Huge BNSF Investment In North Dakota; BNSF To Make Largest, Single-Year CAPEX In Company's History -- All Driven By CBR And The Bakken; March 8, 2014

A reader tells me that there are 300 BNSF job openings in Minot. It wouldn't surprise me.

BNSF is making a huge investment in North Dakota according to The Minot Daily News: 

BNSF will be making record infrastructural investments in North Dakota, including in the Minot area, to improve rail transportation in the state.

"In 2014 we plan to make our largest, single-year capital investment in our company's history. Our investments of capital in expansion and maintenance in North Dakota will be a critical part of efficiently, and safely, facilitating the growth from the state, in particular, crude and agriculture, and growth elsewhere on the network," Ice said.

Ice said BNSF's maintenance investment grows as volumes grow. "In North Dakota this year, BNSF is spending $125 million to keep the existing tracks and facilities strong. Last year set a record for replacement and maintenance spending in the state $112 million."

He said replacement capital expenditures in North Dakota and elsewhere have also been growing since 2009.

"Our planned expansion and efficiency capital will be more than $900 million in 2014, of which $265 million will be spent in North Dakota. This spending is part of a three-year capital expansion plan for North Dakota. We plan to spend $396 million over three years on the Glasgow subdivision alone that will result in over 100 miles of double track and the construction of three critical sidings.

From the Tioga Tribune:

The work planned this season includes 46 miles of new second main track between Minot and Williston.

“In particular, crews are building a railroad bridge just east of Tioga,” McBeth said.

“There is currently a bridge for the existing main track and this additional bridge will be constructed for the second main track.”

Work on the bridge portion of the project should be complete later in the spring, she said.

West of Tioga, crews have been laying track for the second main track, she said. Work will continue on that project in stages throughout the summer.

Specifics:

• double track the line from Minot to Glasgow, MT ($162 million)
• add sidings between Fargo and Grand Forks ($26 million)
• add sidings between Bismarck and Glendive, MT ($14 million)
• add sidings along Devils Lake ($13 million)
• add sidings and an interchange track through the Port of Pembina ($13 million)
• invest in Centralized Traffic Control along the Jamestown, ND, subdivision ($11 million)
• add sidings along the KO subdivision, between Fargo and Minot ($8 million)

Meanwhile:

Random update on BNSF efforts to improve agricultural shipments in the northern tier, The Dickinson Press is reporting:

... customers were notified Feb. 20 that a predicted return to cold temperatures would hamper equipment velocities, particularly in the north. He said there are also problems with throughput in the Chicago network caused by previous weather events and heavy volume. He said the company is shifting some traffic through Memphis and St. Louis, and that wet conditions in the Pacific Northwest have hampered unloading there at some facilities.

U.S. past-due grain car shipments last week increased to 11,698 throughout its system — up 632 cars from the previous week. The U.S. average past-due car count increased to 17.9 days, up from 15.4 the previous week. A past-due shipment is every single car that is at least four days past the “want date” requested by the elevator or shipper.

Past-due shipments in North Dakota increased to 5,512 — up by 451 cars from the previous week. The average North Dakota delay is 18.6 days per car, which increased from 17 days late the previous week.

Obama's "War On Coal" -- Pretty Much A War On American Consumers

Nothing like a little conflict in the Crimean to get the facts out. A picture is worth a thousand words:

It doesn't take a rocket scientist to figure out what's going on in Obama's war on coal. And this is "just" Europe. Imagine how much coal is being shipped to Asia from Australia and the United States. No wonder Canada dropped out of the Kyoto Protocol years ago.

By the way, how much is the "war on coal" costing Americans? At least $4/short ton of coal. Bangor Daily News is reporting:

The price for power plants to emit 1 ton of carbon dioxide in nine northeastern states cleared at a record $4 per short ton at the Regional Greenhouse Gas Initiative’s 23rd permit auction, the market’s administrator said Friday.

The electronic auction, held on Wednesday, raised a total of $93.96 million that can be used by the participating states to invest in clean energy and other consumer benefit programs.

