I really have to thank the reader who brought this to my attention. About two weeks ago a reader noted that nuclear energy, coal, and natural gas had maxed out in New England and the region was responding by increasing the amount of oil being used to generate electricity. It was then noted that renewable energy (mostly wind) was not up to the task. As energy demand increased during the day, renewable energy actually decreased -- it appears that wind turbines were either less efficient or coming off-line during the day when electricity was most needed.
Coal-fired power plants are king again as sub-zero temperatures sent
demand for heating and electricity soaring on the East Coast Friday in
the largest energy market in the nation.
Coal outpaced both natural gas and nuclear power plants in the PJM
market, which extends from the Midwest to Washington, according to
real-time updates provided by the grid operator PJM Interconnection.
Coal provided nearly 20,000 megawatts more electricity throughout the
day Friday than its primary rival natural gas and over 10,000 megawatts
more than nuclear power plants.
One megawatt of electricity can provide 750-1,200 homes with power,
depending on how much demand there is on the system, according to
experts.
The PJM breakdown looked like this: Coal at 45,842 MW; nuclear power
at 35,514; and natural gas at 25,927. Renewables provided 3,086 MW.
Coal, nuclear and natural gas are the three dominant sources of 24-hour
power on the grid.
And renewable energy? In MW:
coal: 45,842 (42%)
nuclear: 35,514
natural gas: 25,927
renewables: 3,086 (2.8%)
total: 110,369
It would be interesting to get the nameplate capacity / percentages for the energy mix. Something tells me the renewable folks would tell us that nameplate capacity for renewable energy was close to 25%. There's a huge difference between nameplate capacity and what renewables actually produce.
This is very, very early in the season. Cold weather like this generally does not appear until mid- to late-January and February. A lot of folks in the northeast are going to be spending their Trump tax savings on expensive spot electricity made more expensive by renewable energy initiatives.
By the way, this is interesting: were it not for coal, some localities may have been in deep trouble. Secretary of Energy Rick Perry has a good case for allowing coal utilities to claim a premium for maintaining "emergency" supplies of coal (previously reported).
Meanwhile, in North Dakota, record cold weather is being reported:
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This Should Give You A Charge
If you want to read some great comments to a very "strange" article, read this short article, and then read the comments.
The Dakota Access Pipeline marks six months of operations on New
Year’s Day, and new data show that North Dakota is already enjoying
major benefits from the $3.8 billion project.
The pipeline has significantly lowered energy transportation
costs and energy companies to move their oil to the Gulf Coast, where it
fetches a higher price. So it’s little surprise that energy production
has surged since the Dakota Access Pipeline opened.
When folks think of oil in North Dakota, they naturally think of the Bakken. But there are several other notable formations. The other day I posted some incredible wells from the Devonian.
A reader noted a great Duperow well:
8499, PA/1,652, Citation Oil & Gas, Skachenko A 1, Jim Creek, Duperow pool, t10/81; cum 1.536 million bbls; last produced 11/11; 30 years of production
******************
I'm Movin' On
Quick: name the television commercial currently featuring this song.
Ronald Reagan did it his way. Donald Trump is doing it his way. And now, Warren Buffett is doing it his way. From The Wall Street Journal:
The real winner of Warren Buffett‘s 10-year bet against hedge funds is Girls Inc. of Omaha.
Mr. Buffett bet $1 million in 2007 that an index fund would outperform a basket of hedge funds over a decade. The proceeds would go to charity, and Mr. Buffett designated his local Girls Inc. affiliate as the recipient if he won. When the closing bell rang at the New York Stock Exchange Friday, the famed investor locked in his victory.
Mr. Buffett, the chairman of Berkshire Hathaway Inc., has said throughout this year that he is confident he would win. From the start of the bet through the end of 2016, Mr. Buffett’s S&P 500 index fund returned 7.1% compounded annually. The competing basket of funds of hedge funds selected by asset manager Protégé Partners returned an average of 2.2%.
And because of a twist in the bet’s history, Girls Inc. of Omaha is likely to get much more than $1 million.
Mr. Buffett and Protégé Partners originally put about $320,000 each into bonds that would appreciate to $1 million over the course of their wager. But the bonds appreciated much faster than expected as interest rates fell so the two sides agreed to go for a bigger prize. In late 2012, they agreed to buy 11,200 shares of Berkshire B shares, which cost $89.70 at the end of 2012. They’ve climbed 121% since then.
It will be interesting to see Warren Buffett's "return on investment" from end of 2016 to end of 2020."
Road to New England: ISO New England electricity prices are starting to spike, as usual. Note that nuclear and coal have maxed out. Natural gas has dropped back a bit suggesting natural gas is in short supply, and, most interesting, of course, renewable energy electricity is declining -- renewable energy simply is not dispatchable: more than enough when it's not needed; can't ramp up when it is needed.
