Only a few short years ago the double punch of fuel efficiency and ethanol mandates had put U.S. gasoline demand on the ropes. But in the past year demand has jumped by 0.5 MMb/d (per data from the Energy Information Administration - EIA). This surge in demand – presumably driven by cheaper prices – has kept refineries running full pelt this summer. Today we discuss the fall and rise of gasoline demand.
Daily Energy Blog
Thursday, 7/09/2015
The U.S. energy production renaissance isn’t just changing where we get our crude oil and natural gas from, it’s forcing major shifts in the domestic oil refining sector. Gulf Coast, East Coast and Midwest refineries that used to depend heavily on foreign oil are turning to domestic sources, refiners’ ability to process very light U.S. crude is being stretched, and traditional pipeline flow patterns—for crude and refined products alike--are being up-ended. Today, we continue our look at fast-changing petroleum products markets and the infrastructure that supports them.
Thursday, 7/02/2015
Big changes are coming to the markets for natural gas, NGLs and crude oil. Even though production volumes are holding their own – despite 60% fewer rigs running, the days of month-after-month record increases in production are behind us, at least for a while. But what about all that infrastructure that has been and continues to be built? Billions of dollars are going into pipelines, processing plants, petrochemical plants, terminals, storage, etc. based on a much higher production growth scenario than now looks likely. So what happens next? That issue is the theme of a new RBN conference scheduled for July 23rd in New York City called State of the Energy Markets, and is the subject of today’s blog – also an advertorial for the conference.
Thursday, 6/11/2015
The boom in U.S. oil and natural gas production has grabbed the headlines the last few years. What shouldn’t be forgotten, though, is that Americans depend on refined petroleum products like gasoline, diesel and jet fuel—not crude—to get from Point A to Point B, and that in some parts of the country, especially the Northeast, fuel oil—not natural gas or electricity—remains the space-heating fuel of choice. Transporting large volumes of petroleum products from refinery to consumer is a monumental and complicated task, a mission accomplished primarily by a still-growing, ever-evolving network of pipelines and storage facilities. Today, we begin a new series on how gasoline, distillate (diesel and heating oil), and jet fuel get to where they’re needed.
Sunday, 6/07/2015
Expectations for continuing rampant production growth for natural gas, natural gas liquids (NGLs) and crude oil have evaporated in the heat of the price melt-down. Volumes may be holding their own, even with 60% less rigs running, but the days of month-after-month record increases in production are behind us, at least for a while. But what about all that infrastructure that has been and continues to be built? Billions of dollars are going into pipelines, processing plants, petrochemical plants, terminals, storage, etc. based on a much higher production growth scenario than now looks likely. So what happens next? That issue is the theme of a new RBN conference scheduled for July 23rd in New York City called State of the Energy Markets, and is the subject of today’s blog – also an advertorial for the conference.
Sunday, 5/31/2015
Did you miss our School of Energy this past March in Calgary? Not a problem! We videoed the whole conference and today we are making School of Energy available online, in streaming video format. The conference video, presentation slides and spreadsheet models are available in segments, or as a full conference package.
Thursday, 5/28/2015
In just a few months’ time, it’s become easier to get regulatory approval to use unmanned aerial systems—more commonly known as drones—and the number of ways drones can be employed by the oil and gas sector has grown substantially. In fact, drones are getting involved in just about everything: geologic mapping, site surveying, methane detection, pipeline inspection—you name it. Today, we explore how drone use in the energy sector is quickly morphing from geeky to mainstream.
Tuesday, 5/19/2015
The E&Ps have cut Capex to the bone, but as a group they expect oil and gas production in 2015 to increase versus last year. That’s true from an overall perspective, and it is an important indicator of upcoming production trends. But the real revelations come when you dig into the details. In the oily sector, small and mid-size companies are making deeper cuts but are faring much better than the big boys. On the gassy side, E&Ps in Appalachia are knocking it out of the park, while more diversified gassy players are having a much harder time of it. Today we begin a blog series to drill deeper into the company numbers to see why and how these differences happen.
Wednesday, 5/13/2015
Fuel oil demand has been declining for years on dry land – under attack by regulators anxious to reduce sulfur emissions. New international regulations introduced in January of this year are designed to further reduce sulfur emissions from ship engines burning marine fuel oil (“bunkers”) at sea. The new regulations have had an immediate impact on the market for 1% sulfur fuel oil. Most affected ship owners are now using more marine gasoil in coastal zones. Today we examine how the new regulations have impacted fuel oil markets.
Thursday, 5/07/2015
In January 2015 new international regulations came into force that reduced the permitted sulfur content in ships “bunker” fuel in Northern European and North American coastal regions. The change has required vessels travelling in those zones to use more expensive fuels or install scrubbers to remove sulfur. The changeover was expected to cause a sharp increase in shipping costs but as we discuss in today’s blog, so far the impact has been far less painful than expected, at least so far.
Sunday, 3/22/2015
Last year was a banner year for the sand mining companies that cater to the U.S. shale drilling services industry. That’s because in 2014 well operators significantly increased the amount of sand used to complete fracturing operations in shale plays – from an average of about 5 MMlb for a single well to 15 MMlb (7,500 tons) or more.
Thursday, 2/26/2015
Freezing weather along the Atlantic Coast has disrupted refinery operations threatening supplies of refined products – in particular distillates – in an already tightly balanced market. The resultant spike in heating oil prices has encouraged European traders to ship cargoes to New York – a reversal of flow patterns seen in recent years. Today we look at northeast distillate fundamentals and explain why European imports are headed across the pond.
Tuesday, 2/24/2015
Producer rates of return are far below where they were a few months back, and the Baker Hughes crude rig count is down 553 since November. A third of pre-crash crude rigs are now idled. That means that crude oil production will be falling soon, right? Not necessarily. There are a number of factors working to keep production up, not the least of which is the rapidly declining cost for drilling and completion services. Today we examine the impact of these factors, review RBN’s crude oil production scenarios and consider what it all means for the long-term relationships between prices, returns and production volumes.
Monday, 2/23/2015
Arnold Schwarzenegger said “Hasta la vista, baby” to the governor’s office in Sacramento four years ago, but his 2007 executive order establishing a low-carbon standard for transportation fuels is only now starting to have a real effect on California refineries. Some refiners say the rule aimed at reducing “life-cycle” greenhouse gas emissions from the transportation fuel sector 10% by 2020 is unrealistic and could result in refinery closings and gasoline and diesel shortages. Others say California’s goal is achievable. Today, we consider the Golden State’s low-carbon fuel standard (LCFS) and what it may mean for refiners.
Wednesday, 2/18/2015
Can it make sense for a producer to drill a well in today’s low price environment even if the rate of return on that well is below zero? Surprisingly the answer is yes, and the issue has important implications for the impact lower prices will ultimately have on U.S. oil and gas production volumes. Factors such as lease requirements can incentivize drilling and cause production levels to continue growing, even when spot prices don’t seem to support it. As the new economics of lower oil, NGL and natural gas prices suggest that production declines are just down the road, the market’s quest to nail down when and how much production will decline has brought the role of “hold by production” (HBP) drilling into the spotlight. Questions about HBP status and its role in producers drilling strategies have been a staple in the latest round of earnings calls.Today we take a closer look at HBP drilling.
