The Road To Minnesota Is Not Through North Dakota; Active Rigs In North Dakota Up To 37; The Era Of $100-Oil Is Over -- Oilprice -- Actually, The Era Of $50-Oil Is Over -- November 4, 2016

First things first: now that I've had 48 hours to think about it, my thoughts on the new MacBook Pro. 

Jobs: first stories coming out on the jobs report today are rosy, but by the end of the day we will know how bad the report really is. Again, the numbers underwhelm. The only reason the unemployment rate ticked down was because a larger number of folks dropped out of the labor force. The numbers are bad, not really, really bad, but bad. We'll post them later. I'm getting ready to go biking -- before the rain hits.

First, exploding tablets. Now exploding washing machines. US announces recall of Samsung washing machines. I cannot make this stuff up. Once the s*** starts hitting the fan, I assume the EU will recall Samsung air conditioners. LOL.

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 The Road to Minnesota

See slide 11 of the presentation at this link: http://files.shareholder.com/downloads/MPL/731067126x0x908163/A1A6E7F5-51BE-453C-889E-39580DBFEDC1/ALE_WEB_version_Sept.2016.pdf. These corporate presentations often disappear over time. I have saved a copy for the archives.

Minnesota utility rates: before we get started on this one, just remember two things --

• the US has a glut of natural gas; and,
• natural gas is the least expensive it has ever been

Now back to the story. Here are the data points:

• Minnesota Power asks for another rate increase
• Minnesota Power: residential customers are paying 35% less than the true cost of getting electricity into their homes
• the utility is asking for an immediate 8% increase (as of January 1, 2017)
• the utility will go back for another 10% increase through the lengthy PUC review rate case process
• 8% now, 10% later (neither will happen), and Minnesota Power will still be way below that 35% figure

What happened? If you read the story closely and have been paying attention: two reasons:

• wind energy mandated by voters
• grid enhancement to protect the grid due to the variability, dependability, and inability of wind to respond when needed; very, very complex grid enhancements are needed to protect the grid from wind power

Minnesota Power is being a bit disingenuous in this discussion: they say they went from a 95% coal-generated system as recently as 2005 to a now 30% renewable system (i.e. wind) -- they can't even force themselves to say the word "wind" -- it is such a debacle. The linked article does not mention the word "natural" or "gas."

Get out the violins.

Later, 11:29 a.m. Central Time: a reader corrects me regarding "renewable power" and provides additional background:

Renewable energy from Minnesota Power is mainly hydroelectricity via a contract from the Winnipeg (Canada) area.

Back about two years ago they signed a long term contract to take hydroelectricity as a back-up when the wind quits. In order to do this they are building/have built huge power (electricity) transmission lines from Ontario (province). That is how they derive the 30%  renewable number. Minnesota has a 25% renewable electricity generation law in place.

As we speak, a second coal-fired plant that serves the Twin Cities is being shut down. 

Whatever their utility bills in Minnesota are in 2016, one can expect they will be higher in 2017. And 2018. And 2019.

Later, 12:39 p.m. Central Time: this is what the global warming scam perpetrated by Soros, Obama, and Hillary have brought us to: buying hydroelectricity from Canada to back-up expensive wind instead of home-grown natural gas from North Dakota, and elsewhere.

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Active rigs:

	11/4/2016	11/04/2015	11/04/2014	11/04/2013	11/04/2012
Active Rigs	37	69	190	180	188

RBN Energy: there's a bit of irony here. RBN Energy titles this segment "last mile of the way." The DAPL will be keystoned because they were unable to complete the last 1,000 feet (about a quarter mile). Meanwhile, Texas is laying more pipeline than that in a day. And even the ND regulators are losing patience with the DAPL operators. A new route will be necessary -- which means that, with another environmental impact statement -- this project is dead. 

But I digress. Back to Texas. RBN Energy has another update on moving natural gas to LNG export projects on the Texas coast.

