RBN blog pages are replete with discussions of the Shale–Rail revolution. We’ve shown how rail has become a formidable competitor to pipeline transportation. Twice as much crude oil moves by rail out of the Bakken versus pipe. Almost 100 new rail terminals will be built during 2012-13. But that’s not the only impact that shale is having. Most of the vast quantities of materials that support shale drilling arrive by rail. Among these are proppants (sand, ceramics), pipe, lubricating chemicals, and water. Today we examine the other end of the shale-rail revolution – the inbound material supply chain.
Daily Energy Blog
Wednesday, 5/01/2013
Category:
Crude Oil
Tuesday, 4/30/2013
Category:
Natural Gas
Early in 2012, soon after Japan’s Fukushima disaster, two California nuclear power plants called SONGS 2 and SONGS 3 (stands for San Onofre Nuclear Generating Station) shut down for the foreseeable future. This pulled roughly 2,200 MW of base load generation out of the Southern California supply stack. The California System Operator (CAISO) scrambled for several weeks to bring replacement power into the system, and succeeded admirably. The grid held together and weathered last year’s hot summer. Now as the summer of 2013 starts to come into focus, there are lots of questions about the SONGS units –which are still off line – and what California’s overall power generation load will mean for natural gas demand and prices. Today we survey the measures that made things work last year and examine the most likely market developments expected for Summer 2013.
Monday, 4/29/2013
Category:
Crude Oil
Yesterday the Intercontinental Exchange Brent premium to WTI NYMEX closed at $9.31/Bbl, its lowest value since January 2012. Spread watchers have long anticipated this narrowing but it throws a spanner in the economics of crude by rail shipments from North Dakota. Today we suggest that the Brent/WTI spread may have narrowed before crude supply fundamentals justify the move and that it could widen again quickly to $15 or higher.
Sunday, 4/28/2013
Category:
Natural Gas Liquids
Natural gas liquids (NGL) production from the Bakken has increased from only 20 Mb/d two years ago to almost 50 Mb/d today. And that is with nearly one-third of the natural gas in the region being flared and no outlet for ethane. For years gathering, processing and pipeline constraints have held back production growth. But that’s all changing. ONEOK has completed their NGL pipeline and plant expansion project and more outlets are on the way. Production could rise to more than 300 Mb/d by 2018. In today’s blog, we examine the Bakken NGL situation.
Thursday, 4/25/2013
Category:
Natural Gas
Last year natural gas power burn increased by 6 Bcf/d over 2011. This year power burn levels in the first quarter were down 10 percent from 2012. Peabody Energy reported last week that coal consumption for generation is growing this year versus 2012. Today we ask whether 2012 power burn was an anomaly and what we should expect in 2013.
Wednesday, 4/24/2013
Category:
Refined Fuels
There is plenty of crude oil in North Dakota but the State does not refine enough of it to meet rising demand for diesel caused by booming energy industry activity. The latest North Dakota Pipeline Authority data shows oil production in February 2013 up 40 percent since February 2012 to 778 Mb/d. Demand for diesel increased 35 percent between February 2010 and February 2013. North Dakota’s only refinery produces less than half the diesel the State consumes. To help remedy that disparity the first new refinery to be built in the Lower 48 since 1977 is under construction today and two more new refineries are planned. Today we look at the refinery economics.
Tuesday, 4/23/2013
Category:
Crude Oil
In the short term midstream companies with crude-by-rail unloading terminals at the Gulf Coast can deliver cheaper light sweet crudes from the Midwest and West Texas. Once new pipelines come online to deliver that crude direct to Houston that price advantage will disappear. At that point rail terminal operators need to diversify their business to survive. Today we look at the fate of Texas Gulf Coast rail terminal operators.
Monday, 4/22/2013
Category:
Crude Oil
By the end of 2014 an additional 1.7 MMb/d of pipeline capacity will open up from the Midwest and the Permian basin – bringing crude into the Texas Gulf Coast region. A good deal of that crude will pass through pipelines and/or storage in the Houston Ship Channel area. Ordinarily all that pipeline capacity should trump crude-by-rail due to lower transport costs. But the onslaught of rail could change the game, as over 200 Mb/d of new rail capacity is being built in the Channel area Today we discuss the logic of crude-by-rail in Houston.
