Jobless Report, This Is Not Good -- July 31, 2014; MPC Beats By $0.78; Other Energy Companies Blowing Away Expectation

A reminder: when posts are this long, there will be typographical and factual errors. This blog  is for my personal use only but I post it publicly for anyone to read, but there is no guarantee of any implied accuracy. Read at your own risk.  If I am alerted to factual errors, I fix them as quickly as possible. It is often hard to separate facts from opinions on this site when I post in paragraphs. That's why I try to link all sources. Go to the sources. 

 JOBS REPORT

Well, This Isn't Good

Claims are in-line with expectations, but expectations would not have earned a smiley face emoticon.

Data points:

• expectations: 300,000 (after last week's "stellar" report -- only 284,000, revised downward to 279,000)
• actual: 302,000
• market reaction: the Dow tanks immediately after news; had been trending higher in pre-market futures; down "triple-digits"

Comments: this takes us back to the reported GDP of 4%, yesterday. The media reaction was muted, and the market was not impressed. It makes one wonder to what degree the GDP might have been massaged. Except for a few respondents to my poll, "no one" thought 2Q14 GDP was going to be above 3%; in fact, big-name analysts had lowered expectations from 3.1% to 3.0% the day before the report. And now, the jobs report today. Something feels fishy. Very fishy.

Now, the jobs report. I can understand the number of jobless claims being revised UPWARD but I don't understand (and have never seen [which doesn't mean it hasn't happened] jobless claims revised DOWNWARD. Jobless claims are simply counting the applications that come in. The number should be revised upward because a) some applications will be in the mail; b) some states are slow in reporting data; c) sometimes "they" conveniently miss a stack of applications [which often happens the week before important elections]. But I can't think of a reason why the numbers should be revised DOWNWARD. Did some states double-count applications last week for some reason, and then go back and re-count them? We know that the government has manipulated the jobless numbers [previously posted, citing an impeccable source] before. Something feels fishy. Very fishy.

But let's assume the numbers are right. Back up to 300,000 first time claims. Five years into the recovery and workers are getting nowhere.

For the record:

• four-week moving average, 297,250. Down 3,500
• continuing claims climb: 2,539,000, up from last week's revised 2,508,000.

UC Irvine? Really?

Los Angeles Trade-Technical College? Really?

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

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

Reporting today: COP, EEP, HP (flex rigs), KOG, MPC, OXY -- according to Yahoo!Finance.

• APA: beats by 1 cent, misses on revs
• American Railcar: beats by 30 cents; nice
• COP: profit rises 1.5%; profit in-line
• XOM: beats by 19 cents; huge; revenues rise almost 5%; production declined y/y
• EEP: after market close
• HP: beats by 12 cents; wow! revs up 13%
• KOG: after market close
• MPC: beats by 78 cents; wow, what happened here; maybe more later; revs also rose almost 5%
• OXY: beats by 6 cents; profit rises 8%; on a triple-digit down day for the Dow, OXY is up very, very nicely

Enterprise Products executes additional agreement for ethane export terminal; evaluating expansion options: Co announced that it has executed an additional long-term contract to provide ethane storage, transportation, refrigeration and loading services from its new ethane export terminal that is currently under construction on the Houston Ship Channel.

• With this new agreement, the co now has long-term commitments for approximately 85 percent of the capacity of the ethane terminal

The Wall Street Journal

How GDP of 4% affects the Fed's thinking.

Current sanctions against Russia won't be enough.

Argentina ... going ... going ... gone....

Some US states, such as Colorado and Illinois, are overwhelmed by number of undocumented immigrants seeking licenses. At least in Colorado, they can smoke while waiting.

Biggest casualty of the Ukraine: Russian-German ties. Russia is Germany's #1 trading partner. Oh-oh.

Huge story: US oil exports ready to sail. Tanker of Texas oil heading to South Kore in first sale since 1970s embargo.

How that $40 million shipment avoided the nearly four-decade ban on exporting U.S. crude is a tale involving two determined energy companies, loophole-seeking lawyers, and an unprecedented boom in American drilling that could create a glut of ultralight oil.

The Singapore-flagged BW Zambesi is the first of many ships likely to carry U.S. oil abroad under a new interpretation of the federal law that bars most sales of American oil overseas.

Analysts say future exports appear wide open: as much as 800,000 barrels a day come from just one of the many U.S. oil fields pumping light oil. Though U.S. policy on oil exports hasn't changed, production of this kind of oil, known as condensate, is surging.

This early shipment "is the wedge that's pushing the door open" for more ultralight oil exports, said Daniel Yergin, vice chairman of consulting firm IHS. 

Cash-poor Venezuela weighs sale of Citgo. Warren Buffett is burning the midnight oil, as they say.

Boeing plans to build its flagship, the 787 Dreamliner jet, exclusively at its non-union factory in South Carolina.

XOM starts to sputter.

The Fed's latest statement raises the possibility that a rate increase will come sooner than many expect.

For The Archives, Let's See If They Make It -- July 30, 2014

For background to this story, go to this link: http://www.investorvillage.com/smbd.asp?mb=4288&mn=144363&pt=msg&mid=14041343.

Even if they reach their goal/projection for October, they will be below the average AND the range for the past five years. Even if everything goes right, they will be short. If it's a cold winter, it's gonna be a big story.

If it's a mild winter, no one will know how close they came.

