Rick D

Rick D
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  • Shell Has Underperformed, But It Could Be The Only Oil Major That Emerges Bigger From The Downturn  [View article]

    That's usually true, but make sure your broker participates in Shell's Scrip Dividend Programme before you do that. Most do but a few do not. If you enroll A shares in a broker's own DRIP instead of Shell's SDP you will NOT be exempt from Dutch tax withholding.
    Dec 7, 2015. 12:56 PM | 3 Likes Like |Link to Comment
  • Should I Own RDS.A Or RDS.B?  [View instapost]

    Vanguard participates in Shell's Scrip Dividend Programme. If you are reinvesting dividends, why would you own B shares? You can own A shares, DRIP them via the SDP, have no withholding, and not end up with 2 different share classes in the same account.

    I use Vanguard. If you elect to reinvest dividends on either RDS.A or RDS.B, Vanguard will automatically enroll you in the SDP and pay your dividends in RDS.A shares, including fractional shares. If you elect cash dividends, you will receive cash. At least that's the way it's always worked for me.

    It is kind of annoying that Shell keeps canceling and then reinstating the SDP. In a taxable account switching share classes has tax consequences. But in an IRA you can switch back to B shares when the SDP is cancelled without any tax consequences. You will incur trading costs (brokerage commissions + bid/ask spread), but that's it.
    Dec 7, 2015. 12:49 PM | 1 Like Like |Link to Comment
  • Shell Has Underperformed, But It Could Be The Only Oil Major That Emerges Bigger From The Downturn  [View article]
    "They will withhold part of the dividend, but you can retrieve it on your tax return."

    Not everyone can retrieve all of the withholding. Some are required to file Form 1116 which can limit recovery.

    "RDS.B for IRA accounts. No withholding."

    It's true that there's no foreign withholding on RDS.B, but even in an IRA you should own RDS.A if your shares are enrolled in Shell's DRIP, the Scrip Dividend Programme. Enrolling A shares in the SDP exempts them from Dutch tax withholding.

    For complete, correct guidance please see the two resources I mentioned in my comment above.
    Dec 7, 2015. 12:31 PM | 2 Likes Like |Link to Comment
  • Shell Has Underperformed, But It Could Be The Only Oil Major That Emerges Bigger From The Downturn  [View article]

    The question of whether to own RDS.A or RDS.B comes up often. There is a lot of confusion and misinformation going around on this subject.

    For guidance on which share class to own, please see either of these two resources:

    Dividends Boom's article and its comment stream (comprehensive but very long): http://seekingalpha.co...

    My Instablog post (shorter; adequate basic guidance for most): http://seekingalpha.co...
    Dec 6, 2015. 09:19 PM | 2 Likes Like |Link to Comment
  • High Yield In Focus: Should You Buy Into Teekay LNG's 9.6% Yield?  [View article]
    shermantr and LNG novice,

    I've looked through TGP's financials. They appear to be fine.

    The marine LNG MLPs are down because market sentiment toward MLPs and midstream entities of any type is very negative right now. In the case of marine LNG MLPs I believe the sentiment is completely unjustified, and I have put my money where my mouth is by substantially increasing my stakes in TGP and GLOP. As long as these securities remain at such low prices, I will likely continue to increase these stakes and may initiate or increase stakes in other midstream entities as well. I view the current pricing as a gift from the market that I intend to take full advantage of.
    Dec 3, 2015. 11:27 PM | Likes Like |Link to Comment
  • High Yield In Focus: Should You Buy Into Teekay LNG's 9.6% Yield?  [View article]

    In a typical LNG train the methane is liquefied in stages using temperature only. At each stage the methane is cooled a little more until it finally reaches the last stage which cools it to -160 Celsius. It is not compressed to liquefy it.

    I've never heard of anyone displacing air with an inert gas before introducing the LNG into the tanker. It simply isn't necessary. Even if there were an ignition source inside the tank, the LNG and LNG vapor is too cold to ignite regardless of the amount of oxygen present.

