Road Trip - Palm Springs to Calgary Day 1

I've been on a few awesome journeys this year, but I was pretty excited about driving from Palm Springs to Calgary with my buddy Howard.

Tuesday, May 7th

12:08P - Leave the Sterling Estates compound to pick up Howard from the airport. I forget to pick up my putter head cover from the Mission Hills Gary Player shop. My quest to break 100 is on hiatus this week.

12:25PM - Arrive at airport. Arrive at airport EARLY. I did not see any planes land on my drive there. Howard isn’t even on the ground yet. I’m very OK with being late unless I’m excited. Today I am stoked. Today is big.

1:08PM - I call Julia and suggest Trio up the street. Its only a block away, I lie and say Howard and I were waiting in the car and just got out to check. We both know I’m busted. Howard is recently single, and a retired divorce lawyer isn’t a bad contact to have when you’re looking for a mature life partner. However this means Howard will be interrogated over lunch. I’m a fast eater and Howard is a slow eater. He’s even slower when he’s under Julia’s microscope. Suddenly time stands still, there is no urgency, I must wait. I must.

I want I want I want to get on the road. We need to drive the entire Pacific Coast Highway Route 1 so maybe this chit chat can wait? Not this time. Its a 2 hour lunch.

2:54 - Could it be? Yesss. Driving. Dana Point to Leggett. The. Entire. Highway. Many will claim to have driven it. We are driving ALL of it. Every fucking inch (except when we exit an overlapping Interstate section and need to take an exit and entrance ramp).

Once we hit the coast, all we need to do is pick the paved road closest to the coast but getting to Dana Point requires a few deft exits and toll roads. The GPS in cars blows. I want to use Google Maps. I want real time traffic factored into my route decision making process. The reflective screen I added to my phone last Christmas Eve makes it impossible to read the screen while wearing sun glasses. I will not remove this screen until I park the car in front of our house in Calgary four days later. Turns out that having kids in the car is more distracting than texting and driving. My glancing down at my iPhone while driving is wrong, especially when I have to remove my prescription sunglasses to read it.

I am willing this drive to be complete. I know it is frivolous. It is a giant time suck. It is inefficient. A car can be driven from Palm Springs to Calgary in 24 hours more or less. I can’t even get an estimate of how long our Pacific Coast Highway trip will take from Google Maps. My laptop screen real estate is too small to drag all the blue dots off of the Interstates.

Ever since Brian F. introduced me to the Beach Boys in grade 4, I’ve had a thing for Southern California. Today we are in it. The mysterious places mentioned in Surfin’ USA are showing up on the road signs!

Beaches. Laguna, Newport, Huntington, Long etc. etc. Giant oil fields were discovered along this stretch of highway. Signal Hill! Pumpjacks. The old photos of Huntington Beach (aka Surf City USA) look much different than the pretty beaches and marshlands of today. We hit traffic. Mostly a consequence of my choice to drive south to Dana Point instead of starting in Santa Monica. I will forever be asking people if they started PCH 1 at Dana Point. I’m not sure if 3 hours of heavy traffic is worth being able to forever ask people if they started PCH 1 at Dana Point.

Howard and I have noticed that in sunny California, the car pool lane is never busy. Also a high percentage (but not all) of Prius drivers near LA drive aggressively. Maybe the lack of power frustrates the driver. Just a theory.

As fortune would have it my Rolling Stone Top 50 Albums of 2012 playlist calls up Sweet Life.

Why see the world, when you've got the beach? - Frank Orange.

This tune comes up later on the trip and it makes sense. To be fair, people from California travel internationally more than most Americans.

Why would you live anywhere else?

Why would you live anywhere else?

We've got the ocean, got the babes

Got the sun, we've got the waves

This is the only place for me

Best Coast

7:36 - Malibu. Soon to be owned by Larry Ellison. The real estate is precious. Malibu is a choke point on the highway. There isn't much real estate available between the landslide zone and the coastal erosion zone. The Malibu preachy actors tend to be coastal erosion deniers. There isn’t room for a beach, a row of beach houses, and two lanes of highway never mind four. Something has to give. My bladder. We gas up in Malibu and drive the scenic curves while watching the sunset. 

We stop in Oxnard?

8:31 - Best Western. Clean, safe, cheap and open. Day one’s driving is done.