DAPL: wow, this is cool. On today's WSJ op-ed page, a huge headline, short piece, "North Dakota's Pipeline Payoff."
The Dakota Access Pipeline marks six months of operations on New
Year’s Day, and new data show that North Dakota is already enjoying
major benefits from the $3.8 billion project.
The pipeline has significantly lowered energy transportation
costs and energy companies to move their oil to the Gulf Coast, where it
fetches a higher price. So it’s little surprise that energy production
has surged since the Dakota Access Pipeline opened.
Between
September and October alone, oil production grew by 78,000 barrels a
day, the biggest month-over-month increase North Dakota has ever seen.
The state peaked at around 1.185 million barrels a day that
month—135,000 barrels more than it produced daily before the pipeline
was operational. Compared with January 2017, North Dakota has an
additional 15 drilling rigs currently in operation.
And there are 114 comments! Whoo-hoo. Any article in the WSJ with more than 4 comments is impressive, and seldom do I see articles with more than a couple of dozen comments.
The New Year’s Honors List made public late Friday revealed that Beatles
drummer Ringo Starr and Barry Gibb, the oldest and last surviving of
the brothers who made up the pop group the Bee Gees, have been tapped as
knights.
Long, long overdue.
*********************************** Winter Trout Fishing In Texas
I was completely unaware of this going on, literally, in our backyard -- if one considers our backyard a few hundred miles distant.
Our older granddaughter did not know where they went fishing, but three hints: a) about 2 hours to get there; b) first, southwest out of the Ft Worth, TX, area, and then northwest, but basically west of Ft Worth; and, c) something about the Brazos River. And when you google that information it takes you to .... ta da .... Possum King Dam and the Brazos River near Graham, Texas. And she was exactly right on the driving instructions and the time it takes to get there.
Yesterday, the two older granddaughters went trout fishing for the first time. Thoroughly enjoyed it. At the end of the day, s'mores at the fire pit.
************************************
Another Great Day In North Texas
Sophia and I spent the entire day together yesterday. Sophia is our 3.5 year-old granddaughter. Wow, we had fun. We had so much fun she didn't even want to go to Menschie's -- her favorite ice cream joint (okay, frozen yogurt that tastes like ice cream and has a gazillion toppings from which to choose). We topped off the day by going to PlayPlace -- McDonald's. She treats PlayPlace just like her personal playground. I sit in the main restaurant area and watch her through the ceiling-to-floor window. She takes off her shoes and socks (so she won't slip on the floor) and when we get home, we wash her feet, just like washing her hands.
Today, we will be going to Denton, TX, to watch our oldest granddaughter in an intramural water polo tournament. The drive up and back will take longer than the two 25-minute games. LOL. But I take Arianna an hour early so she can get ready and I spend my time reading.
The primary reading at these events? The WSJ. Today, in the "Review" section, a "Max Boot" reviews his five favorite books/biographies of "real-life" spies. No, George Smiley and James Bond are not included.
The five books:
Gentleman Spy, by Peter Grose, 1994. The biography of Allen Dulles, who started out in the Office of Strategic Services and was appointed director of the CIA in 1953.
The Billion Dollar Spy, by David E. Hoffman, 2015. The biography of Adolf Tolkachev -- the review is the most fascinating of the five.
The Very Best Men, by Evan Thomas, 1995. The book focuses on four early stars of the CIA -- Tracy Barnes, Frank Wisner, Desmond FitzGerald, and Richard Bissell.
Agent Zigzag, by Ben Macintyre, 2007. The biography of Edward Chapman. This spy sounds the most like a spy in a John le Carré novel.
The Good Spy, by Kai Bird, 2014. The biography of Robert Ames who would die in the Iranian-sponsored bombing of the US Embassy in Beirut in 1983.
Comments. For some reason these comments did not get posted.
I'm going back through blooger to see if any other comments did not get
posted. I try to post all comments and at least make a short reply. I
apologize to folks who sent in a comment and I failed to post/reply.
Here are the ones I have found so far. I will gradually go back and
reply to them at the original post.
Texas reporting strikes again!
The production numbers cited in the article are incorrect!
Looking at just the FANG Reed well(s) this is actually three wells combined into one "Stacked Lateral."
"Stacked
Laterals" are a regulatory tool for allocation of lease acreage and
essentially combine multiple wells into one regulatory entity. This will
appear as one or more wells with "inactive" status and one "Active"
parent well that all the stacked laterals report production to.
So
when the author claims the Reed well has made 674 MBO in 11 mo, that
number is actually the total production of three horizontal wells, a
Spraberry well, and two Wolfcamp wells (1 WCA, 1WCB).
This is a whole different issue than even allocated lease production...
