High Cost Of Non-Dispatchable, Unreliable Energy -- August 8, 2018

From the EIA;

And promoters still tell rate-paying utility customers that wind and solar projects will bring down their utility rates. LOL.

Screenshot of the day:

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The Modern Art Page

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Notes to the Granddaughters

Olivia is taking a robot-building course this week. There are about a dozen in the class, some older than she; some younger.

So far, on the first two days, her robots have out-raced all other rivals.

It is absolutely fascinating to listen to her stories. Before building the robot, she studies very carefully the parameters, looking for the "secret": the one thing that is most crucial. Yesterday, the robot they were to build had to negotiate an eight-turn maze. She noted that the 5th curve was the "secret." If she could figure out the "trick" this curve presented, she would win the race.

They build their robots. She was the last to finish -- she was interrupted by an obnoxious adolescent male who was sure he would win and was stealing her parts (the instructor was unaware; he was helping someone else); and, Olivia took time away from her own project to help a younger student. By the time she got back to her project, the races were beginning.

She completed her robot.

The robots raced the maze one-at-a-time, being timed with a stop-watch. She raced last. And, wow, was she ecstatic. Some robots were unable to complete the maze, but among the robots that finished, she completed the 8-turn maze, taking first place. Second best: in the time Olivia's robot completed the 8-turn maze, the second-place robot had only completed the first five turns.

The fifth turn was a nearly-180-degree -- sharp switch-back, I guess. Olivia rightly figured out how the robot was programmed to turn before the "student engineers" tweaked the code to modify that turning. That was the trick: the robot would naturally make the 180-degree turn if she "pretty-much" left the program alone -- minor tweaking was all that was needed.

Meanwhile, the oldest granddaughter is "off the grid." She is up in Minnesota attending a Spanish camp. At time of registration, everyone had to 'turn in" their cell phones. Once a day, they hand-write a note which the camp typist then e-mails to parents. The parents can reply to the e-mail, but the camp recorder prints off the reply and gives the paper-reply to the student.

Arianna was at this camp last year for a week and was eagerly looking forward to returning this summer for two weeks. It's likely she will return next summer for a full three weeks if she can squeeze it in.

Sophia? Enjoying her new bicycle.

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The Book Page

From Darwin's Fossils: The Collection That Shaped The Theory Of Evolution, Adrian Lister, c. 2018, page 184:

The Beagle had departed England 27 December 1831.

The Beagle docked at Falmouth in Cornwall on 2 October 1836 (two months short of a full-five-year voyage.

After visiting his family and rejoining the Beagle in London to unload the remainder of his belongings, Darwin took lodgings in Cambridge to consult with Henslow and, with the help of his Beagle servant Syms Covington, to unpack and sort his collections.

There were also important people to meet -- Sir Charles Lyell, whose Principles of Geology has been crucial to Darwin's work on the voyage, invited him a tea party on 29 October 1836, where he also met for the first time the anatomist Richard Owen of the Royal College of Surgeons, where Darwin's fossil bones had been sent.

Darwin subsequently visited Owen at the College on several occasions in December, 1836, and invited him to undertake research on the fossils.

Whereas William Clift, the curator, had received and prepared the specimens as they reached the College in 1833 and 1834, it was Owen who was now the rising star of comparative anatomy, having been elevated from his initial position as Clift's assistant to his recent appointment as Hunterian Professor.

While Owen's fame would undoubtedly have been assured by his later, seminal work on fossil reptiles, dinosaurs and much else besides, his study of Darwin's fossil mammals launched his career as a palaeontologist and did much to establish his reputation as the 'British Cuvier.'

Later, in February, 1838, Owen was delighted to receive the Geological Society's Wallaston Medal for his description of Toxodon, Darwin's most celebrated fossil find.

From page 81:

Toxodon platensis, the last of an endemic group of South American mammals. Initially described as a rhinoceros-sized rodent, it is now thought to be a distant relative of the rhinoceros itself.

Darwin's Toxodon fossil is among the treasured possessions of the Natural History Museum in London (p. 76).

US Crude Oil Imports Remain Persistently High -- September 15, 2016

Biggest energy story of the day: Brits okay huge nuclear power plant at huge price. Story below. 

AAPL: It's been a wild week for the world's biggest stock. Apple shares surged 3.5 percent Wednesday — after rising 2.4 percent Tuesday — and climbing 2.2 percent on Monday. Over the past three sessions, the company has added some $50 billion in market capitalization. The reason: their iPhones do not explode.

