A Bit Of Insight Into Puerto Rico's $72 Billion Debt Problem -- The New York Times -- February 7, 2016

When stories like this come out, it's going to be hard for US senators to approve a bailout for Puerto Rico. The New York Times is reporting:

And that is the catch. What most likely would be the biggest recurring expense for these attractions — electricity — costs Aguadilla nothing. It has been provided free for years by the power authority, known as Prepa.

In fact, the power authority has been giving free power to all 78 of Puerto Rico’s municipalities, to many of its government-owned enterprises, even to some for-profit businesses — although not to its citizens. It has done so for decades, even as it has sunk deeper and deeper in debt, borrowing billions just to stay afloat.

Now, however, the island’s government is running out of cash, facing a total debt of $72 billion and already defaulting on some bonds — and an effort is underway to limit the free electricity, which is estimated to cost the power authority hundreds of millions of dollars.

But like many financial arrangements on the island, the free electricity is so tightly woven into the fabric of society that unwinding it would have vast ramifications and, some say, only worsen the plight of the people who live here.

And who thought this up?

The free power dates from 1941, when the utility was established by Rexford Tugwell, a member of Franklin D. Roosevelt’s brain trust and the last American governor of Puerto Rico to be appointed by the president of the United States.

He contended that for electricity to benefit the people, it had to be owned by the people, and he created Prepa by nationalizing the handful of private electric companies then on the island.

Coincidentally I'm reading a biography of Ayn Rand. She would have predicted this when she wrote The Fountainhead back in 1942. She knew Roosevelt was a disaster waiting to happen. 

Third Day In The Bakken -- February 7, 2016

Most of the day was spent with Dad. He said it was one of the best days he's had. I picked him up about 11:00 and went out for lunch, again, the same spot he goes every time we go out together, the Cash Wise deli (in Williston, of course).

It is amazing how busy Cash Wise is. The parking lot was packed and the checkout lines were quite long. And there are plenty of grocery shopping options in Williston: Wal-Mart, Albertson's, as well as all the convenience stores in addition to Cash Wish.

We visited a number of stores. I found a perfect Christmas gift at Home of Economy for my son-in-law. I bought the item for myself -- I've been looking at it for the past several years -- but after walking out of the store I thought he might enjoy it as much as I would. I can't say what it is in case he reads the blog (which I seriously doubt; he has more sense than that and no interest in the Bakken).

Hopefully I won't forget where I put it between now and next December; maybe I'll send it to him for a birthday present.

Then off to Menards. I've driven by it several times since it opened a couple of years ago, but never visited assuming it was household furnishings only. Wow, was I wrong. It's an incredible store. I was quite amazed. I gave Menards a bit of grief for waiting so long to come to Williston, but that's water under the bridge. They more than made up for it with this incredible store. I can only imagine the draw from eastern Montana and southern Canada.

Then we drove out to the new high school which is scheduled to open this fall, 2016. It certainly has come a long way; I wonder if the entire shell might be complete and they are able to get a lot of inside work done this winter. I don't know; I hope it's on schedule so they can open as originally planned, but whether they do or not, it appears it will be worth the wait. Again, an incredible building. I was going to take a photograph but the sun was such it would have been impossible to get a good photograph. I will try Monday or Tuesday.

We drove through all the new housing developments. It's impossible to say how everything is working out but nothing looks "dead" or abandoned. Lots of vehicles in front of apartment buildings, duplexes, single-unit homes.

By 5:00 p.m it was time for dinner again. And again, Cash Wise. After dinner back to his room to watch the first half of the Big Game. At half-time I had planned to leave to check e-mail, blog, etc., and so I'm at the Daily Addiction on Main Street. Hopefully the game will be over by 9:00 p.m. when they close. Denver has really surprised me: 13 - 7 well into the 3rd quarter, and now with another good run, another good series going down the field. It's Denver's game to lose. I think playing (and beating) the Patriots was huge for the Broncos.

Tomorrow I will be with dad again. He is always eager for Mondays to come; weekends are too long for him. 

Overall, I'm getting the same overall impression that Dustin Monke is reporting in Dickinson. 

