"We will start to see prices coming up later this fall," Sloan said. "By the end of this year, there will be open or two more export facilities on line, and that will start to erode some of the supply over-hang, and we will see a little bit of increase in price."
However, he said, those increases won't be to the extreme price levels shown a couple of years ago.
Propane prices have dropped about 40 percent from last year, said Scott Brockelmeyer, spokesman in Kansas City, Mo., for Ferrellgas, which has an operation in Minot.
"This is attributed to the fact that propane inventories are at more than a 20-year high," he said, citing figures from the EIA.
Mike Sloan, an energy analyst with ICF International in Fairfax, Virginia, said a combination of high inventory, inadequate export capacity and lower than normal demand in corn country for crop drying are coming together to create the current low prices.
"We are seeing very rapid growth in production right now. There's a little bit of a disconnect between the growth in production and the growth in demand. That's leading to quite a bit of propane being put into inventory," he said.
Sloan said much of the inventory in storage is waiting for new export facilities to open over the next 3-15 months.
"I do expect that prices will start to come up somewhat once the export capacity comes on line," he said.
The glut of propane is opening markets in places like Central and South America because it's forced prices down to a more favorable range for buyers.
"Prices here have come down to the point that when you take the price here, plus transportation, we can be competitive in a new market," Sloan said. It's opening in markets in places like Japan, India and Korea, and Sloan predicts China will be next.
"China will be a major market for us. The only question is how big. Part of it depends on what happens with the Chinese economy," he said.
In coming years, worldwide demand for propane is expected to grow and put upward pressure on prices, he added. Third-world countries, as they develop, favor portable petroleum fuels to replace wood and other bio-fuels. Domestically, companies are developing facilities to convert propane into propylene, which is a raw material for a number of products.
Propane prices plummet thanks to large inventories
BYLINE: By JILL SCHRAMM, Minot Daily News
MINOT, N.D. (AP) - Propane users may be heating their homes more cheaply this winter than they have for many years.
Large petroleum inventories have caused prices to plummet, and that's good news for many rural residents who heat with propane.
"It's kind of nice to see a smile on a face," propane distributor David O'Keeffe said of the response he's been getting when customers see their lower bills.
Barry Haggin, station manager at New Century Ag in Crosby, said prices dropped below 50 cents a gallon this summer before climbing back into the 50- to 60-cent range this fall.
"We are finding a lot of people have been filling up now," he told the Minot Daily News.
O'Keeffe, who operates O'Keeffe Oil in Mohall/Lansford, said the current low prices reflect an extreme that's seldom seen, just as prices over $4 a gallon a couple of years ago were an unusual extreme. Buying extra tanks now to hoard a supply isn't necessarily a good idea, though, especially given the cost and scarcity of tanks, he said. However, he sees some customers who might only fill half a tank at a time now able to afford a full tank.
Propane dealers are recommending that anyone who hasn't yet filled their tanks for winter take advantage of the current pricing, which is expected to rise with demand once cold weather settles in.
Terry Bernhardt, Enerbase chief executive officer in Minot, said he's seen propane as high as $4.25 a gallon during his 32-year career. As for lows, today's prices are lower than any in recent history.
"It's a very good, aggressive price right now. If people are looking at the propane market at all, they should really consider contracting some of their winter use, if that's available to them," Bernhardt said.
Nationally, average residential propane prices haven't been less than $1 a gallon since 1999, according to the U.S. Energy Information Administration.
From Fuel Fix - via Houston Chronicle
Gas power passes coal for the second time ever
By Jordan Blum
The amount of electricity generated from natural gas in the United States surpassed the share of coal-fired production in July for the second time.
The U.S. Energy Information Administration reported Wednesday that the share of electricity coming from natural gas-fired power plants hit 35 percent in July. It was 34.9 percent from coal plants.
Natural gas first edged coal out as a power generation fuel in April, according to the Energy Department agency.
The shift comes as the ongoing domestic shale boom produces lots of natural gas at relatively cheap prices. At the same time, few new coal plants are being built nationally because of increasing federal regulations on carbon emissions.
