Ella and the tea plantation

The Halpe tea factory tour was one of the highlights of our week. We learned how they grow, pick and sort the leaves (all by hand) for taste and color, and then how it is dried and sorted. Fascinating.

The factory dates back to 1867 when the English ruled Ceylon and decided to compete with China for tea production. Ceylon tea is black, because it is full of antioxidants. Its smokey flavor comes from the burning of land (and rubbish) that is ubiquitous in the area (and stings the eyes).

As Shamus said, the 1800's methods - which have barely changed since - meant that anywhere else (like the UK or USA) the factory would have been closed down for safety reasons. No hard hats, no shoes, no gloves!

We bought loads of tea, and drove back to Ella for lunch. Ella is a really cute little town, full of bars and restaurants. We tried La Mensa, which despite the Spanish name was 100% Sri Lankan. For a bottle of white wine, they had to go to another restaurant to 'borrow' one! Wine is not a 'thing' in Sri Lanka.

Our hotel was on the mountain; it was fairly basic but the view - OMG.

(Victor's hotel was also on the mountain, but up a really hilly, bad road - and the van could not get up the hill. We got out, and after several runs at it our driver got up. It was about 9pm by then and pitch dark.)

After two nights in Ella, we drove the 3.5 hours on really windy roads to Yala. Upon arrival, we sorted the guide for the next morning's safari and Shamus was ordering a breakfast box for the morning when the hotel worker said 'By the way, safaris are cancelled!'  Coronavirus strikes again. All national parks and activities, including whale watching, were cancelled.

Disappointed, we spent the next couple of days sunning ourselves by the pool and still managed to see loads of wildlife - boar, Langur monkeys, birds...

Sri  Lanka was cracking down, and there were already visibly fewer tourists. Luckily, we decided to check on our flight for Saturday, although Sri Lankan Air had not sent any notice of any changes. Turned out, the last flight to London was leaving on the 18th - and there would be none after that for the foreseeable future.

We love Sri Lanka, but really did not want to be stuck here for a month - without our laptops we couldn't even work from here. I got on the phone to the airlines and got us seats on the last flight - economy. Even though we paid for business class each way, we will be stuck in economy - for the SAME price! So much for no penalties.

Our last 4 nights on Talpe Beach were reduced to 1. We checked into our fabulous hotel, which was empty bar another couple. It is a very windy beach, so swimming was out of the question. We went for lunch instead at Victor's Wijaya Beach hotel and cafe - fantastic. 

At the airport now, in business lounge then to our economy seats (argh). Fingers crossed!

Train journey Kandy to Ella

We got the the train station at Peradeniya (Kandy) at 11:30 Thursday to check in for the 12:35 train. Two hours later, at about 1:30, we finally pulled out of the station, chugged for 5 minutes, stopped, went back to the station on a different track and then we were on our way...

The Kandy to Ella train journey is legendary; some of the best scenery in Sri Lanka can be seen from your seat. We were booked on the Viceroy service, a 'luxury' train car with comfy seats.

Full bar service and a pre-ordered curry lunch meant that we were set for the 6-hour trip. If only it were to be 6 hours.

The  scenery was all it was cracked up to be - stunning tea plantations, tiny villages, temples, local boys running outside their homes to watch the train come by.

The train chugged along at 7 km per hour max, rocking violently from side to side. A trip to the loo was an adventure in finding your sea legs (but it was perfectly clean once you got there).

We finally arrived in Ella at 8:30pm. Darshana, our driver, was waiting for us and we got the  address for Victor's hotel and took off. Darshana was a bit concerned about getting the van up some of the mountain roads, but he had not checked the road to Hotel Laura. Unfortunately.

We turned where Victor's GPS said to turn, past a mountain of garbage (first time I have seen any real mess/litter here) and down the narrowest part-tar track imaginable. No Hotel Laura sign anywhere, so D asked a local - he told us to keep going and we would find it. Dead end road. No turnaround.

A 9-point turn and then we got stuck going back up the steep road to the main street. One hour later and lots of burned rubber, the van made it to the top and we got a tuk-tuk to our hotel. Victor got one to Hotel Laura - it WAS on the same road where we got stuck. Just no signs.

Lessons learned: Never assume a car will fit down the roads in Ella. Never assume a hotel will have a sign on the road.

The view from our room made up for the hellish arrival.