If you want more proof refer to the P-16's for these wells.
If
you want more resources to understand the nuances of Stacked Laterals
please refer to the following at the RRC:
http://www.rrc.state.tx.us/media/29117/psa-wells-allocation-wells-and-stacked-laterals.pdf
Correct. Vertical wells are hit or miss and VERY difficult to find even on
3D due to the very steep vertical nature of pinnacle reefs. There
are a few more reefs drilled but thus far none with the oil accumulation
near Dickinson.
Speaking of CLR, remember the Whitman wells in Oakdale field? 2-34H has
produced 1.59 million barrels of oil since Sept 2011. Drilling on 3-34H
was stopped due to unsafe pressures and drilling conditions. It has
finally been drilled to depth and completed. 61 stages, 14.5 million lbs
proppant, 234 thousand barrels fluid. Production to date not
impressive. At least not yet. 12,150 BBLS Oil in 21 days.
Not sure why RBN let out this fascinating solution for last mile
logistics. Just another way in which costs are being crushed
Disclosure- No interest in the company or its securities. I know a
persons with shareholdings in company,
http://www.solarisoilfield.com/solaris-solutions/videos-resources
Have you heard much about microproppants? If only 10% of the proppant
are smaller sized, (10 % Diamter of those sands) the well flow increases
up to 20%. There are smalLas fractres that need microproppanta.
Have you heard much about microproppants? If only 10% of the proppant
are smaller sized, (10 % Diamter of those sands) the well flow increases
up to 20%. There are smalLas fractres that need microproppanta.
Considering White Butte has permitted these wells now, you have believe
that they(and many others who have been waiting out the last few years)
will start drilling again once 2018 begins.
I don't know if things have changed, but a year ago or so, CLR broke ranks with many of the other shale oil operators and went "naked" -- stopped all hedging. Yes, here it is -- back in late 2014 over at Reuters.
WILLISTON N.D. (Reuters) - Harold Hamm, the chief executive of North Dakota oil producer Continental Resources Inc, has stunned a bearish crude market by scrapping all of the company’s hedges - a bold bet that prices will recover soon after sliding some 25 percent.
In so doing, Hamm, who last month called OPEC a “toothless tiger”, appears to be bracing for a price war with the world’s biggest exporter, Saudi Arabia. The OPEC-leader and other key members of the oil exporter group have so far shown no real sign of moving to cut production to lift prices.
Conventional wisdom among oil analysts is that Saudi Arabia, frustrated by a global supply glut caused by soaring output in the United States, is prepared to let prices fall to squeeze U.S. shale oil producers out of the market.
“We have elected to monetize nearly all of our outstanding oil hedges, allowing us to fully participate in what we anticipate will be an oil price recovery,” Hamm said in a statement on Wednesday when the company posted third-quarter results.
The price war with OPEC began in November, 2014, when Saudi Arabia announced it would flood the market with oil, in a not-too-weil-veiled attempt to crush US shale operators.
This week, from Bloomberg: as oil rises, shale drillers with few or no hedges stand to gain.
As
the price of oil rises, heavily-hedged shale drillers may find it
harder to meet investor demands for payback, boosting the value of
producers that haven’t locked in returns for future production.
When
West Texas Intermediate breached $60 a barrel, it was good news
generally for U.S. shale producers. But the higher the price, the less
gain will come to companies that hedged their production as crude held
below $55 for 10 months of the year.
At
least 60 percent of next year’s crude output has been hedged, more than
in previous years, according to RBC Capital Markets LLC. The
result: Rising crude prices will boost the profile of companies with
fewer hedges, according to a report by Cowen & Co. Among the
winners: EOG Resources Inc., Anadarko Petroleum Corp., and
Continental Resources Inc.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.
By the way, google "Continental Resources" naked ends all hedges to see all the nay-sayers with regard to CLR's decision back in 2014 - 2015.
***************************************
Zacks On NOG
Why Northern Oil and Gas (NOG) Could Be Positioned for a Surge
Northern Oil and Gas, Inc. NOG is an exploration and production company that could be an interesting play for investors. That is because, not only does the stock have decent short-term momentum, but it is seeing solid activity on the earnings estimate revision front as well.
These positive earnings estimate revisions suggest that analysts are becoming more optimistic on NOG’s earnings for the coming quarter and year. In fact, consensus estimates have moved sharply higher for both of these time frames over the past four weeks, suggesting that Northern Oil and Gascould be a solid choice for investors.
In the past 30 days, one estimate has gone higher for Northern Oil and Gas while none have gone lower in the same time period. The trend has been pretty favorable too, with estimates increasing from 1 penny a share 30 days ago, to 2 cents today, a move of 100%.
