Hours After Hitting Another Post-Boom Low, Active Rigs Drop Again -- To 45 -- January 29, 2016

Transcript, CVX 4Q15 earnings: SeekingAlpha. 

Active rigs:

	1/29/2016	01/29/2015	01/29/2014	01/29/2013	01/29/2012
Active Rigs	45	146	190	187	204

One can track the rig count over time at this post. 

RBN Energy: The “Great Divide” Between Crude and Natural Gas Is Shuttered By Low Prices.

West Texas Intermediate (WTI) CME NYMEX crude futures settled up 92 cents/Bbl yesterday (January 28, 2016) at $33.22/Bbl and NYMEX Henry Hub natural gas futures settled up slightly at $2.182/MMBtu.

The crude-to-gas ratio - meaning the crude price in $/Bbl divided by the gas price in $/MMBtu - was 15.22 X.

For most of this year so far the ratio has been less than 15X On January 20, 2016 it dipped to 12.5 X – its lowest point since March 2009. Over the 5 years between 2010 and 2014 the ratio averaged 27X - reaching a high of 54X in April 2012.

That lofty five year run for the crude-to-gas ratio was arguably responsible for much of the crude and natural gas liquids production boom since 2011 and a “Golden Age” of natural gas processing. Today we begin a two-part series discussing the ratio and the market implications if it stays low. -- first in a two-part series. Archived.

Fast and furious becomes slow and costly. OPEC (i.e., Saudi Arabia) says no meeting is scheduled. If at all interested, here's a long article over at Reuters/Rigzone.

Russia's oil industry has argued for years that it cannot cut output to support falling global prices for purely technical reasons; in reality it can - as long as it has the political will.

The days that oligarchs decided production levels according to their own private interests are long gone. Today the state directly controls roughly half of output, with most of the rest in the hands of business figures who are loyal to President Vladimir Putin, or at least will not oppose his wishes.

Moscow has long ruled out an output cut coordinated with other producers, even during the collapse in crude prices since the middle of 2014. However, Energy Minister Alexander Novak said on Thursday Saudi Arabia had proposed that all exporters should reduce their production by up to 5 percent, adding that Russia was ready to discuss the idea.

Russia's oil industry has a chequered record on carrying out requests to cut production.

On previous occasions when the Kremlin said it would consider cooperating with OPEC, exports kept flowing or even increased. In some cases oil companies shifted their cargoes from the pipeline system to the railways or tankers where there was less state oversight.

The only time Russia implemented a brief cut was in early 2002 when Moscow reacted to Brent crude prices that were below $20 per barrel - about $15/bbl below Thursday's level.

Since then the picture has changed. The Kremlin has consolidated its control over of Russian oil production since the demise of the giant Yukos energy company following the arrest of its head, Mikhail Khodorkovsky, in 2003.

An industry source noted this consolidation and the increased power of Putin, who oversees all major energy deals in Russia, saying that oil companies are now much more likely to fall into line with a production cut if needed.

Ping-pong. This is nice. The other day I mentioned/linked The Coyote Blog with regard to public transportation -- this was the link. Today, I see The Coyote Blog provided an update:  Phoenix Light Rail (Continued) Fail. At the linked blog, public transportation ridership has dropped for the past three years, and is now (2015) lower than what it was in 2013). It appears that light rail cannibalized bus services and over time both light rail and bus have failed. I bet the dots connect: light rail and bus routes do not connect physically where most needed.

By the way, a lot of Willistonite snowbirds fly into Phoenix every October. Many have made Phoenix their new home, or their second home. 

Politics -- January 29, 2016

Updates

Later, 11:34 a.m. Central Time: this is quite amazing. Shortly after writing the post below, I came across articles in two liberal papers who unanimously agree that Donald Trump "won" the debate last night -- for the same reason I suggested below. The stories: one in The Guarian and one on the front page of The Los Angeles Times. Pretty funny.


