Friday, March 16, 2018

Holy Mackerel! If You Are Not Watching NCAA, You May Be Missing THE Game Of The Tournament - UMCB (16) Vs Virginia (1) -- March 16, 2018 -- 10:24 Central Time

Three minutes left. The Virginia crowd is shell-shocked.

The best part of the telecast -- watching the shots of the crowd.

I don't think I've ever seen anything like this before.

Not one person in the universe will have a perfect bracket after this game.

UMBC -- University of Maryland, Baltimore County.

74 - 54.

Virginia, #1, schooled in college basketball.

UMCB: "u must be Cinderella."

Sportscasters: unanimous -- biggest upset in college basketball.

Later, next day, CBS link

Look how incredibly prescient this article in The WSJ was three days ago:

Fifteen Permits Renewed -- March 16, 2018

Active rigs:

Active Rigs584731111190

Two new permits:
  • Operator: Whiting
  • Field: Robinson Lake (Mountrail County); Alger (Mountrail County)
  • Comments:
Fifteen permits renewed:
  • BR (9): five Saddle Butte permits and four Curtis permits, all in McKenzie County; different names but same pad
  • Whiting (3): three Schafer permits, all in Williams County
  • Kaiser-Francis (2): an Ecko permit and a Diesel permit, both in Stark County
  • Lime Rock: a State Dvorak permit in Dunn County
Swing Girls

It's Unanimous -- Minnesota -- Enbridge Line-3 -- March 16, 2018

The Bismarck Tribune is reporting:
Minnesota regulators approved the final environmental review Thursday for Enbridge Energy's proposal to replace its aging Line 3 crude oil pipeline in northern Minnesota, setting the stage for a final decision on the disputed project in June.
The Public Utilities Commission voted unanimously to declare the review "adequate," meaning it met the legal requirements, after ordering rewrites in December in four narrow areas dealing mostly with proposed route alternatives.
Built in the 1960s, Line 3 carries crude oil from Alberta through North Dakota and Minnesota to Enbridge's terminal in Superior, Wisconsin. Calgary-based Enbridge says the replacement, made of stronger steel, would restore its original capacity of 760,000 barrels per day and ensure reliable deliveries of crude to Midwest refineries.
Enbridge wants to replace the 282-mile stretch in Minnesota with a new 337-mile pipeline on a partially different route that would take it through the pristine Mississippi River headwaters region. Ojibwe groups oppose it because of the potential for spills in lakes where they gather wild rice.
But is it even needed?
The next major step will be when an administrative law judge releases her report on whether the project is needed. That's due April 23. The PUC will consider her recommendations when it decides in June whether to grant a certificate of need for the project and approve the route.
I hope we're not being set up for a Kerry outcome: I voted for it before I voted against it. But this is Minnesota.

TransCanada Places Cameron Access Project In Service
I am absolutely, positively sure I posted this story this past week, but now I can't find it. Possible it was posted at an earlier site as an update. Be that as it may, here it is "again." From a press release:
TransCanada Corporation today announced its Cameron Access project has been placed into service in Southwest Louisiana, enhancing the company's ability to deliver North American-produced natural gas to high-value LNG export markets. 
Cameron Access involved improvements to existing pipeline, construction of a new compressor station and the addition of 27 miles of 36-inch diameter greenfield pipeline. Representing an investment of approximately US$300 million, the pipeline is capable of transporting 800,000 dekatherms a day to the Cameron LNG export facility.
The Cameron LNG export facility is currently under construction and scheduled to go into service at the end of 2019.
Why I Discontinued My Subscription To The New Yorker

Actually I discontinued my subscription about a year ago. The editors were unable to move on. They suffer from TDS.

The cover of the current issue is just another example. I can't link it to Fox because the blogger app blocks links to Fox news stories.

But I'm sure you can find it if you want.

WOW! WOW! WOW! Parting Shot -- Then Going Biking -- March 16, 2018

Forbes: where small town America is thriving.
We have identified the stellar small places -- metropolitan areas with populations between 12,800 and 300,000 – based on wages, and wage growth and job creation from 2007 to 2017. Even as most smaller towns have seen rather tepid job growth, these cities at the top of our list are outperforming not only their same-size counterparts, but some major urban competitors as well.
Surprisingly, our list of the best small areas for jobs does not include many of the scenic small communities that tend to attract affluent emigrés from large cities. Instead most of our leading areas from the last 10 years tend to be those driven by the energy industry, led by No. 1 Williston, North Dakota. With 36,000 people, Williston has been at the center of the shale oil boom in the state, growing its job count 121% since 2007. Wages have soared 47% to over $68,000, well above the national median income of $52,000.
Two other hot spots in North Dakota’s Bakken shale boom: No. 3 Dickinson and No. 6 Minot.
Texas oil towns also figure prominently: No. 2 Midland and No. 4 Andrews.
 Note: the period includes the "bust" years of 2014 - 2016.

