Daily Energy Post Blog Articles

The collapse in crude oil prices has sent shock waves throughout the global energy industry and Canada has been no exception. Sorting through all the impacts will take time, but what’s clear is that any earlier optimism surrounding supply growth in Canada has evaporated, including for propane supply to feed the new propane export terminals on British Columbia’s coastline. Edmonton propane prices fell 58% since the start of March to as low as 10.25 cents per gallon in U.S. dollars on March 23 — the lowest level since April 2016 — and settled yesterday at 13.13 cents per gallon, according to data from our friends at OPIS. A dampened supply outlook means future export expansion plans also are being reconsidered. Today, we explore what the sharp decline in propane prices could mean for the region’s supplies and future propane exports, including from Pembina Pipeline’s nearly completed export terminal in Prince Rupert, BC.

It’s almost Spring 2020 and energy markets are making another turn. Prices have been clobbered by a combination of low, weather-related demand and COVID-19. Tight capital markets have the E&P sector hunkered down and the pace of production growth is slowing. But at the same time, new pipelines out of the Permian and Bakken are under construction; some are already ramping up flows. Long-delayed LNG terminals and NGL-consuming petrochemical plants are coming online. Essentially all growth in crude and gas — plus most incremental NGL production — is being exported to global markets, and those markets are pushing back. All this has huge implications for commodity flows, infrastructure utilization and price relationships for oil, natural gas and NGLs. Which means that it’s time for RBN’s School of Energy, with all of our curriculum and models updated for the realities of today’s energy markets. Today — in a blatant advertorial — we’ll examine our upcoming School of Energy and explain why this time around we are concentrating even more than usual on NGLs.

Wouldn’t it be nice if everything you needed to keep up with the market was right there on your phone or tablet? And it would be even handier if the data and stories organized themselves just for you, around topics you care about the most. Such a technology would address a formidable challenge we all face: keeping up with the torrent of market information coming at us from trading platforms, online services, trade publications, you name it. It would pull everything you needed into a single database and then organize information on the fly around whatever topic matters most to you at a point in time. And it would be able to reorganize that information on demand as market data ebbs and flows. Over the past few months, we’ve designed an app that tackles this challenge head-on. Today we are introducing the concept of ClusterX, explaining how it works, and giving you the opportunity to help us roll out our new technology to the RBN blogosphere. Warning: this is a blatant advertorial for our new energy market analytics app.

For a few years now, the Shale Revolution has been opening up development opportunities hardly anyone would have thought possible in the Pre-Shale Era. For example, new crude oil, natural gas and NGL pipelines from the Permian to the Gulf Coast, lots of new fractionators and steam crackers, as well as export terminals for crude, LNG, LPG, ethane and, most recently, ethylene. And here’s another. Thanks to the combination of NGL production growth and new ethylene supply — plus increasing demand for alkylate, an octane-boosting gasoline blendstock — the developer of a novel ethylene-to-alkylate project along the Houston Ship Channel has reached a Final Investment Decision (FID). Today, we discuss how the FID is driven by both supply-side and demand-side trends in the NGL and fuels markets.

Much as production growth in the Permian required the development of new pipeline capacity to take away crude oil, natural gas and NGLs, increasing activity in the Williston Basin has spurred the need for incremental capacity to move all three of the energy commodities out of western North Dakota and eastern Montana. For NGLs, the recent start-up of ONEOK’s Elk Creek Pipeline has been the answer to producers’ prayers — not just in the Williston Basin (home of the Bakken formation), but also in the Rockies’ Powder River and the Denver-Julesburg (D-J) basins, through which the new, 240-Mb/d pipeline passes on its way to Bushton, KS. Elk Creek’s timing couldn’t have been better: it came online just as a number of new gas processing plants entered commercial service in the Williston Basin, and just in advance of possible Btu restrictions on the all-important Northern Border gas pipeline that may force cutbacks in ethane rejection. Today, we explain why the Elk Creek NGL Pipeline helps resolve a number of challenges Bakken producers have been facing.

Cold weather and spiking demand from Midwest and Great Plains farmers trying to dry their late-maturing, soggy crops have sent the PADD 2 propane market into a tizzy. Supply is not a major issue — propane inventory levels in the region are only a little below average, and stocks are plentiful along the Gulf Coast in PADD 3 — but distributing propane by rail and truck for crop-drying use has been a bigger-than-normal problem. As a result, farmers are scrambling to get more of the fuel, and propane prices in the U.S. heartland have been skyrocketing. Worse yet, Canada may not be able to come to the rescue as it has in the past, because its propane exports to Asia are up and its inventories are down. Today, we review recent developments on the fuel front in the nation’s breadbasket.

U.S. production and exports of propane have soared through the 2010s, and an increasing share of the propane loaded onto gas carriers at U.S. Gulf Coast terminals is headed to the Far East. The numbers are staggering. So far in 2019, 57% of propane produced from U.S. gas processing plants and refineries has been sent overseas, with about half of that total moving to Asian markets. With exports to Asia now such an integral piece of the propane supply/demand balance, the price of U.S. propane during most of the year is influenced more by the markets in Japan, South Korea and China than it is by demand in Iowa, Michigan and Pennsylvania. The challenge for U.S. propane marketers, producers and exporters is that, to the uninitiated, the Asia propane market is quite convoluted, being dominated by obscure market mechanisms known as FEI and Ginga. Today, we continue our series on international LPG trading with an explanation of how these mechanisms work together to establish propane prices in Asia and, by extension, the Gulf Coast.