Monday, September 19, 2016

They Said It Couldn't Be Done -- LNG By Rail -- September 19, 2016

This one was certainly off my radar scope. A huge "thanks" to a reader for sending it may way. From dated today:
Standing next to a massive cylindrical rail car at the Anchorage Railroad Yard, Alaska Railroad Mechanical Supervisor Josh Cappel asked a fireman to test out the car’s hand-operated braking system.
“Go ahead and fire that thing up tight. Come on, a little tighter than that — there you go!” Cappel joked, drawing laughs from the crowd of about 16 other members of the Anchorage Fire Department.
Starting tomorrow, the Alaska Railroad will be the first in the nation to carry liquefied natural gas by rail. With the Federal Rail Administration’s blessing, LNG will travel the tracks from Anchorage to Fairbanks.
As with any new venture, safety is always a topic of discussion. Cappel said he’s training the Anchorage Fire Department in case the worst happens.
“It’s very important for everyone to understand how rail cars work, especially the fire department,” said Cappel. “If they are responding to any kind of disaster they need to know how these cars work so they don’t get hurt and the people they are rescuing don’t get hurt.”
A new tag: LNGBR.

Video here with some great footage

Wow, I love the blog. 

Huge Things Going On In Energy: An Encana Update -- September 19, 2016

I've been following Encana fairly closely over the last few years but have done a poor job updating Encana on the blog, mostly because Encana is not in the Bakken.

Quick recap: once upon a time, Encana had a huge presence in the Piceance, even going so far as to say they "owned" the Piceance. Not any more.

From Bizjournals in which they said they were selling their assets in the Piceance:
The sale of Encana’s assets in North America and the United States could bring the company $1 billion, helping to reduce the company’s roughly $5.4 billion in fixed and revolving debt.
Encana officials have listed as its “core” focus the company’s Montney and Duvernay assets in Western Canada, along with the Permian Basin and Eagle Ford assets in western part of Texas and the southeastern part of New Mexico.
According to Reuters, the sources said Encana is open to offers on all of its non-core assets including its Piceance Basin assets in western Colorado, its San Juan Basin assets in New Mexico, its Tuscaloosa Marine Shale assets in Mississippi and Louisiana, the Deep Panuke offshore gas field in Nova Scotia and its Horn River and Wheatland assets in western Canada.
The Encana corporate presentation for September, 2016, does not even mention the Piceance. 

The article that brought this back to me was a Bloomberg article in which Encana said it was raising $1 billion to increase drilling in the Permian. 
Encana Corp., the Canadian oil and natural gas producer, is selling about $1 billion of shares to fund drilling next year in Texas and repay debt.
The company agreed to sell 107 million shares at $9.35 apiece. An additional 16.05 million shares can also be purchased, as part of the deal.
Encana joins producers including Crescent Point Energy Corp. in selling shares in recent weeks to fund drilling as U.S. crude is up 65 percent from its February low. Most of the company’s investment next year will be targeted toward increasing output in the Permian Basin in West Texas, the largest U.S. oil field.
One of Canada’s largest gas producers, Encana has increasingly focused its attention on boosting oil and petroleum liquids production from shales including the Permian, where it established a position with the 2014 purchase of Athlon Energy for $7.1 billion. The company said it aims to double the number of wells on stream in the Permian in 2017, compared to this year.
The snippet about Crescent Point Energy explains some of the rumors I've received about Crescent Point Energy over the past few months. 

No New Permits; Seventeen Permits Renewed -- September 19, 2016

Active rigs:

Active Rigs3267196182187

One well coming off confidential list Tuesday:
32433, SI/NC, SM Energy, Bronkar 2-6HN, Moraine, no production data,
Seventeen (17) permits renewed:
  • Newfield (6): threee Malm permits, three Johnsrud Federal permits, all in McKenzie County
  • Hess (3): three CA-Stangeland permits in Williams County
  • EOG (2): two Austin permits, both in Mountrail County
  • HRC (2): two Fort Berthold permits in McKenzie County
  • Resource Energy Cam-Am: an Adeline permit in Divide County
  • Petro-Hunt: a Farstad permit in Burke County
  • Statoil: a Lougheed permit in Williams County 
  • Oasis: a Jensen permit in Williams County
DUCs: eight (8) producing wells completed:
  • 25201, 3,360, BR, Merton 21-15TFH 3NH, North Fork, t8/16; cum --
  • 31073, 428, SM Energy, Inez 1B-16HN, West Ambrose, t9/16; cum --
  • 31074, 318, SM Energy, Loren 1B-16HS, West Ambrose, t9/16; cum --
  • 31075, 371, SM Energy, Rolie 1-16HN, West Ambrose, t9/16; cum --
  • 31652, 120, SM Energy, Sandra 14B-10HS, West Ambrose, t9/16; cum --
  • 31651, 526, SM Energy, Jeremy Federal 14B-10HN, West Ambrose, t9/16; cum --
  • 32432, 271, SM Energy, Bronkar 2B-6HS, Skabo, t8/16; cum --
  • 32487, 448, SM Energy, Stevens 2B-18HN, Skabo, t8/16; cum -- 
Cleaning House

