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Daily Energy Post

Stayin’ Afloat With the LPGees – Part 4 Freight Voyage Calculation Model

Exports of liquefied petroleum gases (LPGs – propane and butane) from the U.S. to international markets - are expected to nearly double from 460 Mb/d in 2014 to 915 Mb/d in 2019 as production from gas plant processing exceeds domestic demand. Available Very Large Gas Carrier (VLGC) vessels to carry these increased overseas volumes are limited. As a result spot freight rates have reached record levels recently. In today’s blog “Stayin’ Afloat With the LPGees – Part 4 Freight Voyage Calculation Model” Sandy Fielden walks through a voyage cost calculation. Today we walk through a voyage cost calculation.

Movin’ Out—Exporting U.S. Sourced LNG from the Maritimes (Part 2)

Despite the challenges they would likely face, as many as four companies are exploring the possibility of exporting liquefied natural gas (LNG) from the Canadian Maritimes [1] to Europe, Latin America and Asia. Their thinking is, with Marcellus natural gas production expected to continue increasing, with Sable Island and Deep Panuke gas just offshore, and Europe little more than a week’s boat ride away, LNG exports from Nova Scotia and New Brunswick may well make economic sense. But LNG export terminals are among the most capital-intensive projects; also, piping Marcellus gas through New England—a region with serious wintertime gas-delivery constraints—to the Maritimes would require major pipeline upgrades. Today we look into the LNG project plans and the pipeline expansion needs in more detail.

Keystone Kops Chase Oil Onto Trains - Challenges for Smaller Oil Sands Producers

With the Keystone Pipeline decision booted down the road again Friday, the challenge for Canadian oil sands producers trying to get their crude to market looms large once again. Growing volumes of Canadian crude will be carried by rail this year to bypass pipeline congestion. But although larger unit trains are beginning to operate from the oil sands region, they mostly help larger producers connected to the pipeline feeder network. Today we review continuing manifest rail shipments by small producers.

My Time Has Come - Normal Butane Exports Nearly Triple Year-over-Year

Propane has received a lot of airtime in recent months given the Polar Vortex and heavy crop drying demand anomalies coinciding with growing propane export volumes.  Now it’s time to show normal butane a little love as normal butane exports almost tripled from this time last year.  In January 2013, 22 Mb/d of butane was exported; that number was 63 Mb/d in January 2014, as reported by the EIA.  All indications are that butane export volumes will be experiencing an astronomical growth rate over the next five years, reaching 300 Mb/d by 2019.  What are the factors driving this rate of growth, and what are the implications for refiners and petrochemical companies?  In today’s blog, we assess the rapid growth in normal butane exports.

The Molecule Laws: I Fought the Law and the Law Won – Part 3: Crude Oil

Energy Information Administration (EIA) data for January 2014 indicates that US crude production has now returned to levels not seen since December 1988. Canadian crude production is also at record levels. The prospects look good for a combination of US production and Canadian imports to free the US from overseas imports by the early 2020’s. But along with this success comes a challenge balancing new streams of crude that are predominantly light with a lot of refinery capacity configured to process heavier crude. This balancing act is compounded by a ban on US crude exports. Today we review the contrast between crude and refined product export rules.

West Coast LPG Exports are a Brand New Game – A New Wave of Exports from Ferndale, WA

All the export LPGs on the West Coast are in a tank in the middle of Washington State in somebody else’s name.   So if you’re dreamin’ about LPG exports, the West Coast is a brand new game.  Apologies to Larry Gatlin.

On March 4th, Petrogas announced the purchase of the Ferndale, WA LPG terminal, the only functioning butane and propane export facility on the U.S. west coast.  Then last Thursday (April 10th) Sage Midstream announced a project to build another world scale LPG (liquefied petroleum gas) export terminal a couple of hundred miles south at the Port of Longview, WA.  These are big developments for the west coast LPG markets. Today we begin a blog series that examines the history of Ferndale, how it has been used in the past, and what these two announcements mean for the future of west coast propane and butane markets.

Texas Bound and Flyin’ – Where Gulf Coast Crude Oil Inventory Is Stored

Gulf Coast crude storage is at record levels and looks set to continue growing as new pipeline capacity opens up later this year from Cushing and the Permian Basin. At Magellan’s Analyst Day presentation last week (April 9, 2014) the company said that demand for crude storage at all locations remains strong with average utilization of 97 percent plus. OilTanking say their Houston crude storage is 99.1 percent contracted. Today we ponder where Gulf Coast crude stocks are located.

Should I Store or Should I Burn—New England’s Gas Power Burn Outlook

Last week (ending April 4) the summer 2014 natural gas storage injection season began with a whimper by adding 4 Bcf to empty tanks pummeled by the Polar Vortex. That was a slower than expected start to the Herculean task of replenishing gas stocks before next winter. A lot of factors will have to fall into place for that to happen. A too-hot summer could pull gas away from injection and into demand for power burn. Today we continue our analysis of regional power burn prospects with a look at New England demand this year.

Changes in Longitudes — More Barriers to Ethane Exports

With U.S. ethane prices low and ethane rejection expected to continue increasing, interest in exporting liquid ethane is ramping up. But there are significant barriers to these exports, including: (1) loading and unloading terminal infrastructure, (2) shipping, (3) pricing, and (4) petrochemical demand.  We examined the first two of these barriers earlier this week.  Today we wrap up this blog series, examining pricing and demand.

The Molecule Laws: I Fought the Law and the Law Won – Part 2 Natural Gas Liquids

Today the US is producing more natural gas, natural gas liquids (NGLs) and some grades of crude oil hydrocarbons than we can use.  Consequently we’ve shifted from an overall position of hydrocarbon shortage to one of surplus. But only some of those surplus products can be exported. That’s because of rules put on the books during the decades of shortage that restrict or ban the export of hydrocarbons. At least six such “Molecule Laws” are now variously impacting international market transactions involving US produced hydrocarbons. Today we describe the export rules affecting NGLs.