RBN Energy

Tuesday, 1/19/2021

U.S. crude oil imported from Western Canada averaged almost 3.6 MMb/d in the first 10 months of 2020 and accounted for 60% of total imports over the period. That’s some growth! Ten years ago, Canada was sending less than 2 MMb/d south and contributing only 21% of total U.S, import volumes. Alberta oil sands producers are planning for more production and export growth through the 2020s, with most of the incremental volumes bound for Midwest and Gulf Coast refineries and export docks. If that happens — and there’s no certainty it will — more north-to-south pipeline capacity through the U.S. heartland will be needed. Today, we continue our series on the efforts to expand or reverse crude oil pipelines between the U.S./Canada border and the Gulf of Mexico.

Recently Published Reports

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Crude Voyager Crude Voyager Report January 19, 2021 10 hours 30 min ago
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Crude Oil Permian Crude Oil Permian - January 19, 2021 17 hours 28 min ago
Chart Toppers Chart Toppers - January 19, 2021 18 hours 7 min ago

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Daily energy Posts

Monday, 01/18/2021
Category:
Crude Oil

Western Canada’s crude oil production, like in many other regions of the world during the spring of 2020, had to pull back sharply in response to the price and demand chaos brought about by COVID-19. By the end of 2020, oil production almost everywhere remained much lower or was being carefully managed to avoid creating another supply glut. In contrast, production in Western Canada has almost fully rebounded, and is being primed to increase to what could be all-time highs this year. With Alberta’s oil sands producers renewing their role as the long-standing driver of oil supply growth and the recent suspension of production limits in the province, the stage is set for us to review the most recent oil supply developments and future growth prospects.

Sunday, 01/17/2021
Category:
Natural Gas

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Thursday, 01/14/2021
Category:
Natural Gas Liquids

After several years of development, Shell’s $6 billion Pennsylvania Petrochemicals Complex — the first of its kind in the Marcellus/Utica shale play — is really taking shape about 30 miles northwest of Pittsburgh. The facility, which will consist of a 3.3-billion-lb/year ethylene plant and three polyethylene units, is in its final stages of construction, as is a pipeline that will supply regionally sourced ethane to the steam cracker. When the Falcon Pipeline and the PPC comes online, possibly as soon as 2022, they will provide a new and important outlet for the vast amounts of ethane that is now either “rejected” into natural gas for its Btu value or piped to Canada, the Gulf Coast, or the Marcus Hook export terminal near Philadelphia. Today, we discuss progress on the Marcellus/Utica’s first world-class petrochemical complex and what it will mean for the play’s NGL market.

Wednesday, 01/13/2021
Category:
Crude Oil

Just before the holidays, the Federal Regulatory Commission issued its final decision on the oil pipeline index rate for the next five years. The what?? Well, once rates for interstate oil pipelines are set and accepted by FERC, the rates can move around to match the market, but any increases are capped by an annual index announced by the FERC each year. The index is equal to the current year’s inflation rate, plus an “adder” that is calculated by the FERC every five years based on an examination of the industry’s results from the previous five years. In today’s blog, we explain how a few tweaks in the way FERC calculates the cost-of-service-based adder will significantly affect how much liquids pipeline rates can rise through the first half of the 2020s.

Tuesday, 01/12/2021
Category:
Natural Gas Liquids

It’s been a chaotic start to the new year for propane. In the past 12 days, the Mont Belvieu price is up over 15%, closing on Tuesday at 87 cents/gallon — the highest since October 2018. The usual culprit of winter weather has something to do with it, but not just in North America. Over the past couple of weeks, frigid temperatures in Asia, along with supply cutbacks from the Saudis, have supported U.S. propane exports to those markets, further tightening the U.S. supply/demand balance. But as is often the case these days, the market has another complicating factor. Delays transiting the Panama Canal have stacked up VLGCs — the vessels carrying U.S. propane to Asia — on both the Atlantic and Pacific sides of the waterway, pushing up charter rates to levels not seen in years. And on top of that, new transit-scheduling rules from the Panama Canal Authority will shove VLGCs to the back of the line, potentially making it even more difficult to get through the canal without significant delays. Today, we’ll explore these developments and what they may portend for the remaining weeks of winter.

Monday, 01/11/2021
Category:
Petroleum Products

In the spring of 2020, as the COVID-19 crisis started hitting the energy sector hard, many refiners made the tough decision to dramatically cut back capital spending plans and operating costs for the year in order to weather the storm. While these cuts were swift and sizeable, they were not absolute — they couldn’t be, given that refining is a capital-intensive industry with complex assets that require seemingly constant maintenance, equipment swap-outs, and upgrades. And then there’s the added pressure that refiners also need to invest in keeping their facilities in compliance with changing environmental rules, and to consider the overall impact of investments in new, “greener” fuels, such as renewable diesel, that may help them improve their profitability going forward. Today, we look at refiner capital spending in the context of recent history and highlights some of the growth projects being pursued in the sector.

Sunday, 01/10/2021
Category:
Financial

Much the way that COVID-19 accelerated the trends toward working from anywhere, shopping online, and exercising at home, the pandemic and its far-reaching energy-market effects fast-forwarded the challenges that many North American midstream companies had been expecting to face more gradually through the 2020s. The good news — if you can call it that — is that a lot of economic pain was front-loaded into the past 10 months. The bad news is that a sizable subset of midstreamers is saddled with too much capacity in shale basins where drilling activity and production are down sharply. For them, there’s still more pain ahead, even bankruptcy in a few cases. In today’s blog, we discuss highlights from the newly released 2021 edition of East Daley Capital’s Dirty Little Secrets report about what’s ahead for the midstream sector and 27 leading companies within it.

