13
Nov

Friday Morning

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Market Sentiment Watch: 6 days left until November option expiration. After a few weeks like this I'm glad most of my holdings as a rule are in stocks. Everything will be dollar dependent today with a down dollar being good for commodities and the equity markets as usual and vice versa. Next week we see the beginnings of the Fall conference season with Merrill's Energy Conference giving the companies one last shot in 2009 to espouse their greatness. 

  • Eco data watch:
    • Trade Balance: -36.5 B vs -$32 B expected
    • Import price index: 0.7% vs 0.8% expected
    • Sentiment: After the open, expected to rise to 71.8 for November vs 70.6 in October.

 

 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today - APC, SD, IOC, HDY
  6. Odds & Ends - Lots of ratings and target changes today.

 

Holdings Watch:

  • $10KP II:
    • $17,300
    • 62% Cash

Yesterday's Trades:

  • None

 

Commodity Watch:

Crude oil closed down $2.34 at $76.94, after the EIA reported a somewhat bearish looking set of numbers yesterday. The bigger factor was a Geithner inspired rally in the dollar. Crude held the low end of the recent elevated trading range, just barely. This morning crude is trading off slightly as the dollar decides what to do with the trade data.

 

Natural gas fell $0.13 to close $4.37 yesterday; blame the markets, crude, and continued mild weather. We are seeing some forecasts showing a return to colder temps but so far gas has not noticed and as is typical in the wake of a near miss from a tropical disturbance, the hangover is worse than the party. This morning gas is trading flat before the EIA numbers but has a clear eye on crude prices as well.

Natural Gas Preview - EIA natural gas storage report comes out at 10:30 EST today.

  • My number: 15 to 20 Bcf. My sense is that gas gets a bounce on a number under 15. Otherwise we have to wait on the weather. 
    • History:
      • Last Week: 29 Bcf injection
      • Last Year: 54 Bcf injection
      • 5 Year Average: 33 Bcf Injection
    • Weather: 104 HDDs provide a shot at the lowest injection of the season to date (probably the second to last one).
    • Imports: Down 0.2 Bcfgpd from last week and 1.2 Bcfgpd from last year.
  • Street Consensus: 16 Bcf Injection.

EIA Oil Inventory Review



CRUDE OIL:  Slightly bigger build on low utilization and a bump up in imports; crude inventories remain 7% high to the five year average.

 

 

GASOLINE - Imports fell back away more than demand did while production eased. So you would have expected a decline in gasoline stocks. But a build in the blending components led to an upswing in total motor gasoline stocks.

 

 

 

 

DISTILLATES - I agree with the following statement from (XOM) CEO Rex Tillerson made yesterday:

"Inventories are at record highs around the globe. There is a lot of supply that has to come off the water, get into the system and be consumed,"

"Quite frankly looking at the winter season in the northern hemisphere, even if we have a relatively normal winter we would still have a fair amount of supply."

Looking at the distillate inventory situation, it is just too bloated to fixed and that's before you consider the rumored barrels offshore. To "fix" this, refining capacity is going to need to be constrained for a lengthy period of time, winter is going to need to be colder than normal (which has been a pretty rare thing over the last decade), the exports part of the equation is going to need to crank back up (unlikely soon with all those floating barrels), and the U.S. transportation sector is going to have get off the ground again. We are seeing hints of this last one but the move up in trucks rolling is still pretty tentative.  

 


 

 

 

Stuff We Care About Today

SD Cans Proposed Crusader Acquisition

  • SD probably gets a little bump out of the deal's failure
  • Longer term it will trade with natural gas and I expect it to trade back into the lower teens in the next few months with a stabilization in natural gas prices.
  • Also longer term I think the company has shown its hand and will be looking to add oily upside to the portfolio and to diversify away from being just a West Texas Overthrust play.
  • Until gas rises I expect the name to be somewhat dead money as their recent volumes reduction took the Street by surprise and the name is not cheap on a cash flow basis.
  • I continue to hold the common and some higher strike calls which will scud out next Friday.

Catalyst Watch:

  • A few names under review for addition
  • SD - Crusader catalyst removed

APC - Jubilee Watch:

  • Ghana's Energy Minister confirms work on the FPSO is on schedule and that it will be delivered from the shipyard during 1Q10 in time for the field's late 2010 startup.

