Canadian natural gas exports to the Northeast US fell from about 3Bcf/d in 2008 to around 1 Bcf/d in 2011 and have been at that level ever since. Last November significant US exports began to flow northward across the border into Canada at Niagara. Natural gas demand in Ontario is forecast to reach 3.25 Bcf/d by 2020. Today we describe how projects on the Canadian side will allow Marcellus gas to replace traditional Western Canadian supplies.
Daily Energy Blog
Monday, 2/04/2013
Category:
Natural Gas
Sunday, 2/03/2013
Category:
Crude Oil
Back in October we posted a blog forecasting that the Brent/WTI price spread (at that time $22.76/Bbl) would narrow by the time of the Super Bowl (see Place Your Bets on Narrow Brent /WTI Spread for the Super Bowl). That turned out to be true (it is now $18.99/Bbl) but no Lambeau Leap for the RBN team. A $19 differential is still a big number, and the crude supply congestion in the Midwest that led to a wide WTI discount to Brent in the first place continues. Last week the congestion showed every sign of moving to Houston and staying there at least until the end of the year. Today we present our post-Super Bowl Brent/WTI spread analysis.
Thursday, 1/31/2013
Category:
Crude Oil
Eagle Ford pipeline takeaway capacity is four times production and local refinery consumption – an excess of over 1.3 MMb/d. More than 20 pipeline projects are already built or under construction to move Eagle Ford production to market. Today we review recent Genscape research on Eagle Ford infrastructure and assess the takeaway balance.
Wednesday, 1/30/2013
Category:
Natural Gas
Growth in natural gas demand forecasts these days rely heavily on projections of increased power burn. Lack of coordination between the gas and electric industries threatens to limit that expansion. The greatest challenge is the security of gas supply to the generators and how that impacts reliability. Regional differences in the electric power market appear to make national regulations to secure gas supplies unworkable. Today we review FERC efforts to understand and perhaps attempt to standardize those regional differences.
Tuesday, 1/29/2013
Category:
Crude Oil
Over the next three years seven Gulf Coast region terminal operators will build an estimated 19 MMBbl of new crude oil storage capacity. Those storage expansions are being made in preparation for as much as 3.1 MMb/d of new crude supplies expected into the Gulf Coast refining region over the next two years from new pipeline projects. Today we summarize the efforts that terminal operators are making to get ready for the flood.
Monday, 1/28/2013
Category:
Natural Gas
Is the winter of 2012/13 all over - bar the shouting? With the end of the heating season just nine weeks away (March 31, 2013) there may not be enough time left for winter temperatures to have a material impact on record natural gas storage levels. Today we analyze where the winter could go from here.
Sunday, 1/27/2013
Category:
Crude Oil
This year (2013) Canadian regulators are expected to decide the fate of two West Coast crude oil pipeline projects. If one or both of these pipelines get the go-ahead then future expansion of Canadian production will be secure for a few more years and the export option to Asia will bring producers higher prices. The regulators face a single jeopardy – approve the pipelines or Canadian crude production expansion will decline. Producers face a double jeopardy if the pipelines are not built – lower production and lower prices. Today we discuss how critical the West Coast pipeline projects are to Canadian producers.
Thursday, 1/24/2013
Category:
Natural Gas
Canadian National Energy Board (NEB) data released earlier this month shows that the flow of natural gas imports across the US border at Niagara reversed to become exports for the first time in 2012. In the “old world” before Marcellus in 2008 - Canadian gas flowed into the US at an average 0.9 Bcf/d at Niagara. Last year those imports ground to a halt from May to October 2012 before reversing to 0.3 Bcf/d of exports to Canada in November. The reversal confirms that expanding Marcellus supplies are not just pushing Canadian imports back over the border but also starting to penetrate the Canadian market. Today we look at the dynamics of the Northeast gas flow reversal.
Wednesday, 1/23/2013
Category:
Natural Gas Liquids
Even though ethane prices have recovered by about 4 cnts/gal from the lows last week (January 14, 2013) most gas processing plants are still faced with ethane rejection economics. The past two blogs in our Gas Processing Economics series examined the impact of ethane rejection for a specific plant configuration, running a range of Eagle Ford gas streams. But Eagle Ford gas is quite rich and high in ethane content – certainly not representative of the overall market. Is it possible to use the RBN Gas Processing model to look at the aggregate market for U.S. gas processing? That answer is yes, if you don’t mind hacking your way through some EIA statistics and manipulating a few input variables.
Tuesday, 1/22/2013
Category:
Crude Oil
Demand for imports of condensate to use as a diluent for blending with heavy Canadian bitumen crude is expected to increase from 200 Mb/d in 2013 to over 500 Mb/d by 2020 according to the Canadian Energy Research Institute. This is a very big deal. Last week we described the route that Plains All American developed to ship condensate from the Eagle Ford to Western Canada. Today we describe similar plans being developed by Kinder Morgan.
Tuesday, 1/22/2013
Category:
Natural Gas Liquids
Over the past week (Jan 13-20, 2013) the ethane-to-gas ratio has recovered slightly from 0.99 to 1.05, mostly due to a 3 cnt/gal increase in the price of purity ethane at Mont Belvieu (OPIS 24.5 cnts/gal). [See today’s Spotcheck “Ethane to Henry Hub Gas Ratio” graph. Click here if you have trouble accessing Spotcheck.] But that does not change the fact that the ethane market is still deep in ethane rejection territory. What does it mean for gas processing economics? And how do different gas streams impact NGL recoveries, ethane rejection and tailgate gas volumes. That’s what we’ll examine today.
Thursday, 1/17/2013
Category:
Natural Gas
During 2012 the FERC jumped into the ring to involve itself in the long running debate to improve coordination between the gas and electric power industries. The FERC is motivated by concerns about reliability and the trend to increase power generation from natural gas at the expense of coal and oil. The commission held 5 regional conferences to identify the industry’s concerns and the role of regulation in any solutions. Today we examine progress on this important initiative.
Wednesday, 1/16/2013
Category:
Crude Oil
The pipelines transporting Western Canadian crude oil to US markets are full to overflowing. Space on the main lines is being rationed. As much as 250 Mb/d of new production is expected online during 2013. The price of Western Canadian Select heavy crude fell to nearly $40 under NYMEX WTI during the first week of January 2013. The pressure is on to build new takeaway capacity to Canada’s west coast. Today we look at the Trans Mountain Pipeline expansion project.
Tuesday, 1/15/2013
Category:
Natural Gas
Throughout 2012 and into this January natural gas producers have done far more hedging than consumers with the Henry Hub NYMEX futures contract. Producers are still locking in higher prices on the forward curve to protect the value of their future production in the ground. Today we review trends in hedger sentiment.
Monday, 1/14/2013
Category:
Crude Oil
When Plains All American began building out their terminal at St. James in 2004 the business model was based on crude imports flowing through LOOP. That had to change gears along with the market. Since then they have developed a successful business transporting condensate to Western Canada – that is now being supplied from the Eagle Ford basin. Plains also built a crude rail unloading facility at St. James before crude by rail hit the headlines. Today we describe how Plains successfully leveraged their St. James terminal assets.
