ERCOT Texas Update -- Late Afternoon -- Tuesday, A Work Day -- June 20, 2023

Locator: 44985ENERGY.
Locator: 44985COSTRENEWABLES.
Locator: 44985ELECTRICITY.

Update

Later, 5:42 p.m. CT: just show consumers the cost of electricity and they will cut back.

 Original Post

Link here.

Wind, Solar "Saved" Texas Yesterday But At What Cost! Today Will Be Closer And Way More Expensive -- June 20, 2023

Locator: 44978ERCOT.

Yesterday: the grid held. Folks already forget that yesterday was a holiday. Today, no holiday and it's going to be worse.

Today: 

• it's going to be much closer and it's going to be four times as expensive --
• yesterday, at peak: rates of $500 / MW forecast
• today, at peak, rates of $2,500 / MW forecast 
• Texans voting for "free energy" -- wind and solar -- truly duped

 

 

Pet peeve, and almost criminal, certainly poor, if not unethical journalism:

• local weather forecasters crowing that the grid held, but failing to show "us" the cost for that "miracle," and one completely dependent on wind and sun.

The Renewable Energy Scam -- June 19, 2023

Locator: 44977SCAM.  

Profile: EIA energy by state, North Dakota, link here.

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101 Days Of Summer -- Day 23

ERCOT: it's gonna be close. Not enough wind / sun late this afternoon. Link here.

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As long as solar and wind developers show Texas politicos that capacity exceeds demand, developers will be able to keep adding more solar / wind, and closing conventional (fossil fuel) sources.

In the graph above, the folks investing in renewable energy want the 1300 - 1900 energy price spike to incrementally expand to the left and to the right.

It's all about two things:

• fund all infrastructure on back of conventional/historical pricing models;
• "area under the curve"

We talked about this on the blog years ago. I first noted it while sitting in on a Harvard Business School talk on renewable energy -- about ten years ago. The scam was obvious then for those who understood graphs. LOL.

At the time, I questioned whether we would see publicly-provided graphics to demonstrate the scam.

Random Update -- Heat Advisories -- Texas -- ERCOT? No Problems -- June 17, 2023

Locator: 44967TX.

All that talk about "grid problems." Oh, give me a break. Holding up nicely. Lots of sun; lots of wind.

Combined, wind and solar providing 20K MW of electricity.

NE ISO: 13K demand -- total -- natural gas, oil, coal, nuclear, wind, sun, trash. All of the above, 13K.

Texas: “just” wind and solar -- 20K. And "building" more each year.

ERCOT: Random Update -- 10:16 A.M. -- Saturday -- June 17, 2023

Locator: 44961TX.

ERCOT holding up very, very well. Folks were worried this hot spell would create significant problems.

Max power production capability vastly exceeds demand today ...

... despite fact that wind "comes" at the wrong time.

Combined wind and solar power adds about 10K to 20K ... if baseline without wind / solar is 70, then 20/70 = 29% and 20 / 90 = 22%. Not trivial. And the fuel source is all free and will never run out.

 

Wind Is Free Except When It's Needed Most, Then It Gets Really Expensive -- June 16, 2023

Locator: 44952WIND.   

Updates

Later, 6:56 p.m. CDT: what a joke, what a scam.

Original Post

Texas ERCOT wind production, today, link here:

ERCOT -- Current -- It Looks Like We Maxed Out At 8:00 P.M. And The Grid Held -- February 14, 2021

Update

February 15, 2021: failure on a massive scale. Perhaps unprecedented.

Original Post

Note: yesterday's high was 64K. 

It looks like we maxed out at 69K.

I believe the all-time high for ERCOT was 74K in August, 2019. 

There's definitely a difference between global warming and global cooling.

Link here. 

I believe the all-time record was August 13 - 15, 2019: maxed at 74,666 MW --

ERCOT set a new maximum peak demand in August 2019 at 74,666 MW*, that is 4,747 MW more than the August 2018 demand of 69,919 MW. ... ERS was deployed on August 13 and August 15 during the EEA Level 1 events.

Operating Day: February 14, 2021:

Last Date and Time: Feb 14, 2021 22:20

Oper Day	Hour Ending	NORTH	SOUTH	WEST	HOUSTON	TOTAL
02/14/2021	0100	21982.37	15958.37	5334.28	11623.70	54898.71
02/14/2021	0200	21923.13	15717.33	5300.74	11440.15	54381.35
02/14/2021	0300	22107.58	15612.13	5265.42	11340.07	54325.20
02/14/2021	0400	22493.40	15625.27	5239.99	11259.14	54617.81
02/14/2021	0500	22933.90	15815.21	5178.29	11278.34	55205.74
02/14/2021	0600	23508.41	16114.75	5212.81	11405.91	56241.88
02/14/2021	0700	24126.75	16519.24	5299.67	11649.01	57594.66
02/14/2021	0800	24779.76	16958.00	5357.40	11908.89	59004.06
02/14/2021	0900	25581.04	17543.17	5392.91	12269.86	60786.98
02/14/2021	1000	26431.90	18119.36	5400.45	12582.18	62533.89
02/14/2021	1100	26897.10	18533.09	5380.02	12865.15	63675.36
02/14/2021	1200	27187.53	18779.66	5331.89	13121.96	64421.05
02/14/2021	1300	27319.46	18881.52	5299.15	13085.13	64585.25
02/14/2021	1400	27377.27	18910.67	5245.93	13060.14	64594.01
02/14/2021	1500	27439.77	18990.87	5215.94	13091.69	64738.27
02/14/2021	1600	27657.07	19072.22	5182.80	13177.90	65089.99
02/14/2021	1700	28107.80	19408.93	5168.28	13289.07	65974.08
02/14/2021	1800	28818.62	19959.91	5207.07	13604.09	67589.69
02/14/2021	1900	29607.43	20455.31	5246.65	13840.29	69149.68
02/14/2021	2000	29579.78	20606.68	5221.65	13814.12	69222.23
02/14/2021	2100	29386.44	20612.54	5193.10	13687.38	68879.46
02/14/2021	2200	28981.55	20430.72	5128.47	13486.61	68027.35

