Investing Opportunity -- Nothing About The Bakken -- Following The Tea Leaves -- Novmeber 17, 2016

Updates

November 17, 2016: new processing center in El Paso, TX. Wow.  This is in the waning days of the Obama administration; just wait until Trump moves into office.

Original Post

 

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Some days ago I mention Operation Thor and specifically alluded to private prisoners in Texas.

I don't follow this sector and I can't recall the publicly-traded companies that were affected when Obama's DOJ announced that the US would end contracts with private prisons, most of which were located in Texas.

Just out of curiosity, Geo Group, Inc, which operates private prisons in Texas:

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Ah, Yes, Reality Sets In

China threatens Apple; could ban iPhone. Apple responds, apparently. T+9. Over at Asian Review: Apple could manufacture iPhones in the US. 

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Secondhand Time: The Last of the Soviets

Svetlana Alexievich

c. 2016, translated

DDS: 947ALE

Author: winner of Nobel Prize in Literature.

Perhaps something that followers of Bernie Sanders may want to read, after they put down their coloring books and Play-Doh.  Note that in the paragraph below, early in her book, she uses the word "socialism" and not "communism" or "totalitarianism" or "Stalinism."

Homo sovieticus:

"We're easy to spot! People who've come out of socialism are both like and unlike the rest of  humanity -- we have our own lexicon, our own conceptions of good and evil, our heroes, our martyrs. We have a special relationship with death.

The stories peole tell me are full of jarring terms: "shoot," "execute," "liquidate," "eliminate," or typically Soviet varieties of disappearance such as "arrest," "ten years without the right of correspondence," and "emigration."

How much can we value human life when we know that not long ago people had died by the millions? We're full of hatred ad superstitions. All of us come from the land of the gulag and harrowing war. Collectivization, dekulakization, and mass deportations of various nationalities ...

Kulaks: "better-off peasants"; from 1929 to 1932; Stalin-initiated campaign to arrest, deport, execute "better-off peasants" and their families for the purposes of seizing their property and incorporating it into collective enterprises.

Tesoro To Buy Western Refining -- November 17, 2016

Data points from The Wall Street Journal:

• $4.1 billion
• Western has refineries in: TX, NM, MN (St Paul, see below)
• Tesoro has refineries in: CA, WA, AK, UT, ND
• $37.30/share in cash; a 22% premium over Western's closing price Wednesday

Also here, in bizjournals:

• Tesoro will have a much larger presence in Minnesota
• St Paul Park oil refinery and affiliated chain of SuperAmerica gas station stores

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Firefox Will Allow iPhone Users to Block "Ad-Trackers"

Huge. Over at The Wall Street Journal.

Firefox Focus: a no-tracking browser.

Personally, I enjoy "ad-tracking" browsers. What I would like:

• ads that take up little bandwidth (load quickly)
• don't slow down the "parent site" being accessed
• more targeted ads
• no audio without permission
• more free stuff through ads that find me

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The Terror Dream: Fear and Fantasy in Post-9/11 America

Susan Faludi

c. 2007

DDS: 306.2

From pages 271 - 272:

In part to counteract such troubling reality (frontier white women willingly marrying native Americans), rape in Indian captivity would become a fixation by the mid-nineteenth century in newspapers and periodicals, literature, and art. 

The fear was not a response to a clear and present danger: Indian rape of captives was actually fairly uncommon, as it had been since the earliest abductions. 

Rowlandson was one of many captives to remark on its absence: "Not one of them ever offered the least abuse of unchastity to me, in word or action." She attributed the restraint to God, but numerous North American tribes subscribed to an ethic of strict chastity while on the warpath and an incest taboo afterward. While this was particularly true of the eastern tribes (some of whom regarded rape as a capital offense), North American Indians in general took captives, particularly younger ones, to adopt them, not to turn them into love slaves; the point was to replace family members lost in battle. (The Europeans introduced, of course, a second motive: money. Taking captives to collect a ransom was the byproduct of the colonial era.)

When historian Susan Armitage searched first-person accounts by nineteenth-century pioneer women in the Far West, she found no reports of rape, or even expressions of fear of rape. Nor have frontier scholars found evidence of coerced marriage.

"Not only were younger captives and consenting adults under no compulsion, either actual or perceived, to marry, but they enjoyed as wide a latitude of choice as any Indian," James Axtell wrote in The European and the Indian. In fact, "so free from compulsio were the captives that several married fellow white prisoners."

US Economy As Obama Administration Winds Down -- November 17, 2016

US housing starts: surge to 9-year high in October, 2016.