Tea plantation tour next.

Sri Lanka and the Cultural Triangle

After a 5.5 hour ride on crowded roads (with a short break to feed some adorable baby elephants at Pinnawara Elephant Orphanage), an aching lower back and a stressed-out husband from watching our driver pass oil tankers with about 1.5 inches to spare, we arrived at Habarana and the Cinnamon Wild resort.
The place is gorgeous, lush and quiet and full of cheeky monkeys. Unbeknownst to us, yesterday was "Full Moon Day" - a Buddhist holiday each month where absolutely no alcohol is allowed whatsoever. No beers in the bar, no wine at dinner.
Luckily we had bought a bottle of red in Negombo, which we enjoyed a glass of before dinner on our patio. We immediately got into trouble with our upstairs neighbors, who were sitting outside on their terrace, because Victor decided to hold a shouty Facetime conversation with Ped. We apologized and went to the restaurant.
Tuesday morning: The news from the outside world is so incredibly grim and glum, that I cannot even bear to watch the BBC. TV off, it's time to explore Polunaruwa, the 10th century capital of Sri Lanka and a UNESCO site - which was a fantastic collection of ruins, with a great guide. The architecture reminded me a lot of the Roman ruins we have explored, but they were never here and this (10th C) was a LOT  later - so I guess the Roman influence was ubiquitous by then. Monkeys everywhere!! Such fun!
The Cave Temple - 400 steps to get up to - then Kandy for the train journey tomorrow. We are at a sweet, but worn-out hotel in the hills of Kandy outskirts, with the most incredible views. Train to Ella next.

Coronavirus Travel Diary - One Week and Counting

Saturday 29 February, 2020

T minus one week and I am packing my case for Sri Lanka. The virus panic is spreading by the minute – Iran, South Korea, Italy, USA – but Sri Lanka has only one reported case (and he recovered). The England cricket team has decided it is safe to go there for the tour, and if it’s good enough for them (and their no doubt uber-cautious insurance company) then it’s good enough for us.

UK press headlines are roiling with accusations against the government for not being prepared – which is not completely fair as there are only 20-odd cases here so far. When you think of how much the Brits travel, that is not many at all. I do fear, however, that the NHS is not prepared for an onslaught of people needing hospitalization. For some obscure reason, they hospitalize flu patients each winter, leading to a shortage of beds every year. Hospitals are 87% full at the moment.

Our friends in Thailand have been alternatively excited and panicked.  Unless Thais are confined to base, he (an intrepid Brit) will come with us but his Thai wife will not. The news there is even more hyped than in the West, and she is very nervous of catching the virus. (“We’re doomed, doomed I tell you.”)

Living in London, there are a million viruses flying around the tube, the theatres, the pubs every day. I do not intend to seal myself away at home in hopes of not catching something. Sri Lanka, here we come.

This will be our first stop: http://nationalzoo.gov.lk/elephantorphanage/about_us/

Greed and the Bakken: Explosive Oil Needs Stabilizing

Today's Wall Street Journal article about Bakken crude oil production makes my blood boil. I have been following the crude oil quality issue since the Lac-Megantic explosion last year, trying to get Platts reporters (when I was editor there) to find out why it was so explosive. They failed, whereas the WSJ investigation has unearthed some very disturbing facts.

From today's issue:

When energy companies started extracting oil from shale formations in South Texas a few years ago, they invested hundreds of millions of dollars to make the volatile crude safer to handle.
Now the decision not to build the equipment is coming back to haunt the oil industry as the federal government seeks to prevent fiery accidents of trains laden with North Dakota oil.  In North Dakota's Bakken Shale oil field, nobody installed the necessary equipment. The result is that the second-fastest growing source of crude in the U.S. is producing oil that pipelines often would reject as too dangerous to transport.

North Dakota shale oil contains 33% light ends - the flammable stuff like gases and gasoline. In other words, 33% of a barrel of oil from the Bakken is highly flammable. It also has a high Reid Vapor Pressure (again, thanks to WSJ's excellent investigative reporting), making it one of the most explosive barrels of oil on the planet. Around one million barrels per day comes out of the Bakken and makes its way to refineries around the USA and Canada through pipelines, barges and - mainly - by rail (more than 60% currently moves by rail).