 

Operating Day: yesterday, February 13,2021

 

Last Date and Time: Feb 14, 2021 15:20

Oper Day	Hour Ending	NORTH	SOUTH	WEST	HOUSTON	TOTAL
02/13/2021	0100	22790.09	15263.98	5689.92	12081.23	55825.22
02/13/2021	0200	22604.68	15045.61	5671.68	11821.07	55143.04
02/13/2021	0300	22526.31	15000.03	5661.93	11693.21	54881.47
02/13/2021	0400	22619.18	15072.23	5641.40	11683.52	55016.33
02/13/2021	0500	22905.89	15327.70	5661.87	11770.24	55665.70
02/13/2021	0600	23418.58	15766.30	5720.94	11985.60	56891.43
02/13/2021	0700	24063.82	16381.66	5819.20	12318.78	58583.46
02/13/2021	0800	24690.41	16876.54	5896.40	12577.47	60040.82
02/13/2021	0900	25451.08	17371.36	5966.38	12859.02	61647.83
02/13/2021	1000	26157.05	17827.37	6020.27	13169.36	63174.04
02/13/2021	1100	26455.63	18113.16	5880.79	13236.83	63686.42
02/13/2021	1200	26077.65	18144.96	5802.08	13145.99	63170.67
02/13/2021	1300	24987.43	17978.94	5732.88	13001.46	61700.72
02/13/2021	1400	23530.34	17771.00	5650.29	12781.90	59733.53
02/13/2021	1500	22279.27	17624.40	5599.99	12625.30	58128.96
02/13/2021	1600	21554.73	17452.68	5570.00	12450.71	57028.12
02/13/2021	1700	21655.87	17512.40	5590.12	12390.15	57148.53
02/13/2021	1800	22440.23	17719.92	5659.91	12519.36	58339.43
02/13/2021	1900	23452.06	18008.55	5751.47	12890.53	60102.62
02/13/2021	2000	23697.96	17953.77	5786.24	12903.98	60341.95
02/13/2021	2100	23551.84	17757.98	5698.30	12733.53	59741.66
02/13/2021	2200	23227.90	17392.89	5581.76	12576.49	58779.04
02/13/2021	2300	22681.08	16828.81	5461.32	12236.17	57207.38
02/13/2021	2400	22246.67	16352.29	5405.27	11898.15	55902.38

The Market, Energy, And Political Page, Part 2, T+ 50 -- October 2, 2018

Exactly what happened in the Bakken at the height of the boom. From DallasNews:

America's fastest-growing source of energy has a power problem.

The Permian Basin, which produces almost 4 million barrels of oil a day, has expanded so quickly that suppliers of the electricity needed to keep wells running are struggling to keep up. The Delaware portion alone consumed the equivalent of 350 megawatts this summer, tripling the load from 2015. That's enough to power about 280,000 U.S. homes. And providers say the draw is likely to triple again by 2022.

While providers are rushing to build new power lines, it takes three to six years to get them up and working. In the meantime, drillers are bemoaning the reliability of the system and desperately seeking alternatives, exploring the use of solar and natural gas to fuel power-generating gear on-site.

It looks like Boone Pickens was just too early with regard to his wind farms in west Texas. Of course, he was moving that electricity to the large cities in east Texas, not to the oil fields. 

And more. Exactly what happened in the Bakken six years ago. Another story being carried by Yahoo!Finance:

The west Texas drillers that drove the shale revolution have overwhelmed the region's infrastructure with oil production -driving up costs, depressing regional oil prices and slowing the pace of growth.

The U.S. government continues to forecast the country's oil output rising to fresh record. But competition for limited resources in Texas is making it harder for shale producers to turn a profit and encouraging some to invest elsewhere.

Texas is home to the Permian Basin, the largest U.S. oil field and the center of the country's shale industry. In the past three years, production from the Permian has risen a whopping 1.5 million barrels per day (bpd) to 3.43 million bpd.

All that oil means pipelines from the shale patch are full, so producers are paying more to transport oil on trucks and rail cars. Shortages of labor, water and even the fuel used in fracking are driving up production costs.

Texas Heat And Wind: Lots Of Hot Air -- July 19, 2018

Updates

July 23, 2018, from SeekingAlpha --

• Sempra Energy's  SoCalGas issued a natural gas curtailment watch today, telling customers to be prepared to reduce gas use if needed, with power generators expected to work harder than usual to keep air conditioners humming as a heat wave blankets Southern California
• high temperatures in Los Angeles are forecast to top 90 degrees F every day this week, including 97 on Wednesday, while the normal high in the city at this time of year is 84
• SoCalGas projects gas demand will rise from 3B cf/day toay to 3.B on Tuesday and 3.2B on Wednesday, while receipts of the fuel via pipelines into California are expected to total only ~2.6B cf/day each day, meaning the utility would need to tap storage fields to make up the difference, which could hurt SoCal’s ability to stockpile enough fuel to avoid curtailments for some power and industrial customers on the coldest days during the winter heating season

Later, 3:17 p.m. CDT: California next! From SeekingAlpha -

• Sempra Energy's SoCalGas issues a natural gas curtailment watch for Southern California, with power generators expected to burn more fuel than usual to keep air conditioners humming ahead of an anticipated heat wave [can't they spin the wind turbines faster; turn on the solar panels all night?] 
• although high temperatures in Los Angeles were expected to remain near normal levels of ~84 degrees F through Sunday, readings are forecast to jump into the low 90s during much of next week
• SoCalGas supplies are expected to remain tight this summer and winter due to reduced availability from the Aliso Canyon storage facility following the massive 2015-16 leak and ongoing shutdowns of several pipelines  

Original Post

Posted earlier:

Texas heat: Texas sets back-to-back electricity demand records, and likely to keep setting new records -- summer is just beginning here in Texas. Electricity demand in Texas dwarfs that of California. Amazing.