 

IOC - Antelope #2 Logged

  • Papua New Guinea, 2 miles from the Antelope 1 well
  • Gas and gas liquids column of 1,224 feet, suggests very large aerial extent of the structure; sounds like this well may be closer to the crest.
  • Porosity of 14% average, some over 20%, - that's high and better than the discovery well
  • Likely supports further LNG development here but the real prize would be oil
  • This is only the upper section, still looking for crude in lower zones, as seen in the discovery well; the testing of the lower zones will set up a Catalyst Watch event.
  • Stock should move up today.

(HDY) Update

  • 1,200 sq kilometers of a planned 9,000 sq km 2D seismic shoot have been acquired; plan to done acquiring by early 2010
  • Says quality is excellent.
  • This is a non-press-release event but it's what you do when you are small and have nothing real to talk about at the moment. In my book, they are interesting but a bit promotional for my taste.
  • I don't own it but may take some on a flyer on further weakness.

Odds & Ends

Analyst Watch:

  • GMXR - Buy recommendation from SMH
  • ECA - RBC cuts target from $72 to $70; raised to Outperform by Raymond James
  • NBL - GS cuts it to Sell from Neutral
  • SUN - GS adds it to the Conviction Sell list - stinks to be a refiner these days.
  • ROSE - upped to Buy at SunTrust Robbie Hump with a $19 target
  • WLL - raised to Outperform by Macquarie
  • BPZ - Jefferies raises target from $4.90 to $5.50, maintains Underperform; Natixis raises target from $9 to $12, maintains Buy. 
  • NBR - GS raises target from $19 to $22, maintains Sell

Interesting Read Watch:

 

95 Responses to “Friday Morning”

  1. 1
    zman Says:

    Crude broke the bottom end of the recent elevated consolidation range in overnight trading and is at that level now at 76.55. We don’t get a breach of the upward trend started in March until we pierce about $70.

  2. 2
    zman Says:

    Oil just fell a buck, no reason, just fell out of the range. Talk about sealing OPEC’s meeting next month. No way they hike.

  3. 3
    zman Says:

    Interesting to see indications on a number of stocks ignoring it and paying more attention to the equity futures. In the past I’ve said I didn’t want oil to move up as it then just becomes a potential risk instead of upside potential. That potential risk has come to fruition in the last couple of days and I think we could see oil move back to the lower $70s. That’s does not mean the stocks, which are not discounting current oil price levels based on historic multiples of fwd cash flow, will follow it lower.

  4. 4
    bill Says:

    SD just got upgraded by Tudor. They just downgraded them last week.

    That’s the quickest flip flop I have ever seen. In fairness, the downgrade came with sd lowered production guidance for 2009, but why pump gas to sell it in the 2’s with no ebitda contribution,(IMHO mgt made a good call).

    Tudor chose to downgrade first and ask questions later. With the crusader deal/dilution out of the way and with the price down they are now at buy with a 20 dollar target

  5. 5
    bill Says:

    On Ng production

    Its not falling as fast as everyone expected, but bulls are saying wait,it will happen. Chk took of all their hedges after q1,2010, swn is only 50 % hedged, sd is 0 hedged in 2011 but 75 % hedged in 2010.

    Ng bulls can point to the declining rate of ng production y-o-y but look what we have to look forward to next month

    a 15 % y-o-y gain!!

    as ng production was shut in last year due to storms

    Jan-2008 1769266 57,073 60,262 3,189 6%
    Feb-2008 1684259 58,078 60,950 2,873 5%
    Mar-2008 1819488 58,693 60,917 2,224 4%
    Apr-2008 1746277 58,209 60,735 2,525 4%
    May-2008 1809241 58,363 60,259 1,897 3%
    Jun-2008 1773082 59,103 60,465 1,362 2%
    Jul-2008 1851810 59,736 59,914 178 0%
    Aug-2008 1846385 59,561 60,296 735 1%
    Sep-2008 1570060 52,335 60,000 7,665 15%

  6. 6
    bill Says:

    sorry for the formatting,

    it will be around 60 bcf per day vs 52.3 bcf last year. It wont be negative yoy until jan which is not reported until march 2010

  7. 7
    zman Says:

    Bill – that September gain is purely due to Hurricanes last year. Storm losses on a spike like that are excluded from the thinking. It simply won’t matter. They will be looking at the “other” states data, plus Texas, Wyoming, Oklahoma for insight into the declines to see if they are coming off.

  8. 8
    bill Says:

    I hear ya, but i can see the press stating ng production 15 % higher adding to the doom and gloom

  9. 9
    BirdsofpreyRcool Says:

    TechTrader convicted today… his unemotional, non-fundamental model says that the SHORT trade has the best odds of working today. He gives it a 70/30 chance of working.