Compared to July of last year, coal generation fell from 150 billion kilowatt-hours down to 139 billion kwh this year. Likewise, natural gas power jumped from 114 billion kwh to 140 kwh.
In the Texas grid managed by the Electric Reliability Council of Texas, coal fell by 1.9 kwh in July, while natural gas power jumped up 3.1 kwh. Gas-fired power was already ahead of coal last year in Texas, according to the report, and gas is just building on its lead.
When the switch first occurred in April, it was during the month of the lowest demand for electricity. In times of low demand, many generators schedule routine maintenance and plants are taken partially offline. The output is highest in the summer and winter.
The price of natural gas is getting cheaper too. The U.S. benchmark for natural gas was $4.14 per million British thermal units last July, and it dipped to $2.91 this past July. It sank even further down to $2.72 in September.
Prior to April, the last time power from natural gas came close to surpassing coal was in April 2012 when natural gas pricing averaged $2 per million Btu.
General Electric, which has been moving to shed a number of divisions and return to its roots as an industrial behemoth, is creating a company to house developing energy businesses, executives said Wednesday.
The company, to be called Current, will focus on providing products and services in energy efficiency, renewable generation and storage to large customers like hospitals, universities, retail stores and cities, Jeffrey R. Immelt, the G.E. chief executive, said in a statement.
“The creation of a new company within G.E. reinforces our commitment to take energy to the next level, focusing on custom outcomes for our commercial and industrial customers, municipalities and utility partners,” he said, “and delivering a platform that can be upgraded as technology advancements are made.”
The move is part of the company’s bid to take advantage of seismic shifts in the energy business as customers seek to save money by better controlling energy use and even by making their own power. As technologies rapidly change, businesses want to be able to manage more of their operating expenses and invest less capital upfront, said
In recent years, the company has been “quietly incubating” several components of the new business, she said, including solar power, energy storage systems, electric vehicle charging equipment, intelligent LED lighting and software to manage it all. It will spin it off to allow it to develop more quickly.
“We want to make sure that they can go fast, and that they can tap into the mother ship to get what they need to go fast and that it doesn’t slow them down,” she said. “Increasingly, these are the models we’re trying to test out: the more speed-to-market, the more entrepreneurial approach.”
Current will start with $1 billion in revenue and expects to become a $5 billion business by 2020, executives said. Early customers who have agreed to start using the G.E. systems include Walgreens, the Simon Property Group, Intel and JPMorgan Chase.
The refiner would not comment on whether it would participate in exports itself.
Phillips 66 went a step further, describing its purchase last year of a terminal in Beaumont, Texas, in part to plans to directly participate in exports should policy change.
Legislative math, however, may offer the greatest relief for refiners opposed to exports as they watch Congress develop bills to end the policy. Supporters may simply not have the votes.
Crude exports have received support from Energy Information Administration studies showing little impact on fuel prices and a Congressional Budget Office study suggesting they would contribute a $1.4bn increase in royalties on federal lands. Valero last month said exports would have only limited effect on its business.
But strong partisan lines around the measure give it thin odds to pass Congress, ClearView Energy Partners analyst Kevin Book says. Senate Republicans added language to a crude export bill in that chamber tying the policy change to sanctions on Iran, and Democrats have targeted oil and gas tax breaks. Neither side will likely be interested in serious trading needed for a repeal to survive a vote, Book said.
It is better for refiners to appear conciliatory on an idea unlikely to move forward and to focus on more immediate issues, such as the biofuel mandates under the Renewable Fuel Standard (RFS), he said.
"If it were imminent that there could actually be a deal, I think you'd see a stronger opposition," Book said. "It doesn't do them any good to spend dollars on it now when there's nothing to fight."
From Argus Media Limited
Large refiners comfortable with crude export push
US independent refiners' opposition to lifting the domestic crude export ban has softened thanks to logistics investments, product export desires and political calculus.
East coast refiners, the most vulnerable in the US to European competition, remain staunchly opposed to selling domestic crude abroad. But large independent refiners have dismissed such concerns as two Congressional proposals repealing the 40-year-old ban gathered steam.