Only one stabilizer - which would remove the most volatile gases - is slated for the Bakken. Why? Money. Stabilizers are expensive; the ones built for the Eagle Ford shale area in Texas cost producers hundreds of millions of dollars. So far, Bakken crude has been one of the best deals going for American (and to a lesser extent Canadian) refiners. It is cheap to produce and cheap to move by rail.  Making Bakken more expensive to produce would hit the American consumer, say refiners and politicians.

Who wants to add to the costs by adding stabilizers? I would say that the next group of people to experience a crude by rail crash and fireball in their town might think it worthwhile. I would also say that after the next rail crash and fire, lawsuits could very well target Bakken producers. And a multi-billion dollar lawsuit could very well make adding stabilizers look cheap.

Get it Through Your Heads: U.S. Crude Oil is Explosive

   The latest derailment of a train carrying crude oil -- which exploded violently and caught fire in Lynchburg, Virginia -- proves yet again that U.S. crude is no average oil. 
   On the whole, crude oil does not explode, nor does it easily catch fire. But newer sources of American crude, particularly from the Bakken field in North Dakota, are proving to be an unwelcome anomaly. 

   Crude oil coming from the Bakken, and also Eagle Ford in Texas, is of high quality. It is very low in density and sulfur. But that does not necessarily make it explosive. 
   After the crash and explosion that killed 47 people in Lac-Megantic, Quebec last year, I urged reporters at Platts (where I was an editor) to dig deep and find the specifications for Bakken from their sources. None of their sources would release any but the most rudimentary of specs. 
   Then analysis done by the Wall Street Journal showed that Bakken crude has an unusually high Reid Vapor Pressure, which is a measurement of volatility. As there are no laws mandating RVP tests for crude, the combustible nature of Bakken and Eagle Ford was largely ignored. Regulators were slow off the mark to test the quality of the oil being shipped by rail. Oil producers and refiners -- in their haste to sell and refine these cheap feedstocks -- often misclassified them as less hazardous than they really were. 

   Because the infrastructure supporting oil transportation in the U.S. is sorely substandard, with barges and existing pipelines overbooked (and proposed new pipelines like Keystone XL unlikely to be built), the U.S. and Canada too quickly embraced moving crude by rail car. They neglected to test crude quality from newer U.S. fields and failed to strengthen safety regulations until after several fiery crashes. They allowed inferior quality rail cars known as DOT 111s to continue to be used, even as they proved themselves to be very good moving firebombs. 
   Now, however, responsible producers and users are beginning to take steps of their own to try and prevent further accidents, and avoid the wrath of the law and punishing insurance claims. Canada will phase out the older cars by 2017. U.S. oil distribution company Global Partners just announced that it would immediately switch to newer specification tank cars called CPC 1232, trying to head off New York Governor Cuomo's move to slow down a Global oil by rail development in Albany. 
   Oil producers, gatherers, traders and end users surely knew the kind of oil they were dealing with, yet they put it onto rail cars that were not fit for the task. The sooner DOT 111s stop carrying oil the better. And the sooner railway operators and regulators get a grip on crude oil, its specifications and flammability, the sooner these accidents will stop happening.

The High Frequency Trading Debate is Not New

I love Michael Lewis. He is the writer I most want to be. I live in his world, I am a journalist and have been a broker and am married to a trader. I know stuff. But I am not Michael Lewis. He is a brilliant writer. I am a hack and part-time flack. HOWEVER, I take exception to the recent the fuss over his book "Flash Boys." I keep hearing on CNBC that NO ONE knew how big the problem of high frequency trading was. I did. Here is one of the tongue-in-cheek blogs I wrote about the issue - in September, 2010.

