RBN Energy

Friday, 9/30/2022

It’s hard to think of a $5.2 billion acquisition as a “bolt-on,” but that’s what EQT Resources — the U.S.’s #1 natural gas producer — is calling its recently announced purchase of Tug Hill’s gas production assets and XcL Midstream’s pipeline and processing assets in northern West Virginia. The deal, which represents the largest acquisition in the Marcellus/Utica Shale in five years, will not only give EQT even more scale in the nation’s leading gas-and-NGLs production region, it also will lower EQT’s breakeven gas price and its emissions intensity. Oh, and with the deal, EQT is doubling its share-repurchase authorization and increasing its year-end-2023 debt-reduction goal by 60%. In today’s RBN blog, we examine and assess these and other aspects of the agreement.

Recently Published Reports

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NATGAS Billboard NATGAS Billboard - September 30, 2022 19 hours 6 min ago
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Daily energy Posts

Thursday, 09/29/2022

In days gone by, the common sentiment in the oil patch when prices rose was “Drill, baby, drill!” Not only have times changed, but even back when the phrase was made famous by former Republican Vice-Presidential nominee Sarah Palin in 2008 it vastly oversimplified and understated the efforts required to secure new production. It’s easy to overlook how intensive (and time-consuming) the operation at a well site is before even being able to extract any of those precious crude oil, natural gas and NGL molecules found beneath our feet. Prior to hydrocarbon production, well sites must be obtained, tested and developed by exploration and production companies trying to determine their chances of making a reasonable return on their investment. In today’s RBN blog, we take a step-by-step look at the leasing process.

Wednesday, 09/21/2022

Economic sanctions can be a powerful tool to punish a country or group, especially if they involve an essential commodity like crude oil. Imposed for a variety of reasons (military, political, social), sanctions can cause serious harm to the targeted entity. But levying them effectively is not as simple as it may seem, and even the most well-intentioned plans can fall short or have unintended consequences or backfire altogether. In today’s RBN blog we look at a plan by the U.S. and its allies to limit the price of Russian crude oil and the significant challenges in designing a cap that is effective and enforceable.

Sunday, 09/11/2022

Massive shifts are occurring in the U.S. crude oil export market, but you wouldn’t know it from the steady-as-she-goes pace of activity. The volumes being loaded along the Gulf Coast have stayed within a relatively tight range — 2.5 MMb/d to 3.2 MMb/d — for 12 consecutive quarters now, and the export pace for each of the past three quarters has remained within a few thousand barrels of 3 MMb/d. So, what’s changed? For one thing, Corpus Christi is now by far the dominant point of export, with Houston, Louisiana, and Beaumont/Nederland trailing. Another is that Europe, heavily impacted by the sharp decline in imports from Russia, is now the leading destination for U.S. barrels. There are other changes, too, including increased use of Very Large Crude Carriers (VLCCs) and terminal expansion projects. In today’s RBN blog, we discuss highlights from our recently published Crude Voyager Quarterly Report.

Tuesday, 09/06/2022

The renewed focus on energy security — and the acknowledgment that the world will continue to rely on hydrocarbons for decades to come — may be breathing new life into an often-overlooked U.S. production area: Alaska’s North Slope. The state’s crude oil output is down to its lowest level since before the Trans-Alaska Pipeline System (TAPS) came online in 1977. But now federal regulators are moving toward final approval for ConocoPhillips’s $8 billion Willow project in the National Petroleum Reserve, and Australia’s Santos Ltd. and Spain’s Repsol have taken a final investment decision (FID) on the $2.6 billion first phase of their Pikka project between Willow and Prudhoe Bay. In today’s RBN blog, we discuss recent hydrocarbon-related developments in America’s Last Frontier.

