Why I Love To Blog -- Reason #56 -- October 24, 2016

I suppose this should be the #1 reason why I love to blog -- learning about things I had never heard of, but ... whatever.

A reader introduced me to Adsorbed Natural Gas domain, something I had never heard of. At the link, see the first comment.

For those unfamiliar with Adsorbed Natural Gas domain, this is probably as good an article as any: chemists find better way to pack natural gas into fuel tanks.

Until manufacturers can find a way to pack more methane into a tank at lower pressures and temperatures, allowing for a greater driving range and less hassle at the pump, passenger cars are unlikely to adopt natural gas as a fuel.

University of California, Berkeley, chemists have now developed a porous and flexible material - a so-called metal-organic framework (MOF) - for storing methane that addresses these problems.

The flexible MOF can be loaded with methane, the main ingredient of natural gas, at 35 to 65 times atmospheric pressure (500-900 psi), whereas compressed natural gas (CNG) vehicles compress natural gas into an empty tank under 250 atmospheres (3,600 psi). Liquefied natural gas (LNG) vehicles operate at lower pressures but require significant insulation in the tank system to maintain the natural gas at minus-162 degrees Celsius (minus-260 degrees Fahrenheit) so that it remains liquid.

Much more at the link. 

What Is Prince Salman Up To? OPEC's Pain Is Only Getting Worse As Revenues Continue To Fall -- Oilprice.com -- June 27, 2016

Updates

Later, 11:59 a.m. Central Time: see first comment. Brought up here so the comment be searched by the browser:

Re: diesel consumption ...

I believe there is a much bigger story unfolding here, with the government/environmental forces only playing a minor role.

CNG versus diesel for transportation needs, with the commercial sector leading the way, is apt to become more mainstream in a decade's time.

If an OTR trucking firm can save a thousand bucks or two - and they can - on a round trip cross country run, they will have a huge competitive advantage in the marketplace.

Many retail CNG prices, according to online sources, sell a GGE (gallon of gas equivalent) for $1.50 or less.

Retail infrastructure build-out for CNG continues and, in a self - reinforcing way - is accelerating.

Engine manufactures, both big and small, are researching and rolling out products fueled by CNG.

With an energy equivalence of 6 to 1, the price of natgas should be $9/MMcfd or, conversely, oil should run $18/bbl.

This economic/energy arbitrage poses enormous potential for those able to take advantage.

Original Post

 

The tea leaves are swirling. What is Prince Salman up to?

From an earlier post:

• October, 2015: Saudi's inventory at record levels; have since fallen almost 40 million bbls
• over same period, US crude oil inventories have increased by slightly over 60 million bbls

Saudi policy appears to be to continue inventory drawdowns for the foreseeable future.

Now we have this article from an oil hedge fund, oilprice.com: 

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before.

A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.

Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year. 

Not only is the drop precipitous, it takes OPEC back to 2004 revenues.

Saudi Arabia? Net oil export revenues in 2014, $247 billion. In 2015, the first full year of the "Saudi Surge," $130 billion. Ouch.

For its part, OPEC put out a more dire assessment of its own finances, putting its losses last year at $438 billion, much higher than the $349 billion estimated by the EIA.

That came even though overall exports climbed by an average of 400,000 barrels per day, or a 1.7 percent increase, largely because of production gains in Iraq and Saudi Arabia. The plunging revenue led to OPEC members to post a current account deficit of $99.6 billion, the first deficit since 1998. That compared to the 2014 surplus of $238.1 billion.

With regards to my thoughts on Prince Salman, go back to the very first link at the top of the page.

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EIA Moment

From the EIA today:

Proposed fuel economy and greenhouse gas emissions standards would increase fuel economy and reduce diesel consumption in medium- and heavy-duty vehicles.

Unlike light-duty vehicles, which have been subject to fuel economy standards since the 1970s, the first phase of medium- and heavy-duty vehicle standards was recently implemented, starting with model year 2014. The proposed Phase 2 standards—issued jointly by the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration—would take effect in model year 2021 for most medium- and heavy-duty vehicle classes and increase in stringency through model year 2027.