Active rigs:

	9/15/2016	09/15/2015	09/15/2014	09/15/2013	09/15/2012
Active Rigs	34	71	199	178	193

RBN Energy: US crude oil imports continue to rise.

Net crude oil imports to the U.S. Gulf Coast in 2016 have been running well above the pace set last year, the increase driven by a combination of lower U.S. crude oil production, rising import levels and relatively flat export volumes. The trend toward higher net imports –– an outgrowth of the end of the ban on U.S. crude exports –– is significant in that it affects oil inventories and oil prices. What’s driving this trend, and how soon might net imports peak? Today, we survey recent developments on the crude oil import/export front, with a focus on the Gulf Coast.

Crude oil traders and the audience at the U.S. Open in Flushing Meadows, NY had one thing in common recently: their heads have been whirling, side to side and up and down. In the case of crude oil traders this was due to a sharp drop in imports in the week ending September 2, followed by a sharp rise the following week. The rollercoaster was caused primarily by the coincidence of three factors: a hurricane preventing discharges at Chevron's Pascagoula, MS refinery and disrupting offloading at the Louisiana Offshore Oil Port; the Labor Day holiday slowing operations elsewhere; and the decision by importers in Texas to reduce their intake of imported barrels ahead of the ad valorem tax assessment on September 1. Soon after tax day, the crude came flooding back in. 

Refiners typically would be expected to take in less crude oil in September ahead of maintenance season in the fall. So far, this is not panning out. Waterborne imports in the first 12 days of September are at 3.24 MMb/d, compared to 3.22 MMb/d in August. Based on the number of vessels currently sailing toward the U.S. Gulf Coast, we expect the week ending September 16 to see a dip in imports, followed by a rebound in the week ending September 23, and an equally strong showing in the final week of September. Looking at the entire month, we expect September to show imports about 500 Mb/d higher than in the same month of 2015. This is a wider gap than the 300-Mb/d excess of August 2016 over August 2015. So, if there is to be an inflection point suggesting lower imports, it doesn’t appear likely to happen in September. 

The most important short-term driver for the swings in import levels is shipments from the Middle East Gulf. (Latin American deliveries can swing widely over a few days but quickly revert to a mean.) Middle East producers prize the U.S. market, in part because it remains the largest consumer of oil in the world, and they have kept their prices for U.S. buyers low. Flows from the Middle East have stayed correspondingly high. Looking beyond September, there appears to be enough Middle Eastern oil on the water expected to arrive along the U.S. Gulf Coast in October to hold imports near 1.1 MMb/d for that month. This is in line with August and September levels. So again, there’s no inflection point on the horizon.

Two comments:

• nothing mentioned about overall US gasoline demand (in other words, we saw the numerator, but not the denominator
• no comment about fact that Saudi Aramco has a huge refinery on the Gulf Coast 

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Job watch: here's the spin for the day -- "applications for US jobless benefits rise less than forecast." Applications edged up 1,000 to 260,000; four-week average dropped to 260,750. 

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UK Approves Huge Nuclear Power Plant

Updates

September 16, 2016: Bloomberg Gadfly weighs in on this. 

Original Post 

Really? Approval for UK's first nuclear-power plant in 20 years announced today. Could be most expensive object ever built: $24 billion. Data points:

• two new reactors
• to be built by French utility along with China General Nuclear Power Corp
• Hinkley Point C, Somerset County, southwest England near two existing plants, one of which has been decommissioned
• huge project; from wiki: 3,200 MW nuclear power plant: $24 billion / 3,200 MW = $7.5 million / MW
• equivalent to three large coal-fired stations
• UK pledges to pay the French utility twice the current market price for electricity for the next 35 years
• French utility gets 9% return on investment
• Brits could pay $48 billion above the market rate over the lifetime of the project
• NOTE: not pay $48 billion BUT pay $48 billion ABOVE the market rate for the project
• would satisfy 7% of UK's power demand
• this is before cost over-runs
• will take a decade before it comes on-line 
• EIA's estimate for new power plant costs
• this speaks volumes about state of global energy

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US retail sales in US decline August by more than forecast, falling 0.3% vs expected 0.1% drop.

Maybe there wasn't enough to buy: manufacturing output in US fell in August. 

New York manufacturing remained weak in September. 

