmark West Texas Intermediate (WTI) declined 7.7% on Monday, July 6, the largest single-day decline in percentage terms since February 4...With the assumption that daily oil prices are independent (i.e., one day's movements do not influence another day's movements) and are normally distributed, a decline of Monday's magnitude would, in theory, have a 0.05% chance of occurring, or about one in 2,000. Historically, since January 2, 2006, 15 trading days (out of a total of 2,394) recorded a larger price decline. --- EIA

Let's see this: this is July 13, 2015; that was July 6, 2015. Better late than never, I guess.

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Active rigs:

	7/13/2015	07/13/2014	07/13/2013	07/13/2012	07/13/2011
Active Rigs	72	190	186	215	177

That ends that. Some time ago someone suggested that "72" was the "new" low. If it was, I missed it. Regardless, we now have it. This is the new post-boom low in active rigs in North Dakota as WTI oil flirts with $50.

I track active rigs here. 

RBN Energy: Improved Alaska North Slope Crude Prospects in a Lower Price Environment. (archived)

In 2015 Alaskan crude has enjoyed something of a change in fortunes compared to the past few years – when shale production seemed to threaten its future. Production was up by over 50 Mb/d in the first 4 months of 2015 (according to the Energy Information Administration – EIA). The market share of Alaskan crude in West Coast refineries also crept up by 1% this year compared to 2014 at a time when crude throughput at those refineries increased. Today we discuss the changes and whether they are likely to continue.

We’ve posted a number of blogs on the challenging prospects for Alaskan crude oil in the face of the shale revolution. Back in January 2013 we described how the State’s crude output has declined steadily from a peak of 2 MMb/d in 1987 to 512 Mb/d on average in 2012.

By last year (2014) production was down to 497 Mb/d. The vast majority of that crude is a type known as Alaskan North Slope (ANS) from the Prudhoe Bay field on the northern coast of Alaska beside the Beaufort Sea. ANS production is shipped 800 miles south on the Trans Alaska Pipeline system (TAPS) from Prudhoe to the ice free Port of Valdez in Southern Alaska. From Valdez the crude is mostly shipped to West Coast refineries using U.S. flagged tankers from the Jones Act fleet.

Although production has been declining there is no lack of Alaskan oil in the ground. A 2011 EIA estimate of Alaska reserves indicated up to 3.5 Billion Bbl of proven conventional oil reserves in producing fields onshore and 36 Billion Bbl of unproven reserves in federal lands offshore and onshore.

As we explained in June 2013 the State has implemented a new tax regime to encourage new development. The State also plans to invest in liquefied natural gas (LNG) export infrastructure to encourage natural gas production.

But the main challenge for Alaskan producers is that the risks and costs of developing and producing crude in sub-zero northern Alaska are higher than those for unconventional drillers in the Lower 48 – where shale oil has begun to threaten ANS market share at West Coast refineries.

ANS (a medium sour crude with an API gravity of 31.5 and 0.96 % sulfur) continues to be the West Coast’s benchmark crude but surging light sweet crude supplies from shale – particularly the Bakken in North Dakota have begun to compete with ANS over the past three years – pushing prices down. [Comment: wait until Californians decide they don't like sulfur in their oil.]

Narrowing price differentials between ANS and the U.S. Midwest benchmark West Texas Intermediate (WTI) led to rare exports of ANS last fall as producers looked to Asian buyers for better prices. Last year’s crude price crash has added insult to injury for Alaska producers and the State Government that relies heavily on oil royalties for revenue. This time we look at how lower crude prices appear to have actually improved ANS prospects at West Coast refineries.

There is much more at the link. The article is as much about ANS as the Bakken. It's a must-read for those interested in the Bakken. Conclusion:

However the picture is not all rosy for Alaska crudes on the West Coast. In the longer term, it has to be in the interest of refiners to increase their access to domestic barrels.