"Clean energy and consumer benefit programs" are aka "slush funds" for the participating states.

For more on Russia, Europe, natural gas, and coal:

RUSSIA AND NATURAL GAS

Europe responds to high-priced Russian natural gas, January, 2014

Russian natural gas exports to Europe; American coal exports to Europe -- May, 2013 

Rising price of Russian natural gas, September, 2011

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So Much For All That Commercial Flight Security

Within hours of a Boeing 777 with 239 souls on board goes missing, the media is already reporting that at least two passengers were traveling on stolen passports. These passports had been stolen quite some time ago and one would think that computerized data bases would have this information -- unless, of course, this was "an inside job."

News You May Have Missed -- Just Catching Up -- Nothing Important -- For The Archives

The Wall Street Journal is reporting:

According to the data, Texas saw the largest influx of well-heeled households moving into the state last year, consistent with move trends overall. South Carolina and Florida also posted net gains.

On the flip side, Illinois and Pennsylvania saw more high-value households move out of state than in, according to the data. California saw the biggest net loss of heavy-weight moves.

Last year, California had a net loss of 49,259 people to other states, according to the U.S. Census. California markets also have seen some of the strongest year-over-year price growth in the U.S., says Ellen Haberle, economist at real-estate brokerage Redfin.

"For the average buyer, it's not that California was affordable to start with—it's just getting even harder," she says.

Texas had the highest net gain in terms of domestic migration—113,528 more people moved into the state than out last year, census data show. Job opportunities are home-buyers' top reason for relocating to Texas, according to a Redfin survey last month of 1,909 customers and website users.

It's not just the numbers of folks leaving California; it's the demographics of those leaving -- the higher income/higher taxed.

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Shale (really) is different -- BP. Rigzone is reporting: 

BP has belatedly recognised there is not a good cultural fit between shale buccaneers and the petroleum engineers and MBAs in the rest of the organisation.

Interestingly, ExxonMobil seems to have known this from the start, and maintained its XTO shale unit as a separate business with a separate headquarters after buying it in 2010. 

XTO operates as a separate entity in North Dakota, though it is a wholly-owned subsidiary of XOM.

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We've discussed the Kashagan numerous times. It's in the news again. Rigzone is reporting:

Kazakhstan is suing foreign oil majors developing its huge Kashagan oilfield in the Caspian Sea, a tactic similar to those that secured the government large stakes in two of the three multinational energy projects on its territory.

Repeated delays at the 13-year-old project, targeted to produce as much oil as OPEC member Angola from a reserve almost as big as Brazil's, have infuriated the Kazakh government. The consortium, led by Exxon, Royal Dutch Shell, Total and Eni as well as Kazakh state oil firm KazMunaiGas, may face Kazakhstan seizing a bigger stake in Kashagan or refusing to reimburse a big chunk of the $50 billion spent on bringing it onstream.

The latter option is written into the Kashagan contracts. Production at Kashagan, the world's biggest oil discovery in 35 years, began in September but was stopped just weeks later after gas was found to be leaking from its pipelines.

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FlexGen brings portable power to remote drilling sites. Rigzone is reporting:

FlexGen Power Systems is a branch of U.S.-based military power supply provider Earl Energy, and its FlexGen Solid State Generator, while new to the oil and gas sector, has been in use by the military worldwide, including Afghanistan and Iraq for several years, Steven Jones, FlexGen’s director of communications told Rigzone.

The company was started by former military personnel who knew first-hand what the shortcomings of typical generators were out in the field and decided a new approach was called for, Jones explained. While the power systems were developed by the military, the company realized there were other applications, such as the oil and gas industry, where the power systems could offer significant advantages over existing products.

For Investors Only

This is an interesting "moment in time" for investors. There are three major events that are affecting the market in the short term:

• the Ukranian event
• the ObamaCare delay
• the Fed's dual mandate

Comments:

• First, the Fed's dual mandate: jobs and inflation. Inflation is not an issue at the moment. The strong jobs report today should have brought the market down. It didn't. This suggests to me, investors have factored in continued gradual tapering.
• Second, the Ukranian event: short term, it's a diplomatic event.
• Third, the ObamaCare delay: this is a "positive" for the market. The perception that the entire program is now on hold through 2017 can only be viewed as a huge "plus" for investors.