Thursday, 01/07/2021
Category:
Natural Gas

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Wednesday, 01/06/2021
Category:
Crude Oil

The province of Alberta has lifted its cap on crude oil production, oil-sands producers are implementing plans to increase their output through the 2020s, and new pipeline capacity from Western Canada into the central U.S. is being added on the all-important Enbridge Mainline system. With those stars aligning, the next big push by midstream companies will be expanding their ability to move Canadian barrels south to the Cushing hub in Oklahoma, the Patoka hub in Illinois, and refineries and export docks along the Gulf Coast. As a group, these new and expanded lines — plus a major pipe reversal — will represent one of the biggest midstream build-outs in the U.S. of this coming decade. Today, we begin a blog series about these projects and what’s driving their development.

Tuesday, 01/05/2021
Category:
Natural Gas

Canada’s natural gas market has been a source of tremendous interest to us at RBN. Last year, demand for gas in Alberta’s oil sands sector plummeted, inventories experienced record highs, yet prices remained remarkably healthy. But how can we know all that? From a data perspective, Canada’s natural gas landscape can be confusing and frustrating. Different units of measure and currencies, limited or no data coverage for important fundamental components, and numerous statistical agencies that organize and report the data in different ways just create further complications. But this data still needs to be tracked given the impact that Canadian gas production, demand, and storage levels can have on the U.S. market — and vice versa. Having all that vital Canadian gas data in one convenient package, along with some great analysis, sure would make life easier. Today, we discuss recent developments on the Canadian gas data front and why Canadian NATGAS Billboard would be a worthy addition to your analytic needs. Warning! Today’s blog is a blatant advertorial for an RBN product.

Monday, 01/04/2021
Category:
Natural Gas Liquids

How about some good news to start the year? Over the past few weeks, ethylene margins have blasted into the stratosphere. These are good times for steam crackers, those petrochemical plants that use mostly NGL feedstocks to produce ethylene and other building-block chemicals. As you might expect, this newfound prosperity has a lot to do with ethylene’s price. In December alone, the price of ethylene was up 50%; versus April it’s up a whopping 4X, coming in yesterday at 37.5 cents per pound (c/lb). There are a whole range of factors responsible, including petchem outages due to the hurricanes, new downstream derivative units coming online, robust exports from the Enterprise Morgan’s Point dock, and, oh yes, strong demand for downstream products — everything from food packaging to construction materials. Is the spike in ethylene prices going to last? And what does it mean for NGLs, which account for more than 95% of the feedstock supply for U.S. ethylene. We’ll explore those questions and more in this blog series we begin today.

Sunday, 01/03/2021
Category:
Crude Oil

Welcome to 2021! We finally have that train wreck of a year 2020 behind us, and it’s time to look forward.  At RBN, we have a long-standing tradition of doing just that in our annual Top 10 Energy Prognostications, where we lay out our expectations for the most important developments for the coming year. But how is that possible amid the chaotic market conditions still ahead? So much has changed, so many market factors have been disrupted, and so few guideposts remain unscathed, there is just no way to predict what is going to happen next, right? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2021 has in store.

Thursday, 12/31/2020
Category:
Crude Oil

Whew. We made it! 2020 is finally in the rear-view mirror. And with the New Year, it’s time for the annual Top 10 Energy Prognostications blog, our long-standing RBN tradition where we lay out the most important developments we see for the year ahead. Unlike many forecasters, we also look back to see how we did with our predictions the previous year. That’s right! We actually check our work. Usually we roll our look back and prognostications for the upcoming year into a single blog. But after the mayhem of 2020, and considering how that upheaval has changed the landscape for 2021, this time around we are splitting our prognostications into two pieces. Monday’s blog will look into the RBN crystal ball one more time to see what 2021 has in store for energy markets. But today we look back. Back to what we posted on January 2, 2020.

Wednesday, 12/30/2020
Category:
Crude Oil

Well, here we are. The last day of 2020. We are tempted to say “unprecedented” to describe the year. But the word is so overused — there’s been an unprecedented use of the word “unprecedented” — let’s just say it will be good riddance to have this one behind us. After all, we’ve seen a collapse in transportation fuel demand, an oil price war between major producers, negative $37/bbl crude prices, massive LNG cargo cancellations — the list goes on — all in the context of a global pandemic and much of the world committed to weaning itself off fossil fuels over the next few decades. How do you make sense of all that? How do you anticipate when it’s going to be “all right” again? Well, one thing we can do is to heed the events and trends that captured the market’s attention during all this chaos. In other words, to put a spotlight on the things that the market considers top priority — crowd-sourced market intelligence, if you will. Well, at RBN we have one way to do that. We scrupulously monitor the website hit rate of the RBN blogs that are fired off to over 30,000 people each day and, at the end of each year, we look back to see which topics generated the most interest from you, our readers. That hit rate reveals a lot about major market trends. So, once again, we look into the rear-view mirror to check out the Top 10 blogs of the year based on the number of rbnenergy.com website hits.

Tuesday, 12/29/2020
Category:
Natural Gas

Talk about whiplash! Not that long ago, the global LNG market was reeling from the effects of the pandemic: stunted demand, severe oversupply, brimming storage, and record low prices, all of which led to a squeeze on offtaker margins and mass cancellations of U.S. cargoes. Within a matter of months, however, the market has done a 180. Global supply has tightened significantly as cargoes can’t get delivered fast enough, and international LNG prices are near two-year highs. U.S. LNG exports and domestic feedgas demand are at record highs in December, for the second straight month. That’s not to say U.S. LNG producers and the domestic gas market are out of the woods. Cancellations are rearing their heads again — not because the demand isn’t there, but because of logistical constraints and a severe vessel shortage, which are injecting more uncertainty into the market. Today, we provide an update on domestic LNG exports and the immediate factors driving them.