After years of waiting on the so-called “second wave” of North American LNG, 2022 could finally be the year that sees multiple LNG export projects reach a final investment decision (FID). Global gas fundamentals have been bullish for about a year, and prices hit record highs throughout the summer and fall. Offtakers around the world are clamoring and competing for LNG cargoes, anticipating a volatile and undersupplied winter. But with Russian piped exports to Europe expected to increase dramatically as the controversial Nord Stream 2 pipeline finally comes online, likely early next year, North American LNG is looking for ways to be more attractive to Asian offtakers. One option on the table for North America is to go west and export from the Pacific Coast, which cuts the voyage time to Asia in half. Exporting from the Pacific Coast is not without its challenges, however, including where and how to source the feedgas required for liquefaction. In today’s RBN blog, we continue our series looking at Pacific Coast LNG export developments, this time focusing on feedgas and infrastructure for the LNG projects in Mexico.
Daily Energy Blog
For all who thought an energy transition was going to be orderly, economic, or rational, the chaos of 2021 energy markets is a wake-up call. It’s not that the shift from fossil fuels to renewables is causing most of the market turmoil, but it is certainly magnifying the effects of a host of energy market glitches that, together with the mechanics of the transition, are wreaking havoc on the global economy. Which underscores the challenge of this generation: We must live, work, and produce hydrocarbons the way the world functions today, while at the same time preparing for — and investing in — a much-lower-carbon future. A future that a lot of folks believe means net-zero greenhouse gas (GHG) emissions and no hydrocarbons. That challenge is the underlying theme for RBN’s Fall 2021 School of Energy, to be held November 9-10. Not only have we restructured our agenda to include a half day covering the impact of hydrogen, CO2 sequestration, and renewable diesel, we’ve reworked and updated our core hydrocarbons market curriculum to examine how crude oil, natural gas, and NGL markets will evolve to accommodate what lies ahead. In today’s RBN blog — a blatant advertorial — we’ll consider these issues and highlight how our upcoming School of Energy integrates existing market dynamics with prospects for the energy transition.
If the ongoing global energy crunch is teaching us anything, it’s that decarbonizing the world’s economy may be even more difficult than many had figured. While a strong case can be made for reducing — or even slashing — greenhouse gas (GHG) emissions by shifting to low-carbon and no-carbon energy sources, the sheer magnitude of the undertaking means there are likely to be major setbacks and compromises along the way. Setbacks like having to turn to coal-fired generation this winter to help keep parts of the Northern Hemisphere warm and productive, and compromises like acknowledging that sometimes the wind doesn’t blow, the sun doesn’t shine, and utilities need to burn a lot more natural gas to make up the difference — assuming there’s enough gas around to burn, that is. One more takeaway from current events is that energy security in the form of being able to count on your counterparties is a pretty big deal. (We’re looking at you, Vladimir Putin.) With all that in mind, in today’s RBN blog, we examine the long-term outlook for energy and GHG emissions as the United Nations’ climate change conference in Glasgow, Scotland, looms on the horizon.
Billionaire Warren Buffett tried to buy it but later bowed out. Billionaire Carl Icahn thinks buying it is a dumb idea — and has launched a tender offer and proxy fight to stop it. The long and winding road leading Southwest Gas Holdings to its planned $1.975 billion acquisition of Questar Pipeline from Dominion Energy started more than a year ago and touches on a number of hot-button topics in today’s energy industry: the divestiture of natural gas assets, the ongoing energy transition, concerns about antitrust regulations, activist investors, and infrastructure. In today’s RBN blog, we look at the sale itself, the current state of natural gas production and pipelines in the Rocky Mountains, and how that gas fits into the nationwide picture.
For years, industry experts warned that the global LNG market was entering a period of extreme oversupply that would last until mid-decade. And up until late last year, that bearish scenario seemed to be materializing. Global gas prices had fallen as more LNG export capacity came online, and then COVID-19 decimated global markets and caused existing LNG terminals to shut-in production. But just as quickly as it collapsed, the market flipped. The world is now left scrambling to secure LNG/gas supply ahead of the heating season and global gas prices have hit record highs in recent weeks, signaling a turbulent winter ahead. Suffice it to say, utilities and governments have energy security and reliability on the mind, not just for prompt winter but for the longer term, and that pressure is unlikely to let up anytime soon. That’s brought previously commitment-wary LNG offtakers back to the negotiation table for new LNG export developments — cautiously and with a sharpened focus on de-risking long-term commitments amid heightened uncertainty. One way to do just that is to capitalize on the economic advantages of North America’s Pacific Coast projects. In today’s RBN blog, we continue our series looking at the state of LNG development on the North American Pacific Coast.