Even as shale production levels off in response to lower prices and a cutback in drilling, the West Coast remains an attractive market for Bakken producers because of its geographic proximity and the fact that they face less competition there than on the Gulf Coast that is close to massive Texas production. In other words, Bakken producers are not about to give way to ANS in the competition for West Coast market share and that competition is likely to keep the lid on ANS prices.

The same goes for Canada where production continues to increase and we have to assume that routes to West Coast markets will eventually be developed. And in the meantime – even as Alaska producers enjoy a slight uptick in their fortunes – they have to reflect on the fact that much of that uptick has come at the cost of a 50% drop in prices.

Winners And Losers; Time For FTC To Investigate Apple -- Apple Has Monopoly On Smartphone Profits -- July 13, 2015

This is not an investment site. Do not make any investment or financial decisions based on what you read here. Do not make any car-buying decisions or smart-phone decisions based on what you read here.

The Los Angeles Times is reporting: Toyota's next Prius is unlikely to boost sagging hybrid market

The next Toyota Prius will arrive just as hybrids seem to be going out of fashion.
Set to debut this fall, the 2016 version of the groundbreaking green car leads a segment beset by falling gas prices and rising efficiency of conventional gasoline cars.

The fourth-generation Prius, analysts say, will have to be an extraordinary car to match its previous successes, and it's unlikely to breathe new life into the flagging hybrid segment. 

In many ways, the Prius is the hybrid segment. Last year, Toyota sold 207,635 of the three combined Prius models, accounting for 42% of the hybrid market.

It's by far the bestselling hybrid in U.S. history, having sold more than 1.8 million units since its debut as a 2001 model. It has, in recent years, often been the bestselling car of any kind in California. [I believe 2014 was the first year in many years that the Prius dropped to #2 in California; Honda Civic went to #1.]

But Prius sales this year are off 15.8% from 2014, according industry research firm Autodata Corp., a figure that mirrors falling sales for all hybrids.

It's #1 competitor: the Honda Civic.

The Prius: $25,000 to $31,000.
The Honda Civic: "a good bit less" than the Prius according to The Los Angeles Times

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Apple iPhones: 92% Of All Profits On Just 20% Of Sales

Time For The FTC To Investigate 

Monopoly On Smartphone Profits

Yahoo!Finance is reporting: Apple rules smartphone biz.

Apple is dominating the smartphone market. Canaccord Genuity estimated Apple's iPhone took 92% of all profits in the smartphone business on just 20% of sales, in the first quarter. 

Not only that, but teenagers are foregoing new clothes to pay for their iPhones. Clothing stores across the US have announced closures and downsizing.

This was before Microsoft announced it's getting out of the smartphone business (or at least taking another look at its smartphone business).

Would it help if Samsung starting giving their phones away?

Initial Production Numbers For Wells Coming Off Confidential List Today, Over The Weekend Have Been Posted -- July 13, 2015

Link here.

Many of the wells caught my attention. This is one example:

• 28962, 1,070, Hess, LK-Erickson-147-97-1102H-4, Little Knife, 10-foot thick window; gas in the middle Bakken averaged 3,100 units with a 10 - 12' flare, t5/15; cum 15K 5/15; after ten days, 15K

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	5-2015	10	14895	14780	6171	20713	19613	1100

Almost 15,000 bbls in the first ten days. Can one assume 45,000 bbls in 30 days if production was allowed to max out?

Graphic of current activity in that area:

 

Saudis Set New Production Record; Saudi Increases Production 1% Month-Over-Month Vs North Dakota 3% Increase Month-Over-Month -- July 13, 2015

Updates

July 14, 2015: increase in Saudi production will NOT off set record domestic demand. Platts is reporting:

Saudi Arabia's refinery intake increased by 235,000 b/d or 12% year on year in the second quarter, and total consumption is expected to reach 3 million b/d in Q3.

Refinery intake increased as the new 400,000 b/d Yasref refinery ramped up to full capacity.

The refinery, a joint venture between Saudi Aramco and Sinopec, will contribute to total Saudi crude consumption reaching 3 million b/d in Q3, as demand peaks due to the summer months. 