• DFW hit 106 late Wednesday afternoon -- but it was a dry heat
• Love Field, downtown Dallas, hit 107
• Spinks Airport, Ft Worth, hit 108
• yesterday, a new record, between 4 and 5 p.m.: 72,192 MW
• yesterday, one hour earlier: also set a record -- broken one hour later
• both of those records topped the August, 2016, mark of 71,110 MW
• California demand record was around 54,000 MW set some years ago

Now, let's look at wind production:

Energy demand today hit 61,195 MW at noon, Texas time, and will continue to rise through late afternoon. During this period, when demand will near/exceed 70,000 MW -- how much energy will all that wind capacity supply? About 3,000 MW.

Note: wind-produced electricity will fall even farther tomorrow.  And not by a trivial amount. Fossil fuel utility plants will need to be up and running well before increased demand becomes reality; incredibly inefficient -- even while wind is providing electricity, fossil-fuel plants need to be running in the background to ensure "viability" of the electric grid.

Link for graphic below:

At the nadir, 42,000 MW, wind provides a significant amount, upwards of 15,000 MW, but it's not dependable, and fossil fuel plants need to be running in the background to ensure the grid "holds."

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Proof That The Texas Grid Is Holding 

Cleaning Out The In-Box -- February 22, 2018

Some days my in-box is just too full to get to everything. Today is one of those days. So, I'm going to clean out the in-box and simply run through the list.

• GE is not going to spin off Baker Hughes any time soon: can you think of a more bullish energy signal? I cannot. GE is up nicely today.
• CLR beats Street as production surges: memo to self, call the naysayers. CLR expects stronger performance in 2018. But look at this: 4Q17 net income of $2.25/share vs 7 cents/share one year ago. Earnings 41 cents vs 32 cents forecast. Wow.
• CenterPoint beats 4Q17 profit forecasts: 33 cents/share vs 30 cents/share forecast. 
• Denbury Resources tops Street 4Q forecasts: 12 cents vs 7 cents forecast. Doing some exciting stuff; I will come back to Denbury later.
• Chesapeake Energy back to profit as production, prices rise. 33 cents/share vs 30 cents/share forecast. But look at this: revenue jumped 25 percent to $2.5 billion. Analysts had only expected revneues of $1.23 billion. Wow.
• Zacks oil, energy wrap. This is really quite amazing. 4Q17 results.

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Venezuelan Woes Continue
Maybe Crypto-Petro-Currency Will Help

From ArgusMedia, some data points:

• Venezuela's state-owned US refining subsidiary CITGO has shelved plans to re-start / operate Aruba's 235,000 b/d refinery
• why? CITGO running short of cash to finance the $695 million plan to revamp the refinery; shortfall due to US sanctions
• CITGO had already built a construction worker's camp and is looking for a way to move forward

From the article:

The Aruba project was aimed at bulking up PdV's nearshore logistics on the eve of the December 2019 expiry of its lease on the accident-prone Isla refinery in Curacao. Deteriorated infrastructure in Venezuela itself, and a Dutch threat in December to close Bopec unless PdV makes critical repairs add to Aruba's relevance for PdV. The Venezuelan company is also using its Dutch Caribbean assets to supply crude to the Cienfuegos refinery in Cuba, a close political ally of Caracas.

But the route from Venezuela through the Dutch Caribbean and onward to the US Gulf coast and other destinations, namely China and India, is fraught with risk for PdV because of frequent debt-related detentions of its cargoes or vessels. The Panamanian-flagged Proteo tanker has been detained in Bullen Bay since early January as a result of a preliminary embargo on its cargo of Venezuelan Boscan crude and the ship's bunkers. Another vessel, the Greek-flagged Promitheas carrying Russian Urals, is also on hold but has yet to berth in Curacao.

The detentions, which numbered as many as 15 in Curacao alone last year, might have been a trigger for Venezuela's early January decision to close its borders with the ABC islands — Aruba, Bonaire and Curacao — which Caracas initially attributed to rampant smuggling of Venezuelan goods and resources such as gold, and later blamed on EU sanctions. The borders remain closed, but the Venezuelan oil logistics are carrying on with no noticeable effect.

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Big Wind Story Of The Day

From the Albuquerque Journal: wind farm developer can't make "it" work if not given huge financial breaks.

Xcel Energy’s plans to build two massive wind farms in New Mexico and West Texas have hit a potential project-killing road block at the Public Regulation Commission.

PRC hearing examiner Elizabeth Hurst wants commissioners to reject a proposal that would allow the utility to recover lost earnings that accumulate during the time that lags between when the wind farms actually come online and when the commission eventually approves new rates for cost recovery and profits on its project.

That lag could take up to two years, during which time Xcel subsidiary Southwestern Public Service Co. would have to write off any earnings because new rates would not yet be approved, even though customers would be benefitting from the electricity generated by the facilities.

But Hurst said it would violate legal principles that prohibit “retroactive rate making,” since it establishes an “interim rate” for the wind farms before the commission has actually approved new rates.

The interim rate design, however, is a key part of a settlement agreement SPS negotiated with other parties in the case, without which the utility might abandon its $1.6 billion project, said David Hudson, Xcel president for New Mexico and Texas.