8:50 - Cabo Seafood Grill and Cantina. Howard ate local style and had a Strawberry Margarita at dinner. I didn't know that Oxnard was famous for strawberries so I feel guilty for mocking his "girlie drink". Not much going on in the section of town we were at but I think we saw a crack whore standing on the corner. You don’t often see legs skinnier than Steven Tylers.


Exciting News From Shoal Point Energy

There are big happenings at Shoal Point Energy. The original team that identified the massive opportunity and captured the acreage (no easy feat) is stepping aside. Marc Jarvis will be replacing George Langdon as CEO. Jarvis' claim to fame is his association with Ultra Petroleum, a rags to riches natural gas deal that changed a few people's postal codes.

The chart on the left from BigCharts.com shows the meteoric rise of Ultra Petroleum. This is what investors in leading edge resource plays are looking for.

The "forward looking statements", mostly references to what the Government of Newfoundland and Labrador might or might not do in the future, were clarified in a second press release. 

Shoal Point Energy is an advertiser and I own shares purchased in the open market.

Road Trip

I’m a the stylish Palm Springs International Airport waiting for the arrival of my road trip buddy, Howard. Our mission is drive a white Lexus LC 340 (Pebble Beach Edition) from Palm Springs to Calgary before Saturday afternoon.

I just heard the announcement! He’s arrived. Our first order of business is to have lunch with my wife, Julia in downtown Palm Springs. She will be grilling him on his new girlfriend.

I’ve chosen an extremely inefficient route to get to Calgary. I want to drive the entire Pacific Coast Highway 1. Not just a few stretches. Why? Because it is there and I’m not going to hold a rope like a daycare kid walking on a downtown field trip while I wait my turn to summit Everest.  This means driving to Dana Point where our little highway intersects a more efficient Interstate.

The WIFI appears to be down at this quaint little airport. I still love it but now I’m writing a Word document instead of live blogging. Word!

Why Don't Golf Carts Fly?

My interest in golf carts started at an early age. I still remember the photo of Bob Hope's nosed out golf cart in My Weekly Reader when I was a young laddy. Now I spend a good part of the winter months near Ground Zero for golf cart customization. It turns out that Bob Hope wasn't the only person who wanted a customized cart. The lowly generic golf cart gets the glam treatment every summer during the Palm Desert Golf Cart parade. People like pimped out golf carts. 

Maybe this summer there'll be a Bubba Hover in the parade. 

This video wasn't intended to sell hovercraft golf carts, it was intended to help market Bubba Watson and Oakley as hip and edgy. Turns out the concept is too good to completely dismiss.

I can attest to the desire of at least some golfers to stand out from the crowd. Everything from Loudmouth pants, lime green golfballs to plushy club head covers can be seen out on the links. 

Meanwhile the brains at Neoterich Hovercraft have been getting orders! Since the commercial, they have announced a limited edition of 100 carts.


@warrenbuffet Takes on Twitter

If Twitter followers were dollars Warren Buffet would be having a big day.

Buffett ‘In the House’ Gets 50,000 Followers on Twitter

He's pushing 100,000 followers as of 11:21 PST so his numbers are ramping. I think Twitter followers are worth more than Bitcoins. 

So far his only tweet has been

There are numerous unofficial Warren Buffett Twitter accounts but @WarrenBuffet is verified. I'm not sure if Buffett would use a term like "in the house" so we'll see shortly the account is the real deal. 

Off to See the Oracle

The Oracle of Omaha, Warren Buffet, will be answering questions this Saturday at the Berkshire Hathaway Annual Shareholders Meeting. The highlight of this event at the CenturyLink Center will be the live unscripted QandA that runs from 9:30AM to 3:30PM. Warren and Charlie Munger don't pull any punches.   

There is not a cloud in the sky today in Rancho Mirage, CA but a trip of ever cascading delays could be in the cards.

Fracking's Fine in Western Newfoundland

Shoal Point Energy Ltd's (CNSX:SHP) partner in Western Newfoundland's massive Green Point shale play is doing a great job of community relations. Black Spruce Exploration CEO, David Murray, has been meeting extensively with local community leaders to prepare for the potential long term impacts (which are seen by the community as extremely positive).  

Black Spruce is looking to start drilling "mid-summer". This is an exciting play.

Wavefront's Changes

Introducing new technologies to old industries isn't for the faint of heart.  

