RBN Energy

Thursday, 5/19/2022

The race is heating up for building natural gas pipeline takeaway capacity out of the Permian. Associated gas production from the crude-focused basin is at record highs this month and gaining momentum, which means that without additional pipeline capacity, the Permian is headed for serious pipeline constraints — and potentially negative pricing — by late this year or early next, which would, in turn, limit crude oil production growth there. Midstreamers are jockeying for the pole position to move surplus gas from the increasingly constrained basin to LNG export markets along the Gulf Coast. One of the contenders, Matterhorn Express Pipeline (MXP), a joint venture (JV) between WhiteWater, EnLink Midstream Partners, Devon Energy and MPLX, announced its final investment decision (FID) late yesterday. In today’s RBN blog, we provide new details on the greenfield project.

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Daily energy Posts

Sunday, 02/06/2022

Oil sands, the workhorse of Alberta’s — and Canada’s — crude oil production growth, achieved a record production year in 2021. A steady turnaround in crude oil prices, improved market access, and the tried-and-true resilience of oil sands producers combined to drive the increase in output. With 2022 barely out of the starting blocks, the oil sands players have provided production guidance for this year that, if fulfilled, could set the oil sands on track for another year of record output. In today’s RBN blog, we consider the latest production guidance estimates and what these could mean for the availability of oil pipeline export capacity from Western Canada.

Wednesday, 02/02/2022

Even through the market turmoil of the past couple of years, the Permian has been a production powerhouse, lately churning out an average of nearly 5 MMb/d of crude oil and 14 Bcf/d of natural gas. But is the Permian on shaky ground? Well, sort of. Distinct areas within both the Midland and Delaware basins in West Texas have experienced an increasing number of higher-magnitude earthquakes that have been linked to the saltwater disposal (SWD) wells that E&Ps use to get rid of the massive volumes of “produced water” their oil and gas operations generate. As a result, regulators have been ordering some of these disposal wells to be shut down and directing producers and midstreamers to develop “seismic response action plans” aimed at reducing the frequency and severity of quakes. In today’s RBN blog, we look at what has been happening on the earthquake front in West Texas and how E&Ps can deal with it.

Tuesday, 01/18/2022

It’s possible for a single new infrastructure project to be a game-changer — the Transcontinental Railroad comes to mind, and so do the New York City subway system and the Hoover Dam. In the energy industry’s midstream sector, things work a little differently. There, projects are incremental. They’re privately, rather than publicly backed and so they must be commercially justified, which means they need to serve a specific purpose. That’s not to say they can’t shift the landscape of the areas they serve. For example, when the Shale Revolution transformed and disrupted U.S. hydrocarbon markets, supply and demand dynamics were turned on their head and waves of projects had to be built to handle surging production in suddenly supercharged shale plays like the Bakken, Appalachia, and Permian and to serve new markets, most notably exports. Sometimes, it’s a more complicated combination of projects and events that, as a group, cause not-so-subtle shifts in how things are done. Lately, handfuls of pipeline projects and refinery closures — plus increasing regional crude oil production in both the U.S. and Canada — have spurred changes in traditional pipeline-flow patterns and may breathe new life into oil-export activity at the Louisiana Offshore Oil Port and the Beaumont-Nederland area in Texas. In today’s RBN blog, we discuss these changes and their effects.

Sunday, 01/16/2022

Pandemic. Deep freeze. Decarbonization. Stymied production growth. Sky-high prices. 2021 was definitely one for the record books. But thank goodness we made it and can look forward to a New Year! That means it is time for our annual Top 10 Energy Prognostications, the long-standing RBN tradition where we consider what’s coming next to energy markets. Say what? Surely it would be foolhardy to make predictions now. After all, we’re in the midst of a chaotic energy transition, a pandemic that’s becoming endemic, and political shenanigans in Washington and across the globe. Foolhardy? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2022 has in store for us. 

Wednesday, 01/12/2022
Thursday, 01/06/2022

You can count on certain things this time of year. Alabama is in the hunt for a college football national championship, there’s fresh powder somewhere in the Rockies, it’s mostly still shorts weather in Houston, and there’s a catchy new country song ripe for blog titles. January also brings some unknowns, with pundits throwing out various scenarios for stock and commodity markets, as well as the more recent trend in postulating the outcomes of the latest COVID variant. When it comes to the U.S. onshore oil and natural gas markets, the Permian continues to be old reliable, especially with crude north of $70/bbl and natural gas prices flirting with $4/MMBtu. There’s a lot we can’t predict about the year ahead (like the NCAA football championship, though this writer, at least, is pulling for Georgia next week), but our view of Permian production growth hasn’t changed. In today’s blog, we provide this year’s outlook for Permian crude oil and natural gas markets.

Tuesday, 01/04/2022

Mexico’s state-owned Petróleos Mexicanos, the second-largest exporter of crude oil to the U.S. after Canada, said in late December that it will slash its export volumes in 2022 and eliminate them completely in 2023. The plan is premised on Pemex’s expectation that, with increased utilization of the company’s six existing refineries and the impending start-up of a new one, it will need every barrel of the Maya, Isthmus, Olmeca, and other varieties of oil it produces. While at first glance it may seem that Mexico phasing out exports of crude would pose a major challenge to some U.S. refineries, there’s good reason to believe that in reality it won’t. In fact, as we discuss in today’s RBN blog, there may be less to Pemex’s planned export phase-out than meets the eye.

