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.

The doubling of crude oil production in the Denver-Julesburg Basin over the past 18 months spurred a rapid build-out of crude gathering systems and other infrastructure. Unlike the sprawling Permian Basin, with its numerous centers of drilling and production activity in parts of West Texas and southeastern New Mexico, the vast majority of the D-J Basin’s incremental crude output has come from Weld County, CO. Understandably, Weld County also is where most of the D-J’s crude gathering systems are located, and where most of the gathering system expansions are being planned and built. Today, we continue a series on existing and planned pipeline networks to move D-J crude from the lease to regional hubs and takeaway pipes.

With oil and gas prices drifting lower and markets continuing to pummel exploration and production companies, shareholders and analysts approached the third-quarter 2019 earnings season with the sense of impending doom akin to awaiting the results of an IRS audit. There was a lot of talk that the Shale Revolution was fizzling out and that the industry was approaching yet another financial Armageddon, like the 2014-15 oil price crash crisis. But the results belied the worst fears: while lower commodity prices did reduce profits and cash flows, E&Ps as a group remained solidly profitable in the third quarter, with 40 of the 47 companies we track ending up in the black. The reductions in operating income and cash flows were generally in line with lower realizations from oil and gas sales, although lower commodity prices did trigger some write-downs of properties that could no longer be profitably developed. Once again, E&Ps held the line on costs, continuing the financial discipline that fueled the industry’s recovery after the mid-decade price crash. Although producers generally cut back expenditures in line with lower cash flows, increases in drilling efficiency allowed production to keep growing. Today, we examine the financial health of the 47 E&Ps we track in this analysis and the ways they are navigating the price downturn.

As new crude oil pipeline capacity to the Gulf Coast comes online, a growing disconnect is developing between the surplus crude volumes available for export and the actual export capacity at coastal terminals, particularly projects that would accommodate the more economical and efficient Very Large Crude Carriers (VLCC). This is especially true in the Beaumont-Port Arthur, TX, area, where the relatively shallow depth of the Sabine Neches Waterway limits vessels to Aframax-class ships or partially loaded Suezmax tankers. If planned pipeline expansions into the BPA region over the next two years are completed, over 1 MMb/d of additional crude exports would need to leave BPA terminals to balance the market. Today, we look at current and future export capacity out of BPA.

Anything but normal might be the best way to characterize today’s market for normal butane. Butane production at gas processing plants and fractionators is at or near an all-time high. Butane consumption by steam crackers is maxed out, and so were butane exports until new dock capacity came online this fall. Butane inventories? They’ve risen to record levels too, and this summer, butane prices fell to their lowest mark in more than a decade. Now, with winter-gasoline blending season in high gear and new room for export growth, butane prices at Mont Belvieu are up more than 35% from where they stood a month and a half ago. What does all this mean for the butane market this winter? Today, we discuss recent trends in normal butane production, consumption, exports and stocks.

They are unsung heroes, the guys and gals who get in early, stay late, and are usually working odd hours on the weekends. They resolve issues before they arise, solve complex problems when they do pop up, and are always working the phones to get the next hot piece of intel. No, we’re not talking about the new cast from Season 2 of “Jack Ryan,” and no, it’s not the kids from “Stranger Things.” The keyboard warriors we’re referring to are crude oil schedulers. They’re at the forefront of the daily logistics taking place at truck injection points, gathering systems, and takeaway pipelines from Western Canada down to the Gulf Coast (and around the rest of the world as well). As more and more new pipelines get built out in places like West Texas, it’s important to revisit the basics of how crude oil moves and the role that crude schedulers play. Today, we bring it back to the roots of crude oil operations and shine some light on an underappreciated group of crude oil operators.

Limited natural gas export options and persistently weak gas prices are not new phenomena in Western Canada. But market conditions in the past couple of years have become particularly untenable. Western Canadian Sedimentary Basin (WCSB) gas supply has ratcheted higher and shows signs of further growth, even as its share of export markets has been shrinking with the rise of U.S. shale gas. In-region oversupply conditions have worsened, creating transportation constraints further and further upstream in the WCSB, and prices at the regional benchmark AECO hub have seen historical lows as a result. To deal with this, and perhaps provide a long-term solution to weak natural gas prices, pipeline egress will have to expand again after a decade of decline and stagnation. New takeaway capacity is now starting to be developed. The question is, will it be enough? Today, we discuss highlights from our new Drill Down Report, which assesses the expanding gas pipeline options out of Western Canada, including when, where and how much takeaway capacity will be developed.