Yesterday "everybody" was opining that Trump made a huge mistake; now these same sources are all saying his move was brilliant. LOL.

The [London] Guardian: Trump just proved: it's possible to win a debate without showing up.
The clear winner of the final Republican debate, just four days before the first votes are cast in Iowa, was the Macavity candidate.

Just like the mystery cat, Donald Trump was nowhere near the scene of the crime at the Fox News debate. You could find him on rival news channels, but the damage was already done to poor Ted Cruz: the only candidate who could come close to beating him in Iowa.

Cruz, standing exposed in the middle of the stage, was subject to a barrage of fire from the moderators and his rival candidates. And Trump didn’t have to do any of the dirty work himself.

The Los Angeles Times, the very top story, the very top at the on-line edition -- above the Flint, MI, story; above the ISIS story; above the Russian airliner story; above everything --  Even in boycott, Donald Trump succeeds in winning Republican debate.

The unorthodox political strategy that has kept Donald Trump at the top of the Republican presidential field may have triumphed again with his much-disputed decision not to attend Thursday's televised debate in Iowa.

He was not there to be pierced by video clips employed to great effect against other candidates by the Fox News moderators. He was not there to attract insults from the rest of the pack, and in his absence few were offered. He was not there to step into any sort of quicksand that might have threatened his national lead and his strength in Iowa, where the first votes will be cast in caucuses Monday night.

Texas Sen. Ted Cruz and Florida Sen. Marco Rubio, vying for prominence below Trump, got the added stage time each has desired as they battle for the territory below the front-runner. But both appeared churlish at times and may have suffered from an extended fight over immigration, which included video clips in which each man contradicted his more recent statements which he then had to explain from the stage.

Trump's departure left Cruz as the preeminent candidate on stage, and the result was not what Cruz might have hoped. Fox anchor Megyn Kelly asked Cruz .... And then he was challenged by moderator Chris Wallace on whether his votes on military issues matched his incendiary rhetoric about fighting ISIS.

He replied by asserting -- incorrectly -- that the United States had carpet-bombed Iraq in the first Gulf War, a tactic he has said he would use against ISIS even though it is considered a war crime. (Although the Persian Gulf war bombing was incessant, it was targeted at military sites and sought to avoid civilian casualties.)

Rubio then jumped on Cruz, saying that the Texan hadn't taken action as a senator to rebuild the military.

"The only budget that Ted has ever voted for is a budget that Rand Paul sponsored that brags about cutting defense spending," Rubio said, knocking Cruz and the Kentucky senator standing nearby.

Pretty funny.

Original Post

 

It's interesting how things turn out.

I'm sure most folks have heard that Donald Trump skipped the last debate in Iowa before the voting begins Monday.

This is what happened: the two leading men at the bottom of the pack -- Jeb Bush and Chris Christie -- with each of them polling about 1% were able to steal votes/support from the others that showed up at the debate, namely, Cruz and Rubio. Since Cruz is Trump's only "serious" challenger in Iowa, and because Rubio is Trump's only "serious" challenger nationally, it worked out quite well for The Donald. He may do well to skip a few future debates.

With short notice, Trump filled his venue -- filled his venue? That's what was reported. My hunch is he "overfilled" his venue and had to turn back some wanting to get in.

Be that as it may, if one does not know who Trump is or who his rivals are by now, I doubt any more debates will make much difference. Again, the Dems did it right. Three debates during Sunday Night Football. The GOP has scheduled x+1 too many debates, where "x" stands for number of debates as of last night.

Minnesota Loves Spending Money On Solar Energy -- January 29, 2016

Updates

February 1, 2016: St Cloud Times is reporting:

Xcel Energy said Friday that its plan to reduce carbon emissions at least 60 percent by 2030, including closing two coal-fired Sherco units and replacing them with a new natural gas plant in Becker, will have a minimal impact on electric rates.
In documents filed with the Minnesota Public Utilities Commission, Xcel said its plan, if approved, would result in an annual rate increase of 2.4 percent, compared to 2 percent a year if it continued business as usual for the next 15 years.
The plan calls for replacing Sherco units 1 and 2 with a natural gas plant in Becker and more renewable energy like solar and wind.

