Big changes are coming to the new epicenter of the global LNG market: Texas and Louisiana. On top of the existing 12.5 Bcf/d of LNG export capacity in the two states, another 11+ Bcf/d of additional capacity is planned by 2028. The good news is that the two major supply basins that will feed this LNG demand — the Permian and the Haynesville — will be growing, but unfortunately not quite as fast as LNG exports beyond 2024. And there’s another complication, namely that the two basins are hundreds of miles from the coastal LNG terminals, meaning that we’ll need to see lots of incremental pipeline capacity developed to move gas to the water.
Daily Energy Blog
Friday, 1/26/2024
Category:
Natural Gas
Thursday, 1/25/2024
Category:
Financial
A lot of energy-industry M&A activity lately has been focused on the acquiring company gaining scale in a shale play or region where it’s already very active, usually the Permian. The latest multibillion-dollar deal in the energy space is different: Sunoco LP (stock ticker symbol SUN), which is primarily involved in fuel distribution east of the Mississippi and in Texas, is buying NuStar Energy (ticker NS), a midstream company with a mix of pipelines (crude oil, products and ammonia) and terminals, most of them within the U.S.’s midsection. As we discuss in today’s RBN blog, the combined company will have a massive footprint, with all kinds of opportunities for synergies and growth.
Welcome to the Future - With Tier 3 Costs Sky-High, U.S. Refiners Consider Investments, Alternatives
Wednesday, 1/24/2024
Category:
Refined Fuels
When the price of the Tier 3 sulfur credit hit a new high of $3,600 in October 2023, the tradable sulfur credit for gasoline moved from the background to center stage in refining circles. And while credit prices have retreated slightly to about $3,400, they still represent a nearly 10-fold increase over two years and translate to a Tier 3 compliance cost of almost $3/bbl, raising concerns from refiners in a highly competitive market. In today’s RBN blog, we look at how refiners are adapting and the investments that could reduce the cost of compliance.
Tuesday, 1/23/2024
Category:
Renewables
Discussions and debates around the carbon-capture industry have been everywhere in recent years, from the federal incentives designed to spur its growth and the role it might play in decarbonization efforts to the technical challenges and economic headwinds that add uncertainty to its long-term outlook. And while all of those are important topics worthy of future conversation, none of those potential projects are going to happen without somewhere to put all that carbon dioxide (CO2). The wells used for permanent CO2 sequestration are largely approved at the federal level by the Environmental Protection Agency (EPA) but a few states have gained control — aka “primacy” — over the permitting process. In today’s RBN blog, we explain what it means to have primacy, why it has become an increasingly important goal in recent years, and the potential benefits that come with it.
Monday, 1/22/2024
Category:
Crude Oil
As we step into the new year with record-high U.S. crude oil production and export volumes as strong as ever, there’s a race underway among four offshore export projects that aim to tap into those rising supplies and — with their ability to fully load Very Large Crude Carriers (VLCCs) without any reverse lightering — push export volumes to new heights. While Enterprise Products Partners’ Sea Port Oil Terminal (SPOT) might be leading the development race so far, Energy Transfer’s (ET) Blue Marlin Offshore Port has momentum also. In today’s RBN blog, we update Blue Marlin’s progress, look at the critical role anchor shippers play in project development, and show how growing offshore exports could impact existing onshore terminals.
Friday, 1/19/2024
Category:
Natural Gas
With all the talk about U.S. LNG exports and plans for more LNG export capacity, it can be easy to forget that more than 6 Bcf/d of U.S. natural gas — mostly from the Permian and the Eagle Ford — is being piped to Mexico. That’s more than 3X the volumes that were being piped south of the border 10 years ago, a tripling made possible by the buildout of new pipelines from the Agua Dulce and Waha hubs to the Rio Grande and, from there, new pipes within Mexico. And where is all that gas headed? Mostly to new gas-fired power plants and industrial facilities — a handful of new LNG export terminals being planned on that side of the border will only add to the demand. In today’s RBN blog, we discuss the ever-increasing flows of gas to Mexico and the tens of billions of dollars of new infrastructure making it all possible.
Thursday, 1/18/2024
Category:
Renewables
The long-delayed rules around the federal government’s Hydrogen Production Tax Credit (PTC), also known as 45V, have been the subject of heated debate (and lobbying) since passage of the Inflation Reduction Act (IRA) in August 2022. While some industry groups argued for looser guidelines around the PTC that would allow the low-carbon hydrogen industry to grow quickly, others called for a stricter set of rules from the start, arguing that an approach that was too lax would lead to an increase in greenhouse gas (GHG) emissions. In today’s RBN blog, we’ll look at how those newly published rules rely on the so-called “three pillars” of clean hydrogen, how they prioritize production of green hydrogen at the expense of its blue and pink varieties, and explain the rules around temporal matching and why it might be hard to hit the administration’s 2028 target date for implementation.