There are a number of reasons why certain U.S. refineries might want to include waxy crude oil from Utah’s Uinta Basin in their crude slates — the highly paraffinic oil has a lot of neat qualities. But waxy crude can be a hard sell, mostly because, like bacon fat, it needs to be kept warm to remain in a liquid, flowable state. As a result, the vast majority of the waxy crude produced is driven in insulated tanker trucks to refineries in nearby Salt Lake City. Uinta producers have been making progress of late, however, in sending regular shipments of waxy crude in coiled and insulated railcars to a couple of Gulf Coast refineries. Existing terminals would support incremental growth, and a proposed new railroad out of the basin would allow far larger volumes to be efficiently railed to market. In today’s RBN blog, we continue our look at the prospects for a most unusual type of crude oil.
For six months, European natural gas prices skyrocketed higher almost every day. The soaring prices made sense. Gas inventories in Europe were low following higher-than-normal demand last winter. Economies were recovering from COVID-19. Russia was curtailing gas deliveries. It all added up to a likely supply shortage during the winter of 2021-22. And the market did what markets do: anticipate. Even though the next winter season was months away, gas buyers went to work, stocking up on supplies like squirrels gathering nuts. The more prices increased, the more panic buying kicked in. By last Tuesday, October 5, the European TTF price was up more than 5X what it had been on May 1. Then, on Wednesday, a few comments from Vladimir Putin seemed to pop the bubble, and within a few days the Dutch TTF price was down 27%. Is everything OK now? Was the gas-price run-up all just speculative buying and short covering? Or is a supply crunch still on the horizon, and this is just the calm before the storm? In today’s RBN blog, we explore those questions.
Given everything that’s happened lately on the ESG front — with a lot more expected — it’s safe to say that while hydrocarbons will continue to play an important role in the global economy for the foreseeable future, the companies that produce, transport and process crude oil, natural gas and NGLs will need to work much harder to minimize and mitigate their impact on the environment. Traditional energy companies have been scrambling to respond to the full-court press by investors, lenders and others to rein in and offset their greenhouse gas (GHG) emissions. In addition to establishing goals for slashing their GHGs, and taking steps to tighten their upstream, midstream, and downstream operations, they’ve offered and delivered “carbon-neutral” shipments of LNG, oil and LPG to overseas buyers, using “nature-based” carbon credits to offset their life-cycle emissions. Now, as we discuss in today’s RBN blog, there’s a big push by U.S. gas distributors and other buyers to shift to gas that’s been produced, gathered, processed and transported as cleanly as humanly possible.
When most people think about alternative fuels in the transportation sector, they think electric vehicles (EVs): Teslas, Mustang Mach-E’s, F-150 Lightnings, and other zero-to-60 stunners. EVs have certainly jumped to the fore among low-carbon options, but other possibilities may prove to be even better. One is hydrogen-fueled vehicles, which while posing a number of economic and logistical challenges, could eliminate the range anxiety associated with EVs — assuming that a robust, nationwide network of hydrogen fueling stations can be developed. In today’s RBN blog, we discuss hydrogen’s potential as a transportation fuel, including its infrastructure-related challenges and how it qualifies for credits under California’s Low Carbon Fuel Standard.
Henry Hub has long been the center of the universe for the Lower 48 natural gas market, but what it represents has changed dramatically since its inception, particularly over the past decade. It has gone from being a benchmark pricing location for a vibrant producing region, to being situated in the fastest-growing demand region and a key hub for wheeling feedgas supply to the proliferating LNG export facilities in Louisiana — all with little change to its infrastructure. As this occurred, the gas price at Henry has gone from being among the lowest in the country to one of the most premium. Physical volumes exchanged at the hub, which have always been dwarfed by financial trades there (and still are), have climbed in recent years and are now at the highest levels since 2008. Moreover, the inflows are concentrated on just a couple of pipelines, and those key interconnects are at risk of becoming constrained. In today’s RBN blog, we provide an update on the shifting gas flows at Henry Hub.