A total of 13 U.S. liquefaction trains with a combined capacity of about 58 MTPA (~8 Bcf/d) are either in early stages of operation along the Gulf Coast or under construction and scheduled to be online by the end of 2019. Of that, about 3.2 Bcf/d is being developed along the Texas Gulf Coast. Beyond that, a “second wave” of liquefaction projects is lining up, with as much as an additional 11 Bcf/d of capacity proposed for Texas by the early 2020s. While many of these second-wave projects may not get built, those that do will require the construction or rejigging of hundreds of miles of pipelines, particularly along that Gulf Coast corridor. Several of the first and second wave liquefaction projects have proposed to build laterals that connect to and branch out from nearby long-haul pipelines, creating new Gulf Coast-bound delivery points for Eagle Ford shale gas as well for supply that will eventually move south from supply basins as far north as the Marcellus and Utica shales. Today, we take a closer look at these liquefaction-related pipeline projects and how they will connect to and impact the existing pipeline network.

Much as the rise of natural gas supply in the U.S. Northeast—traditionally a demand region with minimal supply—has required a massive retooling of the pipeline network, the rise of liquefaction demand on the Gulf Coast (which only a few years ago was planning for LNG imports and regasification) will require a similar retooling. This has already happened with Cheniere Energy’s Sabine Pass LNG’s terminal in Cameron Parish, LA. In order for Cheniere to supply the liquefaction trains, it had to modify and expand its Creole Trail pipeline, which was originally intended to move regasified LNG inland from the terminal, to be bi-directional. Sabine Pass also plans on sourcing a good chunk of its gas from the Marcellus/Utica, piggybacking on the modifications/expansions being made to several big pipelines to move gas south to the Gulf Coast. The same will occur in Texas as additional liquefaction facilities come online there, with the potential to substantially disrupt traditional flow patterns and pricing relationships.

RBN Energy: the list of potential new LNG projects along the Texas-Louisiana coast.

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The Long And The Short Of It

Update on WTI pricing: from what I can see in this long, long Oilprice article, there is nothing new for regular readers, but for newbies, it may be useful. 

The key developments in oil prices from 2007 to September 2016 are highlighted in the following bullet points, in bold red I've added my observation:

• 2007-2008 – EOG Bakken Parshall discovery well in 2007 -- Over a 20-month period, oil prices (average monthly Brent) moved up from $53.68/b in January 2007 to 113.02/b in August 2008 (July averaged $133.16, though oil prices went as high as $147/b). Only 6 of these 20 months saw oil prices above $100/b, averaging $88.59/b over the period.
• 2008-2009 – CLR jumps into the Bakken big time -- Over a 7-month period (Sept 2008-March 2009), oil prices moved down from $98.13/b in September 2008 to $40.35/b in December 2008, averaging $56.58/b.
• 2009-2014 – the Bakken hits its stride -- Over a 64-month period (April 2009-July 2014), oil prices remained above $100/b for 42 months, averaging 97.89/b.
• 2014-2016 – Saudi Arabia's trillion-dollar mistake -- Over this 26-months period (Aug 2014-Sept 2016), oil prices moved down from $106.64/b in July 2014 to $46.69/b in September 2016 (with a low of $30.75 in January 2014), so far averaging $54.33/b. However, since August 2015, average monthly oil prices have remained below $50/b.

As for the future:

The oil industry should realize sooner or later that the era of $100/b or over is technically over.

The era of $100-oil is over. LOL. The era of $50-oil is over. WTI is trading down almost another dollar today, and is trading at about $43.50.

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In My Celtic Phase

Through a number of books that I have just completed, I find myself back in my "Celtic" phase.

We have an incredibly good community library here in Southlake, TX. One of the nice things about a very, very good community library is that with a very, very limited budget, their book selections have to be first-rate, and that has been my experience going through the stacks.

Today, I noted that they have an earlier edition of the a world history book that I just bought for our oldest granddaughter who wanted a book on world history: The History of the World, Sixth Edition, J. M. Roberts & Odd Arne Westad, c. 2013, hardcover. So, that was cool. It was the only "real" such world history book on the shelf -- so it confirmed that it was a good choice.

Several books away was an interesting looking one, Egypt, Greece, and Rome: Civilizations of the Ancient Mediterranean, by Charles Freeman, c. 1996: DDS: 909.098 FRE.

I will read selected portions of Freeman's book. I have just finished a chapter on Caesar and his experience with the Gauls (Celts), and so that's where I will start: the Celts and Parthians.