These standards are projected to reduce diesel consumption by 0.5 million barrels of oil equivalent per day by 2040. --- EIA 

One-half million bopd by 2040 -- hardly worth thinking about.

The estimated reduction in boe, of course, goes out the window, if more folks buy medium- and heavy-duty vehicles than projected, which is very, very possible.

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Meanwhile, This Weekend --

The AP is reporting:

It's going to be a busy holiday weekend on the nation's highways.

A record 43 million Americans are expected to travel this Independence Day weekend.

CNG News From Texas, UPS -- March 16, 2016

Huge news -- one has no idea how often I've wondered why we're not hearing more stories like this. A huge "thank you" to a reader for sending me this, from Houston bizjournal:

Atlanta-based United Parcel Service Inc. will build 12 compressed natural gas (CNG) fueling stations for a new fleet of trucks, some of which will be located in four cities across Texas.

In addition to the stations, UPS will also deploy 380 new Class 8 trucks — 18 wheelers or semis — as part of a $100 million investment in cleaner fuel.

UPS is working toward a goal of logging one billion miles driven by alternative-fuel vehicles by 2017. The shipping company's current alternative-fuel fleet comprises 6 percent of its total fleet.

In February, UPS expanded its agreement with California-based Clean Energy Fuels Corp.  to use up to 500,000 gallon equivalents of renewable liquefied natural gas annually in Texas. UPS stations in Houston and Mesquite will dispense the RLNG to a fleet of about 140 UPS tractors.

If one reads the article, one can finally understand why the USPS never went to CNG and it never will.

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The Hypocrisy Page

or

The Perfect Bumper Sticker For The 2016 General Election

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Easy, Easy For GOP

Regarding President Obama's Supreme Court nomination, some data points and comments:

• it is now customary for the president's first nomination to be borked
• this nomination is President Obama's sacrificial lamb
• GOP will get wobbly; 75% chance Senate will consider the nomination
• however, if the Senate does not consider this nomination, the Senate will not consider anyone President Obama nominates
• if the Senate leadership does not invoke the "Biden Rule" on Supreme Court, I will be quite distraught
• my hunch: he will be confirmed in late November (2016), early December after some theatrical grandstanding (the GOP won't want a Hillary nomination; and the GOP won't trust a Trump nomination)

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A Note for the Granddaughters

I always get on my bike from the left side. Never, never, never do I get on from the right side. Except twice, that I recall. It's awkward, and I'm prone to losing my balance when getting on from the right side.

This morning, because my bike was left overnight on the patio, I was on the grass when I got on. For some inexplicable reason, I decided to get on from the right side. The bike was oriented to go downhill, and the lawn was disrupted by dozens of two-inch to four-inch tree roots that the kids trip over every day running through the backyard. What could possibly go wrong?

I finally "recovered" from the feeling of nausea about a half-mile down the road. LOL.

But I made it to Starbucks in, otherwise, great shape.

Dual-Fueled Trucks Coming To The Bakken -- Diesel/CNG -- December 7, 2014

This is an interesting story over at TheBakkenMagazine.com: Trident Resources brings dual-fueled trucking to the Bakken.

Several interesting data points in the article. I may come back to this article and post some of those data points. The technology could also be used to power diesel-powered oil well pumps.

Six Days On The Road, Dave Dudley  

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At Least It's Hard To Catch

FoxNews is reporting: the tenth (10th) Sierra Leonean doctor has died from Ebola.

Because Ebola is transmitted through the bodily fluids of the sick and dead, it is sometimes called the "caretakers' disease." Hundreds of health workers have been infected in this outbreak.

In the current outbreak, Ebola has sickened more than 17,500 people, mostly in Guinea, Liberia and Sierra Leone. Of those, about 6,200 have died. It is currently spreading fastest in Sierra Leone.

Yes, I missed the opportunity to name another Geico Rock Award nominee for 2014 when I forgot to nominate the individual who first told America "Ebola is NOT" easy to catch."

But that's water under the bridge.