"I don't think it's going to be as big a deal as some people think," Phillips 66 chief executive Greg Garland said in an investor presentation last month.
Integrated refiners operating in the US have long embraced the idea of crude exports, willing to sacrifice downstream advantages for their upstream business. But exports only increased operating costs for the merchant approach of many US independent refiners. Those companies tied the export policy to changing long-standing shipping regulations and other legislative efforts that were very unlikely to pass.
A strong and rising products export business softened some of that opposition. Refiners cannot easily oppose exports of crude while sending growing volumes of refined products overseas. US gasoline exports through July climbed to an average 466,000 b/d, a 40pc increase compared to the same period of 2010. Diesel exports have increased by almost half over the same period, to an average 1,158 b/d through the first seven months of this year.
Resistance eroded further as larger refiners increased their ability to move crude. Refiners have increasingly used growing logistics subsidiaries to keep high quality crude in their own systems while collecting fees for moving other production to new markets.
US independent refiner Tesoro, which has spent years linking Bakken oil fields to midcontinent and west coast refineries, said last month the company supports crude exports unconditionally.
However, the drops need to be viewed in context of the growth in taxable sales in recent years when oil was booming, Rauschenberger said, growth that led to a record $28.2 billion in taxable sales and purchases in 2014. For example, he said, this year's second-quarter figures are more than 70 percent higher than the second quarter of 2010.
The downturn in oil activity even has a bright side - more people are looking for work, according to Rud.
"We want to maintain customer service but that's been a real struggle," he said. "We're 14,000, 15,000 bodies short in the retail sector. And if you look around in the bigger cities, companies are continuing to build."
Three of the state's four most populated cities - Fargo, Grand Forks and Minot - had small increases in taxable sales and purchases in the second quarter, of less than 3 percent. The fourth, Bismarck, had a decline of about 2 percent.
North Dakota taxable sales drop 16 percent in second quarter
BYLINE: By BLAKE NICHOLSON, Associated Press Financial Wire
BISMARCK, N.D. (AP) - North Dakota's taxable sales and purchases dropped more than 16 percent during April, May and June compared to the same quarter a year ago because of a decline in activity in the western oil patch.
It is only the second such quarterly decline since 2009, but officials say they're not surprised nor too concerned given the tremendous growth in taxable sales and purchases the state has experienced in recent years.
"Hopefully this is just a short-term situation," said Mike Rud, president of the North Dakota Retail Association. "We weren't going to keep running at levels we were running at anyway."
The state recorded $5.9 billion in taxable sales and purchases during the second quarter, compared to about $7 billion in the second quarter of 2014, state Tax Commissioner Ryan Rauschenberger said Tuesday. Six of the 15 major industry sectors had gains, but the mining and oil extraction sector was down more than 31.4 percent.
Oil production in North Dakota - the nation's second-leading producer behind Texas - remains at near-record levels, but drillers are concentrating rigs in high-producing areas and the overall number of rigs has plummeted.
"When you take that amount of people out of the oil patch, think of the clothes they're wearing, the food they're eating, the gas they're buying," Rud said. "It's always scary (to see a drop), though it's part of the process and we knew it wasn't going to be able to keep going the way it was."
The oil patch hubs of Dickinson and Williston saw decreases in taxable sales and purchases of 20 percent and 36 percent respectively, as did the counties those cities are located in, Stark and Williams.
One is the IMF ’s latest markdown of global GDP growth prospects. And there is the increased uncertainty about the Federal Reserves’ interest rate path, new U.S. debt ceiling debate, and lingering political risk across Europe.
“This kind of bifurcation has typically led to more attractively valued asset prices, and that is generally what we are seeing today,” asserts Wilson. He says that with interest rates stable, prices for stocks and corporate bonds have become much cheaper.
Yet, notes Wilson, “investors are now aggressively shunning risky assets – which usually indicates a good time to buy them.”
Partial Column - Posted - Oct. 2nd.