• groundbreaking jumped 25% 
• seasonally adjusted annual pace of 1.32 million units
• highest level since August, 2007
• biggest increase since 1982
• starts increased in all four region of the US
• single-family home building jumped almost 11%

Jobless claims: sink to 43-year low as labor market tightens.

• plummeted an astounding 19,000 to 235,000
• lowest level since November, 1973
• forecast: jobless claims rising to 257,000
• net swing from forecast (+ 3,000) to actual (- 19,000) = 22,000
• when swings are this huge, there is a usually a story -- which is seldom reported 
• if reported, it generally reflects the view of the author, not any real analysis
• hard to believe the analysts would be that far off
• four-week average fell 6,500 to 253,500

Inflation? The Fed, and US savers looking for a bit of good news.

• consumer prices in US increase for third consecutive month
• inflation moving closer to the Federal Reserve's goal
• CPI climbed 0.4% in October; gained 0.3% in September
• the numbers exclude what most Americans spend most on, in any given week: food and gasoline 

Maine: tight labor market -- going after immigrants, refugees.

• Maine: oldest median age in the nation
• one of only two states where deaths outnumbered births between July, 2014, and July, 2015 (the other state: West Virginia)
• by 2024: Maine could see a net decrease of 28% of people between 35 and 64 -- and a loss of one electoral vote (down to the minimum of 3)

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US Presidents Not Subject To Conflict-Of-Interest Laws

Heard on MSNBC. Not fact-checked.

Blind trusts not required.

Liquidation of family businesses not required.

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Monet Painting Sells For Record Amount

Data points from The Wall Street Journal:

• "Grainstack"
• $81.4 million
• expected to sell for $45 million
• seller: "famed" Denver stock picker Tom Marsico bought it fourteen years ago, in 2002, for roughly $12 million
• five collectors bid for it
• 1891 canvas; anonymous bidder over the telephone
• previous Monet record: $80.4 million; "Water Lily Pond," eight years ago

Back To The Permian -- November 17, 2016

This morning on MSNBC Morning Joe it was mentioned that the USGS analysis of the Permian showed:

• 20 billion bbls
• largest continuous reservoir USGS has ever surveyed
• 3x the size of the Bakken

I took another look at the first note at the blog regarding this new survey. At the post, the Permian:

• an estimated and previously unaccounted for 20 billion bbls crude oil
• 16 trillion cubic feet of natural gas; and, 
• 1.6 billion bbls of natural gas 

Let's go back to some earlier posts on the size of the Bakken:

• a trillion-bbl reservoir?
• Bentek: 2.2 million bopd
• USGS 2013 Bakken-Three Forks: top line estimate: 11.4 billion bbls
• Bakken production through 2040

Comments derived from those links regarding the Bakken follow.

A trillion-bbl reservoir:

• the trillion-bbl reservoir first posited by CLR, was eventually pulled back to the Leigh Price number, 500 billion bbls
• a 3% primary recovery rate of 500 billion bbls = 15 billion bbls
• a 10% primary recovery rate of 500 billion bbls = 50 billion bbls

Bentek and EIA, Bakken production 2040:

• 1.5 million bopd average through 2030; 2016 - 2030 =  15 yrs x 365 days/yr x 1.5 million bopd = 8,200 million bbls = 8 billion bbls (sub-total)
• 2.0 million bopd average, 2031 - 2040) = 10 years x 365 days/yr x 2 million bopd = 7,300 million bopd = 7 billion bbls (sub-total)
• 1 million bopd average after 2040 through unknown number of years
• total estimate based on Bentek, EIA presentations in the past: 8 billion + 7 billion + x billion = at least 15 billion bbls
• everyone pretty much agrees 3% recovery rate is a very, very conservative recovery rate for the Bakken; Whiting has suggested as much as 8%

USGS Permian and Bakken surveys

• for the Bakken-Three Forks: top-line estimate -- 11.4 billion bbls
• I've not see USGS's top-line estimate for the Permian; the headline number is 20 billion bbls
• 20 billion bbls is not 3x the size of the Bakken
• but that's about right: USGS mid-range estimate for the Bakken: 7.4 billion bbls; for the Permian: 20 billion bbls

This graphic was posted by the EIA earlier this year, August 22, 2016:

Note the amount of dark blue (Bakken) vs the Wolfcamp (blue).

In light of the new USGS survey of the Permian the graph will have to be re-done (I would suppose).

North Dakota County Votes Down Wind Farm; Visual Pollution Near "The Park" -- November 17, 2016

Hoping Those Tipis-Tepees-Teepees Have Central Heat

Early? Huge blizzard, major snowstorms predicted for upper midwest from Rocky Mountains east through Minneapolis to entire state of Minnesota. The weather pattern appears to "miss" North Dakota except the far southeast corner. Blizzard warnings are for northeastern South Dakota / southwestern Minnesota. It's going to be close but the big question is whether the Standing Rock Reservation will be hit.