Mexico: Ford moving all small-auto production in the US to Mexico. Toyota moving Tacoma pick-up production from US to Mexico.

Benghazi: Colin Powell says, in e-mail to Condi Rice, that the Benghazi congressional hearings were a witch hunt. Rice said she agreed.

IRS. House GOP won't push for vote on impeachment of IRS chief.

Richard Dawkins: oldest fossils in Greenland (stromatolites) pushes origin of life on earth back to 3.7 billion years ago. Previously, origin of life was estimated to be between about 2 billion and 1 billion years ago (John Hands, CosmoSapiens, c. 2015, p. 286).

AAPL: shares are soaring -- CNBC yesterday.

Energy: Zacks highlights: Spectra Energy, Enbridge, Apache, EOG, and Tesoro.

Crazy: US consumes about 10 million bbls of gasoline daily. India? one-half million bbls of gasoline daily.

Crazier: Venezuela where eggs now cots $150/dozen. 

Most valuable sports franchise: Dallas Cowboys, $4 billion. In 1989, the current owner paid $140 million for the franchise.

Grisly. Water runs red. I was witness to similar "atrocities" when stationed in Turkey.

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Lost Decade

The story in today's WSJ graphically shows how bad things have gotten under the Obama administration.

The Journal looked at income gains/losses among states, comparing 2015 income with income in 2008. It's hard to say whether the 2008 figures were pre-recession / post-recession. The recession hit full-force in 2009.

The Journal looked at 13 states -- chosen because they are politically important this year. Of the thirteen only three showed any income increase over the past decade, and the gains were minimal:

• Colorado: 1.9%
• Iowa; 1.5%
• New Hampshire: 0.2%

My hunch: expenses over the past decade grew a lot faster than 2% for those folks.
Now the really bad news, the ten states who saw their incomes actually decrease:

• Nevada: -15.5%
• Georgia: -8.5%
• Arizona: -8.2%
• North Carolina: -6.7%
• Florida: -6.0%
• Michigan: -4.5%
• Ohio: 3.3%
• Wisconsin: -3.0%
• Virginia:-1.7%
• Pennsylvania: -0.2% 

Earlier in the week, the Journal reported equally bad news with an upbeat headline:

• Median household incomes stood 1.6% shy of the 2007 level, before the last recession took its toll, and 2.4% below the all-time high reached in 1999.

So, everyone is excited that US household income is surging -- and yet it is 2.4% below that of 1999.

Two lost decades. The first under George Bush. The second under Barack Obama.

However, that wasn't the big story. The big story was the "haves" vs the "have-nots." Some states are doing well; others are in deep, deep trouble.

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Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution

Nathaniel Philbrick

c. 2016

DDS: 973.4 PHI

Chapter 4

The Year of the Hangman

1777

Recap: 1775 - 1776

• Benedict Arnold, successful in holding Fort Ticonderoga; prevented British forces from the north connecting with Howe on the Hudson; HQ is Morristown, NJ
• Geo Washington: a series of failures; retreats; crossed the Delaware twice; finally takes Trenton, NJ; his HQ across the Delaware in Newton, PA

This chapter:

• Benedict Arnold in Morristown; wants to rid his hometown, New Haven, CT, of the Brits
• both Geo Washington and Arnold upset with Continental Congress
• Geo Washington handles it better than Arnold
• Benedict sees action in Connecticut; Brits perhaps won, but at great cost, and not much to show for it
• Washington moves HQ to Morristown, NW, where Benedict had been
• Benedict promoted to major general based on actions in CT, but still not give seniority; he submits letter of resignation 
• "year of the hangman": so-called because the Brits planned to hang several turncoats/rebels (not sure if that ever happened)

Key takeaway: 

• Geo Washington finally switches tactics that will allow him to win the war; quit fighting the British offensively; fight a defensive war; guerilla war; war of attrition

Now: 

• the chapter is important for continuity, but not much happened in the big scheme of things

Running The Numbers For The Proposed Natural Gas Power Plant In Emmons Country -- September 3, 2014

Emmons natural gas power plant proposal, $600 million for 675 MW.

That works out to $890,000 / MW.

These are the ballpark numbers I've used before (http://themilliondollarway.blogspot.com/2014/08/power-plant-costs-for-archives-august.html):

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

So, Emmons: $600 million for 675 MW

$600,000,000 / 675 MW = $888,888 / MW which seems to be in the ballpark. 