In the 1960's American sitcom Get Smart there were two opposing agencies - CONTROL and KAOS. At CONTROL you had The Chief, Maxwell Smart (Agent 86) and Agent 99 as the good guys. KAOS was the bad guys of course.
In today's seemingly perplexing world of electronic trading The Chief appears to be played by U.S. Senator Charles Schumer. The well-meaning but hapless Maxwell Smart is played by U.S. Securities and Exchange Commission Chairman Mary Schapiro. (The SEC staff can take turns as Agent 99.) KAOS is represented by high frequency and algorithmic trading.
The Chief (Schumer) made a strong suggestion (order) to regulators to get a grip on KAOS, by looking into slowing down some high-speed trading at times of market stress and investigating manipulative strategies including quote stuffing.
Agent 86 (Schapiro) got on the case and the investigation is underway. One telling statement by Schapiro this week alluded to the algos that automate execution when she said that regulators need to decide whether they "are subject to appropriate rules and controls."
"An out-of-control algorithm not only can cause serious losses to the firm that uses it, it can also cause severe trading disruptions that harm market stability and shake investor confidence," Schapiro said in the statement. She added that the SEC will review market fragmentation and the role of dark pools of liquidity that fall outside the traditional market structure.
“High-frequency trading firms are subject to very little in the way of obligations,” Schapiro said at an event held by the Security Traders Association in Washington. “We will consider carefully whether these firms should be subject to an appropriate regulatory structure governing key aspects of their market behavior, including quoting and trading strategies.”
The SEC may also need to peer a little more closely into the market structure that preceded all of these issues. A third of TabbFORUM readers polled said that the Securities and Exchange Commission had something to do with the May 6 flash crash: 31% of respondents to the poll blamed the crash on Reg NMS. (Still, 29% said it was “something else." Cue Siegfried - the Vice President in charge of Public Relations and Terror at KAOS).
All of this investigating is good news, as long as moderation is the byword for resolution. If indeed your opinion is that HFT and algos are run by a shady KAOS-style cartel on Wall Street then the more controls the better. It is my opinion that KAOS-as-HFT is a figment of non-financial industry scaremongers, and that a lighter touch is needed.
CONTROL can best come out on top if it deploys the proper tools: pre-trade risk management and controls, real-time risk management, real-time market monitoring and surveillance. All of these will help to stop KAOS in its tracks before it has the chance to throw another bomb into the room (flash crash...get it?).

I knew about HFT. The SEC knew about HFT. The trading firms and exchanges and brokers knew about HFT. And everyone knew it was a bomb waiting for a detonator. I just wish I had written the book!

Banning crude by rail in North America

When a train loaded with crude oil from North Dakota rolled away from its night-time berth near the town of Lac-Megantic, Quebec, no one would have predicted the scope of its devastation.

The July 2013 derailment and explosion left 47 people dead, a town decimated and the fires took days to extinguish. Rail cars were piled up like charred sausages from the grill scraped off a plate into the rubbish bin; the burnt remains of a BBQ gone wrong.  

Regulators and the oil industry were astonished -- crude oil was not supposed to explode. But Lac-Megantic was only one example of American crude oil from North Dakota doing just that. 

Commodities: Private equity takes over where banks leave off

(Originally published on Platts.com)
Just as the US oil industry starts to get really interesting, banks are being forced to leave it.
New regulations and over-zealous government, nervous over the presence of banks in physical oil and commodities markets, are pushing the banks to shed their assets—and making room for other moneyed institutions to jump in.
Profitable opportunities are visible, with production soaring as the US winkles out tight oil and gas. E&P beckons investors, as do infrastructure plays such as rail terminals and blending facilities.
But banks are wary of making new investments and are seriously considering sloughing off the ones that they already have.
The US Senate Banking, Housing and Urban Affairs Committee is looking into whether large merchant banks, such as JP Morgan, should be allowed to own or operate oil terminals, pipelines, or warehouses that hold vast amounts of aluminum and other businesses that deal in global commodities.
JPMorgan Chase is selling or spinning off its entire physical commodity trading operations, as a Platts Oilgram News story reported. The bank emerged over the past few years as a major commodities trader, along with other US banks as Morgan Stanley, Goldman Sachs, Citigroup and Bank of America Merrill Lynch.
So, as the banks begin to shed their trading and physical assets, private equity firms are quietly sneaking in to take their place, and one of them at least is on the verge of an IPO in London.
Riverstone Holdings, an American private equity fund with over $24 billion committed to E&P, midstream and power investments, is planning an initial public offering for Riverstone Energy Ltd. The company will launch in late October on the London Stock Exchange, and is expected to raise up to £1.5 billion ($2.4 billion).
Riverstone has already gone where banks (now) fear to tread, taking ownership in refining maverick Tom O’Malley’s PBF, UK shale gas company Cuadrilla, and US deepwater E&P company Cobalt, among many others.
Perhaps Riverstone’s founders, both from Goldman Sachs, had inklings that commodities would be yanked away from investment banks once they became Fed-controlled “real banks.” After all, banks owning oil storage, and refineries — and trading the oil — when the market was rising was never going to look altruistic.
But from a private equity firm, no one expects altruism.   
Riverstone is just one of many that are investing heavily in energy assets. Denham Capital, which flies under the oil industry radar, has $7 billion under management in oil, gas, power and renewable funds. Billionaire Mikhail Fridman’s L1 Energy Fund will invest $20 billion (that his Alfa Group made from the TNK-BP sale in March this year) in oil and gas projects. And these are just the tip of the private-equity-in-energy iceberg.
According to Forbes, private equity accounted for 10% of 2012 energy buyout deal value worldwide. And 83% of energy-related buyout deal value was for oil and gas properties—nearly half of them in North America. (This included 2012’s biggest buyout, Riverstone Holdings and Apollo Global Management’s $7.2 billion acquisition of EP Energy, Forbes said.)
So, is this a new trend or one that is destined to become dull and mainstream? Is this a case of the bandwagon having sailed past already?
According to fund management firm Hamilton, in an article in Pensions & Investments magazine, limited partners are beginning to question if there is too much private equity capital chasing the energy sector.
“The simple answer is: No,” it said. “The size of the market, the long-term growth prospects and the complex nature of the energy value chain will continue to present investment opportunity. The massive capital spending requirements to meet expected global demand dwarf the amount of private equity capital available today.”       
   