“It will be extremely difficult to proceed because of financial uncertainty,” Hudson told the Journal. “We wouldn’t know when we would start earning a return, and the longer new rates are delayed, the bigger the financial damage is to the company.”

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Best new link of the day: @TeslaCharts at Twitter. Thanks, Don.

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Best Chart Of The Day

Although they don't call it that, WalletHub's newest survey ranks the "most boring states" in the US.

#1: Vermont. 

When you get to the link, one needs to turn the chart "upside down" -- bottom to top, top to bottom -- to see how the "most boring states" survey turned out.

In addition to the fixed chart, the interactive map is very, very nice.

Also, note where North Dakota ranks on the survey. 

It appears to be one of the most accurate surveys I've ever seen based on where Vermont and North Dakota rank.

********************************** 

Best Renewable Energy Chart Of The Decade (So Far)

Link here.

Denton, TX -- Energy Revolution -- September 8, 2017

Denton is about forty minutes from where we live. We drive their five or six times a year to take our older granddaughter to water polo tournaments. Denton is part of her water polo "composite team": Southlake; Flower Mound (Lewisville); and, Denton.

This PennEnergy story is fascinating and it's all about Denton.

A revolutionary path forward in the world’s energy transition, one that is unprecedented in the global power industry, is taking shape in the USA. In Texas, the city of Denton – with 128,000 inhabitants and an annual peak load of 350 MW – has developed a clever way to increase its reliance on renewable energy to 70% with wind power, and its utility business model is being replicated across the U.S.

Until now, all attempts to create “zero-carbon cities” have been expensive, experimental efforts centered around one consideration: sustainability. Common challenges facing the incorporation of more renewables into the grid have included system stability concerns due to the inflexibility of the existing power systems and, depending on the relative mix of available renewables, increased generation costs. For example, in Germany, wide integration of wind and solar power have led to a doubling of consumer electricity prices since the early 2000s, as the country seeks to curb carbon emissions. In order for a low-carbon model to work, utilities must not only consider sustainability, but also reliability and affordability, and take smaller steps to move toward a zero-carbon goal. Trying to take one single quantum leap directly to the zero-carbon system is not realistic, practical, or economically viable.

In Denton, this type of optimal power solution is already underway and, once it goes live with its new systems in 2019, CO₂ emissions will be reduced 78%, costs will fall 35%, and water savings will exceed 90%. These results will outperform all other existing models and set a benchmark for other cities and countries around the world. 

Denton will make history and serve as a viable model for many other cities in Texas—a state that already ranks No. 1 in wind power output—and in other states located in the windy mid-section of the United States that stretches from the Gulf Coast to North Dakota. We call this region the U.S. Wind Corridor, and its powerful winds are a major natural resource, giving the country a huge advantage and business opportunity.

Due to 70% renewables, Denton’s exposure to fuel commodity price risk will be very low, and electricity price volatility risks will be mitigated through hedging with their own flexible plant. Clean, cost efficient and low-risk - no longer will renewables lead to higher costs and volatility risks. How can this be done?
It involves three key steps:

1. Denton gives up its stake in a 34-year-old coal plant, and buys wind and solar with long-term power purchase agreements. Such contracts offer a price of less than $20/MWh in the wind-rich Midwest.
2. Denton buys another portion of its electricity mainly from the real-time electricity market, where prices are lower on average than in ERCOT’s day-ahead market, but also more volatile.
3. The third important building block of the business model is a modern, flexible gas power plant, with unlimited five-minute starts to full load. This enables Denton to hedge its real-time market purchasing costs at any 5-minute price interval.

The total package is unbeatable and unique on a global scale: 70% renewables, 35% cost savings, power generation water saving of more than 90%, very low dependency on fuel commodity prices, and a 78% reduction in carbon emissions. Utilities can now save big money while simultaneously integrating large amounts of renewables into the grid.

Denton is at the forefront of innovation in the electricity universe, a prime example for many others looking to integrate renewables in a smart way.

Of course this sounds like a paid advertisement, or an op-ed piece written by the wind industry. It's possible the print edition provides the background of the writers and/or the source of the essay, but the on-line edition only has the authors: Jussi Heikkinen & Matti Rautkivi of Wärtsilä.

Based on the following, my hunch is that this article was in the "special advertising section" of the magazine.

Wärtsilä's home page.

From wiki:

Wärtsilä is a Finnish corporation which manufactures and services power sources and other equipment in the marine and energy markets.

The core products of Wärtsilä include large combustion engines used in cruise ships and ferries.

As of 2016 the company employed more than 18,000 workers in over 70 countries.

Wärtsilä has three main businesses; Energy Solutions focusing on the energy market, Marine Solutions focusing on the marine market and Services, responsible for supporting both markets. Wärtsilä operates globally but its Marine Solutions division is heavily focused on Asia.

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

Note: this is not an investment site. Do not make any investment, financial, travel, job, relationship, or auto buying decisions based on what you read here or think you may have read here but I found this interesting:

• Goldman Sachs today: we never made much money on Bit Oil.
• five years ago, one could have bought Phillips 66 (PSX) at $31/share; today, PSX is up almost 2%, trading above $80; and, more stories on how much stock Warren Buffett has accumulated in this company; he now owns more than 10% of the PSX shares outstanding

Global warming in Texas: the high for today in north Texas is 99 degrees. This is eleven (11) degrees higher than "normal."

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

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

Quiz: does anyone "recognize" these numbers?

• 44
• 51
• 66
• 77
• 80

Bakken's bragging rights: Richard Zeit's most recent contribution to SeekingAlpha: the Bakken still has the best wells.

How exceptional are Pioneer's best well results in the Permian?

If I were to compare the company's well results for the 23 wells in the Sale Ranch area to that in the deep portions of the Williston Basin, where the majority of the drilling activity in the Bakken/Three Forks is currently concentrated, I must conclude that the Permian does not hold the monopoly on the best wells.