Now, instead of eyeing expansion and trying to track uncharted growth, most businesses and cities are planning for modesty and hoping they can plan for the possibility of both a calm and busy future, should oil prices and activity suddenly rebound.

Major projects and commercial development in Dickinson have all but come to a halt as the hub city begins paying off deficits created by infrastructure and building projects that helped alleviate the booming, oil-driven economy.

What remains of Dickinson’s once hurried building sector is on the public side, where the Dickinson Middle School building is taking shape and water treatment facilities are under construction. New commercial developments — such as stores and restaurants — while still opening, aren’t coming as fast as they were the past two years.

However, Dickinson’s economy isn’t faltering — even in the face of low oil prices and uncertain farm commodities and livestock prices.

I would assume we are near the bottom of the current cycle. Whether it's a long 'U" or a short "U" recovery is impossible to say. But the tea leaves certainly don't suggest a "V" recovery. I assume there are not many unemployed in Williston; winters always seem to sort that out. I suppose there could be a fair number of folks on the edge who have children in school and will decide at the end of the school year what to do. Folks that have jobs now are unlikely to leave if they don't have a job waiting for them someplace else.

The big, big plus for families on the cusp: the school system is as good as any in the country, and much, much better than most. It may sound corny, but the community of faith, churches, etc., is also very, very strong. A lot of families on the cusp will get a lot of support from others, and many will make ends meet by getting a second or third job. By the way, my Dad asked a 20-something -- maybe eighteen or nineteen years old -- what she was getting paid as a cashier at one of the big box stores we visited. It was $14/hour.

Real estate and restaurants will be the sectors to watch.

Among the big box stores, the big three competing with each other: Home of Economy, Menards, and Wal-Mart. They all have their weaknesses and strengths. I will leave it at that, for now.

Oh, the big story I forgot to mention. This may have been the highlight of the day. While walking to our table at Cash Wise, I passed two middle-aged men; they appeared to be somewhat Latino but their language seemed more Slavic. They were a bit older than middle-aged; a bit out of place in a young person's oil patch world, but they were both field workers one could tell. The one had a clam-shell phone on the table; the other was showing off pictures of his grandchild (looked to be six months old) on his iPhone. He appeared as proud as could be.

Photographs Worth A Thousand Words -- February 7, 2016

From The Los Angeles Times today, a photograph of the oil patch in California:

For a comparable photo of the Bakken, go go this link: http://www.vernwhittenphotography.net/wes8914/, and at the link skip to photograph #21 of 38 photographs in that set.

The two photographs, side-by-side, might be the best example to "describe" the difference between vertical wells in conventional oil fields, and horizontal fields in tight plays, like the Bakken.

Off The Net For Awhile -- February 7, 2016

There are a lot of typographical errors that need to be cleaned up on the blog. I will get to them when I get to them.

I'm heading out to explore the Bakken with my dad.

Then, we're going to watch the Big Game. He has no interest in football, so my plan is to watch each quarter of the game in a different venue. Possibly even more venues. Every place in town has a flat screen television, so we can munch our way through the various venues.

I'm looking forward to the lutefisk buffet at Ole's and Sven's all you can eat. We won't stay there long; they have one older television and it will be tuned to the curling tournament in Weyburn (Canada).

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

Snow In Boston

Boston is expecting up to eighteen (18) inches of snow overnight (Sunday, February 7, 2016). School-age Kennedys were told some years ago they might never see snow again. Boston has had some severe winters in the past few years, and now another 18 inches of snow forecast.  

65,000%? Maybe Exponents Would Be Appropriate -- February 7, 2016

Governor Cuomo won't allow fracking in his state, but apparently he has little concern about the risks nuclear power plants pose -- especially aging plants with a history of radioactive-contaminated water leaks. This is from the governor's office when he was gold that "alarming levels of radioactivity at three monitoring wells was reported by the nuclear plant -- radioactive tritium-contaminated water -- one well's radioactivity increased nearly 65,000 percent.

Note: the company self-reported. This was not "discovered" by the EPA or the NRC or some other state or federal government agency. The company has been directed to do its own investigation and then report back its findings. I can't make this stuff up. 