Much, much more to read at the linked Forbes article.

Notes to the Granddaughters

One book today.

Jonas Salk: A Life, Charlotte DeCroes Jacobs, c. 2015.

Extremely well-written; easy to read. The author is a Professor of Medicine (Emerita) at Stanford University. Her first biography was Henry Kaplan and the Story of Hodgkin's Disease, listed as one of the "Best Five Books" on doctors' lives by the Wall Street Journal. The author is a cancer specialist and now lives in Palo Alto, CA, where she treats veterans with cancer.

Chapter 2:
  • b. 1914, NYC
  • before his 16th birthday, began college at City College along with three-quarters of his classmantes,
  • 1934, age 21: matriculated at University and Bellevue Hospital Medical College, soon to be renamed the New York University College of Medicine;
  • alumni included: Walter Reed (yellow fever); William Gorgas (Panama Canal); Hermann Biggs (public health to control TB, diphtheria, and venereal disease)
  • graduated, MD: June 8, 1939; 25 years old
Chapter 4:
  • the story of Thomas Francis, Jr; beginning of protective vaccines
  • Salk moves to Ann Arbor, MI, to be with Thomas Francis, at beginning of WWII
Chapter 5:
  • first work: influenza
Chapter 6:
  • Salks leave Ann Arbor in October, 1947
  • to be with Max Lauffer at the University of Pittsburgh
  • wanted to move ahead with his influenza research
Chapter 7: polio
  • Harry Weaver, research director of the National Foundation for Infantile Paralysis (NFIP) spotted Salk when the former visited Pittsburgh
  • the story of polio
  • Salk was awarded $148,075 for the first year, the largest grant ever received by any Pittsburgh facility
  • Salk had published no papers on poliomyelitis, performed no preliminary research on the virus; had not even attended a polio conference
Chapter 8: January, 1948 -- Weaver's battle plans begin
  • March of Dimes
  • worked at Pittsburgh
Chapter 9:
  • 1951 -- wow, wow, wow --
  • the number of polio cases in the US was rising -- 28,000 new cases by year's end
  • 1952 NFIP grant for Salk's team: $196,920
Chapter 10:
  • epidemiologists forecast a record year of polio for 1952
  • Salk's trials begin
  • wow, wow, wow -- the HeLa cell lines (p. 111)
Chapter 11:
field trials to begin
Salk was not aware of Weaver's plans; working with RIvers
1953: 35,968 polio cases in the US -- the third-highest incidence in US history
vaccine referred to as the Salk vaccine -- highly embarrassing to Salk

If You Have Time For Only One Article Today, This Is It -- Nothing About The Bakken -- Tesla -- March 16, 2018

This is an incredibly interesting article (at the link below) to read regarding Tesla. I can't post all of it, but it's a must read -- right to the end in which, after reading all this, the writer presents a case for buying shares in Tesla.

Surfing through the cable channels yesterday while looking for the four cable stations carrying the NCAA March Madness First Round games I happened to catch 90 seconds of "Fast Money." The moderator remained neutral but the rest of the traders were all positive regarding Tesla: some seemed "strained" to commit to a recommendation to buy but the "guy" on the far right  was outright bullish, but if one paid close attention, he seemed a bit "strained" also. But it was subtle. Maybe I was reading too much into his facial expressions -- he might be a great poker player. When I heard three of the four recommending Tesla, one phrase came to mind: "group think."

Whatever. I digress.

The article is linked here.
The CNBC report [on Wednesday this past week] noted Tesla's use of re-manufactured parts, but after spending 11 years traipsing through auto plants and driving cars on all six inhabited continents, I just can't reconcile the notion of re-manufactured parts being used on new vehicles, although the CNBC report did not explicitly state that Tesla does this.
Tesla's Fremont, CA, assembly facility has a terrible reputation in the auto industry, and General Motors' attempt to force-feed its workforce the principles of lean production by contributing that plant to a joint venture with Toyota proved to be an abysmal failure. If you don't believe me, check out the NUMMI entry in Wikipedia; it's actually quite amusing.
But "bad plants" are most frequently the result of the absence of design for manufacturability principles, and the more I read about Fremont, the more I realize that Tesla management simply has no idea how to build a car profitably. Note I said "build a car profitably," not just "build a car." Tesla's Model S has performed extremely well in industry quality and owner satisfaction surveys (though the Model X has not) and it seems that once a Tesla leaves Fremont it is in fine fettle.
Getting from the idea to the finished product is supposed to produce a return on capital, though, and Tesla never has. Tesla produced negative EBITDA in the fourth quarter for the second consecutive period and that is just unheard of in the automotive world.
Ferrari produced an EBITDA margin of 30.8% in 2017 and soon-to-be-public Aston Martin posted a 23.6% figure.
In contrast Tesla's $1.6 billion of negative EBIT in 2017 was matched almost to the penny by the company's $1.6 billion of depreciation and amortization. So, Tesla's EBITDA margin in 2017 was zero. That's astounding for a car company focused on the luxury market, and it is simply not sustainable.
Tesla burned through $3.5 billion of cash in 2017, and with the Model 3 still in "manufacturing hell," I don't expect that figure to improve in 2018.
So much more at the link.