Oil investors spurn Mexico and Latin America

(This blog originally appeared on Platts.com)   

     Everyone knows there is a lot of oil in Mexico. Venezuela has its fair share, as do Brazil and Argentina. There’s even more oil to be found in Ecuador, and the Falklands is having its day in the sun. But the news about oil exploration and production investment today is predominately focused on the US and Canada. Why is that?

      Decades of nationalistic sentiment have created a no-go area in Mexico and Latin America, with foreign nationals and major oil companies mostly conspicuous by their absence.

      When Enrique Pena Nieto was elected last year as Mexico’s new president, he pledged to reform the oil industry. Last month, he proposed that Pemex, the state oil and natural gas monopoly, would be able to launch contracts on the basis of profit-sharing rather than production-sharing.  But then the analysis started coming down, and it wasn’t good.

Lac-Megantic oil-by-rail crash could be rail's Exxon Valdez

     As the smoke clears in Lac-Megantic, Quebec after a runaway train packed with crude oil tankers crashed, the oil industry is coming to terms with a business that has perhaps grown too far, too fast.

     The Lac-Megantic accident is shining an unwelcome spotlight on the lack of regulatory oversight on oil by rail in both the US and Canada. The fact that the rail cars (belonging to the Maine, Montreal & Atlantic rail company) that crashed and exploded were considered unfit to carry hazardous materials sharpens that focus.

     Getting landlocked crude out of newer fields in North Dakota, Canada and other far flung parts of North America has become an obsession with producers, traders – and with refiners, looking lustfully at the cheaper feedstock.

     The oil rush has changed the face of rail in North America. In a country where passenger and cargo-bearing rail was largely replaced by the car and large 18-wheel trucks half a century ago, the speed with which new railroad lines, railcars and loading facilities are being built is simply astonishing.

     Today around one million barrels per day of crude oil is moved via rail across the US and Canada. To put that into perspective, it equates to more than the total output of the UK North Sea, which fell below 1.0m b/d last year. Or roughly to four VLCC’s worth of crude oil every week. In other words, it is a lot of oil.

     And this is set to grow. In the US, crude by rail shipments are expected to reach to near 1.10 million b/d at the end of 2014, up from about 718,000 b/d this month and about 156,000 b/d in January of 2012, according to Bentek Energy, a division of Platts.

     The Railway Association of Canada estimated that as many as 140,000 carloads of crude, totaling about 91 million barrels, will be shipped on Canadian tracks this year, compared with 500 carloads, or about 325,000 barrels, in 2009.

     The headlong dive into crude by rail may have just been stopped short by the Lac-Megantic incident. And, just as the Exxon Valdez oil spill in Alaska in 1989 spelled the end of single-hull oil tankers coming to the US (and banned them worldwide in 2010), the Lac-Megantic crash would spell the end of using DOT-111A railcars. And it could herald a new rash of regulation for the rail industry.