Wavefront Technology Solutions' (WEE.V) original focus was on revitalizing mature oil fields. All forms of enhanced oil recovery (EOR) involve the injection of a fluid. Better injection leads to better EOR performance. It sounds simple on paper and it works on paper, in the lab and in the field. However, the time it takes to commercialize a new technology in heavy industries like the oil patch is on the order of 15 years. Wavefront has been a public company for over 9. The new client cycle of sales, installation and evaluation of Powerwave EOR takes forever in stock market time. According to Wikipedia, patience is the state of endurance under difficult circumstances.

Whenever someone doesn't believe me about how long innovation takes in the oil patch, I always ask them if they know who George Mitchell is. He started working on the Barnett shale gas play in 1981. 

Quarter over Quarter Revenue Growth

Quarter over Quarter Revenue Growth

As of this morning,  Wavefront's market cap is ~$27 million. Cash as of February 28th was over $12 million. The latest quarterly results, released yesterday, have disappointed some investors looking for steady revenue growth. Wavefront mentioned some  future business in Brazil and Columbia worth $1.9 million. The EOR sales funnel isn't empty but but the "dough ray me" is not ramping up as quickly as shareholders would like. 

The most important recent information about Wavefront relates to a commitment to expand into  a couple of new areas, well stimulation and performance drilling. These opportunities are a direct result of Wavefront's acquisition of Vortech Inc.,  a company that had intellectual property (IP) complimentary to Wavefront's, for $4 million. It is looking like a clever deal. 

If you think that new oil supplies are going to come from existing fields by the use of enhanced oil recovery (EOR), then Wavefront has a proven technology. If you think that shale oil and gas are going to lead to energy abundance, Wavefront has a solution that provides dramatic cost savings in horizontal drilling. These are achieved by increasing the rate of penetration (ROP) while drilling by 5-30% (and in one case 94%). My hunch is that the performance drilling business will be significant for Wavefront. Time is money in the drilling business and Wavefront's IP can make a meaningful immediate contribution to drilling performance. I think the adoption rate will be much faster in the performance drilling sector given the ease at which pilot tests have been scheduled. This contrasts with the EOR business where it can take years to line up a field test. I know of a couple of private EOR companies that are looking to acquire water flood assets  

The market previously valued Wavefront on the blue sky potential of its IP. I'm not sure what a patent portfolio that allows field verified substantial improvements in well stimulation, performance drilling and EOR is worth. I would guess that it exceeds Wavefront's current enterprise value of $15 million.

The company has reacted to market realities without selling any of its IP or diluting its share structure. Wavefront will eventually cross the chasm towards mainstream adoption of their IP for EOR projects. In the meantime they have lots of cash and exciting new business opportunities where they can apply their valuable IP.

I own shares of Wavefront Technology Solutions Inc. (WEE.V) which I have personally purchased for investment purposes. I am also a consultant to the company.

Peak Oil isn’t Dead

I get lots of interesting material sent to me by readers and it doesn't seem fair to keep it all to myself. Here's a piece that takes the other side of my YES answer to Is Peak Oil Dead?

Peak oil isn’t dead: An interview with Chris Nelder

I'm not retracting anything from my recent talk. I think that the gloom and doom has been overdone on oil supply (and climate change). I like much of what Nelder says, I just think that we need to be realistic on timing. While everyone is focussed on the supply from shale oil, they're missing the large EOR prize that companies like my client, Wavefront Technology Solutions Inc. (WEE.V) are digging into.

Basic research will provide a better payback than throwing public funds at not ready for prime time projects. 

What Kind of Bounce?

I'm tapped into lots of chatter about precious metals. Lately I've been filtering most of it. ETF and fund redemptions are causing forced selling. I think it will get worse before it gets better.  Non-diversified "hedge" funds that loaded up on precious metals are in serious trouble.

Markets can remain irrational a lot longer than you and I can remain solvent.

John Maynard Keynes

Shoal Point Energy Update

We have a new advertiser.

Disclosure - I bought Shoal Point Energy (SHP) shares in the open market at prices well over $0.30. Thankfully the enormous Green Point Shale resource play is slated for further exploration activity.

Shoal Point has done a great job of acreage capture and now they have a farmin partner, Black Spruce Resources, which is a private entity.  I'll be posting more on the company in coming weeks.

Rock and Roll

I've been to some shows lately including Dave Stewart at the Troubadour in Los Angeles, The Palma Violets and Franz Ferdinand at Pappy and Harriet's in Pioneertown and the oh so hipster Coachella Valley Music and Arts Festival.