Wednesday, 1/17/2024
Category:
Natural Gas Liquids
In North Dakota’s Bakken production region, crude oil is king. The light, sweet crude produced there is attractive to buyers in the Midwest and Gulf Coast and is the primary driver of producer economics in the basin. And when the crude is produced, it comes along with a healthy dose of NGL-rich associated natural gas. But while those are valuable products in their own right, providing economic uplift when sold, it’s a double-edged sword. Natural gas and NGL volumes are increasing rapidly and will soon test the limits of takeaway capacity, with the potential to disrupt not only those commodities but also the crude production with which they’re associated. In today’s RBN blog, we discuss three potential limitations faced by Bakken producers: natural gas pipeline capacity, NGL pipeline capacity and, at the fulcrum of those two, the Btu heat content of the gas being piped out of the basin.
Tuesday, 1/16/2024
Category:
Crude Oil
The impending startup of Canada’s government-owned Trans Mountain Expansion Project, better known as TMX, will add exit capacity for Western Canadian crude oil production and is expected to redirect at least some of Alberta’s output toward California and Asia and away from its traditional North American markets, including complex refiners in Eastern Canada and the U.S. Midwest and Gulf Coast. Among them, Gulf Coast refiners, who have become the “price-setting” consumers of heavy Western Canadian crude, are expected to be the hardest hit. In today’s RBN blog, we examine the Gulf of Mexico production and imported grades that might become stand-ins for the “lost” Canadian barrels.
Friday, 1/12/2024
Category:
Financial
In a deal the energy industry had been whispering about for months, Chesapeake Energy and Southwestern Energy will combine to form what will be the largest natural gas producer in the U.S., with 7.3 Bcf/d of production in the Marcellus/Utica and the Haynesville and ready access to the Northeast and the LNG export market — assuming the merger passes muster with federal regulators. In today’s RBN blog, we discuss the merger and why it makes sense for both E&Ps.
Monday, 1/15/2024
Category:
Government & Regulatory
The U.S. Supreme Court will hear oral arguments January 17 in a pair of cases that are poised to capsize the so-called Chevron Deference, a 40-year-old legal doctrine that provides a key foundation for modern administrative law. It’s a big deal – big enough that we’re willing to wade into a little bit of legalese to help make sense of it. So strap in because in today’s RBN blog, we’ll explain what the Chevron Deference is, why it’s worth knowing about, how it applies to two cases that could alter its application, and how a ruling that limits or eliminates the doctrine’s usage and application could transform energy industry regulation.
Thursday, 1/11/2024
Category:
Natural Gas
U.S. natural gas production continues to increase, with more growth expected at least through the middle of this decade to feed new LNG export capacity coming online along the Gulf Coast. Production growth will require new infrastructure, but long-distance transmission lines have become increasingly difficult to build due to entrenched environmental opposition. Meanwhile, gathering pipes have grown in size and length, blurring the lines between gathering and transmission. In today’s RBN blog, we’ll discuss what separates gathering systems from transmission pipelines, why those differences matter, and how those systems are continuing to evolve.
Wednesday, 1/10/2024
Category:
Financial
Permian this and Permian that. For several years now, acreage and production in that sprawling, crude-oil-focused shale play in West Texas and southeastern New Mexico have been at the center of so much M&A activity. And the deals keep coming! Just last week, APA Corp. — the international E&P formerly known as Apache — announced that it will be acquiring Callon Petroleum, which in recent years has become a Permian pure play with significant holdings in both the Delaware and Midland basins. In today’s RBN blog, we discuss the APA/Callon deal, the drivers behind it, and why the acquisition makes sense for both companies.
Tuesday, 1/09/2024
Category:
Financial
There’s been a lot of M&A activity the past couple of years among oil and gas producers — midstreamers too. That makes sense. Joining forces can provide all kinds of opportunities: for synergy, economies of scale, and expansion within (or into) key production areas, to name just a few. Well, energy-industry consolidation isn’t limited to E&Ps and midstream companies. Just recently, two major providers of contract compression services — critical to the gathering and processing of natural gas in the Permian and other plays — announced that they will be combining to form what they say will be the largest firm in that space. In today’s RBN blog, we’ll look at the gas compression services sector and the plan by Kodiak Gas Services to acquire CSI Compressco LP.
Monday, 1/08/2024
Category:
Natural Gas Liquids
The demand for ethane by Alberta’s petrochemical industry has experienced a slow expansion in the past 20 or so years. However, that demand is likely to increase sharply by the end of the decade now that Dow Chemical has sanctioned a major expansion at its operations in Fort Saskatchewan, AB, that will more than double the site’s ethane requirements. As we discuss in today’s RBN blog, this will call for an “all-hands-on-deck” approach to increasing Alberta’s access to ethane supplies from numerous sources.