    HeadTrader says it feels like a down day, but if we go down too fast to get a good SHORT entry, then he would play for a bounce and go LONG. Either way, he would be out before late afternoon, as volume is going dry up.

  10. 10
    zman Says:

    If you look at data compiled by Simmons you can see the shale volumes peaked in May and then started rolling over. Their data goes back to Jan 2005 with total shale volumes rising steadily from 1.9 Bcfgpd to 8.5 Bcfpgd this past summer. That’s been the big driver of onshore growth in the U.S.

    Texas rolled over in aggregate in late 2008/early 2009 with the rig count.

    The other states (which include Arkansas-Fayetteville shale and Pennsylvania and W. Va. – Marcellus had risen sharply, now slowed to a crawl.)

    If you look at the total 60 Bcfgpd from the lower 48 with 8 Bcfgpd from the shales, that leases a highly neglected (there has been scant conventional drilling) … makes me wonder when we see these declines go ahead and kick in. Admittedly, the conventional stuff has been slower to decline that I thought. A lot slow that the 33% per year estimate made by Papa, Aubrey and others.

  11. 11
    zman Says:

    WLL – someone noticing 2 days of upgrades and the potential that speaks to for analysts wanting to get in front of Lewis and Clark news that could come as soon as Monday.

  12. 12
    BirdsofpreyRcool Says:

    Update — HeadTrader having 2nd thoughts about shorting the rally… he wishes he bought DIS at the open. Thinks the Dow may set the tone for the day.

  13. 13
    zman Says:

    Bill – I hear ya too, as per my last comments in 10. I am still in the “not if but when” camp but its a lonely camp these days.

    NG up 4 cents before numbers. Last I saw Street was still at 16 Bcf. There is a small chance the weather could have driven a smaller number or even flat on the week which would spark a short lived rally. This week’s weather was too warm so it’s like we get a small build next week too. The lingering injection season/slow start to withdrawal season is often hard on gas prices. When winter sets in, they then generally move higher.

  14. 14
    zman Says:

    Thanks for the updates BOP.

  15. 15
    bill Says:

    I wonder who is now bidding for crusader?
    I also wonder how sd gets it 7 m break up fee from a bankrupt company

  16. 16
    zman Says:

    SD up 3% for saving $230 mm and getting paid $7 mm to do it.

  17. 17
    zman Says:

    While the group swoons during these commodity price pull backs, the LINE just treads water. Getting paid to be boring. Better times = higher prices. They manage their hedges like other people manage their drilling programs. Swapping out longer dated hedges in the out years to boost the price of nearer term ones.

  18. 18
    bill Says:

    >Swapping out longer dated hedges in the out years to boost the price of nearer term ones.

    which helps short term cash flow, which helps price, which allows them to sell more shares.. you gotta love the model

  19. 19
    zman Says:

    Bill – they’ve been good buyers of distressed assets over the years and good monetizers during the good times.

    RMD – I did look over the numbers you sent on share count and growth there and I agree, that analyst did a poor job of pulling numbers out of the air. There is no cause and effect relationship in his numbers for share issuance vs production.

  20. 20
    zman Says:

    Consumer sentiment: 66. Once again, the economists has no clue on the numbers.

  21. 21
    bloodystupidjohnson Says:

    Z – in all the energy names (coal included) who which management teams are your favorite.

    And who are your least favorite.

    SD – this should help SD. I think Mr Market is still leary of companies making acquistions unless it is oily in nature.

  22. 22
    isleworth Says:

    Z- thoughts on why HK going to woodshed? NG prices?

  23. 23
    zman Says:

    BSJ –

    My favorite managements watch: Newfield and Anadarko, then EOG, DVN, APA, CLR, SWN in no particular order.

    Coal – BTU. I like WLT as a stock, haven’t followed closely enough to know management well enough to say but I like what I hear there.

    Service – OII

    Other E&P

    CHK, HK with reservations regarding their appetites.

    EXXI – Shiller is top notch, not sure about the prospects for the company just yet.
    DNE – great respect for Jim Watt, even more concerned about the survivability of the company.
    ROSE – some of management I like much

    On the negative side:
    LNG – just don’t trust them
    AXAS – lots of promises in the past
    MMR – good oil finder but promotional, highly so, may not matter but I’ve done more than my share of waiting for months for something that was “days” away. That’s probably not fair as what they do is extreme environment drilling and I just drive a desk with 5 screens but there you have it.

  24. 24
    zman Says:

    Isle – search me. I really don’t get it, think it may be something to do with the chart. The one glitch to the call last week was the upped guidance on spending and the need for asset sales to fund a portion of it.

