On August 4, the U.S. Senate confirmed two new commissioners for the Federal Energy Regulatory Commission (FERC), restoring the three-member quorum legally required for FERC to vote. The Senate action ended a six-month dry spell during which FERC could not issue any orders, and thus could not approve any of the many pipeline projects pending there. What does it mean that FERC can act again to approve new projects? And does that mean the industry can move forward at the pace it needs? Today we explore these questions and assess what it will take to get some key gas infrastructure projects back on track.
Daily energy Posts
Despite starting the 2017 injection season on April 1 with much less gas in storage than last year, U.S. natural gas prices in recent months have struggled to return to $3.00 levels. The market has been dealing with a mixed bag of factors, with demand down significantly, mostly due to milder-than-normal weather and the rise of competing generation sources. On the supply side, even though production has been flat and imports from Canada down, those developments combined with higher exports of LNG have not been enough to prevent larger injections into storage. Now, prospects for a price rally are waning as summer gives way to the more temperate shoulder season. Where does that leave the gas market heading into winter? Today, we begin a series looking at how gas market fundamentals have shaped up this summer as well as prospects for the winter.
Production of natural gas liquids in the Permian is growing so quickly that within a year or two some parts of the super-hot play may experience NGL takeaway constraints. That is good news for the owners of the eight existing NGL pipelines out of the Permian, which are likely to see flows on their pipes increase as NGL production rises — assuming, that is, that they have capacity to spare and that they are connected to natural gas processing plants within the faster-growing parts of the region. Today we continue our blog series on Permian NGL production, processing and pipelines with a look at ONEOK’s West Texas LPG Pipeline and the Chevron Phillips Chemical EZ Pipeline.
The stars may finally be aligning for two related crude oil infrastructure projects that, if undertaken, would provide an important new pathway to overseas markets for Bakken, western Canadian and other North American crude. The first would involve reversing the Capline Pipeline, which was built to transport crude north from the U.S. Gulf Coast to Midwest refiners; the second would make modest physical changes to the Louisiana Offshore Oil Port — better known as LOOP — to allow the crude import facility off the Bayou State coast to load crude onto ships, including Very Large Crude Carriers (VLCCs). Today we look at the new infrastructure and market forces that may finally spur Capline’s reversal and lead imports-focused LOOP to enable exports.
Nearly two-thirds of the effective NGL pipeline takeaway capacity out of the Permian is controlled by Energy Transfer Partners and DCP Midstream. But there are several other NGL pipelines used to flow Permian NGLs to faraway storage facilities and fractionators — assuming, that is, that their natural gas processing plants are connected to the pipe alternatives in question. Today we continue our blog series on the NGL side of the Permian with a look at Enterprise Products Partners’ Chaparral and Seminole pipelines and Enterprise’s and BP’s Rio Grande Pipeline, including the volumes of NGLs that have been flowing through them.
Natural gas deliveries for export via Cheniere Energy’s Sabine Pass LNG terminal in Louisiana reached a record in late July, topping 2.5 Bcf/d. In the first seven months of 2017, exports have added an average of 1.5 Bcf/d — or more than 300 Bcf total — of baseload gas demand year on year. Thus far, the terminal has been operating with three liquefaction trains. Now the fourth train, which would bring on another 650-MMcf/d of potential export demand, is nearing completion. The incremental gas deliveries are scheduled to come just as winter heating season is kicking off and likely will tighten the gas market. Today, we look at the latest developments at the terminal.
Associated natural gas production from North Dakota’s oil-focused Bakken Shale is rising as rigs are being added in the region. Bakken gas output reached a record 1.18 Bcf/d this past May. The incremental gas production in the area is intensifying competition with imports from the already-beleaguered Western Canadian Sedimentary Basin (WCSB), which share the same pipeline capacity and target the same Midwest demand markets. The trend also is prompting calls for more pipeline capacity out of the Bakken. How much more capacity is needed and by when? Today, we look at existing natural gas takeaway capacity and flows out of the Bakken.
Growth in LNG supply and demand, the ongoing restructuring of the LNG sector and other factors are giving new significance to the nearly 500 specialized, oceangoing vessels that transport the supercooled, liquefied natural gas around the world. It used to be that the vast majority of LNG was delivered in milk run-like fashion under long-term contracts between suppliers and buyers, but that’s no longer the case. Now, the LNG market is much less structured and more fluid, with spot-market sales becoming more common and with the captains of some LNG-laden vessels not sure where they will end up as they head out of port. Today we describe the ins and outs of the shipping sector that moves hundreds of millions of metric tons of LNG annually.
The year-ago completion of Energy Transfer Partners’ Lone Star Express NGL pipeline from West Texas to the Mont Belvieu storage and fractionation hub near Houston was a big deal. The new, 533-mile pipe increased effective NGL takeaway capacity out of the Permian by more than 25% and gave Energy Transfer a larger conduit for moving NGL produced at its Permian natural gas processing plants directly to the company’s still-growing complex of fractionators in Mont Belvieu. Energy Transfer also owns another big NGL pipeline out of the Permian: the Lone Star West Texas Gateway. Today we continue our blog series on the NGL side of the Permian with a look at what is currently the biggest fish in the play’s NGL pond.
