Catching Up On Southern Corporation -- August 12, 2018

These guys are making Elon Musk look good.

I lost the bubble on Southern Corporation's Kemper project. Apparently the last time I posted a note about the Kemper "clean-coal" project was October 18, 2017, about a year ago, when I thought the project was still underway. I was wrong. See below. [I really did lose the bubble on this one: I actually noted in June - July 2017 that the Kemper "clean coal" project was shut down; the plant would be natural gas only.]

From a post dated October 16, 2015 (about three years ago):

More Sticker Shock 

Southern Company / Kemper

Who was it that said, "a sucker is born every minute"?

Just when I thought it could get no more ridiculous, I was sent this story by a reader. First, for background, re-read the Kemper story, the cost of "clean coal" in the US:

Note: at $6.1 billion this was three times more than expected; now it's up to $6.3 billion.

This is a 582-megawatt plant. So, $6.3 billion (and still rising) / 582 MW = $11 million /MW. Remember, even the most expensive solar energy / wind energy project seldom gets above $3 million / MW and even at $3 million / MW, that's outrageous -- in the US.

So, what is the status of the Southern Company / Kemper project? It was shut down -- according to a June 28, 2017, article in The Atlanta Journal-Constitution:

Southern Company is suspending efforts to get a troubled Mississippi plant running properly that had been touted as the future for “clean coal” power plants.

The Atlanta utility company said Wednesday it is “immediately suspending start-up and operations activities” for the coal gasification unit at its Mississippi Power subsidiary’s Kemper plant.

The power plant, which also burns natural gas, will continue operating using that fuel.
The decision marks a huge reversal for the first-of-its kind plant, which aimed to burn cheap lignite coal more cleanly than conventional plants. But the $7.5 billion plant was billions of dollars over budget and years behind schedule, and still not working properly.
Southern’s action follows a decision last week by the Mississippi Public Service Commission to order the company to pull the plug on the project and absorb billions in costs. 

But we certainly haven't heard the last of Southern Corporation boondoggles. 

A reader noted this today, from oilprice: Southern Corporation now estimates it will cost $28 billion to complete a Georgia nuclear project, twice the original estimate of $14 billion. From the story:

Southern Company's Georgia Power subsidiary announced yet another increase in the estimated cost to complete the Vogtle 3 and 4 nuclear units.

At this moment this is the only ongoing nuclear construction project in the United States. Georgia Power has raised its cost to complete the nuclear project by 15 percent.

This pushes the final cost estimate for these units to almost $28 billion.

Perhaps more significant for investors, Southern's management agreed to write off almost $1.1 billion of Vogtle costs, rather than attempt to charge ratepayers for the expenditures.

Later this fall, all owners will vote on whether to continue the project.

These revised cost estimates indicate that total cost of the two units could approach $28 billion upon completion. Back in 2012, when the Georgia Public Service Commission regulators approved them, the cost estimate was $14 billion. This is a 100 percent cost increase over initial estimates and represents incremental financial risk for investors.

Wow, there certainly seems to be a pattern here.

For the Kemper (Mississippi) "clean-coal" project: 

• triple the original price estimate, $6 billion vs $2 billion
• then the "clean-coal" project shut down

For the Vogtle  (Georgia) "nuclear" project:

• from $14 billion to $28 billion
• later this fall, owners will vote whether to continue this project

One wonders if Robert Mueller's time would be better spent looking at Southern Company's track record on megaprojects.

I was surprised and dismayed that the writer of the oilprice article failed to mention the Kemper project. He is obviously wearing blinders and only looking at this story as an "expensive" nuclear power plant story.

Financial Times: Has The US Shale Revolution Peaked? -- October 18, 2017

Updates

August 12, 2018: a re-look.

October 19, 2017: a reader commented on this (see comments) --

That article is so skewed from reality one wonders how a respected publication ran with it.

Niobrara drill/completions can be done for under $3 million.

Mile-a-day drilling is somewhat routine with 7,000'+ starting to appear.

The precision in targeting the most productive rock is near 100%.

The use of diversion techniques, microproppants, and restricted flowback are all relatively new developments.

EOR efforts are barely beginning.

The decrease in cost - along with MUCH higher production - is expanding economic areas in existing plays and favorably influencing the Uinta, Powder River, Rogersville, possibly the TMS, to name just a few.

The amount of natural gas and NGLs coming from these unconventional operations will continue to rock the world.

Original Post 

The big question I had regarding this article: what was its point? Why did the Financial Times publish it? Why did the Financial Times publish it at this time? A lot of terms were thrown around without definitions; the best example: "efficiency". What jumped out at me was the writer's apparent misunderstanding that in the big scheme of things, the US shale revolution is NOT about horizontal drilling. It's about hydraulic fracturing. Wow, I could go on and on.

See also this post on the resurgence of the Haynesville. 

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The Article

Disclaimer: in a long note written by someone with an inappropriate exuberance for the Bakken, factual and typographical errors are bound to occur. The point of my comments is to provide a general gist of my worldview of the Bakken. And I'm sure I'm wrong in many cases, and see things from a different angle.

The Brits apparently don't understand the US shale revolution. A reader sent me this article -- absolutely fascinating -- and so incredibly off base I just had to blog about it. The link: https://www.ft.com/content/e17930dc-b288-11e7-a398-73d59db9e399.

It's behind a paywall. If the link is blocked, google -- ft in charts has us shale peaked.

Note: there is so much to write here, it's impossible to capture everything. I may stop here, or I may add more. But for those who understand the US shale revolution, this is nothing new. For newbies? Well, what can I say? One wonders if the Saudi's planted this story in yet another attempt to kill the US shale revolution. 

Really: what was the point of the article? The headline asks whether the US shale revolution has peaked. That may be the main theme, but a secondary theme is to suggest that if the US shale revolution has peaked, it is because "technology and efficiencies" have peaked.

The article lost relevancy for me as soon as I noted that not once did the article mention:

• the price of WTI
• the fact that Saudi Arabia was unable to crush the US shale operators
• the fact that OPEC will have to extend production cuts if they hope to quash the current crude oil glut

The article alludes to those issues but does not address them directly. The article seems to focus on US shale technology. It begins:

In the outlook for crude prices, a crucial factor is how far US shale oil production can grow. 

The shale revolution has transformed global oil markets over the past decade, reversing the long decline in US output, challenging Opec’s influence, and helping to trigger the plunge in prices that began in 2014. It has meant windfalls for oil consumers, and some painful adjustments for producers. The leap forward that made shale oil commercially viable for the first time was a revolution in productivity. 

EOG Resources and other pioneering companies worked out how to get oil to flow from wells at much higher rates than in the past, thanks to the application of improved techniques for horizontal drilling and hydraulic fracturing, and those productivity gains continued after the first breakthroughs. Exploration and production companies have been able to drill wells faster, and squeeze more oil out of them by targeting the right rocks more precisely and fracturing them more effectively. The outlook for the industry depends on how far those gains can be sustained and extended. 

Disclaimer: I am inappropriately exuberant about the Bakken.

So, let's begin to look at the various points.

1.  The article starts with two plays: the Bakken and the Eagle Ford. The entire article pretty much only focuses on the Bakken, Eagle Ford, and the Permian. The SCOOP/STACK was not mentioned. Nor the Niobrara (a graph did include the "DJ"). Nor several other US plays (see sidebar at the right).

2. Immediately, the writer begins with "rig count."

A rush to drill in shale formations such as the Eagle Ford in Texas and the Bakken in North Dakota was followed by a flood of production, which mostly held up even after most rigs stopped running in 2014-16. 