    Some smaller LNG depots (those to refuel LNG-powered trucks, for instance) simply leave the top of the LNG tank open to the air so that boil-off gas can escape into the atmosphere. The fact that oxygen is present in the system is of no consequence. The methane-air mixture is simply too cold to ignite.
    Dec 3, 2015. 11:18 PM | Likes Like |Link to Comment
  • High Yield In Focus: Should You Buy Into Teekay LNG's 9.6% Yield?  [View article]

    LNG is typically kept at atmospheric pressure.

    The temperature of the methane doesn't rise even though heat enters the container holding it. It remains at about -160 degrees Celsius. The small amount of heat coming in through the walls of the container causes a small amount of methane to vaporize. The gaseous methane freely escapes and is captured and used to power the ship or is reliquefied by chilling and put back into the tank. (Some older LNG ships actually leave the tops of the tanks open to the air and the boiling methane escapes into the atmosphere, just like boiling water in an open pot on a stove.)

    Look at a picture of a typical LNG tanker. You'll see large pipes connected to the top of the LNG tank(s). These are to remove the boil-off gas. The pressure never rises above 1 atmosphere.

    Imagine a pot of water boiling on your stove. As long as you don't force the steam to remain in the pot (i.e. you aren't using a pressure cooker), the water remains at 100 degrees Celsius and the pressure at 1 atmosphere no matter how high you turn the burner on the stove. Similarly LNG stays at -160 Celsius with no pressure increase no matter how rapidly the methane boils off.
    Dec 2, 2015. 08:41 PM | 1 Like Like |Link to Comment
  • Teekay-led group wins Bahrain LNG deal  [View news story]

    I don't know for sure why TGP traded down today but the MLP space and indeed the energy sector as a whole was down a lot today. TGP actually went down less than most other investments in the space. Thus the market impact of the announcement may actually have been positive.

    I haven't yet seen enough specifics about the project to comment much in detail. I don't really see any problems with TGP getting involved in something like this, though.

    I doubt it will cause a problem for the distribution. I don't think Teekay's management would have undertaken this if it was not accretive to distributable cash flow per unit. Will the market have concerns? Possibly. There's so much negative sentiment toward MLPs these days (mostly unjustified in my opinion) that it's difficult to predict how the market will react.
    Dec 2, 2015. 08:17 PM | 1 Like Like |Link to Comment
  • Teekay-led group wins Bahrain LNG deal  [View news story]
    The entire midstream sector is down because of (imo overblown) concerns about KMI's debt load. TGP hasn't got anything to do with this but got caught in the crossfire, so to speak.

    Long TGP and KMI. I'm likely to buy more of both in the coming weeks and months.
    Dec 2, 2015. 02:03 PM | 3 Likes Like |Link to Comment
  • Teekay-led group wins Bahrain LNG deal  [View news story]

    TGP isn't a natural gas producer.

    The project in question is a receiving and regasification terminal. Volumes through this terminal would likely increase as a result of low natural gas prices. Regardless, Teekay has a 20-year charter for the floating storage unit and is insulated from price fluctuations.
    Dec 2, 2015. 01:59 PM | 4 Likes Like |Link to Comment
  • High Yield In Focus: Should You Buy Into Teekay LNG's 9.6% Yield?  [View article]

    LNG isn't under pressure during transport, at least not in the LNG tankers I am familiar with. A little bit of boiling does occur, which actually helps keep the rest of the LNG cold, due to the heat of vaporization being taken from the remaining LNG.

    The boil-off gas is usually either used to power the ship or is reliquefied and returned to the container. In some older ships the boil-off gas is released to the atmosphere, but this is obviously discouraged today because it is both a waste of the product and an unnecessary release of a greenhouse gas.
    Dec 2, 2015. 01:06 PM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred  [View article]

    Safety actually should be a factor in an investment in any aspect of the oil and gas business, which inherently involves working with dangerous substances. Investing in a sloppy accident-prone operator is likely to prove injurious to your wealth. Just ask anyone who owned BP stock in 2010.

    In this case the relative safety of LNG compared to other energy sources is a plus for those who wish to invest in this portion of the energy industry. However, the public's lack of understanding of LNG's relative safety is a serious impediment to the growth of LNG.
    Nov 9, 2015. 01:22 AM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred  [View article]
    I think you've missed my point.