Original Post

 

This is what the Saudis have achieved with their five-year, $35 billion program to increase production:

The world’s biggest oil exporter pumped 10.564 million barrels a day in June, exceeding a previous record set in 1980, according to data the kingdom submitted to the Organization of Petroleum Exporting Countries.

10.564 million bbls.

From my post of June 30, 2015:

Saudi Arabia, OPEC’s top producer, increased output by 150,000 barrels a day to 10.45 million in June, the most in monthly Bloomberg data going back to 1989. [This increase comes after a $35 billion, 5-year program to increase production. So, after announcing this $35 billion program, Saudi sets a record by increasing output by 150,000 bopd, from 10.30 million = a whopping 1.46% increase. Disclaimer holds.]

So, 10.564 - 10.45 = 0.114
0.114 / 10.45 = 0.0109 = 1% increase month-over-month.

In the most recent data available from the NDIC, North Dakota increased its month-over-month production by almost 3% despite a huge decrease in active rig count and choking back in response to low oil prices and to comply with self-imposed flaring rules and mandated conditioning rules.

Back to Saudi Arabia. We are getting close to the magic 11 million bopd number.

Citigroup Inc. predicts the kingdom will push toward its maximum daily capacity, which the bank estimates at about 11 million barrels, in the second half of 2015.

Also from that post:

In my simple mind, this is my world view:

• numbers coming out of Saudi Arabia can never be trusted;
• Saudi's production fluctuates around 9.5 million barrels of oil;
• at one time, pundits said Saudi's maximum production was 12 million bbls (now it's 11 million bbls);
• this post and the graph at this post tell the story;
• a jump from 10.3 million to 11 million (assuming it's even "real") is hardly earth-shattering especially as off-shore projects are cancelled / delayed;
• Saudi needs to increase production by a million bbls just to meet its own domestic demand -- which is increasing -- and to meet the requirements of the new refineries Saudi is building in-country; 
• Saudi has huge new self-defense expenses and a shooting war to fund; but the biggie is ...
• ... Saudi has just canceled its solar projects for desalination and will require more oil for the energy required for desalination

Goldman Sachs has been talking down oil for months, I think at one time anticipating $40 oil by this time, and hinting at possibilities of $20 oil.

But the graphic that sticks in my mind, in light of Saudi's $35 billion, 5-year project to boost oil production is at this June 5, 2015, link, also linked above. Maybe I'm misreading the graph, but the EIA has Saudi pumping around 12.5 million bopd in the past, and production remains flat, regardless of what the "real" number is.

And then this. This is so cool. I posted that when the numbers come out, analysts will focus on "increased production numbers" but will not emphasize why Saudi needs to increase production. Bloomberg mentions this early in the story:

“Saudi Arabia is still pursuing a market-share strategy,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “They need more oil domestically for air conditioning in the summer, so they could choose to either produce more or reduce exports. Clearly they choose to produce more.”

I've always gotten a kick out of that. Folks go ballistic over the flaring in the Bakken, and yet Saudi uses its most precious commodity -- oil -- to run air conditioners. Wow.

From the Bloomberg article:

Global oil demand will accelerate next year to 1.34 million barrels a day compared with 1.28 million in 2015, led by rising consumption in emerging economies, according to the report. Supply growth outside OPEC will slow to 300,000 barrels a day in 2016 from 860,000 a day this year with the gain concentrated in the U.S.

Setting us up for $200 oil.

By the way, Saudi's strategy to give oil away at $50/bbl:

The group sees “a more balanced market” in 2016 as demand for its crude strengths and supply elsewhere falters.

OPEC said it expects expanding oil consumption to outpace diminished output growth from rival producers such as U.S. shale drillers, whittling away a supply glut. The strategy is taking time to have an impact, with crude prices remaining 46 percent below year-ago levels and annual U.S. production forecast to reach a 45-year high.

Spin.

Let's Make A Deal; Actually, Let's Make A Lot Of Deals; After Getting Stiffed, The IMF Will Be Asked To Contribute To The Greek Bailout -- July 13, 205

More on the Black Hills Corp deal. See below.