Power Plant Costs -- For The Archives -- August 25, 2014; Cost Of Renewable Energy -- Staggering

From an earlier post, March 20, 2014:

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

Updates

September 3, 2014: Compare these numbers for the Emmons County (North Dakota) natural gas power plant proposal.

Original Post

A reader sent me a link to a story of Exelon buying a natural gas power plant in Boston; Houston Biz Journal is reporting:

Houston-based Calpine Corp. is buying a natural-gas fired power plant in Massachusetts from Chicago-based Exelon Corp. for $530 million to boost its presence in that area.

The deal — which translates to $655 per kilowatt — is expected to close in the fourth quarter and will increase Calpine’s footprint in the New England competitive wholesale power market.

The plant, Fore River Generating Station, was built in 2003 and is 12 miles southeast of Boston.  

According to wiki: the plant has a rated capacity of 726 megawatts. Exelon says the same thing: 726 megawatts.

$530,000,000 / 726 = $730,000 / MW. Looks like Calpine got a pretty good deal.

Now, let's see if the solar cost is still accurate. In another story sent, the link sent by the same reader, is reporting that Verizon is adding more solar power:

Verizon announced today that it will invest nearly $40 million to expand the on-site green energy program that it launched in 2013. This year, Verizon will install 10.2 megawatts of new solar power systems at eight Verizon network facilities in five states – California, Maryland, Massachusetts, New Jersey and New York. This investment nearly doubles the amount of renewable power generated by solar energy systems installed at six Verizon facilities last year.

To date, Verizon has invested nearly $140 million in on-site green energy. With the 2014 solar investment announced today, Verizon is on target to deploy upward of 25 megawatts of green energy upon completion of the new solar projects.

$40,000,000 / 10.2 megawatts = $3.9 million / MW. Of course, there may be other offsets that are not being reported, but almost $4 million / MW of solar power (when the sun is shining) seems a tad expensive (compared to $750,000 / MW of natural gas), but is in line with earlier figures. As long as Verizon subscribers don't mind paying for this, seems fair. Whatever makes folks feel good. China just brought another huge coal-plant on line today. And they will do so again, tomorrow. And the next day.

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Other Miscellaneous Energy News

This will help with the tsunami of oil, natural gas, condensate tsunami hitting the gulf coast. Houston Biz Journal is reporting:

Houston-based LyondellBasell Industries will build a new chemical plant in southeastern Texas that may cost more than $1 billion.

The rapidly growing chemical company plans to produce 900 million pounds of propylene oxide, or PO, and 2 billion pounds of tertiary butyl alcohol, or TBA, and its derivatives annually at the plant.

The specifics do not interest me; the reason for posting the story -- further evidence of the widening gap between US and EU energy industry.

Look at the size of that investment: another $1 billion. 

For Investors Only; Just Exactly How Expensive Is Solar Energy?

Breaking news: Ukraine's neighbor, Moldova, now requests to "join" Russia. I haven't read the story, just the headline. Wow, isn't that interesting? I think somehow any reasonable person can say this all started with Obama's apology tour. It appears Mr Putin and former states of the USSR took the apologies seriously. My hunch is that Russia offers a better health care program for its citizens than Moldova could afford, and, of course, cheaper natural gas.

The Trans-Dniester region split from Moldova around 1990 and made a failed attempt at independence in 2006, when it held a referendum that was unrecognized internationally.

The region did not want to split from the Soviet Union at the time of its collapse and has now requested unity with Russia.

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Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. I report on companies that I have no investment relationship about as often as I report on companies that I invest in. If that makes sense. In other words, just because I mention a company, it doesn't mean I'm making any recommendations about it. Generally, information is posted to help me understand the Bakken better or put the Bakken into perspective. Yes, including ObamaCare and global warming.

This is simply idle chatter; waiting for another appointment. This is a note I sent a reader earlier:

Absolutely quiet out there today. I do have to agree with the lead story over at Yahoo!Finance right now -- that the markets yesterday over-reacted to the Fed's/Ms Yellin's testimony. I agree with you that rates (mortgages) will be going up, but for the general market to drop 150 points yesterday with her remarks was a bit crazy. 

First, everyone knew she was going to continue tapering. And she didn't taper by much in the big scheme of things, certainly not more than expected. Second, I think she sounded pretty dovish -- if the unemployment rate drops to 6 or 6.5, under the "old rules" the Fed was going to raise rates.  