As we mentioned many, many times, the "rig count" in the Bakken is irrelevant. I can't talk to the other shale plays and I cannot talk to the oil sector in general, but with regard to the Bakken, tracking the number of rigs has now become irrelevant when looking at past production, current production, and future production. At one time more than 210 rigs in North Dakota did not produced a million bopd; now less than 60 rigs in North Dakota are producing over one million bopd and that's with almost 2400 wells shut-in or not completed.

3. The writer than gets into productivity:

Over the past year, however, the productivity gains seemed to have slowed considerably, suggesting that the revolutionary era for progress in shale is over. In the Eagle Ford shale, productivity — as measured by production from new wells per active rig — has been falling.

But the writer does admit:

Those productivity data from the Energy Information Administration are an imperfect measure, however. For a start, they do not take into account the extent to which companies are drilling wells and then deliberately not bringing them into production as they wait for higher prices. (These are known as DUCs, or Drilled but UnCompleted wells.) So what can we say about the true picture of productivity in shale? 

We'll skip to that later, but this is where the writer failed to mention that during the boom, the price of WTI peaked around $130; WTI dropped to $26 at its low and has since clawed its way back to $52 (barely). Talking about productivity without talking about the price of oil seems to make no sense to me. As far as I can tell, the writer never addressed the issue of price in this article. 

4. At this point, the writer completely misunderstands the shale revolution:

Another factor is the shift from vertical to horizontal wells. A well running horizontally through a layer of oil-bearing rock is typically much more productive than a vertical one that just punches through a section of that layer. Seven years ago, the numbers of wells drilling horizontal and vertical wells in the US were about equal, but since then the vertical rig has just about disappeared. Some, at least, of the reported rise in rig productivity since 2011 was simply a result of that shift to horizontal rigs, which has now largely run its course.

Really? This is what the revolution is all about: horizontal drilling. Horizontal drilling onshore replacing vertical drilling onshore was a no-brainer. The amazing thing is that the shale revolution has resulted in deferring off-shore drilling or, in some cases, abandoning off-shore drilling altogether.

5. And then this:

One of the other big changes in recent years has been in hydraulic fracturing: pumping water, sand and chemicals into the well at high pressure to crack it, allowing the oil and gas to flow out.

This statement alone suggests the writer could be a nominee for the Geico Rock Award.

Helloooo! This is what the US shale revolution was all about. I thought that was a given, but apparently the writer thought it was mostly about the switch from vertical drilling to horizontal drilling. No, the Bakken revolution was due to horizontal drilling plus fracking. The sum of the parts was greater than just simple addition of horizontal drilling plus fracking. The US shale revolution required both: horizontal drilling and fracking.

6.  Then this:

Companies have been using “bigger” fracks, with higher volumes of sand, and the result has often been higher production. But there is some evidence that that process may also be hitting its limits. A good way to assess underlying productivity is to look at production per well, adjusted for the total depth and length of that well. 

Well, duh. "Bigger fracks has often resulted in higher production." What can I say? Well, I might add that the number of stages must also be taken into account. And knowing where to place those stages (think microseismic arrays) might be something to consider. There's a lot more to fracking than sand and water. If that's all it took OXY would still be drilling in North Dakota.

7.  Continuing the fracking theme:

Kayrros, a Paris-based energy research firm, has done that exercise for the Permian Basin of west Texas, the hottest area for investment in the US oil industry recently. 

Its conclusion is that productivity adjusted for well length stopped growing last year, and may even have fallen a little in 2017. As the industry has recovered since last year, companies have moved from drilling in only the most productive “sweet spots” and started to produce from more difficult rocks, creating a natural drag on productivity. Improvements in production techniques have to fight against that drag, and it seems that in the Permian recently they have been losing. 

See graph below.

Again, note: the research firm and/or the writer lumps all operators together into one "sector." In fact, the Bakken has shown increased productivity, and if one breaks the data out further (the Permian has many sub-plays) and by operator, the story would be much clearer. 

Again, price was not mentioned. Choking back wells when prices of oil are low was not mentioned. The example used was the Permian. I can't talk to the Permian but in the Bakken, the number of wells producing 30,000 bbls in the first full month of production after fracking is surging, and the length of the wells has not increased, and for the most part, I am not seeing a huge increase in the amount of sand being used to frack in the Bakken.

This is the graph to which the writer speaks when it is mentioned that improvements in production techniques in the Permian are lagging / losing.

Well, if that's the case, then did improvements in production occur in the Bakken to explain the jump in production/rig in the Bakken? I don't think so. Explanations are elsewhere but I don't want to mention what I think is going on for a number of reasons. 

8. Then the writer moves to the time it takes to drill a well in the various shale plays:

The recorded efficiency of rigs improved dramatically over 2013-16, in part because of the spread of pad drilling: running multiple horizontal wells off from a single site, or pad, to cut down the time spent moving the rigs. Recently, however, the rate of improvement appears to have slowed, especially in the Eagle Ford shale and the Williston Basin, which includes the Bakken formation. 

The writer is being a bit disingenuous here: confusing efficiency of rigs vs time to drill a well. Operators do not include the time it takes to move a rig when they report the number of days it took to drill the well. Combining pad drilling and time to drill a well in the same paragraph as "recorded efficiency" is a bit disingenuous. Pad drilling does not account for "efficiency" in terms of individual wells. In the aggregate pad drilling is incredibly important but pad drilling has nothing to do with production (unless the writer wants to talk about the "halo" effect, which obviously is well beyond the information in this article). 

We're down to 15 days to drill and complete a well in the Bakken. At the beginning of the boom, it was taking as long as 65 days. Of course, the pace of decline is going to slow down; and, believe it or not, at some point, drilling times will fail to stop declining. Is the writer arguing that the Bakken is failing because operators can't drill and complete a well in less than 24 hours?

The shale plays are all identified and can bring wells on line in less than two weeks.

How long does it take to bring a new nuclear plant on-line? Ten years?

How long does it take to bring a new off-shore well on-line? Five years?

It is now estimated that from the time an operator submits a request for a permit for a new well in the Bakken, oil can be flowing into the national pipeline grid within 60 days. From spud to oil in the pipeline in the Bakken: in less than 30 days.

9. Finally, the writer says that "the US exploration and production sector has been a great place to burn cash." The writer lumps/bundles 48 US E&P companies into a single data point. It would be interesting to see a similar graphic for the amount of CAPEX three or four of the major oil companies put into off-shore exploration (not production - just exploration) in any given year.

If one wants to talk about burning cash, one could start with the failed nuclear plant in South Carolina ($12 billion) -- consumers are paying for that plant that will produce no electricity. Or one could talk about the amount of cash invested in Tesla (about $10 billion, so far, I believe) with little to show for that investment. And then, of course, we could talk about the Kemper coal plant in Mississippi that has now cost $7.3 billion and is still not finished. 

Much more could be discussed. The reader who sent me this link suggests the writer did not know much about the US shale revolution or that this was a planted story.

Trump Suffers "Major Setback" Before The End Of His First Year In Office -- Bloomberg -- July 6, 2017

From Bloomberg:

A seven-year, $7.5 billion effort to build a first-of-its-kind “clean coal” power plant in Mississippi is officially over.

Mississippi regulators ordered utility owner Southern Co. on Thursday to come up with a deal that’ll have the Kemper plant -- once hailed by the Obama administration as the future of coal -- running as a natural gas-fired generator instead. That ratified Southern’s June 28 proposal to pull the plug on using coal there.

The ruling seals the fate of the Kemper plant, and memorializes the state utility commission’s call last month for the company to give up on “unproven” technologies at the plant. It also assures that customers won’t pay for the failure.