It will be interesting to look at actual wind/solar results fifteen years from now. Something tells me this is not going to be as rosy as folks think. But, hey, it could have been worse -- the utilities could have gone all in with solar / wind.

January 30, 2016: from the Obama administration -  Average Price of Electricity to Ultimate Customers by End-Use Sector, by State, November 2015 and 2014 (cents per kilowatt-hour) -- selected states. All things being equal, electricity rates should be going down, no up.

North Dakota moved from #3 to #2, behind Louisana, but jumped ahead of both Washington State and Idaho; regular readers are aware of the hydroelectricity issue in these northwestern states.

According to a reader, the MDU residential rate in southwestern ND as of Decembe, 2015, billing,  not including the 35 cents per day basic service charge, is 8.79 cents per KWH.

State - residential	November - 2015	November - 2014
Massachusetts	18.32	17.61
New York	18.30	19.45
Illinois	13.19	12.62
North Dakota	9.31	8.65
South Dakota	10.97	10.42
Iowa - wind	11.42	10.34
Florida	11.69	12.11
Alabama	11.46	11.09
Texas	11.48	11.98
Montana	10.85	10.25
Arizona	11.29	11.08
California - hmmm	17.36	17.00
Washington - Hydro	9.37	8.61
Alaska	20.28	19.70
Hawaii	27.16	34.84
US Average	12.73	12.48

States in New England and the state of California "stand out."

Original Post 

Note: there will be typographical and factual errors in this post. It is not worth the time to fact-check or spell-check this article. Do not make any solar energy decisions based on anything you read here or anything you think you might have read  here.

Data points from this article:

• even regulators had questions about the high cost
• $30 million solar project
• 10-million-watt output
• 143,000 customers in Duluth area; Camp Ridley
• at $3 / installed watt, exceeds Xcel Energy's North Star Solar Project near North Branch, MN ($1.80/watt); $3 / watt = $3 million / MW

For newbies, to put this in perspective:

From an August 25, 2014, post, this is 30-second sound bite for "cost of renewable megawatt":

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

The utility, it appears, was forced into this project. The state of Minnesota mandates that 1.5% (no typo, 1.5%) of its electricity from the sun by 2020. This $30 million project will ... drum roll ... provide ... drum roll ... one-third of that requirement.

Just to show you how unnecessary this project is, this is the stated purpose of the solar panels: it will feed electricity to Camp Ridley during power outages. As long as those power outages occur during daylight hours, and recall from the Nevada experience, it takes one to two hours to "bring up" a solar energy farm. The more one reads between the lines of this article, the more one wonders.  If Arizona ever wants to sell the London Bridge, I know the state they can sell it to.

I'm not sure why regulators questioned the cost of this new Camp Ridley project; it was in line with what solar was costing back in 2014. Oh, that's right. Natural gas electricity is down to 3.5 cents/kw-hour. It is a shame that states are not eligible for the Geico Rock Award.

One can google Xcel at the milliondollarway blog. One gets the feeling that the solar industry has found THE state that can't say "NO" to expensive solar energy. It's really getting to be rather .... well, let's just say the most recent episode of I-98 discussed the high price of intermittent energy in Minnesota.

As the train rounded the curve, Sam and Liam saw the new billboards going up asking for donations to help Minnesotans pay their intermittent energy utility bills. The state was now completely reliant on intermittent energy, and utility bills had surged, as expected. Even the heirs to the great Dayton estate were surprised to see how many wind farms it took to generate enough electricity to keep the lights on, not to mention, to recharge the Teslas. To conserve electricity, the state had asked Minnesotans to stop making Swedish meatballs during peak electricity demand.