From the letter to the company when he was told the radioactivity increased 65,000%:

• deeply concerned
• radioactive tritium-contaminated water
• recently leaked
• into groundwater
• not the first such release at this facility
• nor the first time that this facility has experienced significant failure
• this facility is not safe
• radioactivity significantly higher than in past incidents
• 65,000% increase; from 12,300 picocuries/liter to over 8,000,000 picocuries/liter

So,what is the governor demanding:

• the company must investigate this incident
• how to avoid this in the future

And the final admonition:

"Please report back at the completion of the investigation."

No sense of urgency. No deadline set. Just whenever you get around to it, "report back at the completion."

I can't make this stuff up.

You know, when you get to "thousands of percent," you might want to start using exponents or logarithms. Oh, that's right. we're talking politics, not science here. 

Let's see. A liter is a 1,000 ml. A ml = a gram. So, 8,000,000 picocuries/liter = 8,000 picocuries/gram. The threshold for action in the Bakken and North Dakota is 75 picocuries/gram. Facilities in Montana accept materials with radiation levels of under 30 picocuries per gram, while in Idaho, they tolerate levels as high as 1,500.

One certainly gets the feeling that the EPA is watching the west more closely than the east. Speaking of which, how much toxic chemical(s) did the EPA dump into the Animus River last year? Oh, yes, that's right: the EPA dumped 880,000 pounds of metals into the Animus River, and some of that toxic material ended up in the San Juan River in New Mexico. Utah says some of the contamination reached their state. The toxic metals may have included cadmium, copper, lead, mercury, nickel, zinc, arsenic, and lead. Pretty much the entire periodic table of toxic metals.

Back to "percent." How much, as a percent is atmospheric CO2? 400 ppm = 400 parts per million = 0.0004 or 0.04%. How much did atmospheric increase over the past four years? 4 parts per million = 0.000004 or 0.0004%. How much did atmospheric CO2 increase year-over-year, January, 2015, to January, 2016? That's a trick question. According to CO2 Now, atmospheric CO2 decreased year-over-year this past January. It decreased 0.01 part per million. Yeah, I'm not going to do the math.

Second Day Back In The Bakken -- February 7, 2016

For various reasons I won't post all the conversations I've overheard while in the coffee shops in Williston. I wish I could. But it is so incredibly wonderful to hear things that make this country so unique.

First of all, I've not heard one discouraging word about the downturn in oil prices. Speaking of which, I saw one deer playing on the highway coming north; and I hope to see some buffalo on the range when I head south again, on the return trip to Texas. I plan to take my time getting back (I always say that); I will stop at the "North Unit" where I will see buffalo, and if I miss them there, I can see a herd on the east side of US Highway 85 north of Bowman.

Yesterday, while in one coffee shop, a 20-something woman had come in to do her Bible study. She asked us some questions about the definition of some words. Later, a male friend joined her. She needed to know the finer points of the law regarding a license to own and carry a handgun in Montana, concealed and open carry, I suppose, though she did not use those exact words. The word "ex-husband" came up quite a bit while discussing handgun licenses and reading her Bible.

While leaving a high-end restaurant last night, there was another 20-something woman, jumping up for joy, when on her cell phone she had been told she won a shotgun. Must have been a lottery.

This morning at the coffee shop, the barista asked a regular customer, a 20-something male, who came in for some fancy latte, whether he "got any" coyotes last night. He said they called a lot in but were unable to bag any. He says he hopes he has better luck tonight.

The other barista was drawing "broncos" and "panthers" on the "chalk-board" in anticipation of the Big Game today. For a panther, she drew a kitten which looked a lot like a pig (she only drew the "face"). Her "pony" looked more like a cartoon cow -- again, only the face, straight on. Oh, I see, she has re-drawn the cat in a classic style and now it's perfect. She is very, very, very happy with the pony but I think it needs some work. But I wouldn't change it for anything; it's precious and priceless all at the same time.

She mentioned that the weather was so great yesterday she had planned to go out riding (her horse) but the horse was in such high spirits -- due to the great weather -- she decided "maybe not today." She let the horse enjoy the beautiful weather in its own way.