Consider the following slides that shows QEP Resources' (well results on the company's South Antelope block in the Bakken. Based on Year 1 cumulative oil production, QEP's wells highlighted on these slides appear comparable and possibly stronger.

The Fed rate: All that hand-wringing about the Fed rate? One-quarter percent. Back in 2008 when the weekly inter-bank loan reached a half-trillion dollars, a quarter-percent rate increase might have meant something. But since then the Fed has greatly extricated itself from this debacle. Now, weekly inter-bank loans are a fourth of what they were even in 2000. This graph is quite stunning. And this is the graph associated with that quarter-percent Fed rate everyone is so worried about.

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

Answer to quiz:

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

Active rigs:

	9/19/2016	09/19/2015	09/19/2014	09/19/2013	09/19/2012
Active Rigs	31	67	196	182	187

RBN Energy: an update on MPLX's plan to pipe northeast condensate and natural gasoline.

More than four years after the Utica and the “wet” part of the Marcellus became a hot spot for drillers, the field condensate and natural gasoline produced there are still moved to market by barge, rail and truck.

A three-part, $500 million plan by MPLX LP and the midstream master limited partnership’s (MLP’s) subsidiaries, now well under way, will enable more efficient pipeline transport of these important hydrocarbons to Midwest refineries, Western Canadian diluent pipelines and other end-users. To hold down costs, the effort involves a creative mix of new and existing pipelines. Today we continue our review of MPLX’s plan with a look at its “Utica Build-Out Projects.”

In Episode 1 of this series we discussed the rise (and recent leveling off) in production of natural gas, natural gas liquids (NGLs) and superlight crude oil (also known as field condensate) in the Utica play in eastern Ohio and the liquids-rich portion of the Marcellus in western Pennsylvania and northern West Virginia. We noted that while most of the market’s attention goes to either natural gas or to lighter NGLs like ethane, propane and butanes, the three-state region produces sizable volumes of natural gasoline (an NGL also known as plant condensate) and of superlight crude (also known as field condensate or lease condensate), both of which are important products that have the potential for value uplift.

Plant condensate/natural gasoline is used as a gasoline blending agent, a feedstock for steam crackers and as a diluent –– that is, blended into heavy bitumen crudes in Western Canada to reduce viscosity and enable them to flow more easily through pipelines.

Among other things, field condensate can be blended into crude oil, run as a feedstock at refineries and condensate splitters, or used as diluent. Marcellus/Utica production of field condensate and natural gasoline rose sharply starting in 2013; currently the three-state region is producing about 110 Mb/d of field condensate and about 50 Mb/d of natural gasoline. To date, no pipelines are in place to move them out, leaving field condensate and natural gasoline producers with only three delivery options (tank trucks, rail tankcars, and Ohio River barges), but that is about to change.

While other efforts to develop field condensate and/or natural gasoline pipelines out of the Utica and wet Marcellus have failed or faltered, Findlay, OH-based MPLX –– a master limited partnership (MLP) formed by Marathon Petroleum Corporation (MPC) –– has hung in there, and is finishing up the first part of a three-part pipeline solution.

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For The Archives

Wind - Texas - Amazon

Link here. Data points:

Amazon's largest investment in renewable energy will be in west Texas

• West Texas wind
• Amazon will team with Chicago's Lincoln Clean Energy in this wind farm
• 253-MW Amazon Wind Farm
• east of Abilene in Scurry County
• one MW typically powers 200 homes
• slated to open by end of 2017
• 100 wind turbines
• project costs not released by Amazon, but Lincoln CEO "described" the cost as $300 million 
• $300 million / 253 MW = $1.2 million / MW
• Texas leads the nation in wind power, by far
• Lincoln developing other Texas wind projects; this project will be built and owned by Lincoln, but Amazon has pledged to buy 90% of its output 

Amazon's other activities in Texas

• Amazon has a large warehouse and customer service center located near San Antonio, in Schertz, TX
• Amazon has pledged to open a new 855,000-sq-ft distribution warehouse in north Houston
• Pinto Business Park, near I-45 and Beltway 8
• the Houston warehouse will employ 1,000 people
• this is in addition to Amazon's Prime Now warehouse hub in Humble, TX
• Amazon has just opened more than 20 "Pop Up" electronics stores nationwide; two of them are in Texas -- San Antonio and Arlington

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The Market

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

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

The Open: the numbers held -- the opening at 80 points up. It will take awhile for the effects of the past week to be forgotten. Only 63 new highs on the NYSE today:

• new highs: 63
• new lows: 11

Future: just prior to the open -- the DOW 30 is up 71 points. 

Friday, December 4, 2015 -- Robust Jobs Report; Rate Hike Coming; Participation Rate Jumps

We've talked about this before:

Active rigs:

	12/4/2015	12/04/2014	12/04/2013	12/04/2012	12/04/2011
Active Rigs	64	191	192	181	199

RBN Energy: great update on Corpus Christi.

NRG CEO resigns. Link here. I may come back to this. I have never invested in NRG; never will. But NRG is our electric utility down here in north Texas. From my perspective, their rates are unnecessarily high due to NRG's green energy initiatives. Apparently, the board agrees that the CEO's emphasis on wind energy was ill-advised. From my perspective, no love lost between NRG CEO and me.

Oil prices: Yergin on oil prices. I disagree. I plan to do a post on this but I keep running out of time. Maybe this weekend. Yergin is way smarter than I am, and has much more data available to study, and a whole think tank working for him, so I know I'm wrong, so he's right and I'm wrong but that won't stop me from thinking differently, respectfully disagreeing.