Yellin is not going to box herself in; she says she will look at everything before raising rates (I think she's telling us she also knows the unemployment numbers are "managed." LOL). 

So, for the moment at least, the market is back up; oil down slightly. I think with the Crimean thing (and everything that looks like might follow), the price of oil will go up, all other things staying the same. 

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News from California from the SRE "page."

I posted the announcement about a week ago. Forbes sees the outcome the same as I do:

After the official retirement of California’s largest nuclear plant last June, many in the environmental community there were celebrating. Now that the state’s public utility commissioners have said that the state’s utilities can use natural gas to replace a portion of that lost power, they are far less sanguine. [And it's more than just a portion; I think the split was about 80/20, natural gas/renewables.]

The closure of Southern California Edison’s San Onofre Nuclear Generating Station in June 2013 opened up a whole other debate, which is how to supplant a carbon-free electricity source in a state that has caps on how much carbon pollution utilities can emit. As expected, natural gas will be the primary fuel to do so, given that it is abundant and relatively affordable — and it’s also a fuel that can run around-the-clock.

Bloomberg notes that SRE and Con Edison will share five (5) solar farms:

Sempra Energy (SRE) and Consolidated Edison Inc. agreed to jointly own and operate five solar farms in California and Nevada that will have a total capacity of 360 megawatts. 

Each company will own 50 percent of the power plants, which all have long-term contracts to sell the electricity, San Diego-based Sempra said today in a statement. 

The deal comprises Sempra’s 250-megawatt Copper Mountain Solar 3 plant that’s under construction near Las Vegas and four Con Edison sites the went into operation in 2012, the largest of which has 50 megawatts of capacity. 

Terms weren’t disclosed. [Unfortunately, probably because of the cost.]

SRE is trading near its 52-week highs, and could hit a new high today. Again.

Also, from SRE page (this will be repeated in a stand-alone post). A press release notes:

SunEdison, a leading solar technology manufacturer and provider of solar energy services announced today that it has completed construction of a 24 MW (megawatt) DC (direct current) solar power plant located in the California Desert. 

The Cascade solar power plant is supplying renewable electricity to San Diego Gas & Electric through a 20-year Power Purchase Agreement. Wells Fargo & Company provided tax equity financing following completion of the solar power plant.

The press release did not say how much a 24MW solar power plant costs. So, how much does a 24MW solar plant cost? In Italy, quite a bit. 

PV-Tech reported last year:

Dubai-based investment company Adenium Capital has purchased a 24MW solar farm in Italy.

The €52 million (US$69 million) acquisition, in partnership with ForVEI, almost doubles the capacity of its solar portfolio.

The Calabria solar park is one of the ten largest in Italy and was originally built by Talesun Solar Switzerland.

$70 million / 24MW =  $2.9 million / MW.

So, now we have some numbers to work with:

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

And then one wonders why the EU is going broke. And, one wonders why the US follows.

Einstein had a great definition for insanity.

Anyone who tells me wind and solar energy are free ... 

[Disclaimer: I often make simple arithmetic mistakes. If something looks wrong, it probably is; go to the linked source if you have questions. There is a probably a huge difference between what Dubai was willing to pay to have a site in Italy, compared with what smart California government bureaucrats would be willing to pay for tortoise and bird killers in the desert.]

[Later: Copper Mountain Solar Facility, SRE, 2010, 48 MW, $141 million = $3 million / MW; additional background; some ambiguity about total cost and total energy production.]

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From The EPD Page

 24WallStreet is reporting:

EPD was the beneficiary of an analyst upgrade at Credit Suisse on Wednesday. The firm’s John Edwards raised Enterprise Products to Outperform from Neutral, and the target was raised to $78, versus a $68.80 close.

This upgrade is significant for several reasons. First is that Enterprise is the largest standalone entity in the land of master limited partnerships (MLPs). Second is that the MLP sector has been battered with concerns about lower distributions (yield equivalents). A third reason this upgrade stands out so much is because this $78 price target represents upside of more than 13%, plus that 4.1% distribution yield. Lastly, the $78 price target is only $2 shy of the street high price target, and it is more than $5 above the consensus price target.

So, what does Credit Suisse’s John Edwards see here that is above and beyond most other analysts after an analyst meeting update?

Edwards shows a 1.5 times distribution coverage at its current distribution growth trajectory, as well as an investment of three to four times the capital to sustain that growth trajectory, which should allow Enterprise to grow the distribution faster than most MLPs.