Almost three years after the plant began generating power with gas, Southern has been unable to put crucial coal-gasifiers into service.

The death of Kemper’s “clean coal” component represents a major setback for the very technologies that President Donald Trump has promoted as a way to help save mining jobs. It also marks the end of a high-profile project that was plagued by construction slowdowns, equipment failures and sliding gas prices. Kemper is already years behind schedule and more than $4 billion over budget.

Yup, a major setback for President Donald Trump.

By the way, under which president was this project started? Whatever.

The Kemper story is tracked here.

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And This Is The Problem, Folks --

Getting Caught With A Hand In The Proverbial Cookie Jar

From Joannenova.com:

The BOM got caught this week auto-adjusting cold extremes to be less cold. Lance Pidgeon of the unofficial BOM audit team noticed that the thermometer at Goulburn airport recorded – 10.4°C at 6.17am on Sunday morning, but the official BOM climate records said it was -10.0°C. (What’s the point of that decimal place?) Either way this was a new record for Goulburn in July. (The previous coldest ever July morning was -9.1°C. The oldest day in Goulburn was in August 1994 when it reached -10.9°C).

Apparently this was an automated event where the thermometer recorded something beyond a set limit, and the value put into the official database was the artificial limit. Since colder temperatures have already been recorded in Goulburn, who thought it was a good idea to trim all future minus-ten-point-somethings as if they were automatically “spurious”?

Yesterday, the BOM have acknowledged the error and at first deleted the -10.0 figure, replacing it with a blank space. Then today, after Jennifer Marohasy’s post, they’ve corrected it.

The Political Page, T+160 -- June 29, 2017

Dismantler-In-Chief: Jeff Sessions is dismantling Obama's legal legacy (whatever that was) according to Bloomberg. One could also say he is getting back to enforcing the nation's laws as written by the US Congress and not promulgated by President Obama's executive orders. Whatever. I went through the article very quickly; nothing there seemed particularly noteworthy. The writer noted that Mr Sessions must have a lot of time on his hands simply because he recused himself from going down that Russian rabbit hole.

Dumping on Arizona, Nevada. I saw this article some time ago, or a different version of the same story, at a different site. Much could be written about it. It could go on the "market and energy" page but this particular slant suggests it should go on the "political page." Whatever. If I had more time, I would write more about it. The implications are endless.

The Big Lebowski: chills when it comes to President Trump. Good for him. A breath of fresh air.

Down and Out at MSNBC: Greta Van Susteren "out" at MSNBC. Wow, that happened fast. It was such a non-story, it was buried at the Drudge Report. When will Wolf Blitzer be fired?

Geico Rock Award Nominee for 2017: former Secretary of the Interior, Ken Salazar, on CNBC says we need more projects like Southern Company's Kemper project. Link to follow if I ever find the video link. I guess he knows his legacy is tied up with the never-ending story.

Governor Cuomo: fighting global warming, fighting fracking, fighting sugary soda, apparently left Governor Cuomo spread too thin -- he forgot all about some very basic needs of his fellow New Yorkers: a modern transit system. CBS Local is reporting that Governor Cuomo has declared a state of emergency for the MTA; that Governor Cuomo calls the transit system’s state Of decline ‘unacceptable’ (with a "capital U"). I assume Elon Musk has a solution; just give Musk 100 days and he will solve this problem also.

ICYMI: Connecticut, Illinois in dire economic straits. Fox News has the update. Top three states with the worse credit ratings: Illinois, New Jersey, Connecticut. Some interesting details:

• fifteen states have not passed a budget; deadline is June 30 (tomorrow); includes Connecticut, Illinois
• Connecticut's deficit: $5 billion
• Connecticut:$240 million cash in its 'rainy day fund -- only five states with a smaller cushion
• governor of Connecticut: Democrat
• Connecticut state government: first time in decades -- not in Democratic hands; state senate tied at 18 - 18; Connecticut is historically a blue state
• Aetna, GE have recently left; Xerox, Sikorsky, Vineyard Vines have promised to stay
• Connecticut's unemployment recently rose from 4.5% to 4.9%

The Never-Ending Story, President Obama's Clean Coal Legacy -- June 21, 2017

Throwing in the towel. Pretty funny. This story is tracked here.

After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work on a deal that would have the Kemper plant fueled only by gas.

The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas and capturing emissions.

If I remember correctly, this was one of President Obama's pet projects (yes, see below, "from wiki." Add this to ObamaCare, ISIS, and "we can't just drill our way to lower gasoline prices." What a doofus.

**********************

From Wiki

The never-ending story:

The Kemper Project, also called the Kemper County energy facility, is a coal-fired electrical generating station currently under construction in Kemper County, Mississippi. Mississippi Power, a subsidiary of Southern Company, began construction of the plant in 2010.

The project was central to President Obama's Climate Plan, as it was to be based on "clean coal" and was being considered for more support from the Congress and the incoming Trump Administration in late 2016.

Once operational, the Kemper Project will be a first-of-its-kind electricity plant to employ gasification and carbon capture technologies at this scale. [Nope: it's a boondoggle gone wrong and will simply become one of a gazillion natural gas plants in the US.]

Project management problems have been noted at the Kemper Project.
The power plant was estimated to be in service by May 2014, at a cost of $2.4 billion. As of May 2017, the project was still not in service, and the cost had increased to $7.3 billion.

According to a Sierra Club analysis, Kemper is the most expensive power plant ever built, based on the watts of electricity it will generate.

Can't wait to see how Wiki edits this a year from now to make it "politically correct."

Yup, add this to the Obama legacy. This will end up lost in the dustbin of history. At most, it will be a footnote in the chapter on "Energy During The Obama Era." LOL.

The Never-Ending Story -- Still Not Finished -- Kemper -- PennEnergy -- June 4, 2017

I track the story here. 

Wow, this caught me by surprise. I thought it was finally finished. But apparently not.

Mississippi Power Co. says it will file plans Monday for customers to pay their share of its $7.3 billion Kemper County power plant, even though the plant isn't finished. 

The unit of Atlanta-based Southern Co. didn't yet have a cost update in a Wednesday statement, after Mississippi Power pushed back Kemper's completion date for the 10th time in 18 months. The utility is struggling to reliably run the plant. Customers could be asked to pay more than $4.3 billion. Southern shareholders have lost $2.9 billion.

I Can't Make This Stuff Up -- March 19, 2017

Regular readers know my obsession/fascination with this "one."

It never quits. Penn Energy is reporting that the Kemper plant blows another deadline. After a tubing leak, Mississippi Power Co. now says it's unsure when the $7 billion plant will be finished.

I track the never-ending story here.  

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Australia's Green Energy Debacle

I will come back to this later with links. For now, from PennEnergy, it is being reported that Australia will expand hydropower project to address shortages.  Again, long time readers know the back-story.

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Futures -- Sunday Night

Dow: -31
WTI: -0.80% ($48.39)

********************************

Monday: T+59

Feeling Groovy 

Among the many things I will be watching tomorrow is whether there is a report that DAPL oil has begun flowing. If it does begin flowing, it will be on day #59 of Trump's presidency.

Considering the DAPL pipeline was delayed for religious reasons, it is only fitting to note that according to the "sacred scribes":

Angel Number 59 is a message from your angels that sweeping, positive changes are ahead of you.

You are asked to let go of the ‘old’ with love and gratitude and make room for the ‘new’ to enter your life. Be assured that these life changes will have long-term positive effects on many levels.

