Saturday, August 27, 2016

GE, Alstom, Amtrak -- Nothing About The Bakken -- August 27, 2016

Note: this is not an investment site. Do not make any investment, financial, job, relationship, or travel decisions based on what you read here or think you may have read here. If this important to you, go to the source.


August 28, 2016: a reader sent a link to this story -- GE's "digital revolution."
G.E. has some built-in advantages. Its installed base is huge. For example, the company says more than a third of the world’s electricity is generated on G.E. equipment. It can make progress simply by winning over the aircraft makers, oil companies, hospitals and utilities that now depend on G.E. machinery.
G.E. is starting to attract a developer following. Tata Consultancy Services, for one, says it now has 500 programmers designing and developing Predix applications for customers in the electric-utility, aviation and health care industries. G.E. also promotes partnerships with Infosys, Wipro and Capgemini to help business write Predix software.
In my original post, "electricity from all sources." Then in this NY Times article, more than a third of the world's electricity is generated on GE equipment. 

By the way, note the photograph of the idyllic NY stream that accompanied this article and not the GE turbine power plant just upstream. Had this been an article on the oil sector, one could imagine a photograph of an oil spill. 

Original Post
The other day I mentioned that I have changed my investment strategy a bit, but just before changing that strategy, I had embarked on acquiring more shares of GE on a regular basis. I think GE, long term, is going to do very well in energy (wind, oil, natural gas, electricity from all sources).

Within 24 or 48 hours of posting that, I came across this New York Times article: Amtrak's answer for its aging Acela fleet: 160 mph trains.
A new era of high-speed train travel is coming to the nation’s busiest rail corridor.

Federal officials on Friday announced a $2.45 billion loan to Amtrak for the purchase of state-of-the-art trains to replace the aging Acela trains that use the Northeast Corridor from Washington to Boston.

Amtrak plans to put the first of 28 new trains into service in about five years. Once they are fully deployed, officials expect the Acela to depart every half-hour between Washington and New York and every hour between New York and Boston. That should increase passenger capacity by about 40 percent, they said.

While the new trains will not approach the speeds of some Asian and European trains, officials said they hoped that the new Acela would travel at 160 miles per hour in some places, up from 135 m.p.h. now. The trains will theoretically be able to go faster than 160 m.p.h., though that would require a huge upgrade of the track system.
Vice President Joseph R. Biden Jr., a longtime Amtrak supporter who frequently travels by train between Washington and his home in Delaware, announced the loan at the station in Wilmington that is named in his honor.
Now, why would that catch my attention? And why would I blog about it?

The new trains will be manufactured in New York State by Alstom, a French company that builds high-speed trains around the globe.

Well, it turns out that a division of Alstom, its "power" division was recently bought by GE: GE completes Alstom Power acquistion.

The Street called GE's acquisition of Alstom Power its "best deal in a century."
The CEO predicts GE's industrial segments -- from wind farms to locomotives and jet engines -- will compose 90% of the conglomerate's total revenue by 2018, a substantial leap from 58% last year, according to an annual regulatory filing.
Something tells me Alstom will subcontract the locomotives to GE. Could be wrong.

But for me this is what is important:
  • the blog keeps me interested in things I might not otherwise follow; and,
  • readers send me links to stories I might not find on my own.
By the way, about four months ago, my wife and I were "lost" out near the Texas Motor Speedway when we happened to notice some brand new BNSF locomotives in what looked like a manufacturing  / industrial park, with a huge "GE" loco on one of the buildings. From The Star-Telegram awhile back:
FORT WORTH -- General Electric’s locomotive plant in far north Fort Worth is putting a strain on the company’s relationship with one of its Pennsylvania-based unions.

The plant, which opened in 2012 near Texas Motor Speedway, employs more than 500 people and builds railroad locomotives and mining equipment. 
The facility, near Texas 114 and Farm Road 156, cranks out an average of 1.2 locomotives per day, a plant manager has said, and those vehicles are bought by customers such as Fort Worth-based BNSF Railway and Union Pacific Railroad, based in Omaha, Nebraska.

But workers at the Fort Worth plant aren’t union members, and that has caused some heartburn among union representatives in GE’s much older locomotive plant in Erie, PA.

The EpiPen -- A First World Problem -- Nothing About The Bakken -- August 27, 2016

I can't believe what a great mood I'm in.

I've come to terms with the keystoning of the Dakota Access Pipeline (maybe the Native Americans are "right"); the Clinton Foundation (it's all about "pay for play" and what's wrong with that? Paul Ryan never followed up on the Democratic fund raising from the House floor this past year); and, the huge debt and deficit Obama will leave us with (it will be worse when Hillary gets into office; and Warren Buffett seems not to be worried).

Example of irony: the Dakota Access Pipeline keystoned in Dakota by the Lakota. 

Maybe I will get back to those issues later but I doubt it.

