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Friday, 5/26/2023
Monday, 5/29/2023
For the U.S. oil patch, exports are the lifeblood of today’s market. U.S. refineries are operating at more than 90% of their rated capacity and using as much domestically produced light-sweet shale oil as their sophisticated equipment will allow. That means that virtually all of the incremental U.S. unconventional light-sweet crude oil production will need to be piped to export terminals along the Gulf Coast, loaded onto tankers, and shipped to refineries overseas. In today’s RBN blog, we discuss what this undeniable link between crude oil exports and production growth means for U.S. E&Ps and midstream companies — and the future of the oil and gas industry.
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 Jeremy Meier - Friday, 5/26/2023 (3:00 pm)
May was a tough month for US oil and gas rig count, with producers ending the month with a fourth consecutive weekly decline (-44 vs April 28). Total US rig count was 711 for the week ending May 26, according to Baker Hughes. Rigs were added in the Permian (+1) and Eagle Ford (+1) this week, while the Anadarko (-5), Haynesville (-3), Gulf of Mexico (-1) and All Other Basins (-1) all posted declines. Total US rig count is down 42 in the last 90 days, and down 16 vs. this same week a year ago.
By Sheetal Nasta - Friday, 5/26/2023 (2:15 pm)
Report Highlight: NATGAS Billboard
Weaker supply-demand balances compared with last year have continued to weigh on the natural gas market in May. While domestic consumption and exports were up a combined 3.3 Bcf/d year-on-year, supply gains were even larger, up a net 4.7 Bcf/d year-on-year, according to daily supply-demand data from the RBN NATGAS Billboard report. That left the market ~1.4 Bcf/d longer supply this month to date vs. the same period last year.
Recently Published Reports
| Report | Title | Published |
|---|---|---|
| NATGAS Billboard | NATGAS Billboard - May 26, 2023 | 2 days 19 hours ago |
| Chart Toppers | Chart Toppers - May 26, 2023 | 2 days 22 hours ago |
| NATGAS Appalachia | NATGAS Appalachia – May 25, 2023 | 3 days 16 hours ago |
| NATGAS Billboard | NATGAS Billboard - May 25, 2023 | 3 days 19 hours ago |
| Chart Toppers | Chart Toppers - May 25, 2023 | 3 days 22 hours ago |
Pages
Daily Energy Blog
Thursday, 5/25/2023
Category:
Crude Oil
It’s true, the Permian is — and will likely remain — the center of attention in the U.S. oil and gas industry, not just for its massive and still-growing production volumes but also for the ongoing consolidation among producers in the West Texas/southeastern New Mexico play. But while the Permian has dominated production and M&A activity the past couple of years, Chevron’s recently announced $7.6 billion acquisition of Denver-Julesburg (DJ) Basin-focused PDC Energy highlights the potential for producers to generate significant production and profits from other major U.S. regions, including the Rocky Mountains. In today’s RBN blog, we analyze Chevron’s latest mega-deal and its impacts on the buyer, seller, and the broader oil and gas industry.
Wednesday, 5/24/2023
Category:
Crude Oil
Consider this fact: Three of every five barrels of crude oil produced in the U.S. are exported, either as crude oil or in the form of gasoline, diesel, jet fuel or other petroleum products. Sure, large volumes of crude and products are still being imported, but the net import number is dwindling toward zero — and if you count NGLs (ethane, propane, etc.) in the liquid fuels balance, the U.S. has been a net exporter since 2020. Yes, folks, exports are now calling the shots, and the role of exports is only going to become larger over the next few years. In today’s RBN blog, we discuss highlights from our new Drill Down Report on crude oil and product exports and why they matter more now than ever.
Tuesday, 5/23/2023
Category:
Crude Oil
There is no debate about it: The CME/NYMEX domestic sweet (DSW) crude oil futures prompt-month contract at Cushing, OK, is the most closely followed benchmark in U.S. energy markets. It’s the price quoted in nightly news reports and general media publications. And now, with U.S. exports of WTI deliverable on the Brent contract, domestic sweet at Cushing is arguably setting the price for crudes around the world. But the fact is, most crudes traded in physical markets across North America are not priced at the DSW-at-Cushing benchmark but instead at a differential to Cushing — higher or lower on any given day based on each crude’s unique quality, location, and supply/demand characteristics. In today’s RBN blog, we discuss how the behavior of differentials from the Cushing benchmark can go a long way to explain what is happening with crude oil production, transportation volumes, storage and, of course, exports.
