RBN Energy estimates that by 2015 rail terminal capacity to load heavy bitumen “dilbit” crude in Western Canada will be about 800 Mb/d. Unload terminals hoping to receive that crude on the Gulf Coast will have about 1 MMb/d capacity by 2015. Moving that crude by rail will compete directly with planned pipelines expected to be in service by 2015. Yet the details show only about 25 percent of Canadian rail terminals will be able to load railbit crude, which has less diluent. And the terminals that do handle railbit will not be handle larger unit trains. Today we continue our analysis of Canadian crude transport options.
Daily Energy Blog
Sunday, 9/08/2013
Category:
Crude Oil
Thursday, 9/05/2013
Category:
Natural Gas
Shale has transformed the economics of oil and gas production in the U.S. and is creating an era of lower cost energy. Attractive rates of return are bringing producers to profitable shale plays like bees to a honey pot. Among the keys to those attractive rates of return are high initial production and high cumulative production rates in the early years of typical shale wells. Today we continue our rundown of shale production financial return calculations with a review of well production estimation techniques.
Wednesday, 9/04/2013
Category:
Crude Oil
As we move toward the end of 2013, all eyes in the crude market will focus on the Texas Gulf Coast as a flood of over 1 MMBbl of new crude supplies arrives via pipeline. In anticipation of that bonanza, Oil Tanking Partners (OTP) are in the process of adding 7 MMBbl of crude storage capacity at their Houston Ship Channel terminal and looking to expand their Beaumont capacity. OTP is also benefiting by leasing dock space for propane exports. Today we look at OTP’s ongoing preparations for the flood.
Tuesday, 9/03/2013
Category:
Natural Gas
The Rockies Express pipeline (REX) will soon reverse its direction of flow. Surely there is no more dramatic indication of the huge shifts in physical natural gas movements surging across North America. REX will be moving gas westward - out of the Marcellus/Utica plays into Midwest markets. Gas from the Rockies will go somewhere else. That’s certainly a good thing for Appalachian producers, who are facing (irony of ironies) exactly the same kind of pipeline capacity constraints that Rockies producers were dealing with eight years ago. What can Marcellus/Utica producers learn from the Rockies experience? What will the REX reversal do for Marcellus/Utica take-away capacity? Will Rockies gas get back to where it once belonged? We will explore these questions in this blog series addressing the REX reversal and implications for Marcellus/Utica producers.
Monday, 9/02/2013
Category:
Crude Oil
Seems like every other week a new loading or unloading terminal project is being announced to move Western Canadian heavy crude by rail to somewhere on the Gulf Coast. If they all get built there will be at least seven unit train load terminals operating in Alberta by 2016 with over 550 Mb/d capacity. Six unit train terminals are planned or being built to unload Canadian heavy crude to deliver to Mississippi Gulf Coast refineries (~400 Mb/d unload capacity) and three unit train terminals (~350 Mb/d) are operating or being built to deliver to Texas Gulf Coast refineries that will handle Canadian crude. Today we survey unloading terminals on the Gulf outside the CN direct network.
Thursday, 8/29/2013
Category:
Crude Oil
When you transport crude to market by pipeline its going to get mixed up with other folk’s production being shipped on that pipeline unless you have an exclusive pipeline – which is not the norm. Some pipeline systems use a batch mechanism to separate individual parcels but the usual approach is to mix together like crudes in a common stream. When that happens the pipeline operator uses a quality bank to credit or debit shippers for differences in the quality between the crude they put in and what they take out of the pipeline. Today we explore how quality banks work.
Wednesday, 8/28/2013
Category:
Natural Gas
Shale production has transformed the economics of oil and gas production in the U.S. and is creating an era of lower cost energy. Yet drilling and completion costs are typically far higher for shale wells than they are for conventional drilling. Higher initial production and ultimate well recovery rates contribute to better economics for these unconventional wells. To understand how this works we need to get into the details of shale production costs and revenues. That is the objective of this series. Today we continue our rundown of shale production financial return calculations.
Tuesday, 8/27/2013
Category:
Natural Gas Liquids
Over the next three years, the production of natural gas liquids (NGLs) from the Marcellus/Utica could octuple (8X) to more than 650 Mb/d. Nothing like that has ever happened in the NGL business before. It has already started. Last month MarkWest officially inaugurated the Appalachian ethane business. From 5 Mb/d today we could see 200 Mb/d by this time next year if the economics to move that much ethane made sense. But they won’t. Because there is nowhere for the additional ethane to go. Already up to 250 Mb/d of U.S. ethane is being rejected – pushed back into natural gas in the Rockies, Midcontinent, and other regions. That number will be getting a lot bigger. Today we will begin an examination of the ethane tsunami and what it means for NGL markets in the Northeast and in the center of the NGL universe – Mont Belvieu, TX.