Marathon Petroleum to acquire MarkWest Energy Partners: $16 billion.

Greek deal. The Greeks walked away from $8.1 billion a couple of weeks ago. Greece held out for $100 billion.

The big story in southern California this morning is the skyrocketing price of gasoline. It's gone up almost a dollar / gallon in the minds of the folks sitting around the tables here at Starbucks. Actually, I don't think it's gone up that much. It's only gone up about 30 cents / day each of the past three days.

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The Black Hills Deal

I posted that yesterday.

My concluding paragraph: It costs about $500,000 to lay a mile of pipeline across easy prairie, upwards of $2 million/mile under water. And that's assuming Tom Steyer will let you build a new pipeline.

And that's what the deal was all about.  It's easier to buy existing pipeline than to fight the environmentalists.

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The Marathon Petroleum Deal

From the link above:

A Findlay, Ohio-based energy asset firm owned by Marathon Petroleum Corp. reached a deal to acquire Denver-based midstream natural gas firm MarkWest Energy Partners in a deal valued at about $15.8 billion, officials said Monday.

MarkWest will become a wholly owned subsidiary of Marathon's MPLX LP following the close of the deal, which is expected to take place in the fourth quarter of 2015.

MPLX's assets include ownership of crude oil pipelines in the Midwest and Gulf Coast regions and a butane storage cavern in West Virginia. MarkWest is the No. 2 player by market share in processing of natural gas from the Marcellus Shale and Utica Shale.

The combined company will have a total market capitalization of $21 billion, purportedly making it the fourth-largest limited master partnership.

MPLX is making a one-time $20 billion payment to acquire MarkWest and will assume $4.2 billion in debt.

Marathon Petroleum is kicking in $675 million in cash to support the acquisition.
The deal reflects a 32% premium of Friday's closing price of MarkWest shares.

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Greek Deal

The i's are not dotted and the t's are not crossed ... oh, and a few other things:

• Finland has to agree
• Tsipras has to step down
• Greek parliament must capitulate, lose face, feign remorse
• Greek people have to hold back on celebrations until after the deal is closed

Okay, now the best part.

You all recall that Greek told the IMF to suck eggs; Greek said they wanted the New York bankers out of Europe. The Greeks telegraphed the world and the IMF they were not going to pay back the $2 billion loan they owed the IMF. The Greeks kept their word; they defaulted and did not pay the IMF. After that, we heard nothing more from the IMF; they were nowhere to be found in the newspaper articles or internet articles that followed.

But then this, as part of the bailout deal:

The loan will come mainly from the European Stability Mechanism (ESM) - the eurozone bailout fund. But the International Monetary Fund will also be asked to make a contribution from March 2016. 

LOL. I can't make this up. After being stiffed, the IMF is going to be asked to contribute to the $100 billion bailout plan. I can't wait for this story to develop.

If the deal goes through, this was the why: Tsipras used the old "divide and conquer" strategy. France wanted to hold the EU together at all costs. Remember, Hollande and Tsipras are cut from the same swath of liberal -- very, very liberal -- cloth. Hollande was going to do anything he could to save Tsipras, the Greeks, the EU. (By the say, if the deal goes through, this puts the "socialist" stamp on EU in almost indelible red ink.)

On the other hand, the Germans had had enough of the Greek tragedy and were ready to walk.

Tsipras knew he simply had to scare the heck out of the EU with a huge French-German rift. Even Angela Merkel knew that. If Germany and France couldn't come together on an agreement, that was effectively the end of the EU. Merkel blinked. Hollande stood his ground. Tsipras smiled. The iliad, the odyssey, the deal.

Later, 11:29 a.m. Pacific time: same story but from MyWay:

The deal includes commitments from Tsipras to push a drastic austerity program including pension, market and privatization reforms through parliament as soon as possible.

In return, the 18 other eurozone leaders committed to start talks on a new bailout program.

