Update On One Of The Most Important Pipelines Out Of The Bakken -- June 23, 2016

Democratic sit-in at the House. I bet it's over by the end of the day; if not today, Friday before 3:00 p.m. so reps can catch flights home for the long 4th of July break. The GOP has already left town. 

Active rigs:

	6/23/2016	06/23/2015	06/23/2014	06/23/2013	06/23/2012
Active Rigs	29	77	190	189	210

RBN Energy: update on Tallgrass Energy Partners' Pony Express Pipeline.

Tallgrass Energy Partners’ Pony Express Pipeline provides capacity to move 230 Mb/d of Bakken crude oil received at Guernsey, WY, all the way to the mega-hub at Cushing, OK, making it one of the most important pipeline corridors out of the Williston Basin.

Possibly because of its moniker ‘Express’, it is often thought of as a bullet line, hauling barrels 760 miles in a straight shot across Wyoming, Colorado, Nebraska, Kansas and into Oklahoma.

But there is much more to Pony, including a major outlet for Niobrara crude (the 90,000 bopd Northeast Colorado Lateral) and an expanding capability to deliver oil to refineries and other facilities on the way to Cushing. In Part 2 of our blog series covering pipelines out of the Bakken/Rockies region, we examine what the changes in crude production and flow patterns have meant to Pony Express and how this pipeline can be expected to respond to changes in regional crude oil supply and demand.

First, a quick recap. For years prior to the Shale Revolution, long-existing pipeline capacity out of the Bakken could handle the modest volumes of conventional oil being produced there. By 2011 though, Bakken tight-oil production had begun a steep, rapid rise, quickly outstripping available pipeline capacity (much of which had to be shared with crude heading south/southeast from western Canada).

As a result, pipeline congestion and significant price discounting festered while Bakken producers and midstream companies scrambled to develop alternative routes to market. The solution was the development of rail loading terminals—they could be built quickly and at relatively modest costs, and they could use existing rail lines. Crude-by-rail (CBR) also allows for destination flexibility; in other words, if a producer could achieve higher netbacks (the crude sale price minus transportation costs from the wellhead) by railing its crude to the East Coast or the West Coast (neither of which is connected to crude producing regions via pipeline) instead of the Midwest or the Gulf Coast then, heck, rail it to the East or West Coast.

In all, 21 rail terminals were built in the Bakken, and their combined capacity is a fairly astonishing 1.5 MMb/d (compared to current Bakken production of just over 1 MMb/d—down from its December 2014 peak of 1.3 MMb/d). Moving crude by rail isn’t cheap, though, and as the Brent-West Texas Intermediate (WTI) differentials that drove the CBR boom went from fat to skinny, what the Bakken needed to remain competitive was new pipeline capacity that could move crude to market much more cost-effectively. Slowly but surely, new pipeline capacity was added, to the point that some are wondering whether new additions being planned are really needed.  But that’s another story.  Today we are focused on Pony Express, which is also called PXP.  The pipeline has quite a history. See that history at the linked site.

See that history as the linked site. A very, very interesting read.

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Finally, It Took Awhile

The Wall Street Journal finally reports on the story of Obama's fracking regulation being struck down by his own appointed judge. 

U.S. District Judge Scott Skavdahl issued a ruling late Tuesday invalidating the regulation, saying the Interior Department lacked the authority to issue it because Congress hadn’t given the agency such authority. The same judge last year issued a preliminary injunction blocking the rule until he made a final decision.

Mr. Skavdahl, whom President Barack Obama nominated in 2011, said the issue before his court wasn't whether fracking “is good or bad for the environment or the citizens of the United States,” but rather whether Congress had given the Interior Department the authority to regulate fracking.

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Turning Points?

The Wall Street Journal reports that energy stock sales reach a record. Share sales of QEP Resources and Birchcliff Energy show stock investors' faith that prices won't falter again.

Stock sales by two North American oil-and-gas producers vaulted the sums raised by such deals this year to record levels, while further cementing the southwestern Permian Basin as the U.S. oil patch’s hottest region.

Denver-based driller QEP Resources Inc. and Canada’s Birchcliff Energy Ltd. announced offerings late Tuesday that brought to more than $20 billion the total in North American oil-and-gas company share sales this year. That figure tops the record of roughly $19 billion raised in follow-on stock offerings—in which already-public companies sell new shares—for oil-and-gas producers for all of last year, according to a Wall Street Journal analysis of Dealogic data.

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More On The Panama Canal Expansion

The Wall Street Journal reports that South Carolina will get boost from the Panama Canal expansion. Inland Greenville-Spartanburg region, called the Upstate, gears up for business boom.

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Noise-Canceling Headphones

Last week, while spending the week in Plano/Frisco area in north Texas, I visited the Bose store at one of the many malls there (I now forget which mall). It turns out that Bose had introduced new noise-canceling headphones; they had just been put out on display.

A Wall Street Journal article today reports on the eight best wireless noise-canceling headphones.

The writer got to the point immediately: "I plan to buy the jet-neutralizing Bose headphones."

One upon a time I had a pair of Bose headphones; they were ruined by leaking alkaline batteries. I assume Bose would have provided a free replacement, but maybe not. I never asked. But I was not impressed, to say the least.

The new Bose headphones: they no longer require throwaway AA batteries; they run up to 20 hours on a single charge.

Bluetooth is important: the new iPhone is likely to do away with the headphone jack. 

The Bose QuietComfort 35 headphones cost $350.

The other seven:

• Runner-up: Sony h.ear on Wireless NC, $350; bulky body
• Parrot Zik 3, $350
• Bang & Olufsen Beoplay H8, $450
• Sennheiser Momentum Wireless, $400
• Samsung Level On Wireless Pro, $180
• JBL Everest Elite 700, $300
• Beats Studio Wireless, $250

Yup. The Apple set of headphones, Beats, was rated at the bottom.

After the first two (Bose and Sony), "the results quickly fell off a cliff." So, if the rest fell off the cliff and Beats was the worse of the lot ... Tim Cook may not be happy....

It's even worse. The writer says that on the light-rail train commute, "with the Beats, I had difficulty determining whether noise-canceling was turned on."

JBL? "My colleagues actually laughed when I walked in one day wearing the JBL headphones. Their large ear pads apparently made me look like a space alien. You won't win any style points for the pleated pads on the Bose, either, though at least they are slim and foldable."

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Beat The Heat

I saw this in the weekend edition of The Wall Street Journal. I see that the on-line edition is still posting it. Kind of fun: 50 clever ways to beat the heat.