Angel Number 59 is a message that changes in your life will align you with your Divine life purpose and soul mission, and the angels encourage you to live and fulfill your lightworking duties and destiny. It is time to shift your focus from the material to the spiritual.

Feeling groovy -- the 59th Street Bridge --

Feeling Groovy, Simon & Garfunkel

Noble Increases Footprint In The Permian; Cheap Crude And Captive Market Boost Pacific Northwest Refineries -- RBN Energy -- January 17, 2017

Trump jobs: add Bayer to the ever-lengthening list.

German-based Bayer AG has committed to President-elect Donald Trump that it will invest $8 billion in American research and development as part of its deal to acquire Monsanto, Trump's transition team said Tuesday. 

Incoming White House press secretary Sean Spicer told reporters that Bayer will also protect all of Monsanto's 9,000 American jobs while creating an additional 3,000 high-tech positions in the country. That agreement, he added, came after Trump met with CEOs from both companies last week.

Trump jobs: just announced (10:06 a.m. Central Time): Hyundai will invest $3.1 billion in US. On CNBC. At the WSJ.

Trump jobs:

Meets, exceeds federal minimum wage; great career path for those with demonstrated skills.

Investment not noted in the screenshot: the investment will also add up to 24,000 new (temporary) construction jobs. But aren't most construction jobs (except Kemper CCS) temporary?

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Click Bait

Five states where taxes are going up in 2017. Can you name at least one of the five? If you did not name California, you are not paying attention. These are the five states listed by Kiplinger:
Maine, California, New Jersey, Pennsylvania, and, Louisiana.

• PA: higher taxes on cigarettes, by a $1/pack; now $2.60/pack; another most-regressive tax
• LA: higher sales taxes; 5%, up from 4%; the average state and local sales tax is now 9.9%, the highest in the US;
• Maine: higher income tax on top earners
• CA: higher taxes on smokers; from 87 cents/pack to $2.87/pack; will also apply to e-cigarettes
• NJ: higher gasoline taxes

This was mostly click bait: either previously announced and well-known (higher gasoline tax in NJ) or inconsequential to most of us (higher cigarette taxes)

************************************

Exxon Mobil To Increase Footprint In The Permian

Link:

• Exxon Mobil Corporation said today it will more than double its Permian Basin resource to 6B barrels of oil equivalent through the acquisition of companies owned by the Bass family of Fort Worth, Texas, with an estimated resource of 3.4B barrels of oil equivalent in New Mexico’s Delaware Basin, a highly prolific, oil-prone section of the Permian Basin
• ExxonMobil will make an upfront payment of $5.6B in ExxonMobil shares, and a series of additional contingent cash payments totaling up to $1B, to be paid beginning in 2020 and ending no later than 2032 commensurate with the development of the resource
• The acquired companies, which include the operating entity BOPCO, hold about 275,000 acres of leasehold, and production of more than 18,000 net oil equivalent barrels per day, about 70% of which is liquids. This includes about 250,000 acres of leasehold in the Permian Basin, the bulk of that in contiguous, held-by-production units in the New Mexico Delaware Basin, with more than 60B barrels of oil equivalent estimated in place. The companies also hold producing acreage in other areas in the United States
• ExxonMobil is producing approximately 140,000 net oil-equivalent barrels per day across its Permian Basin leasehold
• “The highly-contiguous position will provide significant cost advantages in developing 3.4B barrels of resource, of which 75% is liquids. By utilizing ExxonMobil’s technological strength coupled with its unconventional development capabilities we can drill the longest lateral wells in the Permian Basin, reducing development costs and increasing reserve capture.” 

$6.6 billion / 275,000 leasehold acres =  $24, 000 / acre.

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Noble Increases Footprint In The Permian

Biggest M&A to date in 2017: Noble buys Clayton Williams, southern Delaware Basin, $2.7 billion.

• Noble will have second-largest position in southern Delaware Basin
• deal provides 4,200 drilling locations on about 120,000 acre
• many of the locations economical with oil at $40/bbl
• 55 million shares and $665 million to shareholders of Clayton Williams
• acres acquired in this deal not mentioned at Bloomberg

At WorldOil:

• 71,000 net acres
• back-of-the-envelope: $2.7 billion / 71,000 net acres = $38,000 / acre
• Southern Delaware Basin, Reeves and Ward counties
• directly adjacent to Noble Energy's existing 47,200 net acres
• Noble has an additional 100,000 net acres in other areas of the Permian
• CNBC Jim Cramer says this was new acreage was not the best of the best in the Permian (I guess that's why acreage went for only $38,000 / acre)
• EURs in Wolfcamp A wells: 1 million boe for a 7,500-ft lateral

Does the 120,000 acres sound familiar? See earlier story (just a couple of days ago) on WPX with 120,000 acres in the Permian.

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Back to the Bakken

Active rigs:

	1/17/2017	01/17/2016	01/17/2015	01/17/2014	01/17/2013
Active Rigs	36	49	157	187	185

RBN Energy: cheap crude and captive market boost Pacific Northwest refineries.

The five refineries in the U.S. Pacific Northwest (PNW) performed better in 2016 than rivals on the East Coast for two main reasons. First, the changing pattern of North American crude supply has worked to their advantage. Faced with the threat of dwindling mainstay crude supplies from Alaska, refiners in Washington State replaced 22% of their slate with North Dakota Bakken crude moved in by rail. They have also enjoyed advantaged access to discounted crude supplies from Western Canada. Second, PNW refiners face less competition for refined product customers than rivals on the East and Gulf coasts, meaning they have a captive market that often translates to higher margins. Today we review performance and prospects for PNW refineries.

The refineries:

• BP, Ferndal, WA: 227,000 bopd
• Shell, Anacores, WA: 145,000
• Tesoro, Anacrotes, WA: 120,000
• Phillips 66, Ferndale, WA: 101,000
• US Oil & Refining, Tacoma, WA: 41,000

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It's Crying Time Again

#17 in the 20-song countdown. Finding another crying time song? Awesome. Finding one with Barbra Streisand? Priceless:

Crying Time Again, Ray Charles, Barbra Streisand
At the end of the day, the 2017 presidential election was all about NYC, the Trumpers vs the Never-Trumpers. 

At least that's how New Yorkers see it, based on coverage in The New Yorker. 

Hey, This Is Texas! Of Course This Facility Is The Largest Of Its Kind In The Universe -- January 10, 2017

This could be the biggest non-Bakken story of the year to date.

Updates

October 31, 2017: EIA update on Petra Nova. 

The Petra Nova facility, a coal-fired power plant located near Houston, Texas, is one of only two operating power plants with carbon capture and storage (CCS) in the world, and it is the only such facility in the United States.

The 110 megawatt (MW) Boundary Dam plant in Saskatchewan, Canada, near the border with North Dakota, is the other electric utility facility using a CCS system.

Petra Nova’s carbon-capture system is designed to capture about 90% of the carbon dioxide (CO2) emitted from the flue gas slipstream, or about 33% of the total emissions from Unit 8. The post-combustion process is energy intensive and requires a dedicated natural gas unit to accommodate the energy requirements of the carbon-capture process.

 The carbon dioxide captured by Petra Nova’s system is then used in enhanced oil recovery at nearby oil fields. Enhanced oil recovery involves injecting water, chemicals, or gases (such as carbon dioxide) into oil reservoirs to increase the ability of oil to flow to a well.

By comparison, Kemper had been designed to capture about 65% of the plant’s CO2 using a pre-combustion system. The capital costs associated with the Kemper project were initially estimated at $2.4 billion, or about $4,100 per kilowatt (kW), but cost overruns led to construction costs in excess of $7.5 billion (nearly $13,000/kW). Petra Nova CCS retrofit costs were reported to be $1 billion, or $4,200/kW, and the project was completed on budget and on time.