Right now I'm enjoying the "Review" section of today's Wall Street Journal. Our older granddaughter wants to be a marine biologist (although lately, there are indications, this may be changing); her father, a US Navy submarine veteran and avid sailor, has hopes of sailing around the world. So, it was with great joy and surprise I saw Angus Phillips review of Tristan Gooley's How To Read Water, a 400-page book at $19.95. (At $13.95 and free shipping.) The link is here. Yes, I just ordered it and will have it in two days. [The most grating response to any question is the one I generally get at Barnes and Noble: "We don't have it in stock but we can order it." Well, so can I. From Amazon. And a whole lot cheaper.] [Update: I put the order in earlier this morning, just before I went biking. I just received an e-mail saying my order had shipped -- less than six hours later -- posted 4:10 p.m. same day.]

Earlier this week our 10-year-old granddaughter says she wants to "read" Shakespeare so she can understand "what he's all about." She is now reading the plays re-written in "modern" English, in prose, but using original Shakespeare dialogue. So, I was intrigued to a see a long review of Shakespeare's first folio, also in today's "Review." Fascinating. Reading the review suggests there may not be much new that we don't already know, but perhaps it's updated for a more enjoyable read. The link is here. It has an Oxford imprint so I assume it is very, very good, but I doubt I will get it. If the author doesn't weigh in (correctly) on the "true" William Shakespeare, I lose my interest fairly quickly.

On page 2 of the first section of the WSJ today: Suburbs Divide on Development. I might have missed this story but my wife caught it. There's a fair amount of ink devoted to our area north of DFW, specifically the city of Flower Mound. The link is here. This is not stated in the article, but this is a truism that cannot be forgotten: most land appreciates faster than inflation; most homes don't.

The EpiPen Story

Holman W. Jenkins, Jr. has a great opinion piece on the $600 hammer EpiPen. He provided the obvious answer. Why pay $600 for an American two-pack of EpiPens, when you can get them for about $100 each in Canada (the internet will work just fine)?  By the way, it would be an interesting science project to see exactly how widely used EpiPens really are. In my 30+ years being in the business of medicine, I have never seen a layperson use an EpiPen. I've worked with school nurses for decades and I've never seen a school nurse (or even heard of a school nurse) using an EpiPen. Anyway, here's a Canadian site offering EpiPens for about $160/pen which is probably the "standard" price in Canada.

By the way, the EpiPen story gets crazier the more one looks at it. The standard EpiPen delivers 0.3 ml of 1:1000 epinephrine. One can buy a 1-ml amp (enough for three doses) of epinephrine for $4.49.

Three doses is one more dose than the standard 2-pack epinephrine provides. Three doses for $4.49 vs two doses for $600.

Syringes and needles are virtually free: every insulin-dependent diabetic has ample supplies of syringes and needles, and most jurisdictions provide the homeless and drug addicts with syringes and needles for free, it seems. Whatever the expense, it has to be nominal. The challenge of administering epinephrine in an emergency is not the "physical" action but the "mental" action. The "mental" action is recognizing an emergency; recognizing that it is an allergic reaction; knowing that epinephrine is needed; and knowing where that epinephrine is. Snapping open an ampule, "drawing up" 0.3 ml in a standard little syringe, and then using one's own fist to push the needle into the thigh (by holding onto the syringe) and using one's own thumb to push in the plunger is the entirety of the "physical" action. This is not rocket science. If one has the time to complete the "mental" action, one has ample time to complete the "physical" action. Emergency room physicians do not use EpiPens; they use syringes, generally handed to them by nurses or technicians.

Meanwhile, there's a heroin overdose epidemic in the Rust Belt. It seems like there is an easy way to stop a heroin overdose epidemic. 

Perhaps more later. Going biking.

Southlake Public Library

Later. It's about a 30-minute ride from my hovel to the Southlake Library. I generally ride to this library or the Grapevine Public Library every day; they are both about the same distance from home. The Southlake ride is more urban, more fun. The Grapevine ride is a bit more rural or industrial, and more utilitarian.

There is a half-mile stretch of road on the Southlake route that has been under construction (widening from two lane to four lane) for quite some time. It is a bit sporty competing with F-150's where there is no shoulder. For the most part (99.9% of the time) the drivers have been wonderful. Today, they've opened up the new road to the extent that I have almost two full lanes of asphalt to myself. For the next stage of construction, it just so happens it's going to be a lot easier to navigate, at least heading north.

The books today: I will continue Matt Ridley's Genome (previously posted) and will begin Bill Bryson's The Road to Little Dribbling: Adventures of an American In Britain, c. 2015. I've already read a bit of it and for any American who has lived in Great Britain for any length of time, it's a must read.

23 Pairs Of Chromosomes

From Matt Ridley's Genome:
It is actually rather surprising that human beings do not have twenty-four pairs of chromosomes. Chimpanzees have twenty-four pairs of chromosomes; so do gorillas and orang utans. Among the apes we are the exception.

Under the microscope, the most striking and obvious difference between ourselves and all the other great apes, is that we have one pair less. The reason, it immediately becomes apparent, it not that a pair of ape chromosomes has gone missing in us, but that two ape chromosomes have fused together in su.