The writer of the above recommended one read the NUMMI entry at wiki. I did not find it particularly interesting except as history.

By the way, when talking about EVs, a lot of ink is used talking about lithium, cobalt, batteries, etc.

We don't hear much about copper. I wonder: do EVs use copper? I know my little electric race cars which I played with when growing up in Williston, used copper. I assume today's big EVs use copper also.

Let's see. From Reuters last year:
The growing number of electric vehicles hitting roads is set to fuel a nine-fold increase in copper demand from the sector over the coming decade, according to an industry report on Tuesday.
Electric or hybrid cars and buses are expected to reach 27 million by 2027, up from 3 million this year, according to a report by consultancy IDTechEx, commissioned by the International Copper Association (ICA). 
Electric vehicles use a substantial amount of copper in their batteries and in the windings and copper rotors used in electric motors. A single car can have up to six kilometers of copper wiring, according to the ICA.
The global market for copper is around 23.9 million tonnes, according to the International Copper Study Group.
That suggests electric vehicles could account for about 6 percent of global copper demand in ten years, according to analyst estimates, rising from less than 1 percent this year. 
So, lots of copper but it doesn't sound like  it will put a strain on global copper supply. And I guess that's why no one talks much about copper and EVs.

Random Update Of Crude Oil Production -- March 16, 2018

There is talk that Russia might cut short its agreement on crude oil production cuts this summer. Saudi Arabia says it remains committed to maintaining production discipline. The US? pedal to the metal if the price is right.

A historical look at production is enlightening.

Note: see first comment. Be sure to note that the y-axes are different in these three graphs. The range for the Russian graph, for example, is 10.54 million bopd most recently, compared with a high of around 10.75 million -- that range is not particularly great. Meanwhile, during that same period, US production went from around 9.0 million bopd to 10.4 million bopd -- a significant different from that of Russia. OPEC, in the big scheme of things has not varied much -- ranging between 36 million bopd and 34 million bopd.




Gasoline Demand On Track For A "Record" Summer -- March 16, 2018

For some reason, it always seems to take a day or two after the data is posted for the EIA to get the graph updated. Here it is:

Canadian Heavy Oil Selling At Nearly $30 Discount To WTI -- March 16, 2018

Link here.
On Thursday, Western Canadian Select was trading at a discount of US$27 a barrel to WTI. The discount widened to the biggest level, US$30.55 a barrel, in four years on February 5, after a selloff following the temporary shutdown of Keystone in mid-November. additional storage capacity in Alberta and data about lower crude-by-rail shipments added concerns over the domestic oil glut, as TransCanada’s Keystone Pipeline has yet to return to normal pressure levels following a leak and temporary shutdown last November.
Global warming causing much of the trouble:
This week, market participants were digesting news about increased storage capacity and January crude-by-rail data. Crude-by-rail exports out of Canada fell by 11.3 percent month on month in January to 140,959 bpd, according to the latest data by Canada’s Crude Oil Logistics Committee, quoted by Platts. Analysts had expected rail crude exports to be either flat or down, because Canadian rail operators and customers had reported delays in shipments due to extreme weather.
And new storage comes on-line early:
In addition, Kinder Morgan Canada and Canadian midstream operator Keyera said earlier this week that they added two additional tanks at the Base Line Terminal for service ahead of schedule. The two tanks add an additional 800,000 barrels of crude storage to the 1.6 million barrels currently in operation.
Much more at the link.

It goes without saying that the Keystone XL was a huge deal for Canada.

It's hard to imagine oil in North America selling for about $30/bbl. For Canada, something has to give. I can't imagine many producers able to stay afloat selling crude oil for $30/bbl.