Sunday, 4/21/2013
Category:
Crude Oil
Last week we reviewed prospects for oil production from the Niobrara shale formation in Colorado and Wyoming (see Bananarama in the Rockies). Despite early promise the Niobrara has proven complex to drill successfully but recent optimism from Noble Energy,Anadarko and others suggest that the tide may be turning. Today we take a look at growing takeaway capacity in the Rocky Mountains.
Thursday, 4/18/2013
Category:
Crude Oil
The latest Energy Information Administration (EIA) April 2013 short term energy outlook forecasts US crude oil production to increase from an average of 6.5 MMb/d in 2012 to 7.9 MMb/d in 2014. Surging crude production needs to find routes to market – and often competes for pipeline space with growing Canadian imports. New crude pipelines are taking too long to build. At the same time many natural gas pipelines are flowing far beneath capacity because new gas production nearer to market makes them redundant. Converting these natural gas pipelines to crude oil use where geography allows is a potential win-win. Today we look at gas to crude pipeline conversion economics.
Wednesday, 4/17/2013
Category:
Industry
It’s time! Registration for RBN’s *Summer* School of Energy is open. Once again RBN Energy is offering an intense curriculum of energy market fundamentals analysis covering the whys and hows of the most important developments in the crude oil, natural gas and NGL markets. This time the course is hot. Really hot. Because we are holding the conference in the middle of July in Houston. And we’ve expanded the content to include an optional Preschool that consists of a half-day deep dive into the (hot) condensate markets, and another half day for a tour of (very hot) Mont Belvieu. There is more - much more that we’ll review below. And BTW, if this sounds like an unabashed commercial for our conference, that’s because it is. You have been warned!
Tuesday, 4/16/2013
Category:
Crude Oil
As much as 240 Mb/d of light sweet crude from North Dakota is currently being shipped from the Bakken to St. James LA in what has become a pipeline on wheels. More crude is also moving to the Gulf Coast from Western Canada by rail and new destination terminals are being developed along the Mississippi River. But increased pipeline capacity to the Gulf Coast is a growing competitive threat to these rail destinations. Today we survey rail destination terminals East of the Mississippi.
Monday, 4/15/2013
Category:
Natural Gas
Last week (April 9, 2013) South African firm SASOL held an investor strategy day in New York. The company confirmed it is moving ahead with plans to build a 100 Mb/d gas-to-liquids (GTL) plant in Lake Charles, LA. Shell is evaluating plans for a similar plant in LA. The plant feedstock will be up to 1 Bcf/d of dry natural gas and output will be very low sulfur diesel, naphtha and liquefied petroleum gas (LPG). A year ago in April 2012 the economics looked very positive because of the wide spread between gas prices and refined products but the margins have narrowed since then. Today we look at prospects for this plant and others like it.
Sunday, 4/14/2013
Category:
Crude Oil
January 2013 oil production from the Denver-Julesburg and Powder River Basin Niobrara Shale plays in Colorado and Wyoming was 170 Mb/d (Bentek estimate). Operators in the Niobrara have been running hot and cold on the play ever since a gusher in Weld County, CO hit the headlines in October 2009 by producing 550 b/d in its first ninety days. Some like Chesapeake have sold assets; others like Noble Energy expect their oil production to increase significantly in 2013. Today we check out the current sentiment on this Rockies play.
Thursday, 4/11/2013
Category:
Natural Gas
These days natural gas can be traded in spot, term, or financial at over 120 locations across the US. Deals can be executed by Apps, by instant messages and by high-speed algorithm. And it is reported that a few human beings actually still trade gas bilaterally over the telephone as was done in the time of the Cro-Magnons. None of that would be happening without the big bang. Today we recall how the dust settled after the big bang in natural gas markets.