Sam noted the irony, "It's kind of funny how things worked out. Ever since CO2 dropped, it got colder in Minnesota just as they were meeting their state-mandated wind farm initiatives. And now no one can afford it." 

By the way, that $3 million/MW doesn't set any records: the Minnesotans are proud to say they installed solar energy at one of their airports for $7 million/MW. I can't make this stuff up. No links. Google it if interested. I'm burning daylight; more important stuff to cover.

By the way, the quotes for natural gas (above) were back in 2008; since then the price of natural gas electricity has come way down (as noted above, 3.5 cents/kw-hour). If you live in Duluth, MN, and you are paying more than 3.5 cents/kw-hour, send a note to Xcel. 

Remember, the new solar site will require complementary fossil fuel power to provide electricity during the night, during six months of winter, during cloudy days, ...

LOL.

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

Flashback

This is from November 6, 2013:

Don sent me this -- a look at the cost of electricity in the 57 US states. When you get to the link, click on the second presentation, an Excel spreadsheet.

North Dakota is third cheapest at 8.58 cents/kwh.
Idaho, with its hydroelectric power, is cheapest at 7.87 cents/kwh.
Washington State, also with hydroelectric power, is second, at 8.28 cents/kwh.

New York State, which bans fracking, and hates coal, but loves wind, pays 18.26 cents/kwh, more than twice what North Dakotans pay.

One can move the Excel spreadsheet to your own spreadsheet and then sort. Doing that, New York is the most expensive for electricity, excluding Hawaii, which is in last place, at 34.68 cents/kwh.

I think the Germans pay in excess of 35 cents/kwh. 

Two Words Janet Yellen Doesn't Like To See In Same Phrase, Much Less Same Sentence: GDP Anemic. In Any Order -- January 29, 2016

Updates

February 2, 2016: how bad are things going for Janet, and by extension, Hussein? The Fed, apparently, is discussing with US banks on the repercussions of following the Japanese lead (see below) and going to "negative rates." They're calling it a "stress test." The Fed is running out of arrows in its quiver.
 

Original Post

 

This pretty much confirms what "gasoline demand" predicted six months ago. From the Wall Street Journal, U.S. Economy Grew Anemic 0.7% in Fourth Quarter. A sign of flagging momentum amid global weakness and financial market turmoil. Economists surveyed by The Wall Street Journal had expected GDP to grow at a 0.8% pace in the October-to-December span.

And so it goes.

Janet Yellen's decision to "raise rates" last quarter was quite prescient. She's off to a great start.

By the way, did you all see that Japan has lowered its "fed rate"? Yup, the Japanese "fed rate" is now in negative territory: depositors pay banks to hold their money. Ms Yamaguchi will wonder why her 10,000 yen is worth only 9,999 yen a year from now.

Let's see, who's reporting today?

• Chevron misses by 82 cents; took a huge loss vs 46-cent-profit forecast. Not a good day for someone.
• Mastercard reports that its profit rose 11% and shares drop as much as Chevron shares fell; beat by 10 cents, earning 79 cents vs 69 cents forecast.
• Phillips 66 reports all kinds of things: "suffers from sharp drop in refining margins" (did Warren Buffett blow it again?); "profit plunges 43%; reports $1.20 per share vs $1.25 forecast. Wow, not a good day for Warren. We talked about refining margins just two days ago. See this link. When Warren was buying PSX, refining margins were $1.00/US gallon of gasoline; recently, as low as 25 cents. That huge glut of gasoline is the reason no doubt; if the supply of gasoline rises much more, the Japanese will start giving it away for free.

And then it should be interesting to see what Amazon did -- after posting biggest profit in its history, its shares plunge almost 15%. Amazon has recovered a bit; after-hours yesterday Amazon had dropped as much as 15%; this morning, Amazon is down less than 10%.

As I've said many, many times, this is not an investment site. Do not make any investment, financial, or travel decisions based on anything you read here or think you may have read here.