A philosophical question - If you witness a great performance and nobody raves about it on their blog, did it really happen?

Hell ya! 

Jimmy Kimmel's Lie Witness News piece has been making the rounds. It does a great job of preying on the Fear of Missing Out (FOMO) that the kids face when they are confronted with the smorgasbord of over 100 acts. 

YYC WiFi

ShawOpen has muscled its way into the coffee shops and malls of Calgary by offering faster speeds. I've checked different options from a few different locations and ShawOpen has always been faster. It's a pretty nice option for Shaw subscribers. 

Starbucks WiFi

ShawOpen

Live From the Calgary Energy and Resource Investment Conference

Yesterday I gave my keynote speech "Is Peak Oil Dead?" and also did a corporate presentation for my favorite company in the world (and its not just because they pay me) Wavefront Technology Solutions (WEE.V). I'm excited about recent developments.

This abstract by award winning geologist Peter R. Rose M. King Hubbert and the Myth of “Peak Oil” and a Graphic detail on Peak Oil in Economist.com sum up things nicely and I used both of them in my presentation.

This afternoon at 2:30PM I'll be participating in an oil and gas panel discussion with Marin Katusa, Keith Schaefer, and the bow tie loving Josef Schacter. Lots of discussion to follow so if you're in the YYC drop by the Calgary Convention Centre and say hi!

Oil Sands Tailings in the News

A recent article by reporter Mike De Souza has the headline Oilsands tailings leaking into groundwater, Joe Oliver told in memo. De Souza does a great job of linking to original sources. Who wouldn't love to know the contents of a secretive sounding "internal memo" related to the oil sands? The news is more exciting than the science, but any new data on the oil sands is politically charged.

You can navigate to the memo and the abstract of Geological Survey of Canada Open File 7195 A local test study distinguishes natural from anthropogenic groundwater contaminants near an Athabasca Oil Sands mining operation and the original report. 

The internal memo made 2 key points in the summary:

  • The studies have, for the first time, detected potentially harmful, mining-related organic acid contaminants in the groundwater outside a long-established, out-of-pit tailings pond. This finding is consistent with publicly available technical reports of seepage (both projected from theory, and detected in practice).

  • Importantly, concentrations of the measured mining-related organic acid contaminants decrease rapidly with distance from the sample tailings pond. No mining-related organic acids were detected in the Athabasca River at the point where its channel is nearest to the tailings pond. Similarly, no mining-related metals from groundwater reached the river from the test site, and no mining-related metals were detected in the river itself.

The second point gets less attention in De Souza's article. This is not a crisis. The reason for the study in  the first place is that it is difficult determining contamination of the Athabasca River by oil sands development. It naturally eroded through oil sands deposits so there's natural oil sands gunk everywhere. Scientists have to pull out an advanced toolkit to distinguish man made (anthropogenic) compounds from the natural ones. They  used new ways to analyze isotopes of carbon, lead, and zinc to help make the distinction. Leading edge science. 

The metals don't seem to be going anywhere so the main nasties in question are a class of compounds called napthenic acids (NA). They concentrate in oil sands process water because that water is continually re-used. By analyzing acid extractable organics, the scientists were able to characterize the origin of napthenic acids. To quote the study, "Acid extractable organics (AEO) containing classically defined NAs represent a diverse class of organic compounds that are very difficult to characterize chemically."

The GSC report shows that process water AEOs (which include the NAs) are seeping from the unnamed tailings pond (but which is almost certainly the massive Mildred Lake Settlement Basin - see Wikipedia and Wikimapia). The text and map below are directly from the report.

Mining-derived AEO concentrations between 7.3 and 14.1 mg/L in groundwater at approximately 1.6 km down-gradient from the edge of the tailings pond are relatively high compared to the ambient level of less than 1 mg/L for groundwater in the glacio-fluvial aquifer of the studied area. This observation suggests that, on a local scale, groundwater contamination with mining-related AEO may be an issue. 

AEO concentrations attenuate rapidly further down-gradient. The big picture is that  tailings ponds tend to "leak" or seep. The more important question is how much of what substance and is that substance harmful?  This is not an Ajka situation. There are many ways to ameliorate this seepage now that it has been detected.

The science is great but I wouldn't consider it policy changing.

I'm going to sleep well tonight knowing that Joe Oliver has a good advisor who writes sensible memos and that Canada is developing some of the best science for contaminant detection in the world.