    Their hedge position is strong although this rarely matters to the market when gas prices fall for an extended period.

    There is obviously still a trust issue between the Street and the company. Street sees a deal around every quarter (with good reason). Management continues to say we are done with deals and by the way we are growing our socks off and will be best in class among the mid caps in 2009 and again in 2010. If prices move up we have enough unhedged to give us upside on CF, if they move down we can slow down and still grow into the 30 to 40% range on volumes. And we will continue to beat on a quarterly basis and raise numbers quarter after quarter.

  25. 25
    zman Says:

    NG up 7 cents at 4.44 with 10 minutes until the gas numbers.

  26. 26
    zman Says:

    Market no longer caring about the sentiment number. Energy getting left behind as it still has oil down $1 and NG numbers to contend with.

    WLT moving better.

    OIH still in doghouse for second day.

  27. 27
    bloodystupidjohnson Says:

    Z – aka management, some management teams are given tougher hands to play than others. Offshore E&P or underground coal mining is MUCH tougher to manage than lets say an on shore gas driller – much more moving parts.

  28. 28
    zman Says:

    BSJ – agreed. Manufacturing in the case of these shales vs exploration in the case of an MMR or MCF. In the case of those harder hands, I prefer the lower cost ones.

  29. 29
    zman Says:

    25 Bcf. Bad number.

  30. 30
    zman Says:

    Natural gas at 3.813 Tcf, this is an odd looking number given the weather. Makes one wonder about the reporting system.

    Gas sold off then bounced a bit. There is little here that’s bullish over than the number looks odd and that it was well below last year’s number (but it should have been).

  31. 31
    bloodystupidjohnson Says:

    Buffett says that the most important metric for energy companies is cost. The lower its F&D costs the better its management. He says management can’t really control the price of oil or gas, but it can control its costs.

  32. 32
    zman Says:

    Surprising lack of response to the downside in names like CHK and SWN which are, as bill pointed out, only lightly hedged at this point for next year. CHK flat, SWN down only slightly.

  33. 33
    zman Says:

    BSJ – can’t argue with that although I find F&D less a driver, even over time, than falling LOE for share price. Not scientific on that just an observation. I had a reserves database back in a former life and the correlation of stock price to F&D was less clear cut than the one to cash costs.

  34. 34
    zman Says:

    So far HT has the number on the day better than TT. Looks like they “want” this market higher. Even oil way off its lows now.

  35. 35
    VTZ Says:

    Lots of SU news out today:
    -5.5 B$ Capex spending to complete Firebag 3 (Up to 68,000 insitu production) and Millenium Naphtha hydrotreater (margin uplift).
    -Does not know when they will continue Fort Hills
    -Says the Firebag/insitu economics are much stronger than Fort Hills and another stage 4 could be doen 2012
    -400 mill a year for work force reductions, marketing improvements, supply chain.
    -4 billion in asset sales in 2010 of foreign assets
    -Wants to maintain a conservative capital position and fund growth out of free cash flow
    -Declares dividend of 0.10 a Q

  36. 36
    VTZ Says:

    Gold just went flying again at some dollar weakness.

  37. 37
    VTZ Says:

    Did you guys hear the comments from Rex from Exxon saying that 25 dollars of the oil price is due to the dollar. I’m assuming that if he’s saying that ~16% decrease in the dollar from the top caused 25 dollars in crude from a base of say 50 then he’s implying that every:

    ~1% move in the USD is worth ~3% in crude

    That may be the type of answer Jay was looking for yesterday?

  38. 38
    zman Says:

    V – Yeah, I saw it, he also said winter is not going to be enough to right the distillates market, that we need transportation to come back as well. On the dollar vs crude, I don’t know how you make the $25 comment as when do pick a starting point. I guess its a good conversation number but mostly just pulled out of the air.

  39. 39
    zman Says:

    HK flat. Shocking.

    Market starting to look at valuation. Higher multiple names like RRC and UPL off 2% plus…feels like the selling is starting to wash out a bit. Still don’t see anything but weather as a driver for a bounce in natural gas. Still think the E&Ps have jumped the gun on the gas rig count. Makes me want to be even a bit more focused on oil.

  40. 40
    zman Says:

    … and that last comment is only for the very near term view. Gas I think recovers from here but will take awhile to really get going. And only if the E&Ps take it easy with the rigs from here on.

  41. 41
    VTZ Says:

    I was just picking the start of the decline around March for the USD 89 as the starting point with crude around 48.

    If you take the low in crude in mid July at 60. The dollar index was around 80 so a 10% decrease caused a 25% increase in crude.