Speaking of travel, by the way, there is an interesting article in this week's issue of The New Yorker, an essay on air travel, "Air Head," by Nathan Heller, a frequent flyer.

Like many frequent fliers, though, I claim to find advantage in basic routine. I know to book a window seat on red-eyes and an aisle in the daytime. I can explain why a 7 A.M. departure from New York is the best flight to California, what snack is safest in Delta's lounge, and which seat is usually the first out. (It's not in first class.) I can mimic the progression of cabin pings and flap extensions in a Boeing, or the hydraulic bark of an Airbus. These skills have narrow applications, but, then, so does CPR. Their goal is to aver the interminable lines and vanished hours that seem, at times, maybe a little worse than death.

No link; if interested, I'm sure one can google it.

Speaking of air travel makes me think of speed which reminds me of the Wall Street Journal yesterday with this headline:  Free Shipping Alone Isn’t Enough: Online Retailers Go for Speed Net-a-Porter runs a fleet of vans and offers same-day shipping in three cities; Everlane ups the ante with one-hour shipping. Long-time readers will remember my post on "the next big thing": Same-Day Delivery -- Original Post. Yes, that was back on November 21, 2013, and it was the stand-alone post on "the next big thing." Yeah, that's pretty cool.

I updated the Bakken wells that will be reported today. And here they are, reported also at another post:

• 29454, 586, Triangle USA, Little Muddy 9H, Williston, t8/15; cum 82K 11/15;
• 30513, SI/NC, MRO, Anton 34-33TFH, Reunion Bay, no production data,
• 31352, SI/NC, EOG, Wayzetta 97-3019H, Parshall, no production data,
• 31467, SI/NC, SM Energy, Herland 14-12HN, Burg,

Wow, that's a nice round number. Exactly 100 wells came off the confidential list through the last business day in January, 2016. Yes, there are two more days in January but we won't know the results of wells coming off the confidential list over the weekend until Monday.

CLR Proposes To Place Another 22 Wells On A New 2560-Acre Spacing Unit In Elm Creek Oil Field -- January 29, 2016

The highlights of the February, 2016, NDIC hearing dockets have been posted. We're starting to see a number of really huge spacing units at 5,120 acres, or eight (8) sections. I understand the need for overlapping units (to capture "orphan" oil along administrative spacing lines) but one could do that with 1280-spacing units, but that would be incredibly inefficient, so the more standard 2560-acre spacing units to solve the problem made all kinds of sense. I'm having trouble understanding why 5,120-acre spacing units are needed.

The Bakken never quits teaching me things.

The other thing we're starting to see is an increased number of wells being placed in one spacing unit. This was expected and had the "Saudi surge/slump" not occurred, "we" would be much farther along in the manufacturing stage.

Here's an example:

• 24881, CLR, Elm Tree-Bakken, 22 wells on an existing overlapping 2560-acre unit, 14/23/26/35-153-94, McKenzie

For newbies, that is a "case" number (#24881), not a permit number.  This is what some folks call a "stand-up" section -- the sections run vertically, north to south (or south to north). The "up and down" was too big to catch in one screen shot, so here it is in two screen shots. If I get it right, the first screen shot will be the two northern sections, and the second screen shot will be the two southern sections.

The northern two sections of the 2560-acre spacing unit:

The southern two sections of the 2560-acre spacing unit, and, "no, I do not plan to correct the typographical error in the graphic below"):

The wells will likely be long laterals, running through two sections. If so, there will be twenty-two new wells along the section line between sections 23 and 26, possibly with 12 of them north of the section line, and 10 of them below the section line, and CLR will probably drill them one at a time using one rig, sort of like they developed the Brooklyn oil field. Roughnecks can set up "home" for about two years drilling out these proposed 31 wells -- and that's why CLR can get accomplished with four (4) rigs when it used to take 20 rigs to get the same amount of work done:

Elm Creek oil field is tracked here.