Monday, 5/22/2023
Category:
Crude Oil
The energy industry’s upstream products — crude oil, natural gas and NGLs — are commodities, so the lowest-cost producers generally do best, especially if they are well-connected to downstream markets. Due in large part to the intensity of competition, finite drilling locations, the constant need for capital investment and the chilling effect of political headwinds, the industry is in the middle of a consolidation cycle that has enabled a select group of top-tier E&Ps to build scale — and longer-lasting inventories — in the most productive parts of the most lucrative shale plays. That scale, in turn, helps these Shale Era winners reduce their costs, gain market share and — important in 2023 and beyond — return a big slice of their free cash flow to investors as dividends and stock buybacks. In today’s RBN blog, we discuss what’s driving that “urge to merge” and what it means for industry players large and small.
Friday, 5/19/2023
Category:
Government & Regulatory
The NAESB Contract is a familiar element in the day-to-day dealings between natural gas buyers and sellers in the U.S. — a standard form that serves as a useful draft for short- and long-term gas supply agreements — just fill in its blanks and use it, or adjust it until you have a deal. Winter Storm Uri, the devastating deep-freeze event that brought much of Texas to an icy standstill and a deadly blackout in February 2021, raised all kinds of questions about how to interpret the contract’s boilerplate force majeure provisions. As part of the aftermath, some electric industry participants (primarily in other states, not Texas) are pushing at NAESB for changes to the force majeure provisions with the aim of clarifying things and maybe reducing their use to forgive a failure for gas to show up. But nothing is uncomplicated in the world of contracts and force majeure, as we discuss in today’s RBN blog.
Thursday, 5/18/2023
Category:
Financial
The feeling is almost palpable among midstreamers: In a fast-changing energy industry, the companies that gather, transport, store and export hydrocarbons need to consolidate and augment — and be smart about how they get bigger. Scale, that’s the key. That — plus complementary assets that provide synergies, lower costs and increase free cash flow, a sizable portion of which can be returned to shareholders as dividends and buybacks — is what investors are looking for. Oh, and don’t forget this important M&A goal: gaining a larger footprint and a more prominent role in the Permian, the dominant U.S. production area. ONEOK, a midstream company heretofore primarily focused on moving NGLs and natural gas, earlier this week announced an $18.8 billion agreement to acquire Magellan Midstream Partners, which is best known for pipelines that transport refined products and crude oil. In today’s RBN blog, we and our friends at East Daley Analytics kick the tires, look under the hood, and give our thoughts on the deal’s pros and potential cons.
Don't Pass Me By, Part 2 - TransWest Express Shows Challenges in Building Long-Distance Transmission
Wednesday, 5/17/2023
Category:
Government & Regulatory
At the time it was proposed way back in 2005, the TransWest Express Transmission Project seemed like a straightforward idea — bring renewable energy from Wyoming, then (and now) one of the country’s biggest producers of wind power, to help meet increasing customer demand for electricity in the Desert Southwest. And enabling renewable energy to get to market would seem to align with political trade winds. But while the project’s goals couldn’t have been clearer, its 18-year path to final approval illustrates the numerous hurdles faced by long-distance energy projects and the need for change if progress is to me made toward energy goals. In today’s RBN blog, we’ll look at TransWest’s long road to approval, the difficulties in getting new energy infrastructure built and the long-term repercussions of those delays, and some permitting-reform proposals that might shorten project timelines.
Tuesday, 5/16/2023
Category:
Natural Gas
The incredible growth in U.S. LNG export capacity over the past few years has been facilitated by a mostly predictable federal permitting process. It may sometimes be slower than developers like and leave them more open to pushback at the state and local level, but LNG export projects that enter the federal permitting process with both the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) are generally granted their authorizations and export licenses. And once they have them, they’ve been able to hold onto them — until now. Both FERC and the DOE had been granting extensions to these permits as their authorization windows were closing, meaning that projects that were authorized a decade ago and still not online have retained their authorizations and export licenses. But with a DOE rule change announced April 21, the era of repeatedly renewing authorizations appears to be over. The DOE is sending a clear message to LNG developers: Get your project across the finish line in a timely manner or get out of the way and make space for someone who can. In today’s RBN blog, we take a closer look at the DOE rule change and its impact on LNG projects currently under development.
It's All Part of a Bigger Plan - The Case for Energy Transfer's Blue Marlin Crude Oil Export Project
Monday, 5/15/2023
Category:
Crude Oil
It’s been two and a half years since Energy Transfer submitted its plan for the Blue Marlin crude oil export project to the U.S. Maritime Administration (MARAD) and, like the large billfish for which the proposed offshore terminal is named, the project has spent most of its time under the surface and out of sight. But that doesn’t mean there hasn’t been forward movement on the regulatory and business fronts and, with U.S. oil exports rising fast and a preference among many shippers for VLCCs that can be fully loaded without reverse lightering, Blue Marlin is alive and kicking, as we discuss in today’s RBN blog.