Williston's FIre Safety Rating -- Top 2% In The Nation -- Williston Herald -- March 16, 2018

From The Williston Herald:
Williston used to have an ISO rating of somewhere between 5 and 8, depending on location. That has changed, and changed dramatically. The city’s new rating is now Class 2, and that puts it in the top 2 percent of the nation.
Two new fire stations, personnel and equipment from a bond backed by the safety sales tax allowed for this impressive improvement in our city,” Mayor Howard Klug said.
The rating for Williston is actually a dual classification, 2 and 2y. In a dual ISO rating, the first number applies to properties within 5 road miles of a fire station and 1,000 feet of a fire hydrant. The second is for those within 5 road miles of a fire station, but more than 1,000 feet from the nearest hydrant.
Catrambone said the 2y group is not actually much different from the 2 group in Williston, however. The city is now able to bring a lot of water on the scene, thanks to all the new equipment the public safety tax allowed them to purchase. The amount is now more than plenty to handle initial fire fighting while the nearest hydrant is being hooked up.
Much more at the link.

Friday, March 16, 2018 -- WTI Manages To Stay Above $61; Consumer Sentiment Index -- Nice Jump

Economic data:
  • consumer sentiment index: huge -- 102 vs 99 estimate
    • previous high: October, 2017: 100.7
    • previous high: January, 2008:  103.8
  • Jolts: anything with a "million handle" is outstanding -- 6.3 million job openings at end of January, 2018 -- think about that -- that's incredible -- first time unemployment claims measured in "100,000" increments and usually at the low end -- and here we have 6.3 million job openings
To frack or re-frack? Two articles:
  • to frack or re-frack? insights from the Bakken? from 2016; Note: I don't know if it's worth the trouble to get to the document: I do believe the link works but it takes you to a "blank" box where one then clicks on a link to download a PDF document; "pays your money; takes your chance" -- I'm not sure the article has much more than what we have already been posting on the blog
  • frack 2.0: refracking could enable a second wave of production growth in the Bakken and Eagle Ford; link at Baker Energy Blog, May 21, 2015
Friday sports:
  • Tiger Woods makes a respectable showing at Arnold Palmer Invitational, tied for seventh after first day
  • second day of first round of March Madness; most of the games yesterday were incredibly boring
Vermont, the "green" state? Hardly. A geeky article but worth a read. Sort of. Bottom line:
In 2016, the Vermont state Legislature was given an independent report that revealed Vermont’s electric customers actually buy zero percent of the wind energy and just 0.4 percent of photovoltaic solar energy produced in the state. Moreover, the report found, “the state’s electric sector greenhouse gas emissions had doubled over a historic 10-year period.” And they pay more for their electricity.
Texas, the "wind" state? It was my understanding based on news stories that wind energy was increasing exponentially. In fact, in the past year or so, consumption of natural gas has increased significantly, taking the place of coal, and the percentage of wind energy consumed against all types of energy has actually dropped a bit:

Global warming headlines over at iceagenow:
  • Worcester, Massachusetts, smashes snowfall record for second time in two weeks
  • Billerica, Massachusetts: almost 26 inches
  • another five feet of snow for the Sierra by the end of the week
  • twelfth frost of the summer in São Joaquim (South Brazil)
  • Moscow weather in March will be "January cold"
  • up to 21 inches of snow for California
  • travel-halting blizzard for New England
  • someone is reading the blog: "18 inches of GlobBULL Warming hits West Virginia in four (4) hours; link here
Back to the Bakken

Active rigs:

Active Rigs574731111190

RBN Energy: record crude and gas production leads to record NGL production at just the right time, part 2.
With U.S. NGL production hitting a record high of just over 4.0 MMb/d in the fourth quarter of 2017 and ethane production also reaching record volumes at 1.6 MMb/d, the price for ethane has remained stuck at about 25 c/gal — where it’s been for the past two years, even though prices for other NGLs are up over the same period.
The combination of roaring high-ethane-content Permian and SCOOP/STACK NGL volumes, coupled with steam cracker outages and construction delays due to Hurricane Harvey, have landed us here. So where do we expect the ethane market to go now as incremental cracker and export demand ramp up in 2018 and 2019? Today, we continue a series on our updated NGL market forecast, highlighting the NGL product whose market is going through the most changes: ethane. 
LNG buyers not taking advantage of buyer's market, Reuters:
Royal Dutch Shell, the world's biggest liquefied natural gas (LNG) trader, said on Thursday buyers of the fuel have not taken advantage of a market that favours them and have failed to extract better supply deals.
Steve Hill, executive vice president at Shell Energy, said this failure was damaging to all market participants as it prevented new supply from being developed.
"It's quite interesting in that you could argue that buyers haven't necessarily taken advantage of the buyer's market because buyers haven't done very many long-term deals," he told an industry seminar in Tokyo.
"I think what is our concern is that if deals aren't done and projects aren't sanctioned, eventually it won't be a buyers' market anymore because demand will grow and supply won't.
Hill said that a traditional model of switching back and forth between the buyer's market and the seller's market would not be helpful either way because that would lead to demand destruction in addition to projects not being developed on a regular schedule.