It burns just like propane, smells just like propane, and gets transported just like propane. But instead of being extracted at gas processing plants or refineries, it is produced from renewable feedstocks like used cooking oil or soybean oil, and so it has a low carbon intensity. That means it is eligible for low-carbon fuel credits, like those available in California. Renewable propane has been around for years but has never gotten much traction due to a combination of technical and economic issues. Now that is changing, with a deal announced last week by a major propane retailer and a biorefiner showing the way to a win-win-win for the producer, the marketer, and the environment. In today’s RBN blog, we begin a deep-dive series on where renewable propane comes from, why it has been a challenge to get the market going, and what changes may create significant opportunities across the renewable propane value chain.
Daily Energy Blog
The illusion of a smooth energy transition was swept away in 2021, with the drive toward decarbonization running headlong into the reality of energy markets. It is now clear that the transition and its effects are permeating all aspects of supply and demand, from the chaos in European natural gas, to producer capital restraint in the oil patch, to the rising impact of renewable fuels and, of course, the escalating roadblocks to pipeline construction. Gone are the days when traditional energy markets operated independently of the energy transition. Today the markets for crude oil, natural gas, and NGLs are inextricably tied to renewables, decarbonization, and sustainability. It’s simply impossible to understand energy market behavior without having a solid grasp of how these factors are tied together. That is what School of Energy Spring 2022 is all about! In today’s RBN blog — a blatant advertorial — we’ll highlight how our upcoming conference integrates existing market dynamics with prospects for the energy transition.
There is a lot we don’t know about how the energy transition might play out over the next couple of decades. One thing that we can say with a high degree of certainty, however, is that the big run-up in wind and solar generating capacity in recent years is just the beginning — a lot more wind farms and solar arrays will be developed through the 2020s and ’30s, as will many, many energy-storage batteries. Another good bet is that as the portfolios of wind and solar developers grow, they will need help in maintaining, upgrading, and replacing their assets from a newly emerging type of company: the clean energy services provider. In today’s RBN blog, we discuss wind and solar’s role in the energy transition and the types of services these new companies might provide.
The gradual increase in Western Canada’s natural gas production in recent years has been powered by the highly prolific Montney formation, a vast unconventional resource that straddles the Alberta/British Columbia border. With Western Canadian gas price benchmarks at multi-year highs and producers enjoying their best financial position in ages, it would seem logical to expect more gas production growth from the Montney in the future. However, a recent ruling by the BC Supreme Court could negatively affect the pace of well developments and jeopardize future growth in the Montney formation. In today’s RBN blog, we consider this possibility.
Even as winter starts to wind down, global natural gas prices remain elevated as rising tensions between Russia and the Western world have destabilized European energy markets and pushed LNG, and U.S. LNG in particular, to center stage. From a markets perspective, the story of the past year has been high global gas prices — a strong incentive for LNG producers to push production facilities to operate at peak capacity and produce additional cargoes. The tight market has also spurred demand for new long-term sales and purchase agreements (SPAs), creating momentum for a potential new wave of LNG development. But while gas prices in Europe and Asia have been elevated all year, they have not been elevated evenly. The Asia-Europe price spread has swung dramatically from favoring Asia last spring and summer to favoring Europe this winter, and U.S. export destinations have swung with it. Last summer, almost no destination-flexible LNG produced in the U.S. was landing in Europe and now Europe is consuming U.S. LNG at record levels. In today’s RBN blog, we look at how global price spreads impact U.S. LNG export destinations and what the strength in European demand means for the future of LNG development.
In the early days of the Shale Revolution, merger-and-acquisition activity in the midstream sector was happening at a frenetic pace. That frenzy peaked with crude oil prices in 2014, then petered out over the next five years before hitting bottom in COVID-impacted 2020, when abysmal demand and commodity pricing hampered prospects for the production and transportation of oil, natural gas and NGLs. In those dark days, it seemed the only deals getting done were for bulk orders of hand sanitizer and toilet paper from Amazon. Now, with energy prices soaring and energy companies regaining some of their pre-pandemic luster, the pace of deal-making in the oil patch in 2022 looks poised to maintain the momentum that carried through the end of 2021. But buying or marketing midstream assets isn’t nearly as simple as ordering through your Amazon Prime account. Considerable effort is put into the strategy of selling and the diligence of purchasing and, for the uninitiated, the process can be daunting. In today’s RBN blog, we continue our series on midstream dealmaking with a look at what to expect in a sales process.
Multibillion-dollar mergers and acquisitions have attracted a lot of attention the past couple of years. Chevron buys Noble. ConocoPhillips acquires Concho. Cabot merges with Cimarex. Pioneer adds Parsley and DoublePoint. While it’s understandable that these mega-deals grab the spotlight, they tend to overshadow the many smaller-but-still-substantial agreements being announced at a rapid pace over the same period. Many of these less-than-$4-billion deals involve crude-oil-focused producers expanding their holdings in basins where they were already active, and many — no surprise — are happening in the Permian, although acreage in the Denver-Julesburg and the Eagle Ford are in play as well. In today’s RBN blog, we look at a few of the more interesting small and midsize acquisitions announced recently.