     A US National Transportation Safety Board study in 2012 said that 69% of tank cars are DOT-111A. In Canada, these are known as CTX-111A, and comprise 80% of the fleet, according to Canada Transportation Safety Board’s chief investigator Donald Ross.

Ross said that changes as a result of the MM&A investigation could include thicker steel or shields for the tank cars. The American NTSB had already changed the specifications of DOT-111 from October, 2011 to include thicker shells and a ½ inch thick head shield. But there is no rule on retrofitting existing cars, which have a long service life.

     Like the single-hull tanker post-Exxon Valdez, DOT-111As could be the next casualty of the oil rush in North America.

     But there are other issues raising their ugly heads, including the state of some of the railroad tracks around both countries: While the oil industry is spending billions on railcars and loading/unloading facilities, who is spending the money to maintain and upgrade the railroads?

     As Avrom Shtern, a rail-transport policy representative with Montreal-based Green Coalition, said in Oilgram News July 9: The Canadian government's budget cuts have left the rail industry to police itself. "That's unacceptable. You can't just write rules and expect the railways to police themselves," he said.

     Also, questions over the capital adequacy of smaller gathering and distribution companies such as World Fuel, which owned the oil on board the MM&A train, and others are rife. Will they have the financial stability to survive a lawsuit?

     The crash was only a few days ago, so most of these questions will be answered over time. But one thing is for sure, crude by rail has come a long way fast. But the Quebec accident could slow the pace and the way in which the industry grows going forward in both Canada and the US.

Commodities trading: Not for the faint-hearted

(First published on Platts.com) Once the darling of hedge funds, commodities are now looking like a poisoned chalice. Last year, hedge funds such as BlueGold, which specialized in crude oil; Centaurus, in natural gas; and Fortress Commodities, across all raw materials, shut down. Several commodities fund of funds also closed last year after clients fled.

Commodities trading, it seems – and in particular oil – is not for the faint of heart. The field is littered with failed ventures and prison sentences.

International sanctions on exporting countries such as Iran can make trading crude an even more dangerous game. On May 9, the US Treasury said it was penalizing Sambouk Shipping for contravening these sanctions. Sambouk is allegedly associated with Dimitris Cambis, who, along with a network of front companies, was executing ship-to-ship transfers of Iranian oil to obscure its origin.

Getting access to less-than-transparent sources of oil, metals, grains and other commodities has become more hazardous as the US Department of Justice and Securities and Exchange Commission begins to aggressively enforce the Foreign Corrupt Practices Act (FCPA). Archer Daniels Midland became the first commodities trading house to suffer under it.

Because of the global importance of commodities such as oil and foodstuffs, the commodities markets have become a target for public criticism regarding manipulation, bribery and corruption.

So much so that Switzerland, the go-to location for commodities trading houses over the past ten years, is fretting that it will suffer reputational damage because of its newish role as a trading hub. Switzerland is home to the world’s biggest oil and other commodity trading houses, including oil traders Vitol, Glencore, Trafigura, Mercuria and Gunvor.

In a world where deep knowledge, hands-on experience and extensive personal contacts are necessary to do a deal, even those at the top of their game can get into hot water or lose money.

So it is not surprising when Wall Street and City of London hedge funds miss the boat. Trading paper contracts, such as energy futures and derivatives, can be difficult when you don’t have an insider’s view into the physical movements of oil.

What is surprising, perhaps, is that some of the mega-importers of oil have not succeeded in entering the oil trading game. After all, purchasing vast quantities of crude oil and products should theoretically teach importers some of the tricks of the trade.

But many new entrants apparently fail to grasp the basics of the oil trading culture. One recent example is PetroChina. It hired a small staff of traders and operations people in Houston in 2008, with the aim of increasing the Chinese company’s US trading volumes and growing the Houston office.

Last week, a team of six of its Houston oil traders (and reportedly some support staff) left the Chinese oil company en masse, allegedly because promised bonuses were not paid.

The oil trading game is difficult, dangerous and often loss-making. But there is one caveat that remains true: If a company wants its staff to take the risks involved, it should be prepared to make it worth their while.

Pickens, Chickens and Eggs: Using LNG as Transport Fuel

(Originally published on Platts.com) When T. Boone Pickens takes a notion to invest in something, he tries to make sure that everybody else takes the same notion.  So, when he announced that he was putting his money behind LNG filling stations in the US for long-haul trucks, people took notice.