Grammy has been out-of-town for the past week or so but she returns late tonight. In anticipation of her return, Sophia has been sweeping her apartment so it looks nice when Grammy gets back in:


Poll: Will The Federal Reserve Raise Rates This Week? -- September 19, 2016

Investors, of course, will not be impacted one way or the other, except perhaps psychologically.

Traders, of course, will be.

Wall Street traders are doing this:
  • at 5:00 p.m. today and tomorrow they are at the bar, telling their friends and trying to convince themselves that the Fed will not raise rates
  • at 9:30 p.m. tonight and tomorrow night, they are home, telling their significant others they have hedged their holdings to cover in case the Federal Reserve does in fact raise rates
  • at 4:40 p.m. Wednesday afternoon, Wall Street traders are at the bar telling their friends they made the right "call." All one has to do is watch which traders are drinking the best Scotch to know the truth.
And three hours ago, this is what the Las Vegas Sun had to say:
Traders in futures markets have put the probability of a September rate hike at just 15 percent, according to data tracked by the CME Group. The likelihood of a rate hike by the mid-December meeting is put at 60 percent.
Poll at the sidebar at the right. Prost.

As for me, I wagered a bottle of $115 Scotch vs a Readers Digest 10-year subscription for my wife, that the Fed will announce a "rate raise" this week. My wife is unaware of the bet; she is unaware that she has bet the equivalent of a great bottle of Scotch that the Fed will not raise rates.

In case that's not clear:
  • me: the Fed will raise rates this week
  • my wife: the Fed will not raise rates this week

How Charts Can Be Confusing Or Misleading -- September 19, 2016

Be sure to note the y-axis in these two graphs, taken from Richard Zeits' article over at SeekingAlpha today:

Emmy Ratings Flirt With All-Time Low Audience

Link here. It doesn't help when the event becomes a political fundraiser for Hillary Clinton, though I doubt that had much effect on overall viewership.

A Note For The Granddaughters
Astrophysics 101 In The Year 2020
The Nine Numbers of the Cosmos
Michael Rowan-Robinson
c. 1999
DDS 523.1 ROW 

This is kind of cool. I won't finish this note today; the reason will become obvious.

Michael Rowan-Robinson's The Nine Numbers of the Cosmos was published in 1999. Rowan-Robinson focused on nine numbers which he thought were "the major aspects our knowledge of the observable universe. [He was] only trying to characterize what we know about the large-scale universe. Even if all the quantities discussed in this book were known with immense precision, we would still not be able to predict the details of how stars and planets form, how life arises, or what is in your fridge."

In the last chapter the author then summarizes his estimates for each of the nine numbers and tries to predict how accurately they will be known in 2015. It will be interesting to see how close he came.

Today, just the nine numbers and his predictions. At a later day, I will see how close he came.
1. The density of baryonic matter (Ωb): 0.03 ± 0.006, a 20% accuracy
2. The anisotropy of the universe, ΔT/T: 1 part in 100,000, to n accuracy of 25%
3. The Hubble constant, H0: 65 km s−1 Mpc−1, with an uncertainty of 12%
4. The age of the universe, t0: 12 billion years with a total uncertainty of 2 billion years either way, a 20% reduction from the value of 15 billion years which was believed only a few years ago
5. The temperature of the microwave background, T0: 2.728 degrees Kelvin to an accuracy of 0.1%
6. The density of cold dark matter, (Ωcdm): enormous uncertainty; currently in the range of 0 - 0.97; currently favored values are in the range of 0.2 - 0.4, and values lower than 0.1 seem unlikely; in 2015, the author says we should  know Ωcdm and Ωtot  to an accuracy of 1%
7. The tilt, the string tension, or the density of hot dark matter, Ωcdm: currently believed to be about 0.2. The recent discovery of muon neutrino oscillations tells us the value is greater than or equal to about 0.001
8. The cosmological constant, Λ: currently another largely unknown number, lying anywhere in the range of 0. to 0.7
9. The star formation history of the universe, Q, the ratio of the age of the universe to the exponential timescale; currently, the value is in the range of 3 - 6; the author expects that by 2015, we will know this function to an accuracy of 20%
Our granddaughters will likely be able to "skip" years of uncertainty with regard to these values, and begin Physics 101 in college -- their freshman year -- with very accurate numbers for these constants, allowing them to move more quickly in physics than my colleagues were able.