Nineteen (19) New Permits -- October 3, 2014

Active rigs:

	10/3/2014	10/03/2013	10/03/2012	10/03/2011	10/03/2010
Active Rigs	189	185	188	199	143

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Nineteen (19) new permits --

• Operators: Emerald Oil (5), EOG (3), XTO (3), Marathon (2),  Hess (2), BR, OXY USA, Crescent Point, Mountain Divide
  Fields: Charbonneau (McKenzie), Parshall (Mountrail), Manitou (Mountrail), Siverston (McKenzie), Bailey (Dunn), Manning (Dunn), Haystack Butte (McKenzie), Reunion Bay (Mountrail), Little Muddy (Williams), West Ambrose (Divide)
• Comments:

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The Real "Boomtown"

Yahoo!Finance is reporting these two families saved by the Bakken:

Mitzi Bestall and her husband Bill Murphy are realtors who made the move to North Dakota in 2010 thanks to a struggling housing market in Colorado.

“We only did eight homes that year, came back the next year as 'Bakken Realty' and we did approximately $10 million in sales that year,” Mitzi told Yahoo Finance when we visited Bakken Realty’s offices in Williston, North Dakota.

For the first year in their adopted hometown, Mitzi and Bill lived in an RV park. Mitzi was the only woman in the complex, and the one bathroom that everyone in the park shared was a port-o-potty.

“The first year, we made about $8,000 up here,” Bill says. “But it was a great education and it’s more than we would have made in Colorado.”

It's rewarding to read that story. You have no idea how many folks write me, telling me that the Bakken was a "once-in-a-lifetime" opportunity. 

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The Real Entrepreneurs

KXNet is reporting:

Mark Wald and his wife Maria formed Blaise Energy in 2008.

They became the first company in North America to generate electricity from recycled natural gas using generators like this one.

But there was still natural gas being flared.

So Mark began to experiment with transportation.

"There is a lot of discussion and it all makes sense between rail and pipeline, lets get all these resources out of state into the market.  We tried to focus on how do we use it right here?  How do we put it to use right here in North Dakota"

Using a carbon fiber tank, he found a way for his truck to run on Compressed Natural Gas.

Gas that otherwise would be flared into the atmosphere.

When running on CNG, this truck runs cleaner...

Blaise Energy corporate office is in Bismarck, North Dakota. Their website: http://www.blaiseenergy.com/company.html

Active Rigs Down To 186 From Recent High Of 200 -- September 29, 2014

Active rigs:

	9/29/2014	09/29/2013	09/29/2012	09/29/2011	09/29/2010
Active Rigs	186	184	190	196	143

 
I was eagerly awaiting "the number" this morning. When I noted the "precipitous" drop from 200 to 194 (or thereabouts) I suggested there were two possible reasons; a reader told me to expect the drop because the "surface" rigs generally began drilling on Sunday and the number gradually declined as the week wore on.

So, I was curious to see if Monday's (today's) number would be the same, or perhaps even a bit better than Friday.

Not only did we not see a slight increase (as the reader suggested should happen), another significant drop. This is what I wrote then:

Comment: When I see the number of active rigs drop from 200 to 193 in just a few days, I at least have to ask the question: is there a particular reason? Probably not. Just one of those things. But remember, it's the best time of the year in North Dakota to be drilling. Why would the operators be stacking rigs? What has changed in the past few weeks? Two things: price of oil and new flaring rules are about to go into effect.

It is my impression that the price of oil, in the short term (less than 6 months), has no effect on CAPEX or the drilling plans for operators.

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Miscellaneous Rants

From The Los Angeles Times: ObamaCare networks will get even tighter as more physicians are taken off the list.  Somewhere I seem to recall, "if you like your doctor, you can keep your doctor." No.

From The NY Post: ObamaCare's first anniversary report card -- F.  This is very, very good news; the next report won't be worse.

Also from The Los Angeles Times: Govenor Brown vetoes bill that would have curtailed law enforcement surveillance using drones except in oil spills. I can't make this stuff up. Reminds me of the North Dakota criminal case against an operator for the death of six ducks in the worst spring flooding ever in the recorded history of North Dakota.