Forbes - by Gene Marcial - Contributor - Investing
Market In Re-Test
STOCK MARKET IN RE-TEST MODE
The tug-of-war between the bulls and bears continues! The critical question comes down to whether the market’s stubborn downward drive will lead to an authentic bear market, or to the elusive low that will re-energize the bull market.Or, as one market analyst puts it, “is this the end of the correction, or the beginning of the next leg down?”
The savvy analysts at Morgan Stanley, who probed into the market’s typical trading patterns during highly volatile equity market corrections, have come up with this conclusion: The market is re-testing itself.
“That means an important low is probably in the making, which presents investors with the most attractive opportunity we have seen in several years to add to risk investments,” predicts Michael Wilson, chief investment officer at Morgan Stanley Wealth Management.
He says corrections during fiercely volatile markets are usually accompanied by either excessive valuations, growth scare, or both. And then they typically go through a two-stage process before bottoming, with a momentum low followed by a retest of those lows about two months later.
“I think it’s safe to say that we are now currently experiencing that retest,” says Wilson. So why does he think that this is a retest and not the beginning of another downward move?
The first reason: He believes there is a low probability of a recession in the next 12 months. Secondly, valuations aren’t rich. And finally, markets tend to bottom on bad news, not good news, says Wilson.
Indeed, there hasn’t been a shortage of bad news headlines that overshadow the good news about the U.S. housing and labor markets, notes Wilson.
Markets Commodities Oil Markets
Saudi Arabia Cuts Oil Prices Amid OPEC Price War
Reductions follow price cuts by rivals last month
By Benoit Faucon
Saudi Arabia on Sunday made deep reductions to the prices it charges for its oil, hard on the heels of cuts last month by rival producers in the Gulf.
With U.S. production still increasing despite lower oil prices, members of the Organization of the Petroleum Exporting Countries are battling to keep their share of the last growing markets in Asia.
In a list of official prices sent to customers, state-oil company Saudi Aramco cut the price of its light-crude deliveries to Asia by $1.7 a barrel. As a result, it switched to a discount of $1.6 a barrel against the rival Dubai benchmark from a premium of 10 cents a barrel previously. The company also cut its prices for heavy oil by $2 a barrel to the Far East and by 30 cents a barrel to the U.S.
The move come as Iran, Iraq and other countries in the Middie East made deeper cuts in their official prices than Saudi Arabia last month.
Saudi Arabia has vowed to keep pumping at high levels as it hopes lower oil prices will stimulate Asian demand and hit rival production in the U.S. that is expensive to produce. But while Chinese economic growth is slowing, U.S. production rose by about 68,000 barrels a day in July, according to the U.S. Energy Information Administration.
SunPower panels, which have achieved efficiencies of more than 21 percent, have generally been considered the most efficient, but SolarCity’s new modules will exceed that level, Mr. Rive said.
The company plans to begin using the panels primarily for rooftop installations for homes, schools and other buildings, but eventually plans to make them available for large-scale, ground-mounted installations. The panel’s design, which involves layers of different forms of silicon, could allow for the production of electricity on both sides, Mr. Rive said.
From NY Times
Energy & Environment
SolarCity to Make High-Efficiency Panel
By DIANE CARDWELL
When SolarCity, the fast-growing provider of rooftop solar electricity systems, announced last year that it would begin making its own equipment, executives said they would focus on creating high-efficiency panels in an effort to reduce the cost of the electricity they sell. They announced on Friday that they had done just that, with a panel that converts more of the sun’s energy into electricity than competing products.
The company plans to start making the panel — whose output has been measured at more than 22 percent — this month at a small plant in Silicon Valley, said Peter Rive, a founder, but will eventually produce it at the enormous factory it is building in Buffalo.
The move into manufacturing, a business that has proved deadly for many other upstart American solar companies, came with the acquisition of a start-up, Silevo, and is intended to help the company compete with conventional energy sources once generous federal subsidies begin to phase out at the end of next year.
Although 22 percent may not seem like a tremendous level of efficiency, the breakthrough for SolarCity is that it can produce the panels at a lower cost than it pays to buy standard models but get more electricity out of the same square footage, Mr. Rive said.
“You’re talking about a 40 percent increase in efficiency at a lower cost,” he said. “We have to get solar energy to be cheaper than natural gas or coal, and these breakthroughs get us there.”