Back in early December, 2015, I highlighted a particularly active area in Elm Creek oil field.

Active Rigs In North Dakota Hit New Post-Boom Low: 46 -- January 28, 2016

Active rigs:

	1/28/2016	01/28/2015	01/28/2014	01/28/2013	01/28/2012
Active Rigs	46	148	191	190	204

Wells coming off confidential list Friday:

• 29454, 586, Triangle USA, Little Muddy 9H, Williston, t8/15; cum 82K 11/15;
• 30513, SI/NC, MRO, Anton 34-33TFH, Reunion Bay, no production data,
• 31352, SI/NC, EOG, Wayzetta 97-3019H, Parshall, no production data,
• 31467, SI/NC, SM Energy, Herland 14-12HN, Burg,

Five (5) new permits --

• Operators: XTO (4), Hess
• Fields: Bear Creek (Dunn), Alger (Mountrail)
• Comments:

Three (3) producing wells completed:

• 26772, 2,058, Zavanna, Double Down 24-13 2H, East Fork, t1/16; cum -- 
• 26773, 687, Zavanna, Double down 24-13 3TFH, East Fork, t1/16; cum --
• 28895, 1,135, Zavanna, Blackjack 24-13 2TFH, East Fork, t1/16; cum --

Operator Transfer: Whiting transferred about 78 wells to White Rock Oil & Gas, LLC; see this note back on October 16, 2015, when Whiting transferred about 50 older wells to White Rock Oil & Gas, LLC. Some data points about these 78 wells/permits:

• oldest: 06756
• most recent: 29372
• all were from the Big Stick (Madison) Unit, Billings County
• # of permits/wells, 10XXX and below: 47
• # of permits/wells, 11XXX through 12XXX: none
• # of permits/wells, 13XXX through 15XXX: 12
• # of permits/wells, 16XXX: 3
• # of permits/wells, 17XXX: none
• # of permits/wells, 18XXX: 4
• # of permits/wells, 19XXX: 1
• # of permits/wells, 20XXX: none
• # of permits/wells, 21XXX: 2
• # of permits/wells, 22XXX: 4
• # of permits/wells, 23XXX: 1
• # of permits/wells, 24XXX: none
• # of permits/wells, 25XXX:1
• # of permits/wells, 26XXX: 1
• # of permits/wells, 27XXX: none
• # of permits/wells, 28XXX: 1
• # of permits/wells, 29XXX: 1

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

29454, see above, Triangle USA, Little Muddy 9H, Williston:

Date	Oil Runs	MCF Sold
11-2015	18271	9373
10-2015	22817	13242
9-2015	15698	10540
8-2015	23991	10961
7-2015	559	578

The Obama Legacy -- The Recovery -- If One Can Call It That -- On The Backs Of Workers -- January 28, 2016

CNN is reporting:

Median wages declined in 80 of those cities between 2009 and 2014, according to a new study released Thursday by the Brookings Institution. The wage declines were more pronounced among minorities than whites. Also, the wage gaps widened between races in cities with economies that ranked high overall.

So while almost all of the top 100 cities grew and prospered between 2009 and 2014 on some measures, many struggled to create a more inclusive or stronger economy.
Only eight cities out of the largest 100 saw median wages and employment rates rise while its poverty rate fell.

"I was surprised by how few metro areas saw improvement in each of the three measures of economic inclusion," said Richard Shearer, one author of the Brookings report. The three metrics of "economic inclusion" in the Brookings report were: change in median wages, its poverty rate and its employment rate. 

So, what were the eight? As usual, that information was not provided. I assume they were Williston, Watford City, Dickinson, Stanley, Alexander, Minot, Crosby, and Killdeer, all in western North Dakota.

By the way, any increase in wages this year will not come close to matching the ObamaCare premiums now mandated for everyone.

