A combination of pipelines and ships delivers some 4 MMb/d of transportation and heating fuels to the U.S. East Coast, most of it from Gulf Coast refineries. But there’s always room for improvement in refined products delivery infrastructure, whether it’s pipeline or port capacity expansions, new pipeline spurs, or new storage capability. The aim of these projects is almost always the same: to make distribution more efficient and to hold down the per-barrel cost of delivery. Today, we conclude our series with a look at possible infrastructure improvements and a note about the challenges these projects face.
Daily Energy Blog
Wednesday, 3/30/2016
Most of the gasoline, diesel, heating oil and jet fuel consumed in the U.S. East Coast region is piped in via long-distance pipelines from Gulf Coast refineries, but substantial amounts are moved in by ship—either from the Gulf Coast by Jones Act vessels or from overseas. These shipped-in volumes then need to make their way from port to consumer. Today we continue our examination of how transportation fuels and heating oil are delivered to East Coast users with a look at the ports and connecting pipelines that help move these critically important fuels.
Monday, 3/21/2016
The East Coast consumes more than 200 million gallons of gasoline, diesel, heating oil and jet fuel a day, but produces only one-fifth of that total, most of it at New Jersey and Pennsylvania refineries. To keep the region’s cars, trucks, trains and airplanes moving (and many of its homes and businesses heated) huge volumes of fuels need to be delivered from elsewhere, mostly via two pipelines from the Gulf Coast and the rest by ship—some from Gulf and other U.S. ports and some from overseas. Today, we continue our examination of the infrastructure that moves gasoline, diesel, heating oil and jet fuel to the nation’s largest fuel-consuming region with a look at four major pipelines.
Wednesday, 3/16/2016
Every day, refineries along the U.S. Gulf Coast produce far more gasoline, diesel and jet fuel than the region could possibly use, and demand for these fuels along the East Coast for transportation and heating is far higher than local refinery production. To help bring the two regions into balance, a complicated network of pipelines, ports, Jones Act vessels and storage facilities has been developed over the past 70 years—and continues to be updated and expanded. Today, we begin a new series on how millions of barrels of these fuels are moved between and within the nation’s largest refining region and the region where more is used than any other part of the U.S.
Monday, 3/07/2016
Energy markets are in turmoil. Prices have been crushed, energy producers are under stress, and consumers are enjoying a bonanza of savings. In the midst of this turmoil, the elections are on the horizon. The stage is set for 2016-17 to be transformative years for the energy industry. But what kind of transformation will it be? Well, it depends. On lots of things. Prices. Supply/demand. OPEC/no-OPEC. And of course, the outcome of U.S. elections. The elections, and the positions (or lack thereof) taken by candidates during the campaign will be bellwethers of the market the industry will face over the next two years and beyond. Today in Brace for Impact - of the 2016 Elections on Energy Policies, Politics and Markets we set the stage for a new kind of conference being hosted by RBN, Sutherland, and Goldwyn Global Strategies on May 10th in Houston. Warning, today’s blog is an advertorial for the conference.
Tuesday, 3/01/2016
The U.S. refining industry appears to be transitioning from an era of high margins and record throughputs. Falling crude prices at first increased refining margins – especially as demand for cheap refined products like gasoline expanded. Now product inventories are brimming and margins are squeezed. As we explain today the industry can look forward to an extended period of low crude prices while regulatory requirements and the pace of economic growth largely drive refined product trends.
Tuesday, 2/09/2016
Mexican production of gasoline, diesel and jet fuel continues to fall and Mexico’s imports of these refined petroleum products from the U.S. are rising fast to keep pace with increasing demand. Longer term upgrade projects to increase Mexican refinery transport fuel are finally underway. But before refinery upgrades make a dent in imports, two ambitious refined-products pipeline/terminals projects will make it easier and more efficient to move large volumes of gasoline, diesel and jet fuel from Texas refineries into Mexico. Today, we update our coverage of fast-moving developments in Mexico-U.S. hydrocarbon trading.
Thursday, 1/28/2016
West Texas Intermediate (WTI) CME NYMEX crude futures settled up 92 cents/Bbl yesterday (January 28, 2016) at $33.22/Bbl and NYMEX Henry Hub natural gas futures settled up slightly at $2.182/MMBtu. The crude-to-gas ratio - meaning the crude price in $/Bbl divided by the gas price in $/MMBtu - was 15.22 X. For most of this year so far the ratio has been less than 15X On January 20, 2016 it dipped to 12.5 X – its lowest point since March 2009. Over the 5 years between 2010 and 2014 the ratio averaged 27X - reaching a high of 54X in April 2012. That lofty five year run for the crude-to-gas ratio was arguably responsible for much of the crude and natural gas liquids production boom since 2011 and a “Golden Age” of natural gas processing. Today we begin a two-part series discussing the ratio and the market implications if it stays low.
