RBN Energy

Passage of the Inflation Reduction Act (IRA) in August 2022 was intended to unleash a wave of clean-energy initiatives, from hydrogen and renewable fuels to electric vehicles and large-scale carbon-capture projects, all part of the Biden administration’s plans to reduce carbon dioxide (CO2) emissions and move the U.S. closer to a net-zero economy. But while billions in federal financing and tax credits have helped move many projects forward, they can only advance as fast as permitting, regulations and economic reality will allow. In today’s RBN blog, we look at the surge in proposed carbon-capture projects since passage of the IRA, where they are in the review process, and how the pace of permitting at the federal level compares with the states that have primacy over their own sequestration wells. 

Analyst Insights

Analyst Insights are unique perspectives provided by RBN analysts about energy markets developments. The Insights may cover a wide range of information, such as industry trends, fundamentals, competitive landscape, or other market rumblings. These Insights are designed to be bite-size but punchy analysis so that readers can stay abreast of the most important market changes.

By Kristen Holmquist - Thursday, 6/20/2024 (3:00 pm)
Report Highlight: U.S. Propane Billboard

The EIA reported total U.S. propane/propylene inventories built by 1.6 MMbbl for the week ended June 14, well below industry expectations of 2.26 MMbbl and the average for the past five years. Storage is 8% lower than the same time last year.

By Kristen Hays - Thursday, 6/20/2024 (1:15 pm)

A federal appeals court this week ruled that a dispute with Michigan's attorney general regarding its Line 5 crude and NGL pipeline be handled in state court.

Recently Published Reports

Report Title Published
LNG Voyager LNG Voyager Weekly - June 18, 2024 3 days 3 hours ago
TradeView Daily Data TradeView Daily Data - June 17, 2024 3 days 7 hours ago
NATGAS Billboard NATGAS Billboard - June 17, 2024 3 days 14 hours ago
NATGAS Permian NATGAS Permian - June 17, 2024 3 days 16 hours ago
Chart Toppers Chart Toppers - June 17, 2024 3 days 17 hours ago

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Daily Energy Blog

Category:
Crude Oil

Crude oil output in the Permian Basin is now averaging 6.3 MMb/d, up about 400 Mb/d from year-ago levels and 800 Mb/d from April 2022. The gains — and related increases in associated gas — have spurred a new round of concerns about pipeline exit capacity, complicating drillers’ hopes to boost crude production. In today’s RBN blog, we will discuss the takeaway capacity issue and what it means for producers and pipeline operators, including those planning offshore crude export terminals. 

Category:
Natural Gas

The U.S. may be in a monthslong pause in approving new LNG exports but that doesn’t change the fact that U.S. LNG export capacity will nearly double over the next four years, that most of the new liquefaction plants are being built along the Texas coast, and that their primary source of natural gas will be the Permian Basin. That helps to explain why three big midstream players — WhiteWater/I Squared, MPLX and Enbridge — recently formed a joint venture (JV) to develop, build, own and operate gas pipeline and storage assets that link the Permian to existing and planned LNG export terminals. In today’s RBN blog, we examine the new JV and discuss the ongoing development of midstream networks for crude oil, natural gas and NGLs. 

Category:
Refined Fuels

The Biden administration recently announced a very ambitious — to say the least — rule on tailpipe emissions. But while the rule’s legal and political standing might be a bit uncertain — it’s seen by many as a de facto ban on conventionally fueled cars and trucks and is likely to face several court challenges — doubts also remain about whether it matches up with the realities of today’s energy world. In today’s RBN blog, we look at the new rule, what it would mean for U.S. consumers and automakers, and how it conflicts with the views of RBN’s Refined Fuels Analytics (RFA) practice on the future of global oil and refined products demand and the rate of electric vehicle (EV) adoption. 

