DOW Plunges In Early Morning Trading -- April 17, 2015

We'll hear pundits all day long and read stories all day long explaining the plunge in the Dow today.  For me, this is the explanation: profit-taking.

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

GE lost almost $14 billion on finance unit sale. Too many story lines.

The Labor Department said on Friday its Consumer Price Index increased 0.2 percent last month after a similar gain in February. Price increases were fairly broad-based in March, suggesting the recent disinflationary trend had run its course. Okay. Economists polled by Reuters had expected the CPI to rise 0.3 percent from February and be unchanged from a year ago. Link here.

There's a nice article on Sempra over at Seeking Alpha today. I had pretty much forgotten about this company. I certainly did not realize it was hitting new highs.

Sempra Energy, an energy services holding company, is a solid growth story available at a reasonable price in today's overheated market. The stock price of the company created a 52-week high of $116.30 and a 52-week low of $95.88, which implies that the stock is not so volatile. I believe this is relatively a safe stock with reasonable upside left over the next one year.

Sempra's five-year growth plan is really interesting. Sempra is one of the few companies that have successfully built liquefaction facilities in North America. I'm particularly optimistic on its three liquefaction projects that are currently being developed, which are (1) the Port Arthur LNG, (2) the proposed expansion of Cameron LNG with trains No. 4 and No. 5, and (3) the liquefaction facilities at Energia Costa Azul in Baja California, Mexico. Sempra is working to prepare FERC pre-filing for Port Arthur. Octavio M. Simoes, president of Sempra LNG, said:

We have gained valuable experience working with the FERC during the permitting process for the Cameron LNG liquefaction project in Louisiana...If we are successful, this project would provide long-term economic benefits and create new jobs in the region, while strengthening America's role as a global energy leader.

On the Sabine-Neches Ship Channel, Sempra has nearly 2,900 acres of property along with 3 miles of waterfront. It also owns 1.25 miles of waterfront on the Intracoastal Waterway. The Port Arthur, Texas project will utilize a portion these properties. The proposed LNG plant and export facility in Port Arthur will consist of two natural gas liquefaction trains capable of producing 10 million tons of LNG per year, along with facilities for marine vessel berthing and loading.

Much, much more at the link. 

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Apple Page

Apple may have sold another 60 million iPhones in most recent quarter. 24/7 Wall Street is reporting:

If Apple discloses that it sold anything less than 60 million iPhones, shares may drop substantially. For some, a figure less than 70 million would disappoint.

Traditionally, Apple management guides low. If that trend continues, Apple’s revenue ought to be close to $60 billion. iPhone sales will need to reach 60 million to support that level of sales.

For Apple, it is iPhone sales of 60 million or the quarter will be considered a disaster. The impression that the iPhone has made Apple invincible will get stripped away.

Apple Watch goes on display in Milan, Italy.

Apple Watch spotted in England; unique folding UK plug.

For Newbies To The Bakken - April 17, 2015

I'm really posting this for newbies. I post so much, it's easy to miss the really good stuff. This is an example of some of the really, really good stuff in the Bakken. These wells come off the confidential list today:

• 28019, 2,509, QEP, Moberg 4-20-21BH, Grail, t11/14; cum 97K 2/15;
• 28020, 2,325, QEP, Moberg 3-20-21TH, Grail, t11/14; cum 107K 2/15;
• 28021, 2,529, QEP, Moberg 3-20-21BH, Grail, t11/14; cum 94K 2/15;
• 28022, 2,566, QEP, Moberg 2-20-21TH, Grail, t11/14; cum 96K 2/15;

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A Note To The Granddaughters

I've probably read as much about the Plains Indians as anyone in the DFW area, maybe, maybe not. It's hard to believe but the best "reader's digest" resource for culture, language, and tepees of the Great Plains Indians may be in Jonnie Hughes' 2011 On The Origin of Tepees.

Another snippet.

In the early 1800s, up to thirty (30) Native American tribes were using tepees. The majority were semi-nomadic and used tepees only during the buffalo-hunting season. After the buffalo-hunting season, they returned to their permanent homes in the woodlands, river valleys, and mountains.

Only twelve (12) Plains Indians tribes were fully nomadic, living permanently on the plains, hunting buffalo 24/7.

From Hughes, the twelve tribes, from north to south: Sarsi (present-day Alberta); Plains Cree (present-day Saskatchewan); Blackfoot (present-day Alberta, along the Montana-Canadian border); Assiniboine (northern North Dakota along the Canadian border); Gros Ventre (northwestern Montana); Crow (southwestern Montana); Teton Sioux (South Dakota); Northern Cheyenne (Wyoming); Arapaho (southeastern Wyoming, extending into panhandle of Nebraska); Southern Cheyenne (Colorado, extending east into Kansas); Kiowa (northeastern New Mexico extending into the panhandle of Texas; and finally, the Comanche (southeastern New Mexico extending into Odessa/Midland area of west Texas.