Solar panels convert only a fraction of the sun’s energy into electricity — the process is limited by a number of factors, including heat and shading. This year, three companies, including the Chinese giant Trina Solar, announced records in efficiency, all in the high teens.
The utility said it would be targeting greenhouse gas emissions reduction of 240,000 tonnes of carbon dioxide equivalent by the end of 2020.
Meanwhile, the company proposed to receive $10 per tonnes of carbon dioxide equivalent as an incentive, in addition to being eligible for other cost recoveries.
Cascade Natural Gas Corp. has been closely watching the proceeding, primarily looking to understand how much time is involved, the cost of implementing a proposal, the investment opportunity, the impact on ratepayers, and the magnitude of the incentive, according to Cascade parent MDU Resources Group Inc. spokesman Mark Hanson.
"While Cascade has not yet identified a project within our Oregon service area that might qualify as a S.B. 844 project we remain interested in the concept and will be tracking regulatory and program developments related to the initial activities of other Oregon natural gas utilities," Cascade said in its most recent integrated resource plan.
Despite the uncertainties, Hanson noted in a Sept. 25 email that Cascade is intrigued by the possibility of expanding its system and "the ability to have a positive impact on the environment at a time when the natural gas is abundant and low cost."
Meanwhile, NW Natural has also been working on an oil-to-gas furnace replacement proposal to serve the residential market, according to Moore. The company has completed its discussions with stakeholders, and the utility is working on the proposal which it intends to file in the near future, Moore said.
BYLINE: Sarah Smith
Under NW Natural's proposal, large industrial and commercial customers in the market could submit CHP projects for consideration, and depending on their carbon reduction potential, NW Natural would provide incentive funding based on the verified carbon savings, making the project more financially feasible for the customers.
"We've been collaborating with a variety of regional and state organizations interested in helping CHP gain more traction and working to leverage other existing funding streams," NW Natural spokeswoman Melissa Moore said in a Sept. 24 email. "In our view, this is an important effort that could provide a significant carbon reduction benefit for our customers and for Oregon."
Salmi Klotz noted that there are a host of methodologies for determining emissions factors, including the U.S. EPA's Emissions & Generation Resource Integrated Database, or eGrid, approach; a protocol developed by the Northwest Power and Conservation Council; a proposal by the Oregon Department of Energy; and methodologies in each of the state's electric utilities' integrated resource plans.
"I'm working through them to see which would be most applicable from the staff's perspective," Salmi Klotz said. "I don't necessarily see a winner right now."
The proceeding is also challenging the regulator and other stakeholders to explore different types of carbon markets and the value and price of greenhouse gas reductions, Salmi Klotz said.
"I think the state and the stakeholders are starting to understand that a price on carbon is different than a project cost for reductions of carbon," Salmi Klotz said, noting that this distinction will likely prove key in setting incentives and determining cost recoveries.
NW Natural proposed that CHP customers would receive $30 per verified tonne of carbon dioxide equivalent not released, although each CHP customer site would be capped at $4.5 million of incentive payments per year.
SNL Daily Gas Report
Ore. PUC hammers out details on 1st LDC plan to earn returns on CO2 cuts
s the Oregon Public Utility Commission moves forward on a carbon-cutting incentive program for gas utilities, stakeholders are grappling with questions about the costs and value of curbing greenhouse gas emissions and how to measure these reductions.
So far, Northwest Natural Gas Co., d/b/a NW Natural, is the only local distribution company that has applied to participate in the program, which allows utilities to earn a return from carbon dioxide emissions reductions. The Oregon PUC and the LDC are now working through some critical unknowns in the program, according to Jason Salmi Klotz, the commission's climate change lead.
Specifically, the Oregon PUC and regulated utilities will have to agree on both an appropriate methodology for gauging emissions factors and how the value of greenhouse gas emissions reductions will be calculated, Salmi Klotz said in a Sept. 25 interview. These decisions will likely set important precedents for future participation in the program, he said.
