Last week in Ethane Asylum Big Time we looked at the implications of ethane rejection at a typical Eagle Ford plant, using as our example the model developed a few weeks back in our blog series titled How Rich is Rich – Gas Processing Economics – Part 3. In order to get to the market implications and conclusions in “Ethane Asylum Big Time”, we skipped over some of the details of our calculations, promising to get back to the model this week. So that’s where we are going today – deep into the gas processing model abyss. Follow only if you dare.
Daily Energy Blog
Sunday, 1/13/2013
Category:
Natural Gas
Thursday, 1/10/2013
Category:
Natural Gas
Mexico’s pipeline infrastructure is struggling to meet booming demand for cheap US natural gas imports across the Rio Grande. To open the way for increased flows of gas the state energy company PEMEX has launched an ambitious pipeline construction program on both sides of the border. Today we describe these pipeline projects.
Wednesday, 1/09/2013
Category:
Natural Gas
We learned from our friends at Bentek this week that gas demand from the power sector averaged a record 25 Bcf/d in 2012 – nearly 20 percent higher than 2011. The increase in demand for natural gas for power generation largely resulted from system operators switching from coal plants to natural gas after the price of natural gas fell to 10 year lows in April 2012. Today we look at how power generation plant fuel costs drive coal-to-gas switching.
Tuesday, 1/08/2013
Category:
Crude Oil
By the end of this week (Friday January 11, 2013) Phase 2 of the Seaway Reversal pipeline project that delivers crude from Cushing to Houston is supposed to have come online - expanding pipeline capacity from 150 Mb/d to 400 Mb/d. Phase 1 of the project was eagerly anticipated by the market but since then (June 2012) the narrowing in price differentials between WTI Cushing and Brent expected by much of the market has not materialized. Today we explain why Seaway Phase 2 is only one factor in today’s complex US crude market evolution.
Monday, 1/07/2013
Category:
Crude Oil
Over the past two years oil terminal operators in St. James, LA have built rail receipt facilities that handle over 150 Mb/d of crude oil – most of it from North Dakota. That crude is chasing Gulf Coast prices that can be $20/Bbl higher than the Midwest. Today we explain how NuStar Energy has expanded their St James crude oil terminal to capitalize on those price differentials.
Sunday, 1/06/2013
Category:
Natural Gas Liquids
Ethane in Mont Belvieu posted at 22.5 cnts/gal on Friday, continuing the NGL’s descent into the abyss that started mid-2012. The last time we saw ethane at this level was back in 2002. With natural gas prices hanging in there above $3.00/MMbtu, there is no doubt about it. We are deep into ethane rejection economics. Not just for the Conway market like we had last summer. But wide spread, across the board, knock-out-the-ethane style rejection, unlike anything we’ve seen in the last five years. In fact, this is something new. Impending widespread rejection in the world of shale… a world of ultra-rich gas, deep ethane cuts, and constrained infrastructure. Today we’ll drill down deep into the numbers. It’s enough to make you crazy.
Thursday, 1/03/2013
Category:
Natural Gas
US natural gas pipeline exports to Mexico increased by 45 percent in the 9 months to September 2012. This dramatic increase in flows across the US/Mexico border was caused by the need to fill a widening gap between Mexico’s dwindling supplies of gas from domestic production and higher demand for gas to generate electricity. Current low US natural gas prices have made increased pipeline imports an attractive option for Mexican State Energy Company PEMEX but not without complications. Today we take a look at Mexico’s rising gas imports from the US.
Wednesday, 1/02/2013
Category:
Crude Oil
Alaska North Slope (ANS) crude production has been in decline since 1987. Once producing over 2 MMb/d this prolific field averaged just 520 Mb/d in 2012. At the same time refiners on the West Coast who previously relied on ANS are beginning to get access to domestic shale crude and might be consuming Canadian crude exports from British Columbia in a few years’ time. Today we explain the impact on West Coast crude pricing.