Allied upon contact with the Europeans:

• Sarsi - Blackfoot - Gros Ventre
• Plains Cree - Assiniboine - Three Affiliated Tribes of the Knife River - Crow
• Teton Sioux -- by themselves; universally "hated"
• Northern Cheyenne -- Arapaho -- Southern Cheyenne
• Kiowa - Comanche

The Three Affiliated Tribes of the Knife River: Hidatsa, Mandan, and Arikara.

At Little Big Horn, the Sioux allied with the Cheyenne and the Arapaho.

Language families:

• Plains Algic language family: Cheyenne, Arapaho, Blackfoot, and Gros Ventre

• Arapaho and Gros Ventre closely related; only "recently" separated by language

• Plains Cree language family: a wonderful language phenomenon known as a dialect continuum; across Canada, east-west


• Central Algic language family: southeastern Canada -- most likely the whole Algic family (including Cheyenne, Arapaho, Blackfoot, and Gros Ventre) evolved from Central Algic
• Isolates: Comanche, Kiowa, and the Sarsi languages are all isolates




Comanche closely related to the Shoshone language (Great Basin/Utah)

Kiowa: not related to any large language family

Sarsi: part of the huge language family, the Na-Dene group, which extended all the way up to Alaska

• Sioux and Assiniboine probably developed from same common language
• The Sioux called "Crow" the "old tongue"; Crow is a Siouan language but is not directly related to the Sioux language that Sitting Bull spoke; it is more closely related to the language spoken by the Hidatsans (a modern language; earth lodges; semi-nomadic)

Hughes hypothesis: Hidatsa, the ur-language, grew larger; expanded; the area of expansion more difficult to survive; forced to hunt buffalo year-round, fully nomadic; the tribe that left the Hidatsa behind became the Crow.

And now, on to chapter twelve, the evolution of the tepee. Why the three-pole tepee and the four-pole tepee and which came first?

Random Look At The New Whiting Pankowski Permits -- April 17, 2015

A reader asked about the wells in these permits announced yesterday:

#31086 - WHITING OIL AND GAS CORPORATION, P PANKOWSKI 153-98-4-6-7-13H, LOT4 6-153N- 98W, WILLIAMS CO., 485' FNL and 875' FWL, DEVELOPMENT, TRUAX, 20783', 9-5/8 inch , 2263' Ground, API #33-105-04031 

#31087 - WHITING OIL AND GAS CORPORATION, P PANKOWSKI 153-98-4-6-7-13H3, LOT4 6-153N- 98W, WILLIAMS CO., 485' FNL and 905' FWL, DEVELOPMENT, TRUAX, 20703', 9-5/8 inch , 2263' Ground, API #33-105-04032 

#31088 - WHITING OIL AND GAS CORPORATION, P PANKOWSKI 153-98-4-6-7-13HA, LOT4 6-153N- 98W, WILLIAMS CO., 485' FNL and 935' FWL, DEVELOPMENT, TRUAX, 20964', 9-5/8 inch , 2264' Ground, API #33-105-04033 

#31089 - WHITING OIL AND GAS CORPORATION, P PANKOWSKI 153-98-4-6-7-14H3, LOT4 6-153N- 98W, WILLIAMS CO., 485' FNL and 965' FWL, DEVELOPMENT, TRUAX, 21103', 9-5/8 inch , 2264' Ground, API #33-105-04034

This is what the area looks like now with one Pankowski well producing. 

 

 

The purple-shaded area: all 2560-acre spacing. All of the sections in the graphic above (except maybe one) are also spaced at 1280-acre.

 

These new Pankowski wells will be in the same general area, but it appears the new wells will be about 500 feet closer to the north line of section 6 but about 600 more feet from the west line (correct me if I'm wrong, please).

• 20857, 1,312*/358**, Whiting/KOG, Pankowski 4-6H, Three Forks, 1100FNL 300FWL, 23 stages; 1.2 million lbs sand, t2/12; cum 162K 2/15;

*Sundry form received April 12, 2012. 23 stages, 1.2 million lbs sand.

** Scout ticket at the NDIC website. Sundry form received March 21, 2012. 13 stages, 494,000 lbs sand.

I think I'm correct on all this, but I may make errors. But from what I can tell, this first Pankowski well targeted the first bench of the Three Forks. 

The new wells are probably spaced at 1280-acres; will be sited in lot 4 / section 6 and will terminate in section 7. Based on their names, one will target the middle Bakken; two might target the third bench of the Three Forks; not sure what the "HA" targets.

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Rock And Roll Hall Of Fame

Fooled Around and Fell in Love, Elvin Bishop

Richard Zeits On Topping Units -- April 17, 2015

Great article over at Seeking Alpha on topping units. Zeits writes:

Topping units have been a solution broadly used in emerging markets with limited refining capacity but existing local demand for diesel, fuel oil, jet fuel (kerosene), atmospheric gas oil, LPG and asphalt. In the context of the U.S. market where refining capacity is generally highly complex, topping units may be organically integrated into the overall system, with the less valuable by-products absorbed by refiners for deeper processing, without economic loss. It is no surprise that the largest U.S. refiners are taking steps to develop such topping capacity.