April 13, 2017: press release, no link -- "Secretary Perry celebrates successful completion of Petra Nova carbon capture project." Data points, same as those previously posted, but these new ones or important enough to be reposted:

• joint venture: NRG Energy (US) and Nippon Oil (Japan)
• funded in part by US DOE; originally conceived as a 60-MW electric capture project
• expanded to a 240 MWe Houston-area power plant; quadrupling the size of the capture project without additional federal investment 
• 5,000 tons of CO2 captured daily; EOR at the West Ranch Oil Field
• to boost production from 500 bopd to 15,000 bopd
• estimate: 60 million bbls of recoverable oil from EOR operations

January 10, 2017: also in Financial Times.  Additional data points:

• the project is called Petra Nova
• $1 billion project
• capturing CO2 from the equivalent of 240 megawatts of power generation
• covering costs by using gas for oil production

Original Post

At Reuters via Rigzone:

• operations have begun
• NRG Energy and JX Nippon Oil & Gas Exploration
• $10.4 billion carbon capture facilty
• Texas coal-fired power plant
• emissions are being used to extract crude from nearby oilfield
• 80-mile pipeline (yes, at least one state can still build pipelines) to the West Ranch Oil Field
• West Ranch Oil Field opened in 1930; produces 300 bopd
• with EOR, production should jump to 15,000 bopd within three years
• unlike wind and solar projects, this project will NOT result in higher utility costs for consumers
• CO2 extraction = EOR (enhanced oil recovery) -- several readers have spent several years waiting for this news -- time to break out the champagne
• largest of its kind in the world
• US DOE funded $190 million for the project's construction
• Japan: $250 million in loans
• NRG / JX Nippon: split the remaining $600 million
• Mitsubishi: engineered the plant
• at its peak: 1.6 million tons of CO2/year (4,000 tons/day) -- 90% of NRG's nearby power plant, the largest in Texas
• since opening December 29, 2016: 111,000 tons of CO2 (111,000 / 12 days = 9, 250 tons/day (I may have done the math wrong, but the first ten days, the average collected more than doubled expectations
• the other science project, the incredibly expensive Kemper, MS, plant is yet to come on-line
• cost $7 billion (so far) 
• the Texas plant: $1.04 billion
• uses a different process to capture CO2

Update On Federal Government's "Science Project" In Missississississippi -- January 9, 2017

The story is tracked here. 

Posted earlier:

This debacle, recently described by The New York Times as Obama's energy centerpiece, is tracked here. 

Update on the Kemper Mississippi River plant, from Penn Energy:

• Mississippi Power Co to add another month to the construction schedule
• delay will add another $62 million to the cost of the power plant
• new completion date: November 30, 2016
• total price is now nearly $6.9 billion -- let's call it $7 billion, and move on
• original cost estimate: $2.9 billion -- let's call it $3 billion, and move on
• stockholders have absorbed $2.6 billion in losses

Where we are today: bizjournals report that the plant will be operational by January 31, 2017 --

• I see bizjournal is also calling it a $7 billion project (exactly what I posted above some months ago
• most recent delay due to "challenges with the gas clean-up systems for gasifier 'B'"
• this delay has affected integrated operation of both gasifiers
• company says facility will be placed in service by January 31, 2017
• project's cost estimate will rise by $34 million
• any delay after January 31, 2017: $25 to $35 million / month 

The Geico Rock Award: 2017

The winner announced January 3, 2018: Great Britain's Prince Harry.

Nominees

August 30, 2017: Senator Edward Markey, provides solution for gasoline shortage in light of Hurricane Harvey. 


August 8, 2017: Mark Egan: over at CNN Money -- "millions can't feel the stock market boom." Post here. 

July 29, 2017: Nicholas Casey over at The New York Times, with this headline: As Venezuela prepares to vote, some fear an end to democracy.

July 28, 2017: Nathan Crooks over at Bloomberg for asking whether Venezuela is becoming a Cuba-style dictatorship. 

July 23, 2017: US Senate Minority Leader Chuck Schumer, is not aware that gasoline is at record low prices.

June 29, 2017: former Secretary of the Interior, Ken Salazar, on CNBC says we need more projects like Southern Company's Kemper project.

June 16, 2017: analyst who now thinks OPEC should have cut deeper.

June 11, 2017: Clifford Kraus, NY Times, did not know why gasoline prices were so low this summer; did not even hazard some opinions on why gasoline prices might be so low.

May 24, 2017: J Crew's Millard “Mickey” Drexler -- the fashion "genius" who admits he misread the speed of change and is now fighting to keep his company out of bankruptcy.

April 9, 2017: Juan Gonzalez, deputy assistant secretary of state for Western Hemisphere affairs during the Obama administration who now suggests that Putin may have had nefarious reasons for returning to Central America under the Obama administration. At the time, he admits he was skeptical of any security threats that Putin might pose in the region. 

April 6, 2017: Lonnie Golden, economics professor at Penn State University, maintains there is no association between increasing number of part-time jobs (when Americans "desperately" want full-time jobs) and ObamaCare.

April 1, 2017: ABC News seems surprised that Ivanka and Jared Trump are (really) wealthy. 

January 3, 2017: That didn't take long, our first nominee for the 2017 Geico Rock Award. Prince Harry: "Saving endangered animals is God's test for humanity." I guess he missed the Aleppo story, the 2016 equivalent of the 1940s Holocaust.

Note: Geico Rock Award for 2016 has been announced. 

Active Rigs In North Dakota Steady At 42 -- December 22, 2016

First things first: "The Biggest Shot in NBA History." -- a great WSJ sports article. Spoiler alert: the biggest shot in NBA history? It wasn't Michael Jordan's, Ray Allen's or any of Robert Horry's. It was Kyrie Irving's clutch shot in Game 7 of the NBA Finals -- even if nobody realize.

US BAT and the EU VAT: the former is "illegal" under WTO; the VAT is just fine. Just yesterday, I made the observation that the US BAT is nothing different, in the eyes of some folks, than the German VAT. It's way different, of course, but ....

Kemper. Phoenix rising. Heidi Heitkamp in the news.

More appointments: Shaking things up. Carl Icahn, billionaire investor / activist; and, Peter Navarro, a critic of trade with China, join the president-elect's economic team. WSJ says Trump needs to add Larry Kudlow to the team. Agree. Navarro will head the new White House National Trade Council, a new entity. Icahn will be appointed "special advisor on regulations'; opened seven Icahn charter schools in New York. None of these positions will require Senate confirmation. Talking heads continue to raise "conflict of interest" issues. Heidi Heitkamp was director of ND gasification project; any doubt where her allegiances lie. Pelosi? Give me a break. "Joe" made excellent observation on Icahn to push back all this concern about "conflicts of interest."

And another appointment: Kellyann Conway will have title in White House, something like "Special Advisor."

Blind spot: President Reagan was the first president to appoint a Latino to his cabinet. President Trump is likely to be the first president in 28 years to not appoint a Latino to his cabinet. Other than an editorial in the WSJ has anyone said anything about this? 

Squawk Box: giddy with forecast. Two analysts suggest S&P 500 up to 2400; "Joe" says way too low with what Trump is suggesting. Analyst jokingly raise it to 2500, and "Joe" says that is still too low.

SUVs. The headline suggested bad news. Not. Here's the headline: US car makers idle plants among oversupply concerns. It's a good news story: they have an oversupply of sedans, compact cars, and minivans because .... drum roll ... Americans buying high-margin, gas-guzzling SUVs. Others suggest "not so fast": pick-up truck sales and SUVs sales have to slow down, also. Why?