Jobs: rate hike coming. Bloomberg is reporting:

Employers added more jobs than forecast in November, underscoring Federal Reserve Chair Janet Yellen’s confidence that the U.S. economy is strong enough to withstand higher borrowing costs.

The 211,000 increase in payrolls followed a 298,000 gain in October that was bigger than previously estimated, a Labor Department report showed Friday. The median forecast called for a 200,000 advance. The jobless rate held at a more than seven-year low of 5 percent.

Employee pay increased at a slower pace last month. Average hourly earnings at private employers rose 0.2 percent in November after a 0.4 percent gain. The year-over-year increase in hourly pay compared with a 2.3 percent increase in October.

The labor force participation rate -- the share of working-age people who are employed or looking for work -- rose to 62.5 percent from 62.4 percent.

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Note To The Granddaughters

I'm in a great mood. While cleaning the house I came across a piece of junk mail from Gerber life insurance that I would have received about two years ago. That reminded me. Life insurance is really, really inexpensive for children under the age of 14 years of age.

Yes, I know the arguments "against" life insurance, and the arguments regarding term insurance vs permanent insurance. I have no problem with that. It's an individual choice. But for me, I'm a big "believer" in permanent life insurance. There are two types, whole life and universal life.

I sent a photocopy of the Gerber life insurance ad to my primary insurance company, Thrivent, and they referred me to our local agent here in Grapevine, Bob Pangrac. My daughter and I spent 2 1/2 hours with Bob yesterday. I learned a lot and found the experience very enjoyable. I wasn't looking forward to the appointment but I was pleasantly surprised. I think my daughter also learned a lot.

Bob did a great job explaining the difference between whole life and universal life. 

The most important reason for permanent life insurance, as far as I'm concerned, is "insured insurability." Buying these policies before the grandchildren turn 14 years of age, means that they are insurable through the rest of their lives regardless of their medical condition in the out years. In this particular case, with no medical history or exam, our granddaughters can purchase significantly more insurance nine (9) times later in life. Some of these events are age-related (at age 16, 18, 21, 23, etc) and others are event-related (getting married, having children).

So I got three incredibly great policies for the granddaughters at a monthly premium for all three that will be less than the cost of one sushi dinner. In fact, if I have a martini with my sushi dinner, the total cost of these three policies will be about 75% of the cost of the dinner.

I've had a Thrivent policy for decades and couldn't be happier. I have a similar MONY policy for my wife and am similarly happy. I bought the daughters a Thrivent policy shortly after they were born 30 years ago, and their grandfather bought them a Sons of Norway policy about the same time. Even with multiple policies, I do not feel anyone is overinsured and am very happy with the small premiums. The policies for my wife and myself have been completely paid.

So, I'm in a good mood. It was coincidental that the Wall Street Journal had an article on universal life insurance. Bob talked about that yesterday, completely unaware, obviously, that the WSJ was going to have an article on that exact topic. And it's now new. The WSJ had a similar article back in August.

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Note to the Granddaughters

We attended the largest Christmas Parade in Tarrant County, Texas (Ft Worth) last night, here in Grapevine. It seemed to go on forever and ever. About two hours long. The weather was perfect and that might account for the fact that the parade route was packed; the crowds seemed much bigger than last year. Much bigger. It was like Times Square, NYC, on New Year's Eve. The weather was incredibly mild and absolutely dry. Beautiful night. It was the first time our granddaughter, a flutist, marched in a parade. She loved it.

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Note to the Granddaughters

A month or so ago, Texas Monthly published their list of the top 25 barbecue joints in Texas. There must be a thousand barbecue joints in Texas. There's a group in Dallas -- I believe associated with the Dallas Morning News -- whose mission in life is to visit the best barbecue joints across the state. "They" are serious down here when it comes to barbecue, as serious as they are about football specifically, and sports in general. I say all that because it was a huge surprise that one of the 25 was right here in Grapevine, Meat U Anywhere. (In fact, it's across the street from "my" bicycle shop.) After seeing that article in Texas Monthly, I visited one, about a month ago, and then yesterday I took my wife, and then later took my daughter (after the life insurance policy visit), not to eat, but just to see it in anticipation of her in-laws coming to visit over Christmas. We want them to experience real Texas barbecue. From the linked article:

When Andy Sedino, the managing partner and director of operations for Rudy’s Bar-B-Q’s North Texas franchises, left his post in 2012 to launch his own venture, expectations were rightly high. Not only has Sedino met them, but in the short time Meat U Anywhere has been open, the small restaurant has attracted loyal customers eager to pack the joint, especially on weekends, when it serves prime rib, mammoth beef ribs, and thick-cut turkey slices rubbed liberally with herbs.

Yesterday when my daughter and I stopped by to check the menu at lunchtime, the line stretched out the door. We walked right in, walked to the front of the line, but told folks we were only checking out the menu -- not cutting in line -- everyone was as friendly as could be. No one was upset that we might be trying to "cut in." For a large group, I recommend take-out. Order ahead and bring home pulled pork, brisket, smoked turkey, sausage. Menu here.

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The Sports Page

We got home from the parade in time to see the last quarter of the Green Bay Packer - Detroit Lions game last night. All I can say is "incredible." 

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America Is In Good Shape

Data points:

• gasoline is dirt cheap and will remain dirt cheap for years
• auto sales are hitting records
• the country can afford free college tuition for all -- Hillary
• Playboy Magazine will end nude photos after January/February, 2016, issue; Pamela Anderson will be the last nude pictorial
• US Attorney General will prosecute right-wing "hate" speech; apparently more dangerous than jihadists
• despite all that talk about bird flu, there was apparently no shortage of turkeys this Thanksgiving; walking through grocery stores yesterday I was amazed at all the frozen turkeys still available
• open enrollment for ObamaCare is now open through December 15 if one wants coverage by January, 2016
• fighting back, controlling climate change, man is corralling Mother Nature -- not one severe hurricane this past year -- or in the past ten years for that matter
• San Bernardino mass shooting not that big a deal -- NPR:

The shooting in San Bernardino, Calif., was the 355th mass shooting in the U.S. this year — or more than one per day on average so far in 2015 — according to groups monitoring such attacks in recent years.