Current Year Estimates for NOG
Meanwhile, Northern Oil and Gas’ current year figures are also looking quite promising, with one estimate moving higher in the past month, compared to none lower. The consensus estimate trend has also seen a boost for this time frame, increasing from 4 cents per share 30 days ago to 5 cents per share today, an increase of 25%.
All I can say is this: if one is a trader (not an investor) in oil and gas, one must be very, very nimble and prepared for significant volatility.
One can see how conservative these estimates are. Some have suggested with 10% primary recovery (which now appears to be low) and 500 billion bbls original oil in place, the Bakken alone has 50 billion bbls recoverable shale oil. Yes, I know. Don't get me started.
Also: "The numbers from the rather dated US Energy Information
Administration-commissioned study are estimates of technically
recoverable RESOURCES, NOT RESERVES. One might expect a financial paper
to know the difference.." -- Comment at the linked article.
The earliest the Russians will start seeing significant shale oil production is the mid-2020's according to the linked article, at which time it will account for about 2.5% of Russian crude oil production.
Bottom line: a story well ahead of its headlights.
A federal judge in Washington ruled the Trump administration can make
sharp cuts to subsidies Medicare pays some hospitals for
pharmaceuticals, a blow to the American Hospital Association and others
fighting in court and Congress to halt the reductions.
The hospital association and two other health-care trade groups had filed a lawsuit
against the Department of Health and Human Services in an attempt to
stop the cuts. But U.S. District Judge
Rudolph Contreras
on Friday dismissed the case, saying the plaintiffs cannot sue
before exhausting other avenues to challenge the cuts, as required by
law. The other trade-group plaintiffs were the Association of American
Medical Colleges and America’s Essential Hospitals.
Judge Contreras’s ruling means Medicare can proceed with the
cuts, scheduled to start Jan. 1. The administration estimates the cuts
will reduce annual drug spending by Medicare and beneficiaries—who pick
up some of the cost of certain drugs—by about $1.6 billion.
“Flat out, this is a win for patients,” said
Rena Conti,
a University of Chicago associate professor who studies health policy.
When the Kremlin's oil champion and Big Oil's biggest sealed a
strategic alliance in 2011, tight oil was little more than a footnote to
ambitions in the Russian Arctic. But Friday's announcement of a deal to
explore the enormous Bazhenov deposit makes Western Siberia suddenly
much more important.
Like the Bakken shale under North Dakota, the Bazhenov is thought to
contain vast oil reserves trapped in tight rock formations. At 570
million acres, its land mass is the size of Texas and the Gulf of Mexico
combined, according to Sanford. C. Bernstein. Bazhenov could hold
between 60 billion and 140 billion barrels of oil, and production could
approach one million barrels a day, or around 10% of Russia's total, by
2020, analysts say. Commercial production in the Arctic will only
just
be getting started by then. [For newbies: the Bakken, much, much
smaller, could hold 500 billion bbls of oil; without political
interference the Bakken will easily hit one million bbls of oil per day;
and that is about 12% of current US domestic production. Just putting
things into perspective.]
This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale.
The future of the Russian oil industry could lie in the vast Bazhenov shale formation, the largest in the world. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to pump.
Only Americans have really gotten shale right so far, but the Kremlin is taking the first steps to unlock Russia’s potential.
Companies like PAO Gazprom Neft GZPFY -1.08% are leading Moscow’s drive to replicate the U.S. shale boom, experimenting with a uniquely Russian state-controlled approach to fracking that contrasts with the free-for-all among independent producers in Texas and North Dakota.
“The Bazhenov is a huge prize,” says Alexei Vashkevich, Gazprom Neft’s exploration director.
And, yes, this field/formation has been linked at the sidebar at the right since 2012.
In fact, Berkshire may be the biggest winner overall from the Trump tax cut, per Barron's, quite ironic given that Buffett was one of the president's most vocal critics during the 2016 campaign.
he corporate tax cuts recently signed into law by President Trump, coupled with gains in Berkshire's equity investments and strong results from its operating divisions, could give Berkshire's book value a 13% boost in the fourth quarter, Barron's estimates.
Berkshire's outlook for 2018 is bright, Barron's adds, with a combination of solid economic fundamentals and a reduced federal income tax rate leading them to estimate that 2018 EPS easily will surpass $12,000 per class A share.
Given Thursday's close of $299,210 per share, that implies a forward P/E ratio of 24.9. Additionally, Barron's projects that Berkshire's book value per share will end the fourth quarter at about $211,000, giving it a price to book ratio of 1.4.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, relationship, or travel decisions based on anything you read here or think you may have read here.
For investors, 2017 was an incredibly good year. It's hard to believe that 2018 could be any better, but with:
a) the tax cuts; and,
b) the infrastructure bill
it's possible.
Speaking of Berkshire, one year ago, BRK-B, $163.83. Today, $198.22.