    Early June with Crude around 70, USDX around 81. But then later in August crude was around 70 and the USDX fell to 78. So a 9-12.5% drop in usdx caused a 45% increase in crude.

    The starting point obviously makes a difference but the trend seems clear that since March when the dollar started falling every 1% decrease in the usd means ~2-4% in crude. depending on the timeframe you pick.

  42. 42
    zman Says:

    Boring market, grabbing lunch.

    I gotcha now V.

    On the fundamental side, China demand growth continues. Saudi is the number 1 exporter to the Chinese and with S.A.’s production rising it seems clear where those barrels that keep not showing up on U.S. shores are going.

  43. 43
    VTZ Says:

    I’m not saying that will hold true either, just that they’ve been roughly correlated that way except for some shorter timeframes.

  44. 44
    elijahwc Says:

    Drive by observation found elsewhere that may impact oil, dollar et all:

    “Timothy Collins UUP 11/13/2009 10:26 AM EST

    I know this may be repetitive, but the Powershares DB Dollar Index Bull (UUP) is down hard today due to the fact that they’ve begun creating shares again. The arb play there is now gone, and was a fantastic two week play. Position: long some UUP 22-23 call spreads”

  45. 45
    VTZ Says:

    Dollar tankage again to LOD.

  46. 46
    zman Says:

    Yeah, craptastic consumer sentiment = faster printing press turns to stimulate everything from birdhouses to kitty litter.

  47. 47
    VTZ Says:

    Don’t worry there’s no inflation Z. The bastardized CPI says so.

  48. 48
    bloodystupidjohnson Says:

    I if it funny that Chanos call of a potential collapsing Chinese economy did not get more play on this site and else where. It is absolutely true that China can be doing anything with its books and we would not now anything about it. China is still a commie country. A country that still trys to restrict what its citzens can read and do.

  49. 49
    zman Says:

    BSJ – as to me, I just don’t have anything to add on the subject other than the imports numbers on crude and natural gas which are independently confirmed (though they are estimates) being up quite a bit year to date. I’d just be speculating on their economy. Have dealt with some energy concerns over there and the concepts of accounting are, um, interesting.

  50. 50
    VTZ Says:

    I’ve been to China and my friend (who visits China recently) just came back from China and he says the recession is not noticeable.

    I find it hard to believe that they have skewed the numbers any worse than your own government.

    Maybe the US should take a look at the number of times they’ve changed their numbers or how they’ve been reported before they start accusing their bank.

  51. 51
    VTZ Says:

    Also, China is far less commie than it’s made to seem by people like Mark Haynes – the very same fat arrogant bastard who parades hacks on his show and grunts and moans when they aren’t bullish.

  52. 52
    bloodystupidjohnson Says:

    Look at the US economic history from 1800 to 1930, when it was a fast growing economy. It faced many crashes and collapses. There is more reason to suppose that a rapidity growing communist country, that restricts its citizens more that a young US, would also face its share of crashes and collapses.

  53. 53
    bloodystupidjohnson Says:

    VTZ – you can vote out the politicans in this country. You can’t do that in China. We have the politicans that we got because, god bless them, our fellow country men and women want them.

  54. 54
    VTZ Says:

    Except they have an actual plan and direction… what is the central policy in Washington?

    Staying in power? payola? Big industry lobby? Pocket lining?

    They have to be doing something right… they sure as hell aren’t the ones who have been the largest debtors the world has ever known over the past 30 years. Only to get worse in the 10 to come.

  55. 55
    zman Says:

    Toshiba Satellite = worst laptop of all time.

  56. 56
    bloodystupidjohnson Says:

    Vtz – if you have been to China, do you go up in the country side and see how dirt poor the average Chinese are? Many of those people are one bad harvest from starvation.

  57. 57
    tomdavis12 Says:

    Z: ERF Enerplus a Canadian energy trust out with earnings today. Their press release indicates their money going to find crude not NG (shocking). They are in Sleeping Giant (Bakken). “Show me the money” Crude best economics.

  58. 58
    VTZ Says:

    One last thing BSJ – If you’re drinking the “China has to buy our debt forever” kool-aid you’re wrong.

  59. 59
    cargocult Says:

    get a MAC.

  60. 60
    VTZ Says:

    BSJ RE 56 – How you you propose they solve that with that many people? Start selling them iphones?

    They have done an exceptional job at raising people out of poverty into the middle class and they are continuing to try to do that.