    I'm not saying it is impossible to have a serious incident with LNG. It is possible.

    I'm not suggesting taking shortcuts on safety. Far from it.

    I'm saying that LNG shipping is a lot less likely to produce a serious incident than, say, crude oil, refined products, or LPG transport.

    I don't want a missile to hit an LNG tanker either. But given the choice I'd certainly prefer that to a missile hitting, say, a gasoline tanker.

    I don't want people to think that we should be afraid of LNG shipping. You're a lot more likely to get a fireball from a car, truck, train, or airplane accident than from an LNG shipping accident. Yet we aren't afraid to use those methods of transport.

    I once saw a video of an LPG explosion. The description on it incorrectly stated it was an LNG explosion. Under the circumstances of the video LNG would not have exploded and probably would not have even caught on fire. The public unfortunately does not understand the difference and irrationally fears LNG.

    The public generally thinks all hydrocarbons have similar characteristics and risks. Of course this isn't true. I've seen people foolishly think that gasoline was a good substitute for charcoal lighter fluid. (I hope you know why that's not true.)

    The risk of a fireball from an LNG accident or terrorist incident is a LOT lower than it is with other fuels. The public needs to understand that. The benefits of LNG far outweigh the risks. I don't think the general public really understands that. I've seen a lot of unjustified public opposition to LNG terminals.

    Please take a look at those two videos if you haven't already done so.
    Nov 5, 2015. 03:10 PM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred  [View article]

    I think you misunderstood me. I'm not suggesting sloppiness in the handling of LNG. Under certain conditions it CAN be dangerous. (I even gave a specific example where it could be explosive.) It's just a lot less dangerous than you are making it out to be.

    In particular I take exception to your statement:

    "Once [LNG] breaks containment it becomes a gas again. It's the same as a gas leak in your home. A spark or flame WILL ignite it into a fireball."

    This statement is demonstrably false. A gas leak in your home is at room temperature. In the right mixture with air you are correct that this will ignite. However, LNG that has just broken containment is not at room temperature. It is too cold to burn and will not ignite even when exposed to spark or flame. Even when you do get it to burn it generally doesn't create a fireball. It burns more like a candle flame.

    Here is the video I was referring to. The demonstration of a lighted cigarette being placed in a beaker of LNG is at the 4:16 mark: http://bit.ly/1WxeFCo

    And here is another one. Part of this video is even more impressive. A charcoal fire is extinguished by pouring LNG on it: http://bit.ly/1WxeDus

    As for Fischer-Tropsch, pyrolysis, and coal gasification, these are chemical reactions that occur only under very special conditions. They mostly require elevated temperatures. Boiling LNG at minus 260 Fahrenheit definitely isn't at an elevated temperature! I can't imagine any of them happening from an LNG shipping accident.
    Nov 4, 2015. 09:29 PM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred  [View article]

    Boiling LNG vapor is too cold to burn. I have seen a video of someone putting a lighted cigarette into a beaker of boiling LNG. The cigarette was extinguished. No fire resulted.

    In order to be combustible, methane must be above a certain temperature. (I'm not sure of the exact value; I think it is around -40 Fahrenheit.) Boiling LNG is at approximately -260 Fahrenheit. When LNG is regasified, it must also be warmed to a combustible temperature or else pipelines won't take it.

    Methane is flammable only in concentrations of 5 - 15% in air. In open air, by the time the methane vapor from LNG has warmed up enough for combustion it has dissipated to the point of having a concentration less than 5% and is not flammable.

    LNG can pose an explosion hazard, but generally this occurs only in a confined space. Some major explosions have happened where, for instance, LNG has gone into a storm sewer. In a confined space like this it is possible for the methane to warm up to combustion temperature while also being in the 5 - 15% concentration range.

    The bottom line is that LNG is not nearly as dangerous as people often think. LPG, which is often confused with LNG, is much more hazardous due to its vapor being heavier than air. LPG vapor will hug the ground, spreading out until it finds an ignition source, at which time a major explosion occurs. LNG vapor is lighter than air and does not have this issue.
    Nov 4, 2015. 12:21 PM | 2 Likes Like |Link to Comment