Texas Is Now #8 In The World For Oil Production At 3 Million BOPD -- July 30, 2014

The Dallas Business Journal is reporting:

Texas oil production topped 3 million barrels per day in May, putting the Lone Star state on par with the world’s biggest oil producing countries, according to the Energy Information Administration.

Only Russia, Saudi Arabia, United States, China, Canada, Iran and Iraq produce more oil than Texas, according to international oil production numbers from the EIA. Unlike the national production totals that are from May, the international numbers are from March and include condensate.

This is most interesting:

Texas produced as much oil as the entire continent of Europe, according to the EIA. 

Over at "Big Stories," I have a page, "Europe at a Tipping Point." At that page, the energy news regarding Europe is dismal, and it begins: Europe may be the only continent in the world to depend on imported energy -- EU Council President. When one reads that Texas produces as much oil as the entire continent of Europe that provides a glimpse of how bad things are over there. Remember: France has the huge Paris oil basin; there is all kinds of fossil fuel in eastern Europe; I assume if they wanted, Europe could at least challenge Texas in production. Perhaps, perhaps not.

But Europe has some big decisions to make. The Russian natural gas supply is only one of them.

Wisconson Coal Plant Could Close -- Lack Of Coal -- BNSF Unable To Supply Contracted Coal Due To Rail Backlog; Wasn't Wind Supposed To Take Up The Slack? -- July 30, 2014

Updates

August 3, 2014: The coal-rail supply story is affecting the entire midwest, not just the La Crosse power plant. is reporting that the issue is getting federal attention (these are folks from the political party trying to kill the coal industry in the US and slow down BNSF trains to a 5 mph crawl):

U.S. Sen. Tammy Baldwin, D-Wis., released a statement saying: “Following last winter’s devastating propane shortage, I am committed to ensuring that Wisconsinites do not face another energy crisis as temperatures drop. My staff and I will continue to work with BNSF, the Surface Transportation Board, and Dairyland Power to find a solution to this looming fuel shortage.” [Perhaps he needs to also work with POTUS.]

State Sen. Bob Jauch, D-Poplar, and Democratic state Reps. Janet Bewley of Ashland, Nick Milroy of South Range and Stephen Smith of Shell Lake also sent a letter to the National Surface Transportation Board in Washington D.C. The state lawmakers urged the federal agency to take immediate steps to increase coal shipments to Midwest utilities to avert an energy crisis similar to the propane shortage last winter. [Perhaps they need to write POTUS or meet him on the golf course; the three state reps and POTUS could make a foursome.]

Back to the story:

Midwest Energy Terminal in Superior is experiencing similar issues. The facility which provides coal to several power plants along the Great Lakes and St. Lawrence River, including Minnesota Power, is struggling to get supply.

With supplies down by about 1½ million tons, President Fred Shusterich said this is the time of year his customers are stockpiling coal to prepare for the January-March shutdown of the Soo Locks, which brings most shipping to a halt on Lake Superior. This year, difficult ice conditions persisted into May. Yet the trains that typically bring coal from the west to the Superior waterfront facility are coming only half as often as usual. He said that while a typical 123-car rail shipment has a five-day turnaround, it now takes about 10 days to get the shipment.

Minnesota Power spokeswoman Amy Rutledge said the utility also is dealing with coal shipments that have slowed, but the situation is not critical and their supplies are fine now. They also are working with BNSF railroad.

 My recommendation: Minnesota loves wind power. They need to turn on the turbines.

Original Post

LaCrosse Tribune is reporting:

An ongoing rail backlog that has stranded grain shipments across the Great Plains is now threatening to shut down a La Crosse-area power plant.

Dairyland Power Cooperative says it could run out of coal at its Genoa generating plant by January if the BNSF railroad doesn’t rapidly accelerate deliveries.

Halfway through the summer shipping season, the coal supply has dwindled to “perilous levels” and is falling further behind each week, according to a memo sent last week to lawmakers.

The La Crosse-based utility, which serves about 250,000 mostly rural customers, relies on coal to generate power at plants in Alma and Genoa. Alma is served directly by a BNSF rail line, while coal is shipped to Genoa on barges loaded at a terminal in southeast Iowa.

I assume President Obama is not concerned. It's all part of the plan.

A big thank-you to Steve, tonight; he has sent me a number of stories I never would have seen otherwise. The ONEOK story was particularly interesting. Thank you.

Update On World's Largest Gas-To-Liquid (GTL) Plant In The World -- July 30, 2014

Rigzone is reporting:

In 2008, Shell announced it would partner with Qatar Petroleum and build Pearl GTL in order to produce cleaner-burning diesel and kerosene, base oils for top-tier lubricants, a chemical feedstock called naphtha (used to make plastics) and normal paraffin, which is used to produce detergents.

Today, the plant in Ras Laffan Industrial City, 80km north of Doha, Qatar, is the largest gas-to-liquids plant in the world.

At the peak of construction 52,000 workers from 65 countries were deployed on the site and overall it took the team 500 million man-hours to design and build.

As well as being the biggest, Pearl GTL is also one of the most complex and challenging energy projects in the world – the GTL technology alone has 3,500 patents.

The statistics are staggering: to build Pearl GTL a total of 750,000 cubic metres of concrete was poured. That’s enough to construct two Burj Khalifas (the world’s tallest building).

Pearl GTL draws on gas from Qatar’s North Field, estimated to hold 900 trillion cubic feet of gas. That’s an estimated 13% of the world’s total.