"The Greeks have to show they're credible, show that they mean it," said Jeroen Dijsselbloem, president of the eurogroup of eurozone finance ministers and a longtime critic of the Tsipras government.

A Cypriot official said the creditors would look into bridge financing for Greece later Monday, suggesting that the deal could pave the way for the European Central Bank to extend emergency liquidity assistance to Greek banks.

Without it, they risk running out of cash this week. The official spoke only on condition of anonymity because he was not authorized to discuss the deal publicly.

"... as soon as possible."

"... show that they mean it."

"... look into bridge financing for Greece later Monday (today) ... "

Wow, talk about some nebulous phrases, " ... as soon as possible..." and "... show that they mean it ..."

And that bridge financing. Can you imagine how the Germans feel sending cash -- real cash -- to Greek banks to hand out to their citizens? Especially after the Greeks resoundingly voted to thumb their noses at the IMF, EU, EC, and Germany.

At the end of the day, this is about two socialists: Hollande and Tsipras.

Update, July 14, 2015, 12:25 a.m. Pacific Time: remember the $2 billion Greece still owes the IMF. I think a lot of folks forgot because the mainstream press hasn't said anything about it. The IMF hasn't forgotten. The Financial Times is reporting:

The delay in reaching a deal tested to the limit the European Central Bank’s capacity to keep providing Greek banks with emergency finance. But, following the announcement of the agreement, the ECB said it would maintain Greek banks’ €89bn lifeline.

The IMF, however, said late on Monday that Greece had missed a second payment, meaning it now needed to clear €2bn in arrears before the institution could lend to Athens again.

Reading the linked Financial Times story suggests this deal is not yet a "done deal."

The prospect of a collapse of Mr Tsipras’s government was weighing on decision makers in Brussels, where finance ministers were wrestling with how to rush €7bn in bridge financing to Athens so that it does not default on a bond owed to the European Central Bank on Monday.

One EU official said that with Mr Tsipras’s status so unclear, ministers were likely to wait to see if he survives Wednesday’s vote before finalising any bridge financing deal. And some finance ministers, who gathered again in Brussels on Monday night to consider their options, gave warning that Mr Tsipras could face even more conditions to get the desperately needed cash.

“I foresee very difficult negotiations on bridge financing,” said Alex Stubb, the Finnish finance minister. “I certainly have no mandate to give unconditional money.”

I still have trouble seeing German citizens willing to send $100 billion (or thereabouts) in real cash to the banks in Greece. They know that a lot of the cash will be used to pay the salaries of the bank directors and will never reach the pensioners or other account holders. The Germans could very well be asking why are we paying the salaries of all those bankers and bank employees, and then with the rest, handing our cash over to Greek pensioners?

Update, July 14, 2015: as part of "the deal," Greece promises to do a better job collecting taxes. LOL. This is what is going to happen: to show good faith, the Greek government will budget a gazillion dollars for a new "tax collection and enforcement" branch putting a gazillion more civilians on the state payroll, with a great pension. The new tax branch won't be any better than the present system. What amazes me is that the Germans, and the Finns are willing to participate in this charade.

The Dominoes Are Beginning To Fall In The Mideast -- July 13, 2015

If Damascus falls, the dominoes begin to fall -- The Fiscal Times. The most interesting story line: how this was kept off the front page of America's newspapers for the past six months. I posted it some time ago that ISIS would eventually take Syria but it was just a one-off. No follow-up. And now The Fiscal Times has a huge article.

Hindsight is 20/20 but it appears that the president's statement that the US government had no strategy for dealing with ISIS was very, very disingenuous. It looks like the US government may not have had a "published" or "stated" strategy, but there was certainly a strategy in the President's mind.

From the linked article:

The Assad regime now controls no more than 35 percent of the country, leaving the rest to ISIS, the Kurds and the other rebel groups like al-Nusra front. Allepo, Syria's largest city is almost surrounded completely by the rebels. The Syrian Kurds have increased the territories they control in the north to include most of the border areas with Turkey.