The San Bernardino case, where 14 people were killed, wasn't the only mass shooting on Wednesday. A 34-year-old woman was killed and three males, ages 17 to 52, were injured by gunfire in Savannah, GA, earlier in the day. Police believe at least two shooters were involved in that incident, but no arrests had yet been made.

• David Letterman won't be on television this Christmas.

Baby, Please Come Home, Darlene Love
Many years ago it was pointed out that the most dangerous place for pedestrians was in pedestrian crosswalks. More pedestrians are hit by motor vehicles in crosswalks than anywhere else. I was reminded of that when reading this Breitbart report: in the US high-profile shootings are more likely to occur in gun-free zones than anywhere else.

WaPo points to a study by Mother Jones that claims that high-profile shootings began increasing in gun-free zones in late 2011/early 2012. The examples Mother Jones provides are the Aurora movie theater, Sandy Hook Elementary, and the D.C. Navy Yard, all of which were gun-free zones.

Other examples of shootings in gun-free zones that could have been cited are Arapahoe High School (December 2013), Fort Hood (April 2014), Emanuel African Methodist Episcopal Church (June 2015), Chattanooga military offices (July 2015), the Lafayette Grand Theatre (July 2015), and Umpqua Community College (October 1). [And now San Bernardino, Inland Regional Center, another gun-free zone.]

Note the source: not Fox News but Mother Jones. I don't know if Baltimore is a gun-free zone, but homicides in Baltimore stand at 316 today (a dynamic link).

Huge Rain Returns To All Of Texas -- October 23, 2015; The Williston Wire; Slicers And Dicers; Texas Sets Wind Record

Updates

Later, 7:06 p.m. Central Time: after posting the note below regarding the PBS News story on wind turbines, a reader sent me this note (again, why I love to blog; the things I learn). FuelFix is reporting:

The Texas electric grid hit a new record for wind power use early Thursday, as the state continues dominating the rest of the nation in wind farm growth.

At 12:30 am Thursday, the main Texas grid operator reported that nearly 37 percent of demand was met with wind power. The Electricity Reliability Council of Texas, which manages nearly 90 percent of the state’s electric needs, said it used 12,237.6 megawatts of wind power at the time. That bested a previous record set on Sept. 13 of 11,467 megawatts.

A megawatt powers about 500 typical Texas residences during periods of normal demand.

The new record came the same day as the American Wind Energy Association reported Texas accounted for nearly half of the nation’s wind power growth in the third quarter of the year. Texas added 771 megawatts of wind generation in the third quarter and, nationwide, about 1,600 megawatts were put online. Texas now has about 16,400 megawatts of wind power, according to the AWEA, which is about 10,000 megawatts more than the second and third windiest states, California and Iowa. [Boone Pickens was ahead of his time; came out for wind too soon; couldn't get the transmission lines built.]

Texas is expected to exceed 20,000 megawatts next year. Further growth after 2016 may depend on whether Congress extends the production tax credit for wind projects.

The wind association praised recent project announcements like SunEdison saying it will build the 300-megawatt South Plains II wind farm northeast of Lubbock to power Hewlett-Packard data centers, and Monday’s announcement that EDF Renewable Energy will build a 123-megawatt wind project north of Dallas to power Procter & Gamble plants that make its laundry, dish-washing and other cleaning products.

Some companies are even studying ways for wind to power the production of oil and gas. Norway-based DNV GL has partners with Exxon Mobil Corp., Statoil and others on the “WIN WIN” joint industry project to use floating wind turbines to power offshore oil and gas production. [Too bad XOM is saying "goodbye" to California; the state and XOM could have been great partners. LOL.]

Original Post

 

Be sure to check out Hurricane Patricia at this site, "Winds." (This is a dynamic link; it will change over time.)

The city of Houston, TX, is being told to expect as much as a foot of rain from this hurricane which will moderate to a tropical storm over the weekend as it heads for southeastern and eastern Texas later this weekend.

The weathermen and weatherwomen on local television are being advised to take their medication to moderate their "enthusiasm." They are almost jumping out of their clothes reporting all this rain.

Meanwhile back in the Bakken, from The Williston Wire:

The City of Williston, North Dakota, has entered into a partnership with Buxton to strengthen the city's retail development strategy. Buxton's advanced consumer analytics will reveal the best retail options for the community and also help city leaders to better understand the differences between business visitors and tourists. By partnering with Buxton, Williston will utilize the same advanced consumer insights relied on by retailers for site selection decisions.

The City of Williston is getting ready to open new office space in Downtown Williston. The Williston Development Center will be ready for move-ins beginning November 9, 2015. The building, located at 113 4th St. E., is most commonly known as the former Hess Corp building. The two-story site has been completely renovated to make room for the Williston Planning and Zoning Department and Department of Building Safety on the second floor. Williston Economic Development, the Small Business Development Center, Williston Convention & Visitor Bureau and Tri County Regional Economic Development Association will be housed on the main floor.

Williston residents are invited to attend the ribbon cutting for the Main Street Reconstruction project on Thursday, Oct. 29 at 2 p.m. The celebration will be held at the intersection of Main Street and 4th Street. Representatives from the North Dakota Department of Transportation, City of Williston, Knife River, DowlHKM, Williston Area Chamber of Commerce and Williston Downtowners Association will participate in a short program. The Main Street Reconstruction project replaced and improved under and above ground infrastructure in Downtown Williston.