Overstayed their welcome: speaking of the Standing Rock Reservation -- the Standing Rock Sioux Tribal Council voted unanimously to ask Red Warrior Camp to leave. Something tells me if the blizzard hits, "they" will have no trouble shutting down the camp. Unless you've been there, you have no idea how remote, how dangerous this area can be in the winter. And, then, of course, those pesky grizzly bears. 

Paid protestors: the ad has now been removed, but Craigslist had an ad offering payment to folks who would assemble at West Acres Mall in Fargo to shut it down in support of DAPL.

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Speaking of Cold Weather

From AccuWeather:

Temperatures in Pittsburgh, Cleveland, Morgantown, West Virginia, and Buffalo, New York, will plummet from the 60s and 70s on Friday to the upper 20s and lower 30s during Saturday night. Then, temperatures may recover by only 10 degrees or less on Sunday.

Dispatchable energy from solar farm and wind farms will be needed to keep all those homes cozy. Oh, that's right. Solar and wind energy is not dispatchable.

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NIMBY

Proposed Wind Project Shut Down

From The Dickinson Press, data points:

• Charlie Creek Wind Farm; Orion Renewable Energy Group; would have been their first wind farm in ND; had been working on the project for two years; 25,000 acres
• Billing County, southwest North Dakota; near ND Highway 95
• would have begun three miles north of Fairfield and would have extended to one mile south of ND Highway 200
• 114-turbine, 383-megawatt wind farm proposal
• sounds like only the surface owners wanted; otherwise no one else wanted it
• too near Theodore Roosevelt National Park; "visual pollution" issue; park visitors would be able to see 75 wind turbines
• three commissioners; one recused himself due to conflict of interest; other two voted down the project
• huge, huge amount of mailbox money involved: from this site, $5,000 to $8,000/turbine

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Back to the Bakken

North Dakota September, 2016, crude oil production: lowest since February, 2014.  The state issued 82 drilling permits in October, a large increase from 63 in September, although down from 99 in August.

Active rigs:

	11/17/2016	11/17/2015	11/17/2014	11/17/2013	11/17/2012
Active Rigs	38	64	184	183	187

RBN Energy: Texas natural gas pipeline capacity, flows, and basis -- the fretboard model.

The natural gas pipeline grid in Texas is undergoing a historic transformation as interstate pipelines designed to move gas north and east from the Gulf Coast region are being reversed, enabling Marcellus/Utica gas to flow to LNG export markets in Louisiana and Texas, and via Texas for pipeline export to Mexico.  

With a history of oil and gas production going back more than 100 years, no region in the world has a more convoluted network of pipelines than Texas.  The state can be viewed as a dense “spaghetti bowl” of interconnected interstate and intrastate systems that defies traditional gas market analysis, in part because intrastate pipelines do not post receipts and deliveries on their systems as required by federally regulated interstate pipelines. 

However, it is possible to assess the dynamics of regional flows and capacities by examining the morass of flow data available from interstate pipelines in the region that connect to the intrastates. To help make sense of this data, RBN has developed a simplified model that facilitates an understanding of Texas natural gas flows and capacities that we call (unsurprisingly since it’s RBN) the Fretboard Model because the region’s interstate pipelines and capacity constraints look (with just a bit of artistic license) very much like a guitar fretboard.  In today’s blog, we introduce this model.

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The Political Page

It is absolutely incredible how fast MSNBC has come with regard to the new Trump presidency. Mika did clearly say Morning Joe  is of the Democratic Party. Elizabeth Warren came under a significant amount of criticism which really surprised me. Bernstein said world leaders respected Obama but no one feared him. And so on, and so on. Joe, himself, was absent from the set. The first hour was as good as anything I've heard anywhere (I don't watch Fox News at all and only visit the website if a link sends me there).

Steve Bannon's assessment -- read on Morning Joe -- sounded like something Bernie Sanders could have written. Amazing.

Payback is hell. Connect the dots. Jared Kushner. Chris Christie. Elevator: Jared is Trump's son-in-law. Jared's father prosecuted for fraud. Prosecutor: Chris Christie. Chris Christie out of Trump's inner circle.

And their point would be? A crawler at MSNBC: US ranks dead last among the ten wealthiest nations when it comes to health care despite spending the most per capita on health care. Let's see? ObamaCare was passed in 2010. Six years ago. 

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From Investopedia, data points:

• Musk Melon wants to deploy 4,425 satellites 
• to provide high-speed, global internet coverage
• has asked the Obama administration for permission to move forward