Assad is also the de facto mayor of Damascus and the coastal areas. If this trend continues, which is likely to happen, the Syrian regime will probably fall by the end of this year. The two competing forces to occupy Damascus are ISIS and al-Nusra front. 

If either of these two terrorist organizations capture Damascus, the world will witness an unprecedented chain reaction. It would be the first time that al-Qaeda or ISIS controlled a national capital. “ISIS's strategic target is to control one of the historical capitals of the Islamic caliphates: Damascus, Baghdad or Samarra. These cities are very symbolic for its followers,” says Hisham al-Hashimi, an expert on ISIS and the author of the book, The World of ISIS.  [Samarra is 80 miles north of Baghdad.]

After the fall of the Assad regime, the Syrian people's different ethnic and sectarian components would cause the society to fray further.

“Imagine that you wake up one day to find out that the ruling party in Damascus is no longer the Arab Baath Socialist Party; it is al-Nusra front.... Imagine you wake up to hear that another caliph has appeared somewhere else.... I say to those who complain about what is going on in our region: you haven't seen anything yet. Civil wars don't end suddenly, unless there is a victory that left many massacred,” says Harith Hasan, a fellow at the Radcliffe Institute for Advanced Studies at Harvard University who is researching ethnic violence and identity in the Middle East. 

I wonder how long it would take the Obama administration to recognize the new ISIS government in Syria. One hour, one day, month?

War On Coal -- July 13, 2015

Updates

July 14, 2015: WSJ update. Not a pretty picture. It looks like the EPA bureaucracy has simply ignored four million comments and pressed ahead.

Original Post

 

It looks like President Obama can finally put this on his resume: he won his war on coal.

Bloomberg says coal is dead.

In the energy arena today, there are three huge dots to connect, actually four but I won't expand on the fourth one today:

• coal is dead -- Bloomberg
• Marathon buys MarkWest
• Black Hills Corp buys Source Gas
• Not enough surface area in the world for renewables to supply India's energy needs

In the big scheme of things, Warren Buffett has done very, very well with his purchase of Burlington Northern (some years ago, now) and will continue to do well with that deal. But one wonders if there might not be some anxiety in Omaha right now with regard to the railroad. It doesn't take a rocket scientist to see that natural gas is where the money is now, where the deals are being made.

I don't get the print edition of BloombergBusinessweek any more but I assume the linked article above was a huge article in this week's issue, maybe even the cover story. The lede:

Coal is having a hard time lately. U.S. power plants are switching to natural gas, environmental restrictions are kicking in, and the industry is being derided as the world's No. 1 climate criminal. Prices have crashed, sure, but for a real sense of coal's diminishing prospects, check out what's happening in the bond market.

Bonds are where coal companies turn to raise money for such things as new mines and environmental cleanups. But investors are increasingly reluctant to lend to them. Coal bond prices tumbled 17 percent in the second quarter, according to an analysis by Bloomberg Intelligence. It's the fourth consecutive quarter of price declines and the worst performance of any industry group by a long shot.

And then four data points:

• the US grid is changing: 17% of US coal-fired power generation will disappear over the new few years; the "small victory" over EPA's new mercury restrictions are seen as a "temporary reprieve"; there is a great graphic at the link with coal plants that will be closed; coal plants that will shift to natural gas; and "undecided." The largest group / largest plants are in the "undecided" column
• even China is approaching peak coal; Bloomberg thinks wind will replace coal in China (LOL)
• financial distress: the declining prices of bonds is a huge problem for US coal companies
• renewables are ...: according to BloombergBusiness, the coal industry is in  terminal decline; money and interest is with renewable energy; between now and 2040, two-thirds of the money spent on adding new electricity capacity worldwide will be spent on renewables; in the US: 32%

A lot can happen between now and 2040. 

Monday, July 13, 2015

Wow, talk about a busy, busy, busy Monday.

Deals, deals, deals.

The Greeks held out long enough to get a $100 billion bailout.

But first I need to correct a few spelling / typographical errors in earlier posts, but I will be back with new posts in a few minutes.

It's going to be a huge day for blogging.