In the Energy Information Administration’s (EIA) latest ethane production stats — for the month of May — gas plant production of ethane exceeded 1.4 MMb/d for the first time. In the same month, ethane exports also hit a record at 191 Mb/d, and ethane demand for petrochemical production — you guessed it — hit still another all-time high, topping 1.2 MMb/d. All this is just the beginning. These numbers and the throughput of any midstream infrastructure transporting or fractionating ethane will continue to increase over the next two years as new, ethane-only crackers come online, ethane rejection dwindles and overseas exports of ethane ramp up. By 2020, U.S. ethane demand is expected to reach 2 MMb/d — up by two-thirds from where it stands now. Today we continue our series on rising ethane demand, how the new demand will be met and what it all means for ethane prices.
Production cuts by Saudi Arabia and other OPEC producers have had a profound effect on Asian refiners’ crude oil procurement by opening the door to more U.S., Canadian and North Sea crude deliveries to the Far East and South Asia. Of the four major Asian refining countries, China has seen the largest drop in imports of East of Suez crude, which includes oil produced in the Middle East, the Asia-Pacific region, Australasia and far-east Russia, but India, Japan and South Korea have experienced declines as well. What’s going on? And what does it mean for Atlantic Basin crude producers? Today, we discuss recent changes in global crude price differentials and Asian crude import slates, which include more imports from the U.S.
The utilization of NGL takeaway pipelines out of the fast-growing Permian is determined to a significant degree by the natural gas processing plants that the pipes are connected to. Midstream companies prescient — or lucky — enough to own NGL pipelines that extend out of the hottest, most productive sub-regions within the Permian’s Midland and Delaware basins are benefiting not only from higher NGL volumes now, but the likelihood of even fuller pipes as Permian production continues to ramp up. Today we continue our blog series on the NGL side of the Permian phenomenon with a look at existing gas processing plants in the play and their connections to NGL pipelines that move y-grade to storage and fractionators.
Over the past five years, the price differential between regular and premium gasoline has been widening steadily. According to the Energy Information Administration (EIA), as of July 2017 the premium -vs.-regular differential reached $0.53/gallon — more than double the differential in 2012. This has produced cringe-worthy experiences at the pump for consumers requiring the premium grade and an incentive for refiners to optimize the gasoline pool. Consequently, refiners have been making operational adjustments and capital investments to squeeze additional high-octane components out of their feedstocks. Today we examine the premium-regular gasoline differential, provide a primer on gasoline blendstocks and octane levels, and discuss some contributing factors to the widening divide between the pump prices of 87- and 93-octane gasoline.
There is no doubt that the epicenter of U.S. associated natural gas production growth is the Permian, where dry gas output has increased from 3.5 Bcf/d in 2012 to more than 6.5 Bcf/d today. And there is a lot more where that came from. RBN’s Growth Scenario indicates that as much as 12 Bcf/d of natural gas production could be surging out of the Permian by 2022, with less than 1 Bcf/d of that needed for local demand. All of that incremental production will need to move out of the region, either on existing or new pipelines. Permian gas is such a big deal that RBN has developed a brand new weekly report focused specifically on the topic — how much is produced, where it is processed, its destination markets, how it is priced and, most importantly, how the Permian gas market will balance out, both today and in the coming months. Today we take you on a tour of RBN’s NATGAS Permian report five days before we close our inaugural report preview period — it’s your last chance! If it is not obvious, today’s blog is a blatant advertorial for our new report.
For as long as producers have been drilling in the Bakken Shale — the oil-rich formation straddling North Dakota and Montana (plus Saskatchewan and Manitoba in Canada) — associated natural gas, an inherent byproduct, has taken a back seat to crude oil production from the play. In fact, at one point nearly 50% of Bakken’s produced natural gas was being flared, in large part due to limited midstream capacity to gather, process and move the gas to market. But that’s changed in the past couple of years. Substantial midstream capacity has been built. Flaring has eased considerably, and with the shift in drilling activity to the best, most productive acreage, the gas-to-oil output ratio has increased. Add to that rising rig counts and productivity gains in those sweet spots and that phenomenon becomes amplified. The result is that while oil production has largely stagnated this year below peak levels, associated gas volumes from the play climbed to a record high this past May. But will this trend be sustained, and, if so, what will it mean for gas flows, takeaway capacity and gas-on-gas competition at the Canadian border? Today, we begin a blog series looking at gas production trends in the Bakken and implications for gas pipeline flows as well as competing supplies.
The current phase of Mexico’s natural gas pipeline buildout, led by the country’s Comisión Federal de Electricidad (CFE), is nearing completion. With 22 new pipelines built or under construction, the effort has dramatically reshaped Mexico’s natural gas supply portfolio. The capacity of the pipeline network within Mexico has been tripled with the addition of 18 new pipelines, while four new pipelines on the U.S. side of the border will add almost 6 Bcf/d of export capacity by late 2018. As part of the building spree, CFE also initiated development of two new gas headers to be built in Texas: a 6-Bcf/d header at Waha in West Texas that was recently completed by a consortium of Carso Energy, MasTec, and Energy Transfer and the 5-Bcf/d Nueces Header, now under construction by Enbridge at Agua Dulce in South Texas. Today, we discuss CFE’s Nueces Header and its role in moving more gas south.