Over the course of the next few days, I will post current values for these nine numbers of the cosmos and see how far we've come in 15 years.

The Bakken Still Has Bragging Rights -- Zeits -- September 19, 2016

Note: this is not an investment site. Do not make any investment, financial, travel, job, relationship, or auto buying decisions based on what you read here or think you may have read here but I found this interesting:
  • Goldman Sachs today: we never made much money on Bit Oil.
  • five years ago, one could have bought Phillips 66 (PSX) at $31/share; today, PSX is up almost 2%, trading above $80; and, more stories on how much stock Warren Buffett has accumulated in this company; he now owns more than 10% of the PSX shares outstanding
Global warming in Texas: the high for today in north Texas is 99 degrees. This is eleven (11) degrees higher than "normal."

Quick work: is it just me or does anyone else note how fast law enforcement was able to find the people of interest with regard to the terrorist events on the east coast this past weekend? Twenty-four hours ago the mayor of NYC said there was nothing to suggest this was terrorism, and now the FBI has already released a photograph of a person of interest and raided a house in Elizabeth, NJ, which may be connected. It's amazing. Twenty-four hours ago: no clues. Before Good Morning America airs, we already have "people of interest." Incredibly quick work. By the same folks who couldn't find anything illegal in Hillary's 23 mobile devices connected to her private basement server. And that took the FBI about five years of investigation. Whatever. Five devices in immediate area; all used same type of "old model" cell phones; shrapnel; and Christmas lights -- mayor of NYC, others not sure the five devices are "related." No comment from President Obama which is of note considering how fast he comments when there is a police shooting involving someone that could like his son.

Poll. Link here. Trump, 48%; Hillary, 41% -- the spread increased slightly since yesterday. Two stories over the weekend: Hillary losing African-American voters and Hispanic voters. CNN has huge story reporting President Obama suggesting negativity regarding Clinton is sexist. Does not mention percent of women who won't vote for Hillary. Is that sexist when women won't vote for Hillary?

Quiz: does anyone "recognize" these numbers?
  • 44
  • 51
  • 66
  • 77
  • 80
Bakken's bragging rights: Richard Zeit's most recent contribution to SeekingAlpha: the Bakken still has the best wells.
How exceptional are Pioneer's best well results in the Permian?
If I were to compare the company's well results for the 23 wells in the Sale Ranch area to that in the deep portions of the Williston Basin, where the majority of the drilling activity in the Bakken/Three Forks is currently concentrated, I must conclude that the Permian does not hold the monopoly on the best wells.
Consider the following slides that shows QEP Resources' (well results on the company's South Antelope block in the Bakken. Based on Year 1 cumulative oil production, QEP's wells highlighted on these slides appear comparable and possibly stronger.
The Fed rate: All that hand-wringing about the Fed rate? One-quarter percent. Back in 2008 when the weekly inter-bank loan reached a half-trillion dollars, a quarter-percent rate increase might have meant something. But since then the Fed has greatly extricated itself from this debacle. Now, weekly inter-bank loans are a fourth of what they were even in 2000. This graph is quite stunning. And this is the graph associated with that quarter-percent Fed rate everyone is so worried about.

But the only story on Wall Street that seems to be more important than the fiscal crisis in Greece is the concern about the Fed raising the rate a quarter percent.

Answer to quiz:

Now, those numbers above: starting about 8:00 p.m. Central Time last night and checking the Dow 30 futures every two to three hours, those were the futures for the Dow 30, gradually increasing through the night. 