“There is just not much demand for that small economical car,” said Scott James, president of Mike Shaw Automotive, which owns dealerships in Colorado, Texas and Louisiana. “It’s cheap gas.”

Prices at the pump have edged higher this year, hitting an average of $2.20 per gallon this week for regular unleaded, compared with $1.92 a year ago, according to the U.S. Energy Information Administration. But current prices still remain well below the $3-4 range seen between 2011 and 2014.

Mr. James said he has no shortage of pickup-truck and SUV buyers, but that his “gut” tells him that new-vehicle sales overall are headed for a slowdown next year. “It’s certainly plateauing,” he said. “It can’t keep going strong forever.”

Aleppo evacuation nears end. UN is getting ready to send monitors to Aleppo to observe the "evacuation-that-was." I'm sure this has not escaped Trump's attention.

Confused. North Carolina adjourns; fails to repeal transgender law.

President Obama's advice to PEOTUS: undated, a screen shot from about December 18, 2016, just before he used executive order to "permanently" ban drilling in the Arctic and issued new rules with intent to kill coal industry:

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Back to the Bakken

Active rigs:

	12/22/2016	12/22/2015	12/22/2014	12/22/2013	12/22/2012
Active Rigs	42	65	174	191	188

RBN Energy: how the rebounding LNG market will help US gas producers.

Are things really as bad as all that? No, they probably aren’t, especially if you take a longer-term view.

There are signs that the international LNG market’s mid-decade funk may be over, or that it’s at least in the process of ending. One indicator is that, as of this week, spot prices in eastern Asia­­—the epicenter of LNG demand—have risen to about $9/MMBtu, a gain of ~80% from the ~$5 spot prices of a few months ago. LNG demand is also up in 2016 compared to 2015—not necessarily at the two biggest LNG importing countries (#1 Japan and #2 South Korea), but declines there were more than offset by rising LNG demand from up-and-comers like #3 China and #4 India and from the six countries (Pakistan, Jamaica, Lithuania, Poland, Egypt and Jordan) that started importing LNG in 2015-16.

Nice 30-second soundbite: eastern Asia is the epicenter of LNG demand -- #1 Japan, #2 South Korea, #3 China, and #4 India.

But look at this: six countries started importing LNG in 2016: Poland, Pakistan, Egypt, Jordan, Lithuania, and Jamaica.

LNG and Poland: huge back story on so many levels.

LNG and Jordan, Egypt: huge back story on so many levels. 

Kemper: Now It's Operations Cost -- Estimated To Be 4x Projected -- Wow! -- October 22, 2016

From PennEnergy:

The construction of Mississippi Power Co.'s Kemper County power plant isn't the only thing that might be costly. Documents filed recently by the company project that operation and maintenance costs will total $1 billion in its first five years. That's four times as much as the unit of Atlanta-based Southern Co. previously projected.

The amount of equipment, material and employees at the plant has increased sharply as the plant's total cost has ballooned to $6.9 billion. Mississippi Power says it will take more money to support that investment, a position that even Kemper opponents agree makes sense.

This was President Obama's poster child for clean coal energy. And so it goes.

I track this debacle here. Another ObamaTrainWreck. Less than 90 days.

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Nothing To Do With Anything ... Except Sweet Memories

Wonderful memories. A most beautiful woman took me to see Charlie Rich in concert back in 1975 or thereabouts.

Behind Closed Doors, Charlie Rich

Son Of Kemper, Or Kemper II? -- But If It Works, Another Win For GE, San Antonio, TX -- October 17, 2016

Data points from the DOE press release (below):

• $80 million, 6-year project
• San Antonio, TX
• 10-MWe (megawatts electrical)
• supercritical CO2 (sCO2) pilot plant
• General Electric: lead 
• goal: to increase steam Rankine cycle power plant efficiency from sub-30% to 50+ efficiency
• this will be a first

DOE press release:

The U.S. Department of Energy (DOE) is awarding up to $80 million for a six-year project to design, build, and operate a 10-MWe (megawatts electrical) supercritical carbon dioxide (sCO2) pilot plant test facility in San Antonio, TX. The project will be managed by a team led by the Gas Technology Institute (GTI), Southwest Research Institute® (SwRI®), and General Electric Global Research (GE-GR).

The new facility will support the future commercialization of sCO2 Brayton cycle energy conversion systems by testing and demonstrating the potential energy efficiency and cost benefits of this technology. Today the average efficiency of the U.S. fleet of steam Rankine cycle power plants is in the lower 30 percent range. This new facility has the potential to demonstrate greater than 50 percent cycle efficiency. If successfully developed, the supercritical CO2 power cycles could provide significant efficiency gains in geothermal, coal, nuclear, and solar thermal power production.

“Supercritical CO2 power systems have the potential to improve the efficiency and reduce the size of future power plants significantly. Smaller size and increased efficiency can lead to lower costs and fewer greenhouse gas emissions,” said Franklin Orr, DOE’s Under Secretary for Science and Energy. “The selection of this test facility will help to further our nation’s climate goals by bringing us one step closer to deploying this exciting technology on a commercial scale.”

Currently, no commercially-feasible sCO2 facility exists for high temperature and high-efficiency system testing. The 10-MWe test facility developed under the selected project will serve as an opportunity for industry and government to work together to develop and mature the sCO2 power cycles at the pilot-scale, bringing it one step closer to commercialization.

Supercritical CO2 is carbon dioxide that is above its critical temperature and pressure so that it is in a fluid state, enabling a power plant to generate the same amount of electricity from less fuel when compared to traditional steam and water (Rankine cycle) systems commonly used today. This, in turn, decreases CO2 emissions and operating costs. Furthermore, because sCO2 has a high-fluid density relative to steam, sCO2 power plants may be fitted with compact turbomachinery, which would help to reduce capital costs.

The information generated through this project has the potential to inform scale-ups for larger scale demonstrations in the future. While sCO2 technology has been proven in a lab setting, this pilot project will provide important data on potential challenges of operating it on a larger scale. It will also provide an opportunity to test the performance of the system's components when operated on a continuous and fully integrated basis.

The project is part of DOE’s sCO2 crosscutting initiative that includes the Offices of Fossil Energy, Energy Efficiency and Renewable Energy, and Nuclear Energy. This collaborative effort seeks to reduce the technical barriers and risks to commercializing the sCO2 power cycle, with a common goal of establishing a 10 MWe scale Supercritical Transformational Electric Power facility for evaluating the power cycle and component performance over a range of operating conditions.

The Office of Fossil Energy funds research, development and demonstration projects to reduce the risk and cost of advanced carbon technologies and further the sustainable use of the Nation’s fossil resources.

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CLR's Traxel 1-31H: The Surface Owner Should Get The Use Of His/Her Land Back

A reader sent me the following screenshot: note that the pumper, et al, have been removed from this CLR pad. This well never did much. For all intents and purposes, it was a dry well.

From the June 17, 2015, daily activity report:  CLR plugged / abandoned one producer: Traxel 1-31, in Mercer County (#17877). The original permit was issued in 2008. This well was truly a wildcat, and well off the beaten path; not much activity in this area. CLR probable learned a lot about the geology in this area, but an expensive lesson.