Monday, 08/29/2022

Western Canada’s heavy oil producers have become all too familiar with fluctuating and often very wide price discounts for their product. Too often, the culprits have been insufficient pipeline export capacity and/or rapidly rising production. It might be easy to quickly dismiss the latest widening of the heavy oil price discount as being related to these well-known factors, but it turns out that other more international trends are at work, ranging from U.S. government-backed competition in the Gulf Coast to heavy discounting of competing barrels in other far-flung regions of the world. In today’s RBN blog, we look beyond the borders of Canada for an explanation of the latest pressures driving wider Canadian heavy oil price discounts.

Wednesday, 08/17/2022

Yesterday’s Weekly Petroleum Status Report from the Energy Information Administration included an eye-popping statistic: 5 million barrels a day of crude oil were exported from the U.S. in the week ended August 12. It’s the highest U.S. export volume ever reported — and by a margin of nearly half a million barrels a day! But as huge as that top-line number is, and as many headlines as it’s sure to grab, it's not unexpected. Major changes in international crude markets, coupled with tectonic shifts in North American upstream and midstream, have conspired to push U.S. exports higher and higher. In today’s RBN blog, we examine the factors leading up to this point and what it means for crude markets in the U.S. and abroad.

Tuesday, 08/16/2022

There’s a growing acknowledgment in the U.S., Europe and elsewhere that crude oil will remain an important part of our energy future for decades to come. At the same time, however, the drive to decarbonize will continue, and as part of that effort, oil producers will be working to ratchet down their greenhouse gas (GHG) emissions. A lot of that will be achieved through the purchase of carbon offsets or the use of carbon capture and sequestration (CCS), but another approach is for producers to “high-grade” their portfolios by divesting production assets that generate inordinately high volumes of carbon dioxide (CO2) and methane during production and investing instead in assets with much lower carbon intensity. In today’s RBN blog, we discuss the push by some producers to shift to “lower-carbon oil.”

Monday, 08/15/2022

Buoyed by still-elevated crude oil, natural gas and NGL prices — and discipline on capital spending and production growth — U.S. E&Ps have been generating unprecedented cash flow and using much of that bounty to reduce debt, increase dividends and buy back shares. A number of producers have also been investing some of that cash to expand their holdings, mostly to complement their existing acreage in the Permian and other plays and thereby allow for increased efficiency and, in many cases, longer laterals. Few have been doing more in this regard lately than Devon Energy, the Oklahoma City-based E&P, which completed a big bolt-on acquisition in the Bakken in late July and just followed that up with a plan for an even bigger buy in the Eagle Ford. In today’s RBN blog, we look at the company’s strategy.

Wednesday, 08/10/2022

Like an aging pop star, price benchmarks have to re-invent themselves from time to time to maintain their status. The Dated Brent marker –– as much a survivor as Cher, still going strong at 76 –– has had successes and setbacks in the past and will undergo yet another transformation by June 2023, courtesy of price reporting agency Platts. You definitely need to pay attention to this change, because Dated Brent is used as a pricing reference not only for several crude oil streams sold around the world, but also for other commodities such as LNG, fuel oil and other refined products and petrochemicals — oh, and financial derivatives too. Also, the latest version of the price marker will include an adjusted price for the U.S.’s prolific West Texas Intermediate (WTI). In today’s RBN blog, we discuss the details and implications of Dated Brent’s latest makeover for traders, refiners and other market participants.

Monday, 08/08/2022

U.S. gasoline and diesel prices have been sliding the past couple of months, but there's still a lot of angst among politicians and the general public about the cost of motor fuels — and who's to say prices at the pump won't soar again, spurring another round of proposed "fixes" to the markets for crude oil and refined products. Among the proposals floated when prices spiked this spring were bans on the export of U.S.-sourced crude, gasoline and diesel, the idea being that suspending exports would increase the supply available to domestic markets and thus bring down prices. If only it were all so simple! In today's RBN blog, we discuss the complicated ins and outs of oil, gasoline and diesel imports and exports, and the many effects of putting the kibosh on shipments to international markets.