Active rigs:

Active Rigs3167196182187

RBN Energy: an update on MPLX's plan to pipe northeast condensate and natural gasoline.
More than four years after the Utica and the “wet” part of the Marcellus became a hot spot for drillers, the field condensate and natural gasoline produced there are still moved to market by barge, rail and truck.
A three-part, $500 million plan by MPLX LP and the midstream master limited partnership’s (MLP’s) subsidiaries, now well under way, will enable more efficient pipeline transport of these important hydrocarbons to Midwest refineries, Western Canadian diluent pipelines and other end-users. To hold down costs, the effort involves a creative mix of new and existing pipelines. Today we continue our review of MPLX’s plan with a look at its “Utica Build-Out Projects.”
In Episode 1 of this series we discussed the rise (and recent leveling off) in production of natural gas, natural gas liquids (NGLs) and superlight crude oil (also known as field condensate) in the Utica play in eastern Ohio and the liquids-rich portion of the Marcellus in western Pennsylvania and northern West Virginia. We noted that while most of the market’s attention goes to either natural gas or to lighter NGLs like ethane, propane and butanes, the three-state region produces sizable volumes of natural gasoline (an NGL also known as plant condensate) and of superlight crude (also known as field condensate or lease condensate), both of which are important products that have the potential for value uplift.
Plant condensate/natural gasoline is used as a gasoline blending agent, a feedstock for steam crackers and as a diluent –– that is, blended into heavy bitumen crudes in Western Canada to reduce viscosity and enable them to flow more easily through pipelines.
Among other things, field condensate can be blended into crude oil, run as a feedstock at refineries and condensate splitters, or used as diluent. Marcellus/Utica production of field condensate and natural gasoline rose sharply starting in 2013; currently the three-state region is producing about 110 Mb/d of field condensate and about 50 Mb/d of natural gasoline. To date, no pipelines are in place to move them out, leaving field condensate and natural gasoline producers with only three delivery options (tank trucks, rail tankcars, and Ohio River barges), but that is about to change.
While other efforts to develop field condensate and/or natural gasoline pipelines out of the Utica and wet Marcellus have failed or faltered, Findlay, OH-based MPLX –– a master limited partnership (MLP) formed by Marathon Petroleum Corporation (MPC) –– has hung in there, and is finishing up the first part of a three-part pipeline solution.
For The Archives
Wind - Texas - Amazon

Link here. Data points:

Amazon's largest investment in renewable energy will be in west Texas
  • West Texas wind
  • Amazon will team with Chicago's Lincoln Clean Energy in this wind farm
  • 253-MW Amazon Wind Farm
  • east of Abilene in Scurry County
  • one MW typically powers 200 homes
  • slated to open by end of 2017
  • 100 wind turbines
  • project costs not released by Amazon, but Lincoln CEO "described" the cost as $300 million 
  • $300 million / 253 MW = $1.2 million / MW
  • Texas leads the nation in wind power, by far
  • Lincoln developing other Texas wind projects; this project will be built and owned by Lincoln, but Amazon has pledged to buy 90% of its output 
Amazon's other activities in Texas
  • Amazon has a large warehouse and customer service center located near San Antonio, in Schertz, TX
  • Amazon has pledged to open a new 855,000-sq-ft distribution warehouse in north Houston
  • Pinto Business Park, near I-45 and Beltway 8
  • the Houston warehouse will employ 1,000 people
  • this is in addition to Amazon's Prime Now warehouse hub in Humble, TX
  • Amazon has just opened more than 20 "Pop Up" electronics stores nationwide; two of them are in Texas -- San Antonio and Arlington
The Market

Early afternoon trading: the nonsense continues, "the Federal Reserve is likely to hold interest rates steady in the face of disappointing economic data over the last month ... although talk of an interest rate hike persists." And the market's reaction: quickly heading towards negative territory. After being up nearly 120 points early today, the market is now up about 20 points. 

Mid-day trading: the market is holding its gains. There was some talk this past week regarding Warren Buffett's timing/buying Phillips 66. For the year it is up slightly; over two years it's in negative territory; but look at that 5-year gain. Five years ago one could have bought PSX for $32. Today, it's up almost 2%, around $81. Today Bloomberg has a story that Goldman Sachs said it never did make much money on Big Oil. One wonders how they could have missed on that.

The Open: the numbers held -- the opening at 80 points up. It will take awhile for the effects of the past week to be forgotten. Only 63 new highs on the NYSE today:
  • new highs: 63
  • new lows: 11
Future: just prior to the open -- the DOW 30 is up 71 points.