  61. 61
    bloodystupidjohnson Says:

    Well, vtz, you seem to prefer the Chinese form of gov’t over ours. With Obama, it seems that you will be getting your wish.

  62. 62
    Jerome Blank Says:

    HERO seems to be having an especially good day today…

  63. 63
    zman Says:

    Naive Award of the Week:

    And believe me, there are lots of candidates: From a local Blog:

    Vic Snyder on nuclear energy

    Courtesy of the limitless frontiers of the Internet, some thoughts from U.S. Rep. Vic Snyder on what pending energy legislation provides on nuclear energy. You’ll see that he’s sending the piece around because it was rejected for publication by the Arkansas Democrat-Gazette, which had published some opposing views from U.S. Rep. Mike Ross and the newspaper’s editorial page on the subject.

    FROM U.S. REP. VIC SNYDER’S OFFICE

    The Searcy Daily Citizen published the attached op-ed on Friday, November 6, 2009, in their print edition. This piece was originally submitted to the Arkansas Democrat-Gazette in order to give some balance to a Democrat-Gazette op-ed by Congressman Mike Ross and a Democrat-Gazette editorial. However, the Democrat-Gazette decided not to print the piece. Congressman Snyder thought you might want to see what the Daily Citizen readers in White County were able to read.

    Daily Citizen Article:

    Nuclear power: Part of the solution

    While the recent debate on health care reform has been spirited, another critical debate regarding America’s energy future deserves attention. A key goal in the American Clean Energy and Security Act, which passed the House of Representatives recently, is to address the issue of climate change by encouraging efficiency and promoting the development and use of alternative energy. Critics of the bill have argued that the Clean Energy bill is flawed because it does not sufficiently promote the expansion of nuclear energy. A recent editorial in the Arkansas Democrat-Gazette echoes that point of view.
    These critics, however, stand at odds with leaders in the nuclear energy industry who want to expand nuclear power in America.

    Wayne Leonard, president and CEO of Entergy Corp has stated that the bill moves toward establishing the necessary price signals for carbon dioxide to drive innovation and investment in energy efficiency and new energy technologies. John Rowe, chairman and CEO of Exelon which has the largest nuclear portfolio in the nation also has been vocal in his support of the bill. In fact, Exelon recently took the dramatic step of terminating its longtime membership in the U.S. Chamber of Commerce due to the chamber’s opposition to this Clean Energy bill. Other large utilities with nuclear holdings, including PNM Resources and Pacific Gas and Electric, have also left the chamber because of their belief that the bill establishes a more stable business environment for nuclear power expansion while addressing climate change.

    In addition to these business leaders, other nuclear experts have weighed in on the Clean Energy bill. The Nuclear Energy Institute perhaps the premier nuclear energy institute in the country asserted that “this legislation can help stimulate construction of the advanced design nuclear power plants that our nation needs. Additionally, a recent analysis of the bill by the Energy Information Administration revealed that it would result in an additional 96 gigawatts of new nuclear capacity (69 new units) by 2030. As a result, nuclear energy is projected to supply 33 percent of US electricity in 2030, more than any other source.

    As I have said before, the Clean Energy bill is neither perfect nor final. Can it be improved? Of course. The Senate will soon debate its own version of energy legislation that will likely look much different than the bill passed by the House. As this legislative process progresses, I expect the bill to improve. I look forward to supporting a final bill that will promote nuclear and advanced technologies, promote renewable energy sources, and demonstrate America’s leadership to reduce carbon dioxide emissions. For those of us who support expanded nuclear power in America, the Clean Energy bill is a significant step in the right direction. Just ask those who want to build nuclear power plants.

    By: Vic Snyder (D), U.S. Representative for Arkansas.

    My issues with his support of this:

    1) No where does he mention natural gas although his home state has gone from a nobody to a good sized player in the natural gas market in the last 2 years. He did however support a severance tax on the new production. We had none and that’s not right but he wanted more than they got.

    2) Finding a nuclear utility owner who likes the bill is easy since it beats up on the competition which is coal.

    3) Relying on the EIA which is controlled by the administration is just bad logic. The idea that 69 reactors will be built within 20 years when all we have done is kill off reactor after reactor in the states over the last 20 years is, well, naive.

    4) It only stimulates construction of new facilities by raising the operating costs of other facilities.