Valero Energy is currently constructing two large topping units - one at its 165,000-b/d Houston refinery (current crude processing capacity is 90,000 b/d) and one at its 325,000-b/d Corpus Christi refinery (current crude processing capacity is 205,000 b/d). The two new units will have a combined capacity to process 160,000 barrels per day of light and super-light crude produced in the Eagle Ford, with both units expected to be operational within approximately one year. Valero's total investment in the two projects is expected to be $750 million.

For updates on the diesel topping unit in Dickinson, see also:

• won't stabilize diesel prices
• will start accepting crude
• possibly another site near Minot

By the way, when you go through the "refinery" tag, there is talk of other topping plants or refineries of some sort northwest of Williston; near Stanley; in Minot; and even near Devils Lake.

Friday, April 17, 2015 -- Renewable Energy Numbers -- Staggering

Chart of the day. This is from Carpe Diem, yesterday. Note that the percent of US energy from renewable sources was less in 2014 (7%) by a significant amount compared to 1950 (9%). The actual decrease is significant, but then if you add in all the money spent since 2000 to increase the amount of renewable energy, the numbers are even more staggering.  Don sent me the link. He provided the big reason why the percent of renewable energy took such a big hit over the last fifty years (see if you can figure out why -- I'll provide the answer later if I remember). Hint: think California.  Here's the chart:

I assume the delta between 90% and 100% in 2014 was mostly nuclear energy, but I don't know.

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Schlumberger: I may have gotten this wrong yesterday; I can't keep up. SLB will cut another 11,000 jobs bringing total to 20,000 cut jobs in current cost-cutting environment. Bloomberg is reporting:

Schlumberger Ltd., the world’s largest oilfield services provider, will eliminate an additional 11,000 positions in a sign the industry will undergo another round of job cuts as a result of tumbling crude prices.

The latest announced reductions bring the company’s total to 20,000, making its workforce about 15 percent smaller than it was during the third quarter of 2014. Schlumberger had announced plans in January to eliminate 9,000 positions, in what was then the single largest cut in the industry.

Setting us up?  Is Saudi Arabia setting us up for a huge spike in the price of oil? I agree with the thesis at this linked article, but I think there's a bit of hyperbole in the article.

Active rigs:

	4/17/2015	04/17/2014	04/17/2013	04/17/2012	04/17/2011
Active Rigs	93	186	185	206	175

RBN Energy: PAA -- getting oil to the Gulf coast.

The Plains All American (PAA) Cactus Pipeline comes online in the West Texas Permian this month (April 2015). Cactus will bring up to 250 Mb/d of crude and condensate from Midland and McCamey in the Permian to Gardendale, TX - the heart of the Eagle Ford shale – linking the two basins for the first time by pipeline.  It also forms a major component of an expanded pipeline and dock infrastructure owned by a combination of PAA and Enterprise Product Partners (EPD) set to deliver as much as 600 Mb/d of crude and condensate to Corpus Christi and 470 Mb/d to Houston by the end of 2015. Today we describe how a good deal of those deliveries will be processed condensate eligible for export.

PAA is one of the US midstream behemoths - handling about 4 MMb/d of crude oil and natural gas liquids (NGLs) as well as storage and terminal facilities for natural gas, natural gas liquids, crude and refined products. As we outlined in Part 3 of our “Come Gather ‘Round Pipelines” series last year, PAA own and operate significant takeaway capacity in the Permian – including the Basin pipeline to Cushing, the Mesa and Sunrise pipelines between Midland and Colorado City and (recently acquired) a 50% interest in the 300 Mb/d BridgeTex pipeline from Colorado City to East Houston (Magellan owns the other 50%). As we shall see, PAA also own a large crude gathering system in the Eagle Ford. Outside of Texas the company has midstream assets in the Bakken , Western Canada and the Rockies.

In the Eagle Ford, PAA operates a gathering system in the eastern section of the oil and condensate window of the play that is centered on Gardendale. In this part of the Eagle Ford, most of the liquid hydrocarbons are ultra light “lease” condensates having API gravity above 55 degrees. Lease condensate presents producers with a challenge because it has variable quality and is not favored by Gulf Coast refineries configured to process crude with fewer light end components – meaning that prices are regularly discounted. In the good old days before shale, when condensate production was low it was simply blended into the regular crude oil stream. With up to 45% of Eagle Ford “crude” production actually falling into the condensate category now, producers have struggled to find domestic markets. In the Summer of last year (June 2014) a new export market for lease condensate opened up as a result of changes in the interpretation of decades old regulations that lumped lease condensate together with crude oil and banned both from export.. Those export regulations – administered by the Department of Commerce Bureau of Industry and Security (BIS) limit the export of crude and lease condensate except to Canada and under a few special circumstances. However the BIS rules do allow exports of processed crude and condensate (i.e. refined products). As we explained in several blogs the BIS has opened up the market by blessing the export of condensate that has been lightly processed in certain distillation equipment.

 Great article; it will be archived at the source.