Monday, 8/26/2013
Category:
Crude Oil
The strange looking yellow and black waxy crudes produced from the Uinta Basin in Utah since the 1950’s resemble shoe polish at room temperature. Because of the complexity of transporting these waxy crudes over long distances, they have traditionally been consumed by close by Salt Lake City refineries. However, just like many other US production basins these days, Uinta production is increasing – up from 53 Mb/d in January 2011 to an estimated 88 Mb/d this month (August 2013 - source Bentek). Continued production expansion depends on finding new refining capacity or routes to distant markets. Today we begin a series on crude from the Uinta Basin.
Sunday, 8/25/2013
Category:
Crude Oil
Five large-scale rail terminals planned or being constructed in Western Canada will be able to ship up to 550 Mb/d of crude by 2015. Most of that crude will be headed to the Gulf Coast. If crude by rail shipments from Canada are going to compete with pipeline alternatives then the ability to ship bitumen crude raw without diluent will be an important advantage. Yet only about 170 Mb/d of rail terminal capacity is currently built or being developed on the Gulf Coast that can offload raw bitumen using special heating equipment. Today we complete a survey of CN railroad unloading facilities at the Gulf Coast.
Thursday, 8/22/2013
Category:
Natural Gas
The shale gas revolution has transformed the economics of oil and gas production in the U.S. and its effects have been far reaching ,including reduced dependence on imported oil and gas supplies and strengthening domestic manufacturing through lower energy costs. Much of the credit for the technological innovation that allowed this revolution to take place is owed to the late George Mitchell (1919 – 2013) and the members of the Mitchell Energy shale gas team who persevered with the technology. Today we begin a series describing the technology and economics behind the shale drilling boom.
Wednesday, 8/21/2013
Category:
Natural Gas
Alberta has a serious and still-growing problem with stranded natural gas. The volumes of gas piped east and south have been declining and the amount of gas stored in-province has risen to near-record levels, despite a widening discount to US Henry Hub spot gas prices making Alberta gas cheaper than ever. U.S. shale gas is largely to blame, but Alberta gas producers need more than a scapegoat, they need new markets—new ways to either use more of their gas closer to home or move it economically to the east and south or to buyers overseas. It won’t be easy. Today we look at potential new sources of demand.
Tuesday, 8/20/2013
Category:
Crude Oil
Crude oil throughput volumes at Sunoco Logistics’ Nederland Terminal on the Texas Gulf Coast increased by 35 percent from 690 Mb/d in Q2 2012 to 932 Mb/d in Q2 2013 – that’s nearly a million barrels a day! (Source: Sunoco Logistics earnings call). By the end of 2014 another 1 MMb/d of crude will be flowing through Nederland, as it becomes a pivotal storage and distribution terminal for Gulf Coast refineries. Today we describe Nederland’s growing crude advantages.
Monday, 8/19/2013
Category:
Crude Oil
At least 5 large-scale rail terminals are being planned or constructed in the heavy oil sands region of Western Canada to increase the volume shipped to the US by rail from about 100 Mb/d this year to more than 550 Mb/d by 2015. Current shipments are mostly small manifest batches but the new terminals will load unit trains with 50 MBbl plus of crude. Successful development of large loading terminals in Western Canada requires the build out of similar scale unloading terminals close to heavy oil demand in the Gulf Coast region. Today we review destination terminal developments.
Sunday, 8/18/2013
Category:
Crude Oil
The recent dramatic narrowing of the WTI discount to Brent to around $3/Bbl (from $23/Bbl in February) took place at the same time as Cushing, OK crude inventories fell by 23 percent. Both these events have been trumpeted as signaling an end to the three-year logjam preventing landlocked crude supplies from reaching the Gulf Coast by pipeline. Yet the turnaround in Cushing inventories owes as much to declining inflows to Cushing from Canada and West Texas as it does to a flood of crude to the Gulf Coast. An uptick in refinery consumption in the Midwest and falling prices on the CME NYMEX West Texas Intermediate (WTI) futures market (backwardation) have also played an important part in the drop in Cushing inventories. Today we look at what lies behind the crude inventory slide.