Wednesday, 1/27/2016
Over the past six years surging U.S. hydrocarbon production from shale has exceeded domestic demand in many cases – leading to the development of export infrastructure. Large volumes of natural gas liquids (NGLs) such as propane are already being exported. Natural gas exports in the form of liquefied natural gas (LNG) are about to start and the recent end to federal restrictions offers the possibility to increase crude exports if they become competitive. A critical assumption behind all these export opportunities is that the U.S. continues to be the only country (except Canada to a lesser degree) to successfully “crack the code” in shale exploitation to produce commercially significant volumes competitively. This assumption would be turned on its head if competing countries like Mexico, China, Poland, Argentina and the U.K. are able to unlock their own shale potential. Today we review RBN Energy’s first Drill Down report of 2016, which considers the many “below-ground” and “above-ground” factors that will determine whether and how quickly, shale development becomes a worldwide phenomenon.
Thursday, 1/21/2016
Crude oil prices staged a recovery of sorts yesterday (January 21, 2016) after a crushing first two weeks of the year. But even if this proves to be the turning point, a lot of damage has been done to crude and refined product prices along the way. Jet fuel is a case in point. The U.S. Gulf Coast spot price for kerosene-type jet fuel closed on Wednesday (January 20, 2016) at $0.78/Gal - the lowest it’s been since September 2003, and barring a dramatic recovery in crude oil prices, the refined petroleum product, that is mostly used for aviation and by the military, will remain cheap this year. That’s good news for the airlines and, one would hope, for air travelers too. But it’s bad news for refiners because of narrowing jet margins over crude oil. Today, we examine the global market for jet fuel, and how it’s affecting U.S. refiners.
Tuesday, 1/05/2016
Energy market volatility in 2015 was neither the result of random market fluctuations nor geopolitical orchestration. The market pressures had been building for years, as one market event triggered another, leading inexorably to the carnage of Q4 2015. In fact, there were thirty such market events, which are represented by dominos in the new book by Rusty Braziel, titled The Domino Effect now Amazon’s #1 bestselling book in four categories. More dominoes will topple in 2016 and the years b
Sunday, 1/03/2016
2015 was a transformational year for the U.S. shale revolution. Act I of the Shale Revolution is now behind us. We’ll look back at the first decade -- 2005-2015 as the halcyon days – when there was always another market just around the corner. Shale started with dry gas in Texas, but those prices were crushed by the economics of wet gas and NGLs. In just a few years, that market too was annihilated, but economically attractive Appalachia dry gas and the big kahuna, crude oil took center stage. Now after a year of being beaten senseless by low prices, it is clear that those markets too have succumbed to the scourge of shale oversupply. That’s the end of Act I. There is nowhere else for producers to turn. The market dynamics facing Act II of the shale revolution are unprecedented. There is simply no way to predict what is going to happen next. Right? That’s silly. Of course we can! It is the perfect time to roll out RBN’s crystal ball one more time for 2016 - Year of the Monkey. Yup, there is more monkey business coming to energy markets.
Wednesday, 12/30/2015
Energy markets will long remember 2015. For producers and midstreamers, the memories won’t be pleasant. But it was not all bad news. Particularly if you happen to be an energy buyer or refiner. As we’ve done for the past four years, today is a day for looking back over the past twelve months in the RBN blogosphere – to see which blogs have generated the most interest from you, our readers. We track the hit rate for each of our daily blogs, and the number of hits tells you a lot about what is going on in energy markets. So once again we have taken a page out of the late Casey Kasem’s playbook to look at the top blogs of 2015 based on numbers of website hits.
Monday, 12/28/2015
The Colonial System is the largest refined products pipeline in the U.S. and delivers as much as 2.7 MMb/d from Gulf Coast refineries to destinations up the East Coast as far as New York. The southern section of the pipeline has been running full for over three years – leading Colonial to apportion space to shippers. A desire to gain shipper support to expand the pipeline led Colonial to propose new tariff clauses limiting trading practices that have developed around apportionment such as the sale of shipper history. Earlier this month (December 3, 2015) the Federal Energy Regulatory Commission (FERC) postponed the latest Colonial tariff proposal pending a user conference to resolve differences between the pipeline and shippers on these issues. Today we explain the oddities of line space and shipper history trading.
Tuesday, 12/22/2015
While recent analysis has raised concerns crude oil pipelines are running half empty the opposite is true for many of the nations’ refined product distribution pipes. Take the huge Colonial Pipeline system that delivers as much as 2.7 MMb/d of refined products from Gulf Coast refineries to destinations up the East Coast as far as New York. The southern stretch of the pipeline from Pasadena near Houston to Greensboro, NC has been running full since 2012 - meaning that shipper volumes are subject to rationing or apportionment. Today we start a two-part series explaining why the Colonial pipeline is so congested and how it operates.