Sunday, 08/07/2022

The Gulf of Mexico (GOM) has seen more than its share of stormy weather, and — both literally and figuratively — so have crude oil producers active there. Earlier this century, production growth in the offshore GOM was set back by Katrina and other major hurricanes, then by the Deepwater Horizon spill. Starting in 2014, and for five years after that, the Gulf's output ratcheted up, only to be set back again, this time by the double-whammy of COVID and bad storms. Now, the GOM appears to be poised for another period of steady growth — the only question is, with the global push to decarbonize, and with at least of couple of large producers planning to exit the region, will this be Gulf producers' last stretch of good weather? In today's RBN blog, we begin a short series on the ups and downs of GOM production, the new projects starting up this year and beyond, and the Gulf's longer-term prospects.

Tuesday, 08/02/2022

U.S. exports of crude oil, LNG, NGLs and refined products have moved into the spotlight on the world stage. Within the past few years, global markets have come to rely on U.S.-sourced hydrocarbons to meet critical needs for energy supplies. But export volume growth has slowed. Demand in the U.S. is ramping up, leaving less available for shipment overseas. And some members of Congress are encouraging the Biden administration to curtail or even ban some exports. What’s next for U.S. hydrocarbon sales to international markets? Will U.S. exports be there to challenge Russia’s use of oil and gas as political weapons? Or could market, logistical and political forces disrupt the flows that are meeting energy needs of the world? Today, we preview the deep dive into these issues on the agenda at RBN’s upcoming xPortCon conference.

Thursday, 07/14/2022

The global reaction to Russia’s invasion of Ukraine was swift, with calls of condemnation and plans quickly surfacing for the U.S. and other countries to stop their purchases of Russian crude oil and natural gas immediately, or at least as soon as practical. The strategy has been to make the situation as politically and financially painful as possible for Russia, which has not been shy about using its energy supplies as a weapon, before or after the invasion. But those plans haven’t worked as well as hoped, and some impacts are bringing back memories of the 1973 oil embargo which, though driven by a far different series of events, may provide insight into the current situation. In today’s RBN blog, we look at the many parallels to today, including weaponized oil, regional supply shortages, price spikes and well-intentioned (if sometimes ill-conceived) government responses.

Wednesday, 06/01/2022

Permian crude oil markets are getting interesting again, with triple-digit prices making daily headlines and boosting producers’ cash flows. But there have been few parties in the Permian oil midstream space. There, excess long-haul capacity has been the story for some time, a situation that became more pronounced when Wink-to-Webster (W2W) — the last of the new greenfield pipelines to the Texas Gulf Coast — started up earlier this year. There’s so much capacity in place that price spreads have remained tight and competition for barrels has been fierce. That said, there’s a positive story flying under the radar in the Permian oil markets. One of the new pipelines that started up out of the Permian in 2019 is now full. That may surprise some folks, kind of like when the Texas A&M Aggies pulled in the #1 football recruiting class in the country earlier this year. While Alabama’s coach is apparently still trying to swallow that news, you’re not likely to find yourself doubting the ability of a newbuild to get full in today’s competitive environment. At least you won’t after we tell you the story of the EPIC Crude Pipeline, which we do in today’s RBN blog.

Tuesday, 05/10/2022

Brace yourself for it. Over the next few weeks, there’s a good chance that a tsunami of crude oil will be released from the U.S. Strategic Petroleum Reserve (SPR), and it’s likely that much (if not most) of that oil will be piped to Gulf Coast export docks and loaded onto supertankers. If that happens, the export capacity of crude-handling terminals from Corpus Christi to coastal Louisiana will be stress-tested on their ability to send out much larger volumes than they’re used to dealing with. And that’s only the beginning. Over the next year or two, while U.S. E&Ps ratchet up production in response to higher prices as Europeans and others scramble to replace Russian crude oil, Gulf Coast export terminals may well be called upon to load and ship out even more oil (in addition to refined products) on a regular basis. In today’s RBN blog, we discuss the impending SPR releases and the ability of Gulf Coast ports and individual terminals to handle increasing volumes.