But rhetoric is just the beginning. There is a huge need for the actual infrastructure to support the idea, commonly known as the chicken-and-egg conundrum. If Pickens — and Canada and China and Europe — build LNG-filling stations, will they (trucks, ships) come? They should. After all, gas is cheap, clean and plentiful. But support from government and industry is essential to get the egg to grow into a chicken.

Luckily, Pickens is not the first person to get behind the LNG-as-transport-fuel notion. It is happening all across the globe, with companies and countries pledging support for natural gas and LNG-powered vehicles and ships.

In Canada, the federal government is introducing regulations to discourage ships from using bunker fuel in the Great Lakes and within 200 miles offshore, which will encourage greater use of LNG in marine transportation, according to reporting from our Calgary correspondent Ashok Dutta. Trucks and even locomotives in Canada are also using LNG.

Shell is increasing its LNG-for-transport projects to include shipping the fuel to Canada and the US for trucking, and to Europe for marine use. The European Commission is proposing that LNG fueling stations be installed in all 139 maritime and inland ports on the Trans-European Core Network by 2020 and 2025, respectively.  Singapore plans to have LNG bunkering in place by 2014. And auto and truck engine makers such as Volvo and Westport are gearing up to make and market so-called HHP (high horsepower) engines which will use LNG as fuel.

But LNG is a tricky substance, needing cooling or compressing in order to move it, store it and use it. An LNG-fueled truck has to install a special thermal fuel tank to hold the super-cooled liquid. Also, special engines that run on LNG must be installed. So, is it worth the effort?

According to Ben Schlesinger, founding president of Benjamin Schlesinger and Associates energy consultancy, using gas for transport is a no-brainer. LNG is also clean; it eliminates 100% of sulfur and 20-25% of carbon dioxide emissions.

Also: “There is no price risk — it has been low for 20 years. It is easy to install in trucks. It is easy to hedge. The payoff for a vehicle is one year,” Schlesinger said at a lunch seminar on March 26 in New York (although other experts have put the payback period at 1-3 years).

The shipping industry also thinks that it is a good idea, chickens and eggs aside. At the Sea Asia CEO Roundtable last month, Precious Shipping’s managing director put it this way: “The fuel of the future is gas.”

So… LNG is clean, it is cheap, it is plentiful and industry and government are putting some commitment and money into the infrastructure. What more could anyone ask?  That it offers a new source of revenue for governments, perhaps?

The US state of Georgia has already thought about that, according to the local Times Herald.  On March 27, its Senate passed legislation that drivers who use LNG in their cars and trucks will not escape the state’s motor fuel tax. The bill had already been passed by the House of Representatives, and is now awaiting the governor’s signature.
Other states and countries will no doubt follow Georgia, making LNG as a transport fuel a win-win.

ICE -- the mouse that roared -- takes on the Big Board

    In the year 2000, a tiny little upstart energy exchange was born in Atlanta, Georgia. It began by building an electronic trading system for electricity and natural gas, something that was a popular idea at the time.

But it was – perhaps – before its time.

So the InterContinental Exchange cast its eye over the markets to find something with a little more liquidity. Maybe something that could benefit from its technological prowess. ICE spied a very interesting energy exchange on the other side of the Atlantic and engineered a surprising – to the City of London, at least - takeover.

     When ICE bought the International Petroleum Exchange in 2001, no one in the oil business could imagine life without the IPE floor. The idea of oil trading on an electronic exchange was considered heresy. “Impossible,” traders said.

     The thought was that since oil is the game of professional traders, and not mom and pop investors, the floor broker was essential to the game. Swaggering, hard-drinking and mainly Cockney in origin, the IPE floor brokers were considered a permanent fixture in the business.

     IPE’s own automated trading system had gone through many technology iterations and was never up to the task, in many traders’ opinions. So, like a lion stalking the weakest wildebeest, ICE swooped in.

It transformed the International Petroleum Exchange, second only to the New York Mercantile Exchange in terms of energy futures trading, seemingly overnight--from an open outcry “pit” into a sophisticated electronic trading venue. Cockney brokers out, computers in.