Electric Rates Could Be Dropping Significantly, Except For One Reason: States Mandate Intermittent Energy At 10X The Cost -- January 28, 2016

Updates

January 29, 2016: this is a most incredible graphic, from the Wall Street Journal. Take some time studying it -- electricity costs, already cheap in the US, dropped another 15 - 30% in many areas of the country. But someone is going to have to ask Houston if there's a problem. Why is the price of electricity going up in Houston?

Original Post

 

From the linked story below: electricity now costs about 3.5 cents per kilowatt-hour. That compares with an average wholesale price of about 7.6 cents a kilowatt hour for 2008, when gas prices were much higher.

If you are paying more than 3.5 cents kilowatt-hour, ask your utility company how much wind energy you are paying for. Good luck.  

If you want to save a few bucks/month on your utility bill, install a $35,000 solar system on your roof. LOL. 

From yesterday's Wall Street Journal:

The lowest electricity prices in more than a decade are testing the whole business model of independent power-generation companies.

While most companies are thrilled when their fuel costs drop, plunging natural-gas prices have pushed wholesale electricity prices down to rock-bottom levels. That trend is pressuring the sales and stock prices of some of the biggest power-plant owners in the U.S.

Shares in Dynegy Inc., Calpine Corp. and NRG Energy Inc. slid more than 55% last year. So far this year, they are down between 4% and 19%. Last month NRG’s board of directors replaced longtime chief executive David Crane, hoping change at the top would reverse the company’s slippage, but there is no relief in sight.

A U.S. Supreme Court decision this week put additional pressure on generators’ stocks with a ruling that allows big consumers to receive payments for cutting their electricity use that are equivalent to what generators are paid to make electricity. 

Good, bad, or indifferent, this is what caught my attention:

The companies mostly burn coal and natural gas to generate electricity, but it is gas prices that often dictate electricity prices in places like California, Texas and the northeast. That is because the country’s fleet of power plants has dramatically changed over the last 20 years to run on more gas as coal plants have shut down due to old age and new pollution regulations. Today nearly 30% of U.S. power is generated from gas, up from less than 20% two decades ago.

The average U.S. electricity price last year fell by about a third to 3.5 cents a kilowatt-hour, according to a Wall Street Journal analysis of statistics compiled by Intercontinental Exchange Inc. In December, as gas prices hit a 14-year low, the price in some regions was even lower. In the mid-Atlantic power sold for a little as 2.7 cents per kilowatt-hour, according to federal data.

That compares with an average wholesale price of about 7.6 cents a kilowatt hour for 2008, when gas prices were much higher.

3.5 cents/kw-hour. In the mid-Atlantic, for as little as 2.7 cents/kwh. As a rule of thumb, I usually think of 6 - 9 cents / kwh. Because that's what it was back in 2008.

Solar / wind energy? You can't get an honest answer. Too many variables, but 20 - 30 cents/kwh is probably as good a number as any for intermittent energy. Remember, when you suggest otherwise, that intermittent energy needs back-up fuel energy to provide energy at night and when the wind does not blow.

So, for folks who like to pay intermittent energy, they can pay 30 cents/kwh for intermittent energy vs 3 cents/kwh for reliable energy. The only reason our utility bills are not 10x what they are is because utilities manage somehow to limit intermittent energy to only a small percentage of their overall fuel. But if you like solar/wind/intermittent energy, be prepared to pay a utility bill ten times what you are already paying.

Today's Market -- January 28, 2016

Wow, what a day for the market -- Thursday, January 28, 2016. These were the companies I was interested in:

• Baker Hughes, a whopping $2.35/share loss vs forecast 10-cent loss; obviously special factors weigh; shares rise;
• Carbo Ceramics, a loss of 25 cents/share vs a loss of 83 cents forecast; had recently suspended dividend;
• EPD, earnings of 35 cents vs forecast of 35 cents; in-line or beats by a penny;
• Ford Motor Co, huge beat; at 58 cents beat forecast of 51 cents; Ford profit triggers record $9,300 bonuses for UAW workers;
• Helmerich and Payne, crushes estimate; loss 5 cents vs Zacks consensus of 8 cents;
• Valero, huge beat; beats by 31 cents; comes in at $1.79 vs $1.45 forecast;
• Visa, barely beats at 69 cents vs forecast of 68 cents, not much change in shares;
• Amazon, shares plunge almost 15% after hours; earnings at $1.00 vs $1.58 forecast;
• Microsoft, shares up on earnings report of 78 cents earnings vs forecast 72 cents; 

What's the takeaway from all these reports?