Category:
Refined Fuels

The Environmental Protection Agency (EPA) has approved a request by governors from eight Corn Belt states to remove a summertime waiver for Reid Vapor Pressure (RVP) included in the Clean Air Act (CAA) for E10 gasoline, a 90/10 blend of petroleum-derived gasoline blendstock and ethanol. The motive for the governors’ request was a desire to increase sales of E15 gasoline and, by extension, boost ethanol/corn demand by putting it on the same summertime footing as E10. In granting the approval, the EPA conceded that the distribution system wasn’t ready for the change. In today’s RBN blog, we look at the decision and the impact it will have on refiners, retailers and drivers, and how it is likely to work against the Biden administration’s plans to keep a lid on gasoline prices. 

Category:
Crude Oil

In the race to build the next deepwater crude oil export terminal along the U.S. Gulf Coast, there’s a lot of competition but one project now has a clear advantage: Enterprise Product Partners’ planned Sea Port Oil Terminal (SPOT), which has made the most progress in moving through the regulatory morass and announced that it had received its deepwater port license on April 9. In today’s RBN blog, we provide an update on SPOT’s progress and look at some of its inherent advantages, including a potentially shorter time to market and extensive pipeline connectivity. 

Category:
Financial

Growth for growth’s sake. In the early years of the Shale Revolution, that’s what it was all about. Backed by billions of dollars in Wall Street borrowings, E&Ps plowed vast piles of cash into increasing production. It was the era of “Drill baby drill!” And we all know what happened next. Rabid production growth contributed to oversupply and crude oil prices crashed. But resilient E&Ps clawed their way back by adopting what we now know as capital discipline, initially in fits and starts. Then, after the COVID price meltdown, they went all-in, elevating free cash flow generation to Job #1 and returning a significant portion of cash flow to shareholders. It worked! Financial markets started to think of E&Ps more as yield vehicles than growth plays. But it is in the DNA of oil and gas producers to grow. And now that U.S. crude prices are above $85/bbl, could we see a backslide toward organic growth — a 2024 rendition of “Drill baby drill”? In today’s RBN blog, we’ll explore the historical context of E&Ps’ transition to capital discipline and what it tells us about what’s coming next. 

Category:
Crude Oil

The deepwater crude oil export projects under development along the U.S. Gulf Coast offer a number of potential benefits to shippers and customers alike. These include the ability to fully load a Very Large Crude Carrier (VLCC) and the economies of scale that come with that, the elimination of reverse lightering and the corresponding decrease in emissions, and freed-up access on congested ship channels for other exports such as NGLs, refined products and clean ammonia. So, given all the potential upside, why hasn’t anyone fully committed to building one? In today’s RBN blog, we focus on the obstacles faced by deepwater export facilities and where each of the projects under development is in the permitting process. 

Category:
Natural Gas

LNG commerce is composed of two primary models. One is the traditional point-to-point model, on which the industry was founded and still accounts for more than 60% of LNG trade. More recently, the portfolio model has emerged, pursued by upstream oil and gas majors, that would allow them to monetize their gas reserves by converting them to LNG and shipping the product worldwide in vessels under their control — an attractive strategy that also would allow them to increase their exposure in the LNG market to take advantage of international arbitrage opportunities. As such, they are always long in LNG and in the ships required to move it. However, the portfolio model is being infiltrated by a buyer community looking to become short-side portfolio players and increasingly committing to long-term offtake agreements or FOB sales, then shipping LNG not only to meet their domestic market needs but to take advantage of regional pricing differentials. In today’s RBN blog, we look at the rise of the short-side portfolio player model and ask who might prevail in a potential clash of titans over market share and dominance. 

Category:
Financial

U.S. E&Ps have just concluded discussions of their Q4 and full-year 2023 results and, as usual, the view of analysts and investors can be summed up by one question: What have you done for me lately? But while the collective results of the 44 producers we track were off from the previous quarter and a record 2022, there’s a lot to be said for how well they held up through a period of unusually low natural gas prices. In fact, if you take a step or two back for a longer-term perspective you’d see a strong historical performance that suggests E&Ps really have learned how to do well through commodity price ups and downs. In today’s RBN blog, we analyze the 2023 results of a representative group of major U.S. producers and look ahead to how 2024 may shake out. 