Chromosome 2, the second biggest of the human chromosomes, is in fact formed from the fusion of two medium-sized ape chromosomes, as can be seen from the pattern of black bands on the respective chromosomes.

Pope John-Paul II, in his message to the Pontifical Academy of Sciences on 22 October 1966, argued that between ancestral apes and modern human beings, there was an "ontological discontinuity" -- a point at which God injected a human soul into an animal lineage.

Thus can the Church be reconciled to evolutionary theory. Perhaps the ontological leap came at the moment when two ape chromosomes were fused, and the genes for the soul lie near the middle of chromosome 2.
The gene for drumming in on the X chromosome (if you don't believe, watch the sequence beginnign at 3:00):

10-Year-Old Owns The Drums

Update On The Dakota Access Pipeline -- August 27, 2016


August 29, 2016: And now for another perspective: the Dakota Access Pipeline and the "law of Christendom." From Indian Country, TodayMediaNetwork. com.

August 28, 2016: Fortune weighs in on the keystoning of the Dakota Access Pipeline
Original Post

The Bismarck Tribune story is here.

Don sent me the link. I already posted in my "Top Stories of the Week" that I felt the Dakota Access Pipeline would be keystoned.

After posting that, I got the newest update from Don (at the link). I replied to Don:
My hunch is the Dakota Access Pipeline is dead.

The company made the mistake of beginning to build before all the "i's" were dotted and the "t's" were crossed. If the "easement" is not published, the Federal judge will have no choice but to say "Stop."

And the US Army Corps of Engineers will wait until after the election to write the "easement." By that time, national attention will be such that the US Army Corps of Engineers simply will not want to wade into that political quagmire.
The question is whether the company will build 98% of the pipeline, betting that eventually they will get approval. An expensive bet. But there are ways around it. If that ends up being the only sticking point, they can always re-route the pipeline east of the river, hooking up north of Williston, something they probably should have done in the first place. Interestingly enough, if I read the map correctly, the DAPL actually begins north of the river and then swings west, across the Missouri southwest of Williston, and then goes southeast until it crosses the Missouri again. I can see why they did that, but crossing the Missouri twice seems to be tempting fate.

Although the pipeline would not have swung through the heart of the Bakken (unnecessary with all the pipeline already there), it does not appear the pipeline would have been appreciably longer had it stayed north and east of the river entirely -- and there would have been no increased cost associated with two crossings of the Missouri River. 

The route can be viewed here.

See slide 2 of this presentation

Week 34: August 21, 2016 -- August 27, 2016

When I started the blog, one of the "Big Stories" I wanted to track was the shift from the Mideast back to North America as the "center of energy" for the 21st century. I knew almost nothing about energy at the time and I had no idea where the story would take me.

The EIA shows the dominance of the Bakken in US tight oil plays

The "EIA Flickr image of the week" shows the dramatic increase in US fossil fuel production (production, not consumption).

Three big stories from this past week show how far "we" have come in just a few years:
This may have been the biggest story of the week, though I doubt most folks heard the story, and it doesn't seem to have been picked up by many news outlets yet. Time will tell whether this is an accurate interpretation of things to come for China: Chinese domestic oil production is declining; China sees "peak oil" at home. If that is accurate, it explains the "almost-urgent" interest China seems to have in claiming the South China Sea as their lake.

John Kemp posted a graphic showing the drawdown of Saudi cash reserve assets

But then look at this: not only are assets dwindling, and not only is Saudi Arabia apparently producing at maximum rates, the EIA posted a graphic showing how Saudi's crude oil stores are also falling. Something doesn't make sense.

For "oil bulls" worried about a Hillary presidency, apparently Warren Buffett is not. Buying more shares in Phillips 66, his company now owns 15% of PSX. My hunch is his discussions with Hillary over the past two  years reassures him that he has nothing to fear, but fear itself.

How big is the Bakken revolution? Big enough that the major oil companies don't even seem interested in the Gulf of Mexico. The federal government's most recent GOM lease sale was even worse than the previous lease sale. Another post is here. My hunch is that the liability risk is not worth it after seeing what the administration did to BP. Of course, that will never be talked about, never acknowledged, but then we can talk about the regulatory obstacles even after obtaining a lease.

An under-reported story in the Bakken is not the few permits that are being issued, but the number of already-issued permits that are being renewed. One day last week, eighteen permits were renewed. This might be a one-day record.

Active rigs in North Dakota down to 30  
CLR's creative "bookkeeping": DUCs; CLR's 2Q16 corporate presentation;
CLR sells 80,000 non-core assets in the Bakken
EURs in the Bakken approaching one million boe
Some shale drillers returning to the oil patch
DUCs are decreasing but that's because fewer wells are being drilled; in fact, three of four wells coming off confidential list go to DUC status 

Cost of sand could go parabolic -- Mike Filloon

The Dakota Access Pipeline likely to be keystoned

Bakken Economy
New Williston High School opened this past week; school enrollment across the oil patch surges
Highway and road construction update 
Update on US Highway 2 bridge over Little Muddy River north of Williston