Wednesday, 1/02/2013
Category:
Hydrocarbons
Worried about 2013? You are not alone. There are many rational reasons to be concerned about possible developments in energy markets this year, let alone phobias about the number thirteen (triskaidekaphobia). But hey, this is the first working day of the New Year, so let’s look on the positive side. In fact we are so psyched that we are going to violate the cardinal rule of consulting. We are going to make predictions. Of the future! So hold on to your seat and get ready for our Top Ten Energy Prognostications for 2013, which according to Chinese astrology is the Year of the Snake. Hmm, that doesn’t sound good.
Sunday, 12/30/2012
Category:
Hydrocarbons
During 2012 we’ve posted over 200 RBN blogs, covering everything from ethylene cracker margins (Ethylene Ethylene, Prettiest margin I ever seen), to northeast natural gas basis (The Mighty Algonquin) to the impact of a major crude pipeline reversal (Oh-Ho-Ho it’s Magic). Now in our last posting of the year it seems appropriate to take a page out of Casey Kasem’s playbook to look back at the top blogs of 2012 based on website hits. And there’s more! In response to many members who have asked, we’ll also provide an index of all of our blogs by topic. And finally we will introduce a new website feature that will give you the ability to see what is trending on the RBN site in real time. BTW, we are not really going to look at 40 blogs. After all it is New Year’s Eve. But we will look a few of the really big winners for 2012.
Thursday, 12/27/2012
Category:
Natural Gas
The generation of power from natural gas will be the most important growth sector for the gas industry for the foreseeable future – certainly for producers, but also for the pipelines that provide the transportation service to deliver the gas to power generators. Handling the infrastructure and service challenges that come with increased power burn is therefore a priority. This is true for the nation as a whole, but was specifically raised this year by the Midwest Independent System Operator (MISO) in the heart of coal country - where coal-to-gas switching was most significant during 2012. We covered the MISO reports detailing their infrastructure concerns previously (see Hooking Up the Next Generation). This blog post is a review of challenges that the industry must address on both the regional and national level.
Wednesday, 12/26/2012
Category:
Crude Oil
The Louisiana Offshore Oil Port (LOOP) is currently the nation’s largest waterborne crude import terminal. Throughput at LOOP has been declining as domestic crude production has increased. Crude oil imports were over 1 MMb/d in 2008 but dropped to 0.5 MMb/d by September 2012. Light sweet crude imports in September 2012 were 10 percent of their level in 2008. Today we look at future prospects for this huge marine terminal and storage facility on the Louisiana Gulf Coast.
Tuesday, 12/25/2012
Category:
Hydrocarbons
Fundamental to our approach to energy markets at RBN is a view that natural gas, crude oil and NGLs have become much more interdependent than in the days before shale. What happens in gas impacts NGLs, which influences crude oil, which loops back to the natural gas market. We’ve written about these cross-commodity relationships in a number of RBN blogs during 2012, showing the calculations and walking through several spreadsheet models. Now we are taking our analysis one step further. Starting on December 31, 2012, we are launching a new RBN website feature called Spotcheck that displays daily updated graphs of these relationships. Today we’ll describe what is coming next week, and how you can interpret the trends to better understand developments in North America hydrocarbon markets.
Sunday, 12/23/2012
Category:
Crude Oil
The Louisiana Offshore Oil Port (LOOP) is the nation’s largest waterborne crude oil import terminal. Capable of handling 1.2 MMb/d of crude throughput and with associated storage topping 67 MMBbl, LOOP is connected by pipeline to 50% of the nation’s refineries. As shale crude and increasing Canadian imports rush toward the Gulf Coast pushing out waterborne imports, the terminal needs to redefine its future. Today in the first of two blogs on LOOP we look at how the port operates today.
Thursday, 12/20/2012
Category:
Natural Gas Liquids
The values of the crude-to-gas ratio and the Frac spread have fallen fifty percent from their highs this year. Frac spreads represent the difference between the value of natural gas and natural gas liquids (NGLs), which are heavily influenced by the price of crude. Thus the Frac spread is in effect tied to the gas-to crude ratio. Current forward curves suggest that the crude-to-gas ratio will fall another 50 percent over the next few years. Today we ask whether the Frac spread will continue it’s fall next year and beyond.