Sunday, 01/02/2022

Pandemic. Deep freeze. Decarbonization. Stymied production growth. Sky-high prices. 2021 was definitely one for the record books. But thank goodness we made it and can look forward to a New Year! That means it is time for our annual Top 10 Energy Prognostications, the long-standing RBN tradition where we consider what’s coming next to energy markets. Say what? Surely it would be foolhardy to make predictions now. After all, we’re in the midst of a chaotic energy transition, a pandemic that’s becoming endemic, and political shenanigans in Washington and across the globe. Foolhardy? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2022 has in store for us. 

Thursday, 12/30/2021

Finally! It’s the last day of 2021, which means it’s time for our annual Top 10 Energy Prognostications blog, the long-standing RBN tradition where we look into our crystal ball to see what the upcoming year has in store for energy markets. And unlike many forecasters, we also look into the rear-view mirror to see how we did with last year’s predictions. That’s right! We actually check our work! And that’s what we’ll do in today’s scorecard blog. Then on Monday we’ll lay out what we see as the most important developments of the year ahead. But today it’s time to look back. Back to what we posted on January 2, 2021.

Wednesday, 12/29/2021

How do you sum up a year like 2021? It was good times for the economic health of producers and midstreamers alike. Prices were up, as were production and flows. But 2021 also brought along more than its share of chaos, including disruptive market events like Winter Storm Uri’s deep freeze and Europe’s natural gas crisis, along with general perplexity around all things clean, green, renewable, and certified. At RBN we take a different approach to assessing common industry themes. Namely, we examine the events and trends that the market considers the most important — crowd-sourced market intelligence, if you will. We can do that because every weekday we post a blog covering a single topic and blast it to almost 35,000 people, and we scrupulously monitor the website hit rate to see which blogs garner the most interest. Then, at the end of the year, we look back to see which topics rank at the top of the hit parade. That score reveals a lot about major market trends. So today we dive into our Top 10 blogs based on the number of rbnenergy.com website hits over the past year to see what we can learn about where things stand today and what’s up next.

Sunday, 12/26/2021

You would expect the start-up of Enbridge’s Line 3 Replacement project early this fall to have eased the constraints on crude oil pipelines from Western Canada to the U.S. — and it did. You’d also expect that L3R coming online would narrow the price spread between Western Canadian Select and West Texas intermediate — but it didn’t. The latest widening of the WCS-WTI spread, one of many in recent years, is another reminder that oil price differentials can be affected by many factors other than pipeline capacity availability. In today’s RBN blog, we discuss the host of issues that affect this all-important Canadian oil price metric.

Monday, 12/13/2021

There’s been a lot of talk lately about “green” and “blue” hydrogen becoming increasingly important players in the world’s lower-carbon energy future. Green and blue ammonia too, given that ammonia, with its high hydrogen content, is an efficient “carrier” of hydrogen when it needs to be delivered by ship, railcar, or truck. Also, ammonia itself — like hydrogen — can be used to power fuel cells and ammonia-combustion technology is being developed to use fuel ammonia at power plants. But for these low- or zero-carbon energy products to be adopted at a global scale, new infrastructure will need to be built, not only to enable their production and consumption but to transport them to where they’ll be consumed. Enter the just-finished ammonia terminal that Royal Vopak and Moda Midstream jointly developed at a prime site along the Houston Ship Channel. In today’s RBN blog, we discuss the greenfield facility and its prospective role as a major import/export hub for ammonia.

Thursday, 12/09/2021

Trans Mountain Pipeline, the only pipeline that connects crude oil production areas in Alberta to Canada’s West Coast and the U.S. Pacific Northwest, has started to resume operations after a three-week shutdown. The pipeline closure — the longest in TMP’s 68-year history — began November 14 after major flooding exposed portions of the 300-Mb/d conduit, which also carries some refined products. Fortunately, Trans Mountain did not suffer any severe damage, breaks, or spills, and its operators were able to initiate a phased restart on December 5 at reduced pressures. Full service is expected to be restored soon. So what happens when a primary source of crude oil to five refineries — four in Washington state and one in British Columbia — is removed from service with little notice? In today’s RBN blog, we discuss the impacts.

Sunday, 12/05/2021

Late last month, the Canada Energy Regulator (CER) ruled against Enbridge’s proposal to convert as much as 90% of the capacity on its multi-pipeline, 3-MMb/d Mainline crude oil system to long-term contracts. The CER’s action leaves in place the Mainline’s current capacity-allocation process, under which every barrel-per-day of the pipeline system’s capacity is open to all shipping customers on a month-to-month basis. Although the rejection of Enbridge’s proposal is unlikely to change the volume of Western Canadian crude oil flowing on the Mainline over the next few months, the longer-term outlook for Mainline flows is less certain given that other, competing pipeline capacity out of Alberta will be coming into service by late 2022 or early 2023. In today’s RBN blog, we examine the decision to reject long-term contracting and what might be the next steps for Enbridge.

Sunday, 11/21/2021

With the market dislocations brought on in 2020-21, many if not most E&Ps have been reexamining their strategies and making changes. A common result has been a deemphasis on capex and expansion and a renewed focus on increasing free cash flow — and with that excess cash reducing or eliminating debt and rewarding shareholders through dividends and stock buybacks. A prime example of a producer taking this approach is Oasis Petroleum, a Bakken-focused E&P that a year ago this week emerged from COVID-induced bankruptcy filing and has since taken a number of additional steps to position itself as a reliable money-maker, even if crude oil prices were to slide to significantly lower levels. In today’s RBN blog, we discuss the ongoing trend among producers to rethink and rework their strategies as energy markets recover.