Friday, 5/12/2023
Category:
Financial
There’s been a lot of talk over the last year or so about U.S. E&Ps exerting financial discipline by moderating their investments in growth, paying down debt and returning substantial portions of their free cash flow to investors in the form of dividends and stock buybacks. So, worries in the broader economy that the banking crisis and the specter of a looming recession may restrict access to capital markets shouldn’t be a major concern for the 41 oil and gas producers we monitor, right? As we discuss in today’s RBN blog, the answer isn’t a simple yes or no. The bad news is that the E&P sector still holds quite a bit of debt and that several of the companies we track added to their debt load in 2022. The good news is that total debt levels are down and that the net present value (NPV) of oil and gas reserves — a key factor in determining how much debt an E&P can handle — has soared, which may make it easier for them to borrow money if they need it.
Thursday, 5/11/2023
Category:
Natural Gas
Every day, large volumes of associated gas are flared around the world, mostly because there’s not enough infrastructure in place to transport the gas to market. This isn’t just a colossal waste of energy — flaring generates a lot of carbon dioxide (CO2) and, according to a recent study, it’s only 91% efficient (on average) at zapping methane, a particularly potent greenhouse gas (GHG). But what if there was a cost-effective way to beneficially consume the gas that’s stranded in remote parts of the Permian, the Bakken and other major production areas? It turns out there is — by using the gas onsite to produce electricity to power portable, modular data centers used to support cryptocurrency mining, artificial intelligence (AI) programs like ChatGPT, and other high-tech endeavors requiring massive amounts of computation power and energy. In today’s RBN blog, we discuss the growing use of stranded natural gas as a power source for middle-of-nowhere data centers.
Wednesday, 5/10/2023
Category:
Crude Oil
Since the start of this year, Canadian heavy crude oil prices have been steadily improving relative to the light crude oil benchmark of West Texas Intermediate (WTI). Improved access to and through the U.S. as far south as the Gulf Coast has contributed to these better conditions. At the same time, the traditional driver of increasing refinery demand after the end of the most recent maintenance season is being aided by the restart of two Midwest refineries that have typically been consumers of Canadian heavy oil. With international competitive pressures also easing and export buyers remaining active in the Gulf Coast, heavy oil prices could remain in a sweet spot for a good portion of this year. In today’s RBN blog, we look at why international competition for Canadian heavy crude will only intensify next year as vastly increased export access from Canada’s West Coast becomes available.
Tuesday, 5/09/2023
Category:
Natural Gas
New U.S. LNG export projects battling rising labor and equipment costs and/or financing woes have one more thing to worry about that the first wave of projects didn’t: ensuring the feedgas supply will be there when they need it. Bottlenecks have already developed for moving natural gas volumes to the Louisiana coast, where the bulk of future export capacity will be sited. As more liquefaction capacity is built out and more export projects are greenlighted, a lot more pipeline capacity will be needed to move feedgas supply from the Haynesville and other supply basins into southern Louisiana and across the last mile to the terminals. In today’s RBN blog, we conclude our roundup of pipeline expansions in the Bayou State that would help ease transportation constraints and balance the market, this time with a look at announced-but-yet-to-be sanctioned greenfield pipeline expansions, along with an update on their associated export projects.
Monday, 5/08/2023
Category:
Financial
The saying goes, “If you got it, flaunt it,” and the rise of social media has certainly accelerated the ostentatious display of sudden wealth by rock stars, rappers, tech billionaires, star athletes and others. While it might be unseemly for executives at oil and gas companies to indulge in bling from gold chains to $400,000 Maserati GranCabrios to half-billion-dollar mega-yachts, they weren’t shy about displaying their companies’ financial gains last year from surging commodity prices in the form of lavish shareholder returns that in some cases dwarf returns from the traditional dividend giants. In today’s RBN blog, we’ll detail the extraordinary 2022 returns allocated to oil and gas investors and discuss the warning signs that 2023 will be a leaner year.
Friday, 5/05/2023
Category:
Renewables
Clean ammonia, produced by reacting either “blue” or “green” hydrogen with nitrogen, is emerging as one of the most highly touted low-carbon energy sources of the future, thanks largely to massive tax incentives provided by the Inflation Reduction Act (IRA). Skeptics may question the extent to which clean ammonia — and clean hydrogen, on which it’s based — can realistically take market share from natural gas and coal as leading power-plant fuels over the next 20 to 30 years, but there’s a lot to be said for them and, as wind- and solar-power developers have already come to appreciate, billions of dollars in governmental support can do wonders. In today’s RBN blog, we continue our look at the growing list of U.S. clean ammonia projects now under development.