• 17877, 84, CLR, Traxel 1-31H, Wildcat/Beaver Creek Bay, Mercer County; s8/09; t12/09; cum 12K 12/13; even so, it continues to show up on the NDIC dockets requesting spacing and permission to develop; I don't get it, but if this well ever pans out, ..... [it did not]

Out in the middle of nowhere, south of the reservation, due east of Killdeer (you may have to click on the image to see it better):

Five hundred miles away from home:

500 Miles Away From Home, Bobby Bare
Traxel was only 22 miles southeast of Watford City. That's all the bigger the Bakken is. Wow. Twenty-two miles as the bald eagle flies, but it probably felt like 500 miles to the roughnecks driving there from Watford City or Williston.

Week 41: October 9, 2016 -- October 15, 2016

The past week: Forbes reports that Saudi Arabia continues to burn through cash and economic collapse is actually possible. Saudi's lack of cash has radically changed the "landscape" of the Mideast.

The top story of the week, however, was a non-story: North Dakota's crude oil production dropped below one million bopd.

A reminder: EIA changed reporting methods on crude oil storage this past week. Art Berman, over at Forbes, discusses crude oil storage in the US.

For me, personally, I think this was the big story of the week: Update of a re-entered Madison well in Stockyard Creek.

Operations:
Will the number of active rigs in North Dakota drop below 30?
Top 20 fields in the Williston Basin
Follow-up on Whiting wells that were taken off-line
Halcon reports a huge well; 56 stages; 6.7 million lbs sand 
In four days, a Gadeco well produced 10,000 bbls of oil after being "inactive"f for over two years
Abraxas reports six DUCs completed in North Fork oil field
MRO "re-covers" a lousy well
MRO's Juanita USA well produces 67,000 bbls of oil in first month of full production
A Silurian well goes over one million bbls of crude oil production; still producing after 34 years
Zavanna's Gust well in Long Creek looks like it is back to normal
Updating a Gadeco well in Epping oil field
Another Bakken update by Filloon
Updates on DUCs 

Fracking:
The fracking sand story
Shipment of frack sand to Texas sets record
EOG is a winner with a new well design
DUCs to the rescue
High-intensity fracks
Results of a re-entered, re-fracked BR well

Pipelines
A sixth pipeline company wants to tap into the DAPL
Update on natural gas pipelines into Mexico

Natural gas
Bear Creek NG processing plant near Killdeer has been completed 

Bakken economy
Ground breaking for new Williston area airport: $2,000/acre farmland bought for $9,000/acre 
Williams County high school graduates still go to college for free 

Miscellaneous
Permian acreage still selling for $60,000 acre
Kemper plant makes power with gas from coal for the first time: Obama's one energy success story
List of potential US LNG export facilities
Staggering: the building out of US LNG export projects
Why Canada needs more diluent, and where they will get it
Update on natural gas processing and fractionation additions in Alberta
Not that it matters, but atmospheric CO2 decreases month-over-month; back to baseline
Prime real estate along scenic Little Missouri River in the Badlands sells for less than $2,000/acre

Kemper Plant Makes Power With Gas From Coal For First Time -- October 13, 2016

This story is now tracked here.

From The Miami Herald:

Dekalb, MS: Mississippi Power Co. says that the power plant it's building in Kemper County has generated electricity using gas produced from coal for the first time. 

Atlanta-based Southern Co., the utility's parent company, announced that the electricity was generated during a test Wednesday. The company says it used both the part of the plant that turns soft lignite coal into a synthetic gas, as well as the chemical plant that removes carbon dioxide and other chemicals.

Mississippi Power spokesman Jeff Shepard says one of two power generating turbines was fueled with up to half synthetic gas, while continuing to burn up at least half natural gas. The plant has been generating electricity using natural gas since 2014. Shepard says the plant will continue to generate electricity normally as tests continue, using natural and synthetic gas.

I think this was President Obama's signature energy story: completed not a day too late. 

Read more here: http://www.miamiherald.com/news/business/article107838177.html#storylink=

Kemper Mississippi Plant Will Take An Additional Month To Complete; Another $62 Million -- October 4, 2016

This debacle, recently described by The New York Times as Obama's energy centerpiece, is tracked here. 

Update on the Kemper Mississippi River plant, from Penn Energy:

• Mississippi Power Co to add another month to the construction schedule
• delay will add another $62 million to the cost of the power plant
• new completion date: November 30, 2016
• total price is now nearly $6.9 billion -- let's call it $7 billion, and move on
• original cost estimate: $2.9 billion -- let's call it $3 billion, and move on
• stockholders have absorbed $2.6 billion in losses 

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Note To The Granddaughters

Our younger daughter lives in Portland. She is more conservative than I am and lives in one of the most liberal towns in America. She loves Portland, and she loves the city's motto: "Keep Portland weird."

I say all that to say this, Todd Snider is originally from Portland. I assume his picture accompanies an occasional T-shirt with the words, "Keep Portland Weird."

This is a twenty-minute video. Not less than fifteen minutes is spent by Todd telling the story of how he started singing this song. It is truly worth a listen for folks who like Mr Bojangles and Jerry Jeff Walker.

Mr Bojangles, Todd Snider

Wow, It Never Quits -- A New York Times Update On The Centerpiece Of President Obama's Climate Plan -- July 5, 2016

Yes, that was the headline in The New York Times:

A model for "clean coal" runs off the tracks. A Mississippi project, a centerpiece of President Obama's climate plan, has been plagued by problems that managers tried to conceal, and by cost overruns and questions of who will pay.

Those were the words of the Times' editors, not mine: a centerpiece of President Obama's climate plan.

I never knew this plan was traced back to President Obama. I thought it was much older than that, and it was simply an on-going project that he inherited. Let's check wiki, timeline:

• 2008: conceptual design initiated
• 2010: project approved
• 2010: construction begins

And the timeline continued, but I believe President Obama was inaugurated in early 2009, and I would assume that if the "conceptual design" was initiated in 2008, there were thoughts for this plant long before that.

I have trouble calling this "Obama's" albatross but that's what The New York Times would have us believe.

Now back to the article.

The plant was not only a central piece of the Obama administration’s climate plan, it was also supposed to be a model for future power plants to help slow the dangerous effects of global warming.

The project was hailed as a way to bring thousands of jobs to Mississippi, the nation’s poorest state, and to extend a lifeline to the dying coal industry.

The sense of hope is fading fast, however. The Kemper coal plant is more than two years behind schedule and more than $4 billion over its initial budget, $2.4 billion, and it is still not operational.

The Times asked who would pay for this debacle? Well, that's easy. The local ratepayers and if that becomes a political issue later this summer, taxpayers across the nation will pay for it. 

The Iliad And The Odyssey -- May 14, 2016

This ongoing saga is tracked here. If the Kemper clean-coal plant in Mississippi is the 21st century's version of The Odyssey, it was preceded by the 20th century's version of The Iliad: President Obama's war on coal. And like Troy, the US coal industry was finally destroyed.

So, now we have The Odyssey: The WSJ is reporting

A Mississippi power plant intended as a showcase for clean-coal technology has turned into a costly mess for utility Southern Co. , which is now facing an investigation by the Securities and Exchange Commission, a lawsuit from unhappy customers and a price tag that has more than doubled to $6.6 billion.

On Friday, Southern’s credit rating also was downgraded one notch by Fitch Ratings and Moody’s Investors Service, mostly because of its purchase of a gas utility, and because of cost overruns for the Mississippi project and new nuclear reactors it is building in Georgia.

The SEC is looking into Southern’s financial controls and disclosures for the Kemper County Energy Facility in Mississippi, the company disclosed in a regulatory filing this month, amid claims by a former project manager that it misled the public about how long construction would last.

The Atlanta-based company also faces a lawsuit from Mississippi businesses concerned they will be saddled with high costs to pay for the Kemper plant, which is generating power but remains unfinished.