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PBS News Hour Had A Segment On Slicers And Dicers 

October 23, 2015

PBS News Hour had a segment on slicers and dicers. It turns out only "older" wind turbines kill migratory birds; new turbines don't. LOL.

One slicer and dicer is known to have killed one eagle each year for ten years. It was torn down, but the 149 wind turbines on the same farm are still standing. The US government now allows wind turbines to kill up to five eagles every year, or something like that.

Bottom line: wind energy has not one redeeming factor. That was always true and will always remain true. Great Britain figured that out.

And This Is Why Folks "Like" Wind Energy -- Texas Electricity 101 -- September 20, 2015

Updates

 

Later, 9:39 p.m. CT: this is kind of cool (from a reader). A rough rule of thumb: $1 million / mile for pipeline; $1 million / mile of new highway. So, how much does it cost for high-voltage, long-distance power transmission lines? $2 million / mile. FuelFix reports:

The installation of new transmission lines across Texas has reduced the amount of time wind generators aren’t able to transmit power across the state due to congestion, the U.S. Energy Information Administration wrote this week.

Through a $7 billion project completed last year, 3,500 miles of transmission lines were laid out across Texas, connecting rural regions — where there are wind farms are most prevalent — to the urban centers with high demand for electricity. The project was dubbed Competitive Renewable Energy Zones, or CREZ.

CREZ has reduced incidents of “curtailment,” in which wind generators can’t transmit power through the grid because there’s not enough free space on power lines. That amounts to wasted energy, since the power of wind that’s blowing can no longer be used.

And that's just "in-state." Wait until they have to cross state lines.

Original Post

 

Wind power in Texas. Business Insider is reporting:

A very strange thing happened here in Texas, early this morning: The so-called spot price of electricity in Texas fell toward zero, hit zero, and then went negative for several hours. As the Lone Star State slumbered, power producers were paying the state’s electricity system to take electricity off their hands. At one point, the negative price was $8.52 per megawatt hour.

(Perhaps this is what T. Boone Pickens saw coming, years ago when he failed in his attempt for a huge west Texas wind farm.)

Impossible, most economists would say. In any market — and especially in a state devoted to the free market, like Texas — makers won’t provide a product or service at a negative cost. Yet this could only have happened in Texas, which (not surprisingly) has carved out its own unique approach to electricity.

Consider these three unique factors about Texas.

First, Texas is an electricity island. The state often behaves as if it is its own sovereign nation, and indeed it was an independent republic for nearly 10 years. Alone among the 48 continental states, Texas runs an electricity grid that does not connect with those that serve other states. Texas, the state, needs to consume all the electricity it produces.

Second, Texas has way more wind power than any other state. In 2014, wind accounted for 4.4% of electricity produced in the US. Texas, which has more installed wind capacity (15,635 megawatts) than any other state and is home to nearly 10,000 turbines, got 9% of its electricity from wind in 2014.

Third, Texas has a unique market structure. It’s complicated, but ERCOT has set up the grid in such a way that it acquires a large amount of power through continuous auctions. Every five minutes, power generators in the state electronically bid into ERCOT’s real-time market, offering to provide chunks of energy at particular prices.

ERCOT fills the open needs by selecting the bids that are cheapest and that make the most sense from a grid-management perspective — i.e., the power is being fed into the grid at points where the distribution and transmission systems can handle it. Every 15 minutes, the bids settle — at the highest price paid for electricity accepted in the round.
So if 100 MW of electricity are needed, and some producers offer 60 MW at $50 per megawatt-hour, some offer 30 MW at $80 per megawatt-hour, and others offer 40 MW at $100 per megawatt-hour, all the bidders will receive the highest price of $100. (Note: The price ERCOT pays is the wholesale generation charge.)

(Interesting way to run an auction, to say the least.)

After midnight on Sunday, the combination of these three factors pushed the real-time price of electricity lower. Demand fell — at 4 a.m., the amount of electricity needed in the state was about 45% lower than the evening peak. The wind was blowing consistently — much later in the day Texas would establish a new instantaneous-wind-generation record.

(Winds.)

At 3 a.m., wind was supplying about 30% of the state’s electricity. And because the state is an electricity island, all the power produced by the state’s wind farms could only be sold to ERCOT, not grids elsewhere in the country.

That gave wind-farm owners a great incentive to lower their prices. The data show that the clearing price in the real-time market went from $17.40 per megawatt-hour for the interval ending 12:15 a.m., to zero for the interval ending 1:45 a.m. Then it went into negative territory and stayed at zero or less until about 8:15 a.m. For the interval ending 5:45 a.m., the real-time price of electricity in Texas was minus $8.52 per megawatt-hour.

How could this be? I mean, even the most efficient producer couldn’t afford to provide electricity for free or pay someone to take it.

Well, there’s one more wrinkle. Typically, wind is bid at the lowest prices — because you don’t need fuel, it doesn’t really cost that much money to keep wind turbines moving once they’ve been built. But wind operators have another advantage over generators that use coal or natural gas: A federal production tax credit of 2.3 cents per kilowatt-hour that applies to every kilowatt of power produced.

And that means that even if wind operators give the power away or offer the system money to take it, they still receive a tax credit equal to $23 per megawatt-hour. Those tax credits have a monetary value — either to the wind-farm owner or to a third party that might want to buy them.

Much, much more at the link.

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Clever. Why Didn't I Think Of This?

The New York Times is reporting:

Specialists in infectious disease are protesting a gigantic overnight increase in the price of a 62-year-old drug that is the standard of care for treating a life-threatening parasitic infection.

The drug, called Daraprim, was acquired in August by Turing Pharmaceuticals, a start-up run by a former hedge fund manager. Turing immediately raised the price to $750 a tablet from $13.50, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars.

There are many other examples of the same thing. Incredible.