With regard to the jobs report, Reuters is reporting:

U.S. stocks finished mostly higher on Friday, with the S&P 500 closing at a record after more jobs than expected were created in February and January's figure was revised higher.

The S&P 500 ended at a record closing high for the second day in a row. Friday's milestone also was the S&P 500's fifth record closing high in the past seven sessions.

But the overall sentiment was cautious and trading was volatile throughout the session as investors adjusted their positions ahead of the weekend and kept a close eye on the simmering crisis in Ukraine.

The S&P 500 had climbed to an intraday record of 1,883.57 shortly after the opening bell, lifted by the Labor Department's report showing that U.S. employers added 175,000 jobs to their payrolls in February. Economists had expected a gain of 149,000 jobs, according to a Reuters poll.

This tug-of-war on "good" employment numbers vs "bad" employment numbers is perhaps coming to an end where "bad" numbers meant more stimulus, contributing to a rising market. If investors have baked in cautious, continued tapering, then "good" numbers are important right now for investors. The next debate will be whether "better" job numbers are a reflection of a better economy, or the "discontinuation" of 99+ weeks of unemployment benefits.

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The Crimean Event

This Crimean thing is very interesting on so many levels. I don't watch television as a rule, and traveling the last two days, I haven't kept up at all. But it certainly looks like the Ukraine could have been headed for a civil war with two "weak" participants (the Crimean Russian civilians with no army and the Ukrainians with a bullet-less army) fighting it out for bragging rights.

Right, wrong, or indifferent, it almost appears that Putin could be recognized for stepping in and restoring a bit of "adult" leadership. If Putin had not stepped in, I think one could argue that we would now be seeing a lot of physical fighting between the Ukrainians and the Crimeans. Putin stopped that potential fighting and has moved it into the diplomatic arena per this story by Reuters:

In a signal to Moscow, Obama announced plans to punish Russians and Ukrainians involved in what he called “threatening the sovereignty and territorial integrity of Ukraine.” A U.S. official said Russian President Vladimir Putin was not on the list of those to be sanctioned.

I have no idea what it means to "punish the Russians" but not include Putin on that list of those to be sanctioned. I assume I am missing something, but exactly what would "we" be doing if "we" sanctioned Putin? Not let him speak to the US Congress? LOL.

New Bakken Pipeline Proposed -- ETP -- Bakken To Texas Coast

Updates

March 24, 2015: ETP, Bakken-to-Illinois, Dakota Access Pipeline, miles of pipeline being brought in, stored near Aberdeen, SD; South Dakota state has until December 15, 2015, to make decision.

August 30, 2014: Iowa activists trying to stop the ETP pipeline. 
 

Original Post

Reuters is reporting:

Energy Transfer Partners on Friday announced plans to build an oil pipeline from the Bakken shale in North Dakota to U.S. Midwest and Gulf Coast refineries, seeking support for a major new conduit even after rivals dropped similar plans.

Dallas-based ETP said it will launch a so-called open season on March 12 to assess market interest in the project, and said one of the pipeline's destinations will be Sunoco Logistics Partners LP's Nederland, Texas terminal.

A spokeswoman for ETP declined to provide any further details on the project, including what capacity the pipeline might have or when the open season would conclude.

ETP has also been working to develop another major north-south conduit by converting a 30-inch (76-cm) existing natural gas line, known as Trunkline, to ship up to 420,000 barrels-per-day Bakken and Canadian crude from Patoka, Illinois to Nederland.

Don sent me the link. My two cents worth:

Lots of "competition" between rail and pipeline -- it seems folks are trying to sort this out.

I think most folks realize that rail cannot be the permanent answer, but yet, pipeline may not be the preferred choice for some years. Perhaps ETP "knows" that it will take many years to get the pipeline approved, laid, so might as well start now.