And more:

Conceived as a first-of-a-kind plant, it currently looks to be the last of its kind in the U.S., though China and other nations have expressed interest in the technology. Kemper costs have swelled to $6.6 billion, far above the $3 billion forecast in 2010.

Southern spokesman Tim Leljedal said the company remains convinced that the Kemper plant “is the right project for Mississippi.”

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The Air Force Should Have Hired MuskMelon

Updates

May 24, 2016: Fiscal Times is reporting --

The Pentagon says its total aviation inventory will shrink by roughly 10 percent over the next decade because it can’t afford to build and modernize enough planes to keep up with the pace of aircraft retirements, according to a new agency report.

The assessment found that the Air Force and Navy’s fighter jet fleets would be hard hit in the coming years, going from 3,327 today to 2,981, a loss of 346 warplanes. Such a cut would be a major problem for the Air Force. Last year lawmakers directed the service to keep at least 1,900 fighters in its inventory past 2021. Today the service has 1,971 attack aircraft, so the anticipated reduction would bring the Air Force well below that line. 

Remember: this is over ten years; a lot can happen between now and 2026.

For me, the Air Force logistics/acquisition "arm" lost its credibility when it bought algae-based aviation fuel for $150/gallon vs $3/gallon for conventional jet fuel.

The big question is whether drones are counted as aircraft? Yes, apparently they are. Drones are huge force multipliers. Much less expensive than conventional aircraft and they can do some of the routine jobs now being done by conventional aircraft.

Original Post

 

This story is full of crap. Or more precisely, algae.

Fox News is reporting that the USAF can't get its planes up due to a budgetary crisis and "tired" mechanics. Whatever.

“It's not only the personnel that are tired, it's the aircraft that are tired as well,” Master Sgt. Bruce Pfrommer, who has over two decades of experience in the Air Force working on B-1 bombers, told Fox News.

Fox News visited two U.S. Air Force bases – including South Dakota’s Ellsworth Air Force Base located 35 miles from Mount Rushmore, where Pfrommer is stationed – to see the resource problems first-hand, following an investigation into the state of U.S. Marine Corps aviation last month.

Many of the Airmen reported feeing “burnt out” and “exhausted” due to the current pace of operations, and limited resources to support them. During the visit to Ellsworth earlier this week, Fox News was told only about half of the 28th Bomb Wing’s fleet of bombers can fly.

“We have only 20 aircraft assigned on station currently. Out of those 20 only nine are flyable,” Pfrommer said. 

This story gets recycled every six years or so, usually surfacing about the time Congress is writing the next budget.

It was only two years ago that it was being widely reported that the Pentagon was paying $150/gallon for "green" jet fuel (algae-based) vs conventional jet fuel that was going for $3/gallon.

It seems the US Air Force should have hired MuskMelon. Batteries seem to be the new fad, but more importantly, the Tesla CEO is second-to-none when it comes to getting money from the US government.

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Best Way To Follow The Implosion Of Venezuela

Track airline flights.

This is what we will see. About one week before the coup, airline boardings in Caracas will start to rise, reaching a peak 48 to 72 hours before the coup. Twelve to 24 hours before the coup begins, flights into and out of Caracas will be temporarily halted.

By the way, this little bit of trivia I was unaware of until today: USA Today reported that Caracas, Venezuela is the "world's most murderous city." Back on January 29, 2016:

Just when Venezuelans thought things couldn’t get worse, that’s exactly what they did.

The capital Caracas has now been ranked as the most murderous city on Earth, according to a new study by Mexican think-tank the Citizens Council for Public Security and Criminal Justice.

The report calculates that Caracas’s 3,946 homicides in 2015 gave it a truly terrifying annual homicide rate of 120 per 100,000 residents.

Mexico has a "think tank"? I bet El Chapo could break out of that "tank" with both hands tied behind his back. 

April 6, 2016

John Kemp has also noticed this and has been tracking it at his tweet. From the EIA today:

Since 2013, the share of premium gasoline in total motor gasoline sales has steadily increased to 11.3% in August and September 2015, the highest share in more than a decade.

Although lower gasoline prices may be supporting demand for premium gasoline, the upward trend in sales is more likely driven by changes in fuel requirements for light-duty vehicles (LDV) in response to increasing fuel economy standards, which will have widespread implications for future gasoline markets. --- EIA

Active rigs:

	4/6/2016	04/06/2015	04/06/2014	04/06/2013	04/06/2012
Active Rigs	29	94	192	187	208

RBN Energy: What’s Ahead in Refined Products Movements to the East Coast.

BNSF cutting thousands of jobs in light of oil collapse. Over at Dallas bizjournal:

BNSF Railway has furloughed roughly 4,600 of its employees nationwide over the past few months as declining oil prices and coal demand have taken a toll on the industry not seen since the Great Recession.

The furloughs total about 10 percent of Fort Worth-based Burlington Northern Santa Fe’s workforce, roughly matching the layoffs the railroad made in 2007 and 2008.

Kemper's clean coal power -- the price tag went up again. Over at bizjournal:

The price tag for Southern Co.’s Kemper clean coal power plant in Mississippi just went up... again. In a Securities and Exchange filing, the Atlanta-based energy giant reported costs rose $18 million through February and could rise further still.

During March 2016, Mississippi Power has continued to conduct repairs and modifications to the refractory lining inside each of the gasifiers and to inspect and evaluate the need for additional refractory work.

This never-ending story is tracked here.  

Let's see, does the next article mention Kemper in Mississippi?

The clean coal debacle in The New York Times:

OTTAWA — An electrical plant on the Saskatchewan prairie was the great hope for industries that burn coal.

In the first large-scale project of its kind, the plant was equipped with a technology that promised to pluck carbon out of the utility’s exhaust and bury it underground, transforming coal into a cleaner power source. In the months after opening, the utility and the provincial government declared the project an unqualified success.

But the $1.1 billion project is now looking like a green dream.

Known as SaskPower’s Boundary Dam 3, the project has been plagued by multiple shutdowns, has fallen way short of its emissions targets, and faces an unresolved problem with its core technology. The costs, too, have soared, requiring tens of millions of dollars in new equipment and repairs.

“At the outset, its economics were dubious,” said Cathy Sproule, a member of Saskatchewan’s legislature who released confidential internal documents about the project. “Now they’re a disaster.”

The utility that runs the project, SaskPower, and advocates for carbon capture argue that the setbacks are typical teething problems associated with any new and complex technology.

The Boundary Dam Power Station sits near a wealth of resources not far from the North Dakota border.

Hundreds of years of coal reserves are buried under the ground nearby, virtually eliminating transportation costs. And the mining creates employment in an area with limited job prospects.

But the costs are piling up.

One shutdown last spring to clean and replenish the chemical cost 17 million Canadian dollars. Mr. Marsh said that the company was still looking for a way to prevent the contamination.

The repeated shutdowns have caused SaskPower to miss multiple carbon dioxide deliveries to Cenovus Energy, the Canadian oil company that signed a 10-year contract with the utility to buy most of the gas. (Cenovus uses carbon dioxide to force oil from largely depleted wells.)

SaskPower has had to pay 7 million Canadian dollars in penalties, offsetting most of the 9 million Canadian dollars in payments received.

On top of that, the carbon system is a voracious consumer of the electricity generated by Boundary Dam, which has 150 megawatts of capacity. Mr. Marsh testified that about 30 megawatts of capacity were consumed by the system, and an additional 15 to 16 megawatts were needed to compress the carbon dioxide.

Nope, Kemper not mentioned.