And finally, one last story from The Los Angeles Times: the city of Ferguson is about ready to explode/implode, and folks want law enforcement to leave. I can't make this stuff up. This Ferguson is not in California. Or Colorado. That I could understand.

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Miscellaneous Rants

It looks like riots in Hong Kong will affect the US financial markets more than ObamaWar.

PIMCO: too big too fail? I think this is a scarier story that some folks realize. I can't say why. It's just a feeling. The headline: billions flow out the door at PIMCO.

Tesla has to persuade skeptics to install chargers in China. The concern: watching iPads and iPhones blow up when folks try to charge their mobile devices at these car charging stations.

LOL. Team USA heads for the repair shop after (another) Ryder Cup defeat.

Car sales may be doing well in the US, but overseas, a big concern. Platinum skids on car-demand worries; platinum is used in vehicle exhaust filters.

Speaking of which, down here in Texas, it really does feel like "Ford country." Which reminds of a CNG - Ford - Texas story a reader sent me, if I can find it. Here it is ("mail search" certainly works nicely). This was from a recent issue of The Wall Street Journal:

At Mike Scully's Apple Towing in Houston, just one of their big Ford F650 tow trucks saves more gasoline each year than 20 Nissan Leaf electric cars.

When it comes to reducing carbon dioxide, nitrogen oxides and other pollutants, Mike's F650s are equally impressive, and his fuel cost per mile is about the same as that of a four-seat Jeep Wrangler. What is Apple Towing's secret?

The F650 tow trucks run on natural gas, which they refuel for less than $1.70 per gasoline-gallon equivalent, or gge.

PIRA Energy Group estimates that natural gas in transportation will approach 800 million gges this year. Do some simple math and it quickly becomes apparent that natural-gas vehicles (NGVs) will displace 10-12 times more gasoline and diesel than the 250,000 electric cars currently on the road.

When complete, Apple Towing's small fleet of 24 natural-gas tow trucks will displace more gasoline than around 700 Chevy Volts.

And here is a nice side benefit: Those Volts would cost federal taxpayers a whopping $5.3 million in subsidies while Mr. Scully's F650 Fords cost them nothing.

For more than a decade, policy makers and the automotive press have been enamored of electric vehicles, lavishing them with attention and incentives. All this even though when it comes to reducing oil dependence, pollution and fuel cost, the transition of America's truck fleet to natural gas is the hands-down winner.

Mention NGVs to a Washington policy wonk, however, and he will immediately start chattering about chickens and eggs. Received wisdom tells us that natural-gas vehicles won't sell until a huge national refueling infrastructure is built (and refueling infrastructure cannot get built without vehicles).

Apple Towing's Mr. Scully, not being a poultry farmer and thus unaware of this seemingly insoluble dilemma, asked our company, Nat G Solutions, to upgrade his F650s and at the same time install a natural-gas fueling compressor in his parking lot and hook it up to his city gas line. The great infrastructure crisis disappeared.

The other solution to the infrastructure challenge lies in the new generation of multi-fuel systems found on most modern NGVs. For trucks with gasoline engines, most natural-gas upgrades allow them to run on either natural gas or gasoline. These bi-fuel vehicles are user-switchable and they automatically revert to gasoline if the compressed natural gas runs out or the system has a fault.

For diesel trucks, a new generation of retrofit systems—from companies like NGV Motori USA and Landi Renzo —allow us to upgrade the big diesel engines to run on a 60/40 blend of natural gas and diesel, which is combined in real-time inside the engine. If the compressed natural gas runs dry, the truck switches back to 100% diesel and keeps on driving.

This dual-fuel approach is now opening the door for long-haul natural-gas trucking without the need for multibillion-dollar infrastructure incentives or even the need to go out and buy new tractor-trailers.

We're done.

Trucking Industry, Slowly But Surely, Switching To Natural Gas -- September 12, 2014

From Forbes earlier this week:

Last week Anheuser-Busch announced that it was going to replace all 66 of the heavy duty trucks at its Houston brewery. This was no obvious business move. The trucks in its existing fleet are not old or falling apart. Like the Clydesdale horses of yesteryear, these are tough, reliable diesel-powered workhorses that pull 53-foot trailers loaded with 50,000 pounds of beer.