The market dislocations of the past year and a half really took the wind out of the sails of many U.S. hydrocarbon plays. Not the Permian, of course. Sure, production there declined some in the spring of 2020, but has been on the rebound ever since — aside from a brief, Deep Freeze-related downward spike back in February, that is. But the recovery in many other leading production areas was short-lived. Production in the Bakken has stayed close to flat lately, and output in the Eagle Ford has been slipping. The same is true in SCOOP/STACK, which only a few years ago was hailed as maybe the next big thing. What happened? And is there hope for a comeback? In today’s RBN blog, we discuss the once-hot Oklahoma play and its prospects.
It wasn’t that long ago that Western Canada was awash in propane, sending the vast surplus for export by railcar to the U.S. That has changed in the past two years as direct exports to Asia opened up and Canada’s domestic demand for propane rose. With supplies becoming tighter, the combined effect with increasing demand spells trouble for higher exports to the U.S. this winter, a time when they are desperately needed. In today’s RBN blog, we explore the current Western Canadian propane market and what might be next in store.
Last week, panic over gas availability and energy reliability this winter sent international natural gas and LNG prices above $30/MMBtu for the first time. Asia’s Japan Korea Marker (JKM), Europe’s Dutch Title Transfer Facility (TTF) and the UK National Balancing Point (NBP) once again had multiple days in a row of all-time high settlements, as the undersupplied market struggles to find balance. The global shortage has also impacted the gas-rich U.S. market, which is linked to it through LNG exports. The U.S. markets are tight and might also face undersupply this winter, albeit, probably not to the point of triggering reliability issues that are already emerging abroad. If it did, the U.S. exports nearly 10 Bcf/d of LNG, which could be throttled back to free up additional supplies for domestic use. Nonetheless, Henry Hub prices climbed to nearly $6/MMBtu last week and hit post-2008 record highs. This is by no means the first-time various markets have faced considerable imbalance. In fact, last year at this time we were coming out of a period of widespread oversupply and record-low gas prices. But it’s certainly foreboding that it’s not even winter yet, and prices are skyrocketing to new heights. So the big question on everyone’s mind is how bad could this get? The answer of course is complicated and heavily dependent on weather. In today’s RBN blog, “To the Moon and Back – U.S., International Gas Markets Strap in for Wild Winter Ride,” Lindsay Schneider takes a look at how we got here, how LNG has intertwined the international energy markets more than ever, and what that means for the winter ahead.
You may not have noticed it, but in news that feels cosmically reflective of life on Earth recently, the moon began to wobble this year — a natural phenomenon that occurs every 18.6 years. While it won’t cause the sky to fall, it will influence our seas, with global tides suppressed in the near-term but amplified in the second half of the cycle. That’s got some watchers concerned about rising sea levels, but it also presents an interesting dynamic to one developing but often overlooked renewable energy source: our planet’s oceans. “Wave energy” proponents believe ocean-focused technologies can someday complement wind and solar, while also being more reliable. In today’s RBN blog, we examine what wave energy is and how it’s produced, the potential pros and cons compared with other renewables, and what type of projects are being developed.
With the UN’s Climate Change Conference (COP 26) in Glasgow just over a month away, it’s natural to reflect on the progress achieved since the Paris Agreement (signed at COP 21), which is approaching its sixth anniversary. In the past half decade, the world has taken tremendous strides toward decarbonization – not only in rhetoric, but in real and substantial investment. Green hydrogen and carbon capture are among the notable solutions many are pursuing to that end. But perhaps no green business has been in the spotlight as much recently as renewable diesel. Low-carbon fuel standards have spurred a lucrative renewable diesel market that refiners are lining up to access, with units being built and planned across North America. The nationwide buildout is being underwritten by the states that have enacted policies to induce low-carbon solutions, and while the Golden State is paramount among them, Californians are not alone. The largess being generated by those policies is so substantial that it will have an impact on and may incubate other low-carbon technologies that can be paired with renewable diesel to create even lower-carbon fuel sources and capture more of the credits that are ultimately driving the economics of the energy transition. In today’s RBN blog, we identify key manufacturing centers for low-carbon fuel supply growth, the at-times lengthy route the fuels may take to LCFS markets, and the economic incentive structure that justifies all those costs.