    Don’t get me wrong I’m pro nukes. I think they should be a meaningful part of our electricity portfolio. However, the ones we have are aging and have been repeatedly “uprated”. They are increasingly subject to mechanical difficulties. Furthermore, we can’t figure out a good waste storage solution due to NIMBY. And NIMBY is unlikely going to allow 69 new sites to be created. Then there’s the cost. Nuclear reactors are expensive. I’ve seen what a local utility has done to rates of people not even consuming the power of an existing nuke when it is acquired. Green field nukes will mean higher electricity rates. Finally, looking at the percentage of power coming from nukes vs the current (33% vs 20%) and the increase in GW of nuke tells me that coal power sources are planned to decline despite the fact that cleaner coal options exist and the fact that the U.S. has a 300+ year supply of coal at current consumption levels.

  64. 64
    Dman Says:

    The fact that China is autocratic (not really commie anymore) makes it all the more remarkable that their government is more coherent than that of the U.S.

    By most historical standards, China should have fallen flat on its face into the mud with the sort of government they have. But somehow they’ve made it work.

    When an autocratic ex-commie state is doing a better job of dealing with reality than the U.S., doesn’t this call for more soul-searching, not less?

  65. 65
    RMD Says:

    Z, the only problem I have with nuclear is no one yet knows what to do with the waste; other than that nucs seems ideal.

  66. 66
    VTZ Says:

    Hahah Re 61 – My whole point is that Obama is doing it wrong. Also, because China is communist doesn’t mean that they don’t have elements of capitalism.

    The only place in the whole world you can destroy x trillions of capital and your business is as strong as ever is the US. In China if your business fails, you close up shop, same as in the US ( or is it?).

    I don’t earn or hold any USDs so I could not care less what Obama does or doesn’t do. I’m just saying that the Chinese govt is doing lots of things right economically which is more than I can say for Obama right now.

  67. 67
    reefguy Says:

    IOC up 7%

  68. 68
    zman Says:

    Rig Count Watch:

    Oil 361, up 29 for the week, vs 429 last year. Wow. Big increase came from Texas.

    N. Gas 728, down 6, vs 1498 a year ago

    Horizontals: 512, up 5, vs 624 last year.

    Declines in rigs were in LA, OK, NM, flat in ND, WY

  69. 69
    elijahwc Says:

    #55 windows 7 absolutely cured my evil Toshiba Satelllite. amazing but true.

    #65 Yucca Mtn. Let’em eat (yellow)cake.

  70. 70
    zman Says:

    Reef – been waiting for you to show up as I actually put some comments in the post on them this morning, been watching, didn’t feel like chasing it, was thinking the lower section test (condensate and maybe oil) would be the really swing vote on the stock. Any idea when they drill down and have test results.

  71. 71
    Dman Says:

    #69 what was it running before Windows 7?

  72. 72
    reefguy Says:

    Drilling out of 7″ liner shortly. With this bunch, i give it 30 days.

  73. 73
    zman Says:

    Eli – I’m getting a couple of bluescreens a day here, it seems to be related to the second screen.

    Yucca canceled last time I checked.

  74. 74
    zman Says:

    Thanks Reef – it’s going on the catalyst list. Did you listen to their earnings call?

  75. 75
    reefguy Says:

    Yes, will be on a MS call tuesday morning concerning upside

  76. 76
    elijahwc Says:

    #71 Vista Ultimate

    #73 Correct on Yucca. I’m suggesting that we reopen the hole and insert Mr Reid and enough yellowcake to last him a couple of half-lives.

  77. 77
    zman Says:

    Thanks Reef.

    Eli – But I don’t think that would be good for him.

  78. 78
    Jay Says:

    I think I saw this on Squidbillies…

    Headline on main Bloomberg site reads:

    “Mayfly may thwart $3 Billion in coal mined by blowing up U.S. Mountaintops”

    http://www.bloomberg.com/apps/news?pid=20602099&sid=a.yMJQ7Y5a6o

  79. 79
    cargocult Says:

    Any time you trust human beings to keep some of the most dangerous waste material ever produced (nuclear waste) out of harms way for the next 1000+ years then I’ve got some old Enron stock I want to sell you. But that interesting fact is not what is hurting nuclear power in the US. It is not economic without your dread govt subsidies. Just an horrendously expensive way to boil water and inefficiently transport electricity from long distances because nobody wants to live near one. They are still storing all the waste on-site because there is no acceptable place to put it. Maybe we should ship it to Iran?

  80. 80
    zman Says:

    Jefco, Deutsche Bank and others all going more cautious on natural gas in the last week (essentially since the August data cam out). In July I noted the big drop in Wyoming production, in part due to processing being off line. That recovered in August as processing was brought back on line. This appeared to make gas production rally when in fact is was just slowly sliding over the period.

  81. 81
    RMD Says:

    Both DB and GS have reports out today backtracking on their nat gas pricing ests. given the continued strength in gas production.