     The IPE’s membership and operators should have learned a lesson from their LIFFE brethren, whose massive open outcry trading floor was closing down at the time - pit by pit. LIFFE’s main competitor – Deutsche Borse, had gone electronic with its derivatives trading and was walloping LIFFE. LIFFE’s state-of-the-art floor closed doors in November 2000, while its LIFFE Connect electronic trading system went from strength-to-strength.

     The LIFFE exchange itself sold to Euronext, eventually ending up in NYSE’s hands along with the very valuable acquisitions LIFFE had made along the way. This included the London Commodities Exchange, where softs such as coffee, sugar and cocoa were – almost exclusively – traded.

But ICE’s CEO Jeff Sprecher was not daunted by his competition. His dogged determination to make all things electronic took ICE into clearing in a big way, adding the capacity for clearing OTC credit default swaps, and into diversifying its products offerings. ICE’s dominance in markets from oil to interest rates and credit derivatives prompted NASDAQ in 2011 to choose ICE as its partner in its failed bid for NYSE.

     The fact that ICE persevered with its electronic trading platform, making it ever-faster, offering clearing electronically – is probably why it had the money and the ability to buy the venerable New York Stock Exchange and its many acquisitions. I am sure that during the due diligence process, ICE had a good look at NYSE’s hodge-podge of trading systems and infrastructure.

     NYSE members and management had initially resisted the seismic shift to electronic trading, preferring its image as the bastion of Wall Street with its colorful floor brokers and trading pits and specialists. It adopted a hybrid model of automated-cum-open-outcry trading, buying--and then largely ignoring--state-of-the-art trading systems such as ARCA. Aggressive all-electronic competitors such as NASDAQ and newcomers including BATS stomped all over NYSE’s model, gradually eating away at the Big Board’s once-dominant market share.  

     ICE was lurking in the underbrush. Sprecher’s strategy of diversification meant that he needed to further integrate other asset classes, which – once siloed were now tightly correlated with oil trading. Equities, interest rates, foreign exchange, and agriculturals such as corn and sugar were suddenly noticeable as a necessary adjunct to oil futures and swaps trading.

     Limping from its market battering by electronic competitors, NYSE Euronext was the weakest wildebeest.

     Since 1792, when it was formed under a buttonwood tree on Wall Street, the New York Stock Exchange has captured the imaginations of people around the world. It has attracted some of the best and brightest young people to work on Wall Street, conjuring up an image of stolidity and grace.

     Now, although the NYSE brand will remain, ICE will become the top dog. New York City must be stunned that it has lost its bulwark stock exchange to a jumped-up little technology upstart from Atlanta.

A Middle-Aged Woman Moves to New York

  If you are waiting for the punchline - I'm it. In the autumn of my life I upped sticks and moved to Manhattan. (Husband and cat to follow soon.) My friends and most of my family think I am nuts.
  Certainly the moving house - twice - and going back to work (more than) full time was a wrench. My time is no longer my own. My home is not my own. I can't find my winter clothes, and I can't seem to get my bills paid on time. Sleep is erratic. And some woman (has to be) has been trying to grab the attention of a sleeping man (has to be) who is double parked outside her VW Beetle (I recognize the horn) since 5:30 am.   Otherwise I think it is working out OK.
  I often heard older friends of mine in London say "I have one more job left in me" and I think that is what has happened here. I was not ready to retire, which is what freelancing from a leafy New England small town felt like to me.
  But retirement is one of the reasons I am here in NYC working full time. As I rush past middle age it becomes ever clearer that I need a lot more money to realize my retirement goals. Which are pretty lofty: a flat in Paris for city/culture/shoulder seasons, a house in a warmer climate (Spain? Florida?) for winter, and a (bigger) house in Maine for summers.
  Then yesterday I read an article in the Wall Street Journal entitled The Let's-Sell-Our-House- And-See-the-World Retirement by Lynne Martin. She and her husband sold their California home and are now spending their retirement traveling from country to country, staying enough time in each one to experience it fully. They stay in flats or houses that they find on Homeaway.com or VRBO.com. They cook and shop and go to museums, and they soak up the culture of each place they stop. Wow.
   So I have a new plan, thanks to the Martins. I won't forgo a house or two, as I plan to have them paid off by then. But any extra cash I get I will save for travel, going into a special retirement travel fund - for rent, flights, food, fun. We will spend a few months in every place we want to visit, living like natives and learning as much as we can. Suddenly retirement doesn't feel like death to me. And it makes working (more than) full time even more fun.