Category:
Crude Oil

The Uinta Basin in northeastern Utah, which may be the quirkiest production area in the Lower 48, is firing on all cylinders. Production of the basin’s unique waxy crude is at an all-time high, the natural gas takeaway constraints that had threatened to limit growth are being resolved, and demand for waxy crude is on the rise. In today’s RBN blog, we’ll provide an update on the Uinta, where the crude looks and feels like shoe polish and is trucked and railed — not piped — to market. 

Category:
Crude Oil

The Energy Information Administration (EIA) recently raised a few eyebrows across the energy industry with a report that producers in three key shale states — including Texas, the nation’s #1 oil producer — seem to be extracting larger amounts of “heavier” crude oil. Of course, the oil is only heavier relative to the light and superlight grades that have been produced in copious amounts since the dawn of the Shale Revolution. But these denser, lower-API volumes have recently helped drive growth in total crude output. In today’s RBN blog, we unpack what the EIA discussed in its writeup, explore some of the possible drivers behind the apparently heavier oil production, and discuss what it might mean for the domestic market. 

Category:
Natural Gas Liquids

Normal butane is an important gasoline blendstock, with a great combination of high octane and relatively low cost. It also has a high Reid vapor pressure, or RVP, which is a good news/bad news kind of thing because while regulators allow higher-RVP gasoline — that is, gasoline with higher levels of butane — to be sold during the colder months of the year, they forbid its sale during the warmer months, thereby forcing butane levels in gasoline to be kept to a minimum. As we discuss in today’s RBN blog, air-quality regulations and seasonal shifts in butane blending may add complexity to gasoline production and marketing, but they also create opportunities to increase gasoline supply and earn substantially larger profits through much of the year. 

Category:
Natural Gas

Natural gas prices at the Waha Hub in West Texas have been below zero for going on two weeks — that’s outright negative cash prices, not basis, which means Permian producers are literally paying to have their gas taken away. Ample supply along with weak demand have prompted an early start to the injection season this year and are putting downward pressure on U.S. gas prices more broadly. But why all the craziness now? One of the best ways to get a handle on the Permian gas-market meshugah is to examine gas pipeline flows within the basin and without, which, as it turns out, is the focus of our upcoming School of Energy Master Class. Today's RBN blog is a blatant advertorial for that event where we’ll be discussing gas-flow analysis, pipeline modeling and how they help explain why Waha gas prices have gone sub-zero. 

Category:
Natural Gas

It’s been a devastating few weeks for the natural gas market. Sure, Shale Era abundance was supposed to keep gas prices from skyrocketing — and it generally has. But seriously? Henry Hub gas sinking below $2/MMBtu — and staying there, in the depths of the winter heating season? Prices have stabilized a little as a few E&Ps announced cutbacks in capex and gas-focused drilling, but gas-storage levels are abnormally high, coal-plant retirements have trimmed opportunities for coal-to-gas switching, and any significant gains in LNG exports aren’t going to happen until this time next year. With all that, you’ve gotta ask — as we do in today’s RBN blog — how low could natural gas prices go? 

Category:
Natural Gas

The uncertainties around solar power are well understood — when the sun doesn’t shine as much as expected, power grids that rely heavily on that generation must turn elsewhere to meet consumer demand. And while a shortfall in solar generation can be challenging to navigate, the difference between actual and forecast levels is typically only a few percentage points and power grids are usually ready and able to make up any difference. But what happens when the sun is largely obscured by the moon for several hours across a wide swath of the country? In today’s RBN blog, we’ll discuss the impact of the October 14 partial eclipse, preview the path of the April 8 total eclipse, and outline the steps being taken to ensure that power grids are ready for it.