Yet A-B is putting all these diesel workhorses out to pasture — and replacing them with 66 new trucks, that intead run on compressed natural gas.

It’s significant that A-B feels comfortable swapping for an entire fleet that runs on CNG.

The intention of shifting to natgas, says James Sembrot, A-B’s senior transportation director, is to reduce carbon emissions and fuel costs, while doing something green(ish). 

The Houston brewery is among the biggest of the 14 that A-B operates nationwide. The closest breweries to this one are in Fort Collins, Colo. and St. Louis. Each truck rolls virtually around the clock — putting in an average of 140,000 miles in a single year hauling beer to wholesalers. They move seventeen million barrels of beer each year.

In other words: if Texans want to put Bud Light in their mouths (and hell yeah they do) then these trucks gotta haul.

RBN Energy: new liquefaction plants to serve US truckers and frackers.

Many exploration and production (E&P) companies have indicated their sincere interest in at least partly weaning themselves away from diesel—and onto natural gas, much of it from LNG—as their fuel of choice for the engines that power their drilling rigs and hydrofracturing pumps. But there has been some hesitance in making the switch, in part due to concern about whether the LNG-supply infrastructure is sufficiently reliable.

The same is true for railroads, trucking companies and ship owners—they too see potential savings in moving to engines fired partially or entirely by LNG, but they need assurance that their new fuel source will be plentiful and at hand. Today we detail all the new liquefaction capacity being developed specifically to serve these new markets

In Part 1 of this series, we explained why diesel’s dominance as the engine fuel for the E&P and heavy-duty transportation sector may be threatened over the next few years by natural gas. It comes down to economics and environment.

Diesel prices are based on the price of crude oil, and US natural gas is selling at roughly one-quarter the price of crude on a per-BTU basis these days. Even when the costs of liquefying gas and transporting LNG to customers are factored in, natural gas from LNG is consistently less expensive than diesel. Also, rules regarding diesel and shipping fuel emissions are tightening.

The key question becomes, how quickly can fuel-cost savings justify the investment required to retrofit diesel engines to burn a mix of diesel and natural gas (or buy new engines that burn only gas), as well as the cost of adding LNG storage and re-gasifiers?

In Part 2, we pointed out several calculators that can help address the should-we-switch conundrum, noted some pretty big E&P names already testing the potential for dual-fuel and gas-powered engines, and listed the seven existing liquefaction plants (totaling about 580 Mgal/d) that are not utility-focused “peak-shaving” facilities.

This time we examine the far greater amount of liquefaction capacity being planned to provide LNG to the domestic E&P, mining and heavy-duty transportation markets—and, with Canadians being so friendly and all, we are including their projects in this as well. A reminder: As we said in our last episode, a 100 Mgal/d liquefaction plant—pretty typical for what is being planned—would require about 8.3 MMcf/d, or about 3 Bcf a year of natural gas.

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400 PPM

During that short period between a very hot summer (high a/c - electricity - natural gas use) and the very cold winter (high natural gas heating use), the natural gas industry takes an opportunity to fill natgas storage tanks. With this highly unusual early cold snap a lot of natural gas is going to be burned, instead of being stored.

For The Archives: I'm Not Holding My Breath

The Bismarck Tribune is reporting:

Three natural gas-related companies want to know how many operators using diesel fuel in the Bakken would convert to natural gas.

Companies have struggled with what should come to the area first, natural gas vehicles or fueling infrastructure. GoCH4 and partners MicroLNG and AmeriFlare, wants to take the first step by providing the equipment to fuel the vehicles if there are enough companies ready to make the switch.

From my vantage point, not going to happen in my investing lifetime which is now down to ten years, decreasing, and counting.

The companies are still debating "compressed" vs "liquified" and I am unable to keep the pros and cons of each straight. In a more temperate climate it would be confusing enough; throw in two months of sub-zero weather and the calculus is overwhelming. At least for me.

The three companies issued a call for submissions for the purchase of compressed natural gas or liquefied natural gas to determine if the market exists to support the investment.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you might have read here.