I drove my dad out east of town yesterday to see the oil activity there. State Highway 1804 was deserted for the most part. We did not see any rigs. We saw no activity in the oil fields. I saw four flares, pretty much near each other. What struck me was the number of multi-well pads. Until you actually see a multi-well pad, you really can't understand what the Bakken is all about. Besides being "multi-well," the pumpers are huge, absolutely gigantic compared to the older ones in Oklahoma, for example.

The other thing that is striking is that the NDIC GIS map exaggerates the drilling activity in the state. There is so much work yet to be done. One can see vast, wide-open areas between single wells and multi-well pads. All that will be filled in, eventually, and the single-well pads will become four-well pads, and the four-well pads will grow to eight, and eventually most drilling units in this area and the Watford City area will have six to ten pads with a total of 32 wells in each drilling unit. Unless they find a way to reach all that Bakken/Three Forks oil with fewer wells.

Back to my dad. He lives in a home for folks who cannot live alone, for whatever reason. He could live alone, but it's better for him where he is now. For one thing, all his friends are there. He says one of his friends passed away last weekend at the age of 100. He said it was a bit young, but sometimes that happens.

He has had a falling out with one of his other friends, Harry (not his real name). Apparently Harry doesn't get along with most folks at the home. Harry is Norwegian who married a Native American, an "Indian" in the local parlance, some years ago, of course (like seventy years ago).

Harry is still mad -- and I am not making this up -- at some general at the Big Horn -- sometimes he calls him Custer -- sometimes he just calls him "some general." The folks have learned not to bring up the General Custer story when talking to Harry. I've never asked if Harry carries a concealed handgun. Maybe it's time to ask.

And to think some southerners still hold a grudge about the Union.

Random Update On the Lignite (Coal) To Natural Gas Story In North Dakota -- February 7, 2016

The Dickinson Press is reporting:

Even as western North Dakota watches nervously while its once-booming oil industry wallows in the doldrums, a massive construction project centered around coal is quietly hitting its stride.

A $500 million urea fertilizer plant that will take 750 workers to build and 60 employees to operate can’t take up all the slack let loose in the Oil Patch, but it is providing a pretty good economic spin all its own.

The plant is under construction north of Beulah, adjacent to Basin Electric Power Cooperative’s synfuels plant, which through the wizardry of chemistry turns black lignite into natural gas.

The new plant will combine some of the carbon dioxide and ammonia created in that liquification process to make dry urea pellets used as fertilizer in the production of wheat, soybeans and corn.

By the way, did you all notice the interesting data point at this post, posted yesterday? It's the second linked story at that post: 

Less than 0.1 percent of global production has been halted to date even though 3.5 percent of global supply is currently cash negative.

I focused on the first data point: that "less than 0.1% of global production has been halted ..." That data point alone is quite incredible, I think. Less than 0.1% of global oil has been halted due to the Saudi Surge/Slump.

But last night after going through the blog looking for typographical errors, I saw that I had missed the big story: "... only 3.5% of global supply is currently cash negative." 

9/9 DUCs Reported Monday -- February 7, 2016

Monday, February 8, 2016
30428, SI/NC, Statoil, Jack 21-16 3TFH, East Fork, no production data,
31045, SI/NC, XTO, Homer Federal 14X-32F, Grinnell, no production data,
31664, SI/NC, Hess, AN-Evenson-152-95-0310H-11, Antelope, no production data,
Sunday, February 7, 2016
31093, SI/NC, XTO, Nordeng 34X-23EXF, Siverston, no production data,
31466, SI/NC, Statoil, Topaz 20-17 XE 1TFH, Banks, no production data,
31665, SI/NC, Hess, AN-Evenson-152-95-0310H-10, Antelope, no production data,
Saturday, February 6, 2016
27651, SI/NC, Petro-Hunt, Klatt 145-97-19C-18-4H, Little Knife, no production data,
31044, SI/NC, XTO, Homer 14X-32AXD, Grinnell, no production data,
31092, SI/NC, XTO, NOrdeng 34X-34AXB, Siverston, no production data,