It’s been heard in many a pub: “Liquor may not be the answer, but it’s worth a shot.” You could make the same argument for hydrogen. While many question whether it will ever make economic sense to use hydrogen as a supplement to — or replacement for — natural gas on a large scale, others insist that hydrogen has a great future as a climate-friendly fuel, assuming it receives sufficient developmental support from government and ESG-minded industry. As it turns out, an early test of hydrogen’s potential is coming from the liquor industry itself, or more specifically, the maker of a renowned single-malt scotch on the Isle of Islay, off Scotland’s western coast. In today’s RBN blog, we discuss the distiller’s hydrogen production and combustion project and the broader plan by members of the Scotch Whisky Association and Scotland itself to achieve net-zero carbon emissions within a generation, largely through the expanded use of hydrogen.
Not so long ago, most folks in the energy industry hardly gave carbon dioxide (CO2) a thought. Sure, some CO2 was used for enhanced oil recovery (EOR) and in some production areas the natural gas coming out of the ground had to be treated to remove high levels of CO2. But otherwise, CO2 wasn’t on the industry’s radar. Now though, CO2 is a front-and-center concern not just for the energy industry but for society at large as the global economy tries to decarbonize. And while renewable energy like wind and solar will be part of that decades-long effort, so will the push to capture CO2 and permanently store it deep underground. Put simply, it’s time for producers, midstreamers, and refiners alike to gain a deeper understanding of carbon capture and sequestration, how it will affect them, and — ideally — how they can profit from it. In today’s RBN blog, we discuss highlights from our new Drill Down Report.
The illusion of a smooth energy transition was swept away in 2021, with the drive toward decarbonization running headlong into the reality of energy markets. It is now clear that the transition and its effects are permeating all aspects of supply and demand, from the chaos in European natural gas, to producer capital restraint in the oil patch, to the rising impact of renewable fuels and, of course, the escalating roadblocks to pipeline construction. Gone are the days when traditional energy markets operated independently of the energy transition. Today the markets for crude oil, natural gas, and NGLs are inextricably tied to renewables, decarbonization, and sustainability. It’s simply impossible to understand energy market behavior without having a solid grasp of how these factors are tied together. That is what School of Energy Spring 2022 is all about! In today’s RBN blog — a blatant advertorial — we’ll highlight how our upcoming conference integrates existing market dynamics with prospects for the energy transition.
The first wave of LNG projects has done more than just catapult the U.S. to the top tier of LNG exporters, it has reshaped markets, helped move LNG closer to being a true global commodity, and spurred changes in everything from ship sizes and routes to contract types and pricing formulas. Talk about having an impact! And, with new projects still coming online in the U.S. and final investment decisions expected on new terminals and expansions this year, the U.S. LNG industry’s effect on the global gas trade is sure to grow. In today’s RBN blog, we look at the practical impacts that have accompanied growing U.S. production with an emphasis on logistics and, perhaps most important, the changes to LNG pricing in Asia.
Oil sands, the workhorse of Alberta’s — and Canada’s — crude oil production growth, achieved a record production year in 2021. A steady turnaround in crude oil prices, improved market access, and the tried-and-true resilience of oil sands producers combined to drive the increase in output. With 2022 barely out of the starting blocks, the oil sands players have provided production guidance for this year that, if fulfilled, could set the oil sands on track for another year of record output. In today’s RBN blog, we consider the latest production guidance estimates and what these could mean for the availability of oil pipeline export capacity from Western Canada.
It’s expected to be a big year for U.S. LNG. The U.S. was the top monthly exporter of LNG for the first time in December 2021 and is expected to hold onto that crown as new capacity at Sabine Pass and a new terminal, Calcasieu Pass, begin service this year. The chaos of European gas markets has made U.S. exports particularly attractive, especially after a year or more of high global demand, sky-high global gas prices, and an undersupplied market that has left offtakers clamoring for more. Last year saw those offtakers come back to the negotiating table for long-term sales and purchase agreements (SPAs) from new U.S. LNG capacity and several projects now have a realistic path to a positive final investment decision (FID) in 2022. In today’s RBN blog we begin a series taking a closer look at some of the projects most likely to reach FID this year, starting with arguably the most likely next contender, Venture Global’s Plaquemines LNG.
Even through the market turmoil of the past couple of years, the Permian has been a production powerhouse, lately churning out an average of nearly 5 MMb/d of crude oil and 14 Bcf/d of natural gas. But is the Permian on shaky ground? Well, sort of. Distinct areas within both the Midland and Delaware basins in West Texas have experienced an increasing number of higher-magnitude earthquakes that have been linked to the saltwater disposal (SWD) wells that E&Ps use to get rid of the massive volumes of “produced water” their oil and gas operations generate. As a result, regulators have been ordering some of these disposal wells to be shut down and directing producers and midstreamers to develop “seismic response action plans” aimed at reducing the frequency and severity of quakes. In today’s RBN blog, we look at what has been happening on the earthquake front in West Texas and how E&Ps can deal with it.
The Internal Revenue Code’s tax credit for carbon oxide sequestration, better known as 45Q, is fortunate to enjoy something very rare in Washington, DC, these days — generally bipartisan support. A host of changes aimed at bolstering the tax credit were included in the House-approved version of the Democrats’ central piece of legislation, the Build Back Better (BBB) Act, but it appears to have no way forward in the Senate — it was declared “dead” Tuesday by West Virginia Senator Joe Manchin, a must-have vote — which means it will likely be split into separate pieces, further complicating its path to passage. Several proposed changes to the 45Q tax credit have already been included in separate legislation, so they could still become a reality. In today’s RBN blog, we’ll look at some potential changes to the tax credit as well as measures that might restrict its use.