1. The tea leaves suggest that in the oil and gas industry we can finally hit the re-set button and move on.

• where are all the bankruptcies?
• where are all the mergers?
• Russia and KSA apparently talking about curtailing production; really?
• the Bakken down to 46 active rigs; how low will they go?

2. Sometime ago, a Brit analyst/writer suggested American investors were greedy. Years ago, when we were stationed in England, I called a broker in London to open a trading account. He told me that their company already had about as much business as they wanted and did not want to add any new accounts. True story. I was reminded of that when I saw the 15% drop in Amazon's share price when it reported earnings of a dollar vs a forecast of $1.60 or thereabouts. The big story was not that Amazon missed by 40- 60%; the big story was the Amazon actually showed a profit, something I think it has done on only three times before. I don't own any shares in Amazon and doubt I ever will but I love the company. I don't think Bezos is concerned. There is no company that comes close to what it does. Americans are simply too greedy. Yes, I love Amazon -- it always delivers.

3. Microsoft is a pleasant surprise. I don't own shares in Microsoft and never will. But it is surprising, and pleasantly surprising, that Microsoft appears to be able to "re-invent" itself. I don't care for Microsoft, but if Microsoft can re-invent itself, so can others.

4. Ford's results speak for themselves.

Creekside

Natural Gas Infrastructure In New England; New Solar Energy Fees In California -- January 28, 2016

Natural Gas -- The Road to New England

 

From EIA, the natural gas pipeline network in New England. The projects that came on-line in late 2015 or early 2016:

• The Rockies Express Pipline (REX) reversal project had added westbound capacity to flow natural gas to the Midwest in 2014. In late 2015, Texas Eastern Transmission Company’s (Tetco) OPEN project added 550 million cubic feet per day (MMcf/d) of pipeline takeaway capacity out of Ohio.
• Columbia Gas Pipeline's East Side Expansion, a 310 MMcf/d project that flows natural gas produced in Pennsylvania to Mid-Atlantic markets.
• Tennessee Gas Pipeline's Broad Run Flexibility Project, a 590 MMcf/d project originating in West Virginia that moves natural gas to the Gulf Coast states.
• Tetco’s Uniontown-to-Gas City project flows up to 425 MMcf/d of natural gas produced in the Marcellus region to Indiana.
• Williams Transcontinental Pipeline's Leidy Southeast project provides additional capacity to take Marcellus natural gas to Transco's mainline, which extends from Texas to New York. From there, the natural gas serves Mid-Atlantic market areas as well as the Gulf Coast.

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Solar Energy -- The Road To Southern California

From the Los Angeles Times:

Under the decision, new solar customers would face a one-time charge, what the commission calls “a reasonable interconnection fee,” to tie into the electric grid. The commission estimates the fee would range from $75 to $150 per solar customer.

In addition, rooftop solar customers would pay a fee estimated at 2 cents per kilowatt-hour for electricity used from the utility companies, no matter how much power their solar systems generate. This fee would amount to about $6 more a month for the average solar user.

Utilities also would place new solar customers on time-of-use rates, which rise during periods of high electricity demand.

Solar owners would continue to receive a dollar-for-dollar exchange, or retail value, for the electricity they produce in excess of what they use from the power company each month. But on an annual basis, that benefit gets reduced to a wholesale value for any electricity generated in excess of what the solar owner consumed.