  82. 82
    zman Says:

    RMD – saw the DB one, where is GS now for 2010?

  83. 83
    VTZ Says:

    http://www.reuters.com/article/companyNewsAndPR/idUSN1242443020091112

  84. 84
    zman Says:

    CNBC reporting 14 dem senators not able to support cap and trade bill. They are from the midwest, don’t like what it does to coal. LOLOLOL.

  85. 85
    RMD Says:

    GS ests Henry Hub at $5.00 for 1H10 and $5.50 average for whole yr ’10, with equal upside/downside risk for ’10.

  86. 86
    zman Says:

    WLL, WLT and ROSE strong all day. IOC too but I’m not in yet. Otherwise, another throwaway day.

    Beerthirty early. Have a good weekend.

  87. 87
    occam Says:

    China is going through major, and incredibly rapid, change. It is in now way the country you used to know. The picture most Americans have is seriously out of date.

    Just one little known fact: the income of the rural citizens (the bottom of the economic barrel) has almost double in the last few years. In the major cities, there is a true economic miracle.

    Two wonderful books:
    http://www.amazon.com/Writing-Wall-China-Century-Hutton/dp/0316730181/ref=sr_1_1?ie=UTF8&s=books&qid=1258144806&sr=1-1
    written by a former Economist editor, and the only decent book about economics and business in China of the dozen I have read.

    http://www.amazon.com/Oracle-Bones-Journey-Through-China/dp/0060826592/ref=sr_1_1?ie=UTF8&s=books&qid=1258144889&sr=1-1
    by the New Yorker China correspondent. A beautiful picture of the cultural changes in China, and shows how the young have moved to the major cities and driven the tremendous economic expansion China is undergoing. Can’t say enough good about this book.

  88. 88
    BirdsofpreyRcool Says:

    EXXI bonds… the new 16% (14% cash + 2% PIK) Notes zinged out the door… issued at 100 yesterday, they are currently offered at 111, for a yield around 12%. That means that the 10% Notes were a good buy, at any level around or below 89, for those who got them.

  89. 89
    zman Says:

    Thanks O. Their per capita oil consumption is still miniscule compared to the U.S.

    U.S.: 68.7 bopd per 1000 people

    China: 5.7 bopd (2006)

  90. 90
    occam Says:

    A PS to the previous post.

    It is big mistake to think of China as a Communist government, in the philosophical sense that the USSR was.

    Though there is an occasional perfunctory salute to the communist past, the current government is a strange animal that in no way except centralized control works like other communist governments do.

    Just as one example, there are a large number of publicly traded companies with some government ownership. Hard for us even to comprehend what this means.

  91. 91
    VTZ Says:

    Exactly occam, It’s communist by historical designation only. In practicality there is plenty of competition except where the government wants to use an arm of the state for large scale projects. The Hong Kong entrepreneurial spirit has certainly been allowed to spread around the country.

  92. 92
    PackMan Says:

    66 – VTZ – and what a sad state of affairs that is !

  93. 93
    PackMan Says:

    China is still most definitely a communist country, especially politically and militarily. It is still autocratic, totalitarian with one party rule.

    It happens to have a semi-capitalist economy as well.

    Its not like the USSR was, it adapted somewhat, USSR did not. Russia is semi-autocratic, no longer communist, but a corrupt kleptocracy with extreme nationalist and communist yearnings.

    Whatever that means.

    Both China and USSR have corrupt and somewhat illegitimate political systems that are subject to collapse due to their illegitimacy.

    I suppose one can say that more and more about the US as well, in that our political system has become more and more dysfunctional and corrupt; yet we still have a political system that is borne from the people; although even that is under attack as government grows like a weed and asserts itself more and more over key areas of the economy (financial system, autos, health care).

    The danger for China is as the “entrepreneurial” or capitalist system is allowed to spread from Hong Kong (which China played no part in creating or fostering), history shows that the genie is hard to put back in the bottle. At some point, the advance of freedom, whether economic or political, presents a threat to the ruling regime.

  94. 94
    occam Says:

    PackMan – you might want to read some of the recent books and reports on China. Though some of what you say is right, overall I think it is quite an inaccurate picture. China will be the major international factor the U.S. will have to deal with in addition to Islam in the next several decades, and we had better understand them correctly. The Hutton book will change your thinking a lot.

  95. 95
    Jay Says:

    Too late to stop Tehran, Obama aims to stifle an Israeli attack

    Pretty good read.

    http://www.debka.com/article.php?aid=1405

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