"There are some a priori issues that need to be worked out in this initial proceeding with NW Natural that will most likely affect any subsequent proposal from another gas utility," said Salmi Klotz, who is the PUC staff member in charge of the program's implementation. "I think it's quite challenging."
In 2013, Oregon enacted S.B. 844, which created a voluntary incentive program for natural gas utilities to invest in projects that reduce greenhouse gas emissions. NW Natural became the first LDC to formally express interest in participating in the program when it applied on June 24 to take on a combined heat and power project.
Natural Gas Rates to Drop for Intermountain Gas Customers
BYLINE: Targeted News Service
The Idaho Public Utilities Commission issued the following news release:
Rates for customers of Intermountain Gas Company will decrease an average 5.7% effective Oct. 1.
The Idaho Public Utilities Commission approved the company's annual Purchased Gas Cost Adjustment (PGA). Under the PGA, rates are adjusted up or down every Oct. 1 to account for that portion of gas supply expense that changes every year.
Lower wholesale prices for natural gas and a decrease in transportation costs billed to Intermountain by its supplier, Northwest Pipeline GP, contributed to this year's reduction.
The $15.3 million passed on to customers is about a 6.1% decrease to customers who use natural gas for space and water heating, a 3.56% decrease to those who use natural gas for space heating only and a 5.6% reduction for commercial customers. The PGA portion of customer rates will be reduced from the current 39.5 cents per therm to 32.8 cents per therm. With the approval, Intermountain's combined residential and commercial rates are 35% lower than in 2005.
Other factors contributing to the lower rate include increased natural gas production and Intermountain Gas' management of its storage and firm capacity rights on its various pipeline systems.
"When we had equipment break downs, RDO made sure to get us the necessary parts as quickly as they could so our down time was very minimal. They would also check in with us, whether it was to see how the equipment was working or the part they replaced was correct or to see if we needed anything from them," Nick said.
A wide range of equipment was utilized, including Topcon GPS base and rover systems, to John Deere motor graders and dozers, and Topcon Paving sonic systems.
Kelly Snively, RDOIC Account Manager, commented, "This was the ultimate partnership between customer, manufacturers, and dealer. Our customer finished the job way ahead of schedule and commended this accomplishment on the level of technology, equipment, and support they had from our team."
Nick added, "The partnership with the Montana team was great. When a problem occurred, any individual I spoke with would have an answer for me right away. I got to know quite a few of them very well. These team members made my life a lot easier when it came to resolving issues. There was no taking a back seat with them - solutions were given in a favorable manner."
Vice President of RDO Integrated Controls, Kelly Gress, added, "Through a single enterprise approach, we truly demonstrated our ability to provide a total solution, which is a significant win for our entire organization."
From News Bites - Private Companies
RDO Equipment Co.: Knife River - Success in Belgrade, MT 29 September 2015
Knife River is one of the largest construction materials and contracting companies in the United States, with more than 4,800 employees in 19 states and their footprint is very similar to that of RDO Equipment Co.'s.
In Montana, Knife River is one of RDO Integrated Control strongest supporters in the industry of machine control and John Deere and Topcon integration.
For the East Belgrade Interchange project, Knife River completed a very detailed interstate project that involved construction of new bridges along I90. Beginning in August 2013, the project consisted of four phases, with an expected completion of this summer.
Nick McGregor, Knife River GPS Project Manager expected the Interchange project to be a 'no stakes in the ground' project, and except for an initial layout for visual effects, that was a true statement.
"Typically when most roads are built, a separate surveyor will provide staking, such as catch stakes. There is vital information we need to know as far as slopes, shoulders of the roads, and measuring fill material. Also, with three roundabouts that were incorporated into this Interchange Project, there were various amounts of grade changes with tight radii. But we were able to utilize our GPS equipment for all of it," commented Nick.
He added, "With the complexity of the Interchange Project, having machine control take over with no waiting period for survey stakes to be put in the ground, we were able to keep building as fast as we could import or export the material, giving us full advantage for early completion."
RDO Equipment Co. and RDO Integrated Controls, a united team, filled the needs of Knife River throughout every phase of the project, whether it was heavy equipment needs, machine parts and repair, or machine control service and support.