Over the past three-plus years, Corpus Christi has dominated the U.S. crude oil export market, largely because of the availability of straight-shot pipeline access from the Permian to two Corpus-area terminals at Ingleside — Enbridge Ingleside Energy Center (EIEC) and South Texas Gateway (STG) — that can partially load the huge 2-MMbbl VLCCs (Very Large Crude Carriers). But capacity on the pipes to Corpus is now nearly maxed out and, with Permian production rising and exports strong, an increasing share of West Texas crude output is instead being sent to Houston on pipelines with capacity to spare. The catch for Permian shippers with capacity on Permian-to-Houston pipes is that the Midland-to-MEH (Magellan East Houston) price differential for WTI has been depressingly low —$0.22/bbl on average this year, compared to almost $20/bbl for a few months in 2018 and averaging $5.50/bbl as recently as 2019. However, the Midland-to-MEH WTI price spread looks to be on the verge of a rebound of sorts, as we discuss in today’s RBN blog.
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.
November WTI fell slightly on Monday, settling at $89.68/bbl, a decrease of $0.35/bbl (-0.4%). The minor slide was attributed to Russia easing its recent fuel export ban, which had led to the perception of tightening supplies.
A Gulf of Mexico lease sale scheduled for September 27 will include millions of acres that had been removed from the sale in August by the Bureau of Ocean Energy Management (BOEM), a federal judge ruled late last week.
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Daily Energy Blog
The world consumes about 100 MMb/d of liquid fuels, which are critically important to every segment of the global economy and to nearly every aspect of our daily lives. The size and scope of this market means it’s impacted by all kinds of short-term forces — economic ups and downs, geopolitics, domestic developments and major weather events, just to name a few — some of which are difficult, if not impossible, to foresee. But while these events can sometimes come out of nowhere, there are some long-term forces on the horizon that will shape markets in the decades to come, even if the magnitude of these changes might be up for debate. One is a move to prioritize alternative fuel sources rather than crude oil, but a meaningful shift won’t happen as quickly as many forecasts would indicate — and that has big implications for liquid fuel demand and the outlook for U.S. refiners. In today’s RBN blog, we discuss these issues and other highlights from the recent webcast by RBN’s Refined Fuels Analytics (RFA) practice on their newly released update to the Future of Fuels report.
When it comes to proposals to build large-scale energy projects, whether it’s a new electric transmission line, a mining complex, or an interstate oil or gas pipeline, the permitting process can be a delicate balancing act. Nearly everyone understands that appropriate social and environmental safeguards are essential. At the same time, the permitting process can’t be so cumbersome that it takes a decade or more to build that transmission line, complete that mine, or get a pipeline into operation. There’s a general understanding that the permitting process needs to be improved but, as the title of today’s blog implies, it’s a whole lot easier said than done. In today’s RBN blog, we preview our latest Drill Down Report on the major themes around permitting reform and examine the factors that could help — or hinder — further efforts.
A wide range of ever-changing economic and other forces — domestic and international — are constantly impacting the U.S. refinery complex, for good and for bad. Fluctuations in crude oil supply and prices. Ups and downs in demand for refined products. Refinery closures and expansions. And don’t forget this: the pace of the much-discussed transition to lower-carbon energy sources. There’s a lot at play in the world of gasoline, middle distillates and resid — renewable fuels too — and while industry players can’t fully anticipate what’s next in the refined-product roller coaster ahead, it’s critically important to keep up with the latest developments and to have a deep understanding of the many factors influencing crude oil and fuel markets — and the relationships among those drivers. In today’s RBN blog, we discuss the key findings in a newly released update to Future of Fuels, an in-depth report by RBN’s Refined Fuels Analytics (RFA) practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short, medium and long term.
When it comes to large-scale energy and infrastructure projects, permitting can sometimes look like a game of Whack-a-Mole, where efforts to conclude the process are continually frustrated by issues that appear (and then sometimes reappear again and again), encompassing everything from environmental reviews and the vagaries of different federal agencies to legal challenges and public (and political) opposition. But if the difficulties in building a new pipeline, transmission line, or solar farm seem immense, they pale in comparison to what developers of mining projects can face. In today’s RBN blog, we look at why mining projects take so long to develop, the unique challenges of the permitting process, and some ways that it might be improved.
It seems logical that shifting over time to aviation fuel with a lower carbon footprint would represent the most practical way for the global airline industry to reduce its greenhouse gas (GHG) emissions. But for that shift to happen, there needs to be an economic rationale for producing sustainable aviation fuel and, despite a seemingly generous production credit for SAF in the Inflation Reduction Act (IRA), that rationale is a least a little shaky when compared to renewable diesel (RD) credits available today. In today’s RBN blog, we conclude our two-part series on SAF with an examination of RD and SAF economics (which are remarkably similar), the degree to which existing SAF incentives may fall short of RD, and what it all means for SAF producers and production.
The recent drama related to the U.S. debt ceiling may have illustrated the chaos that polarization has brought to Washington, but it showed one other thing as well: there’s an appetite for federal permitting reform from Democrats and Republicans alike. The Fiscal Responsibility Act (FRA), signed into law Saturday by President Biden, addressed some immediate priorities — including changes to the review process under the National Environmental Policy Act (NEPA) — but its mandate to expedite completion of the long-delayed Mountain Valley Pipeline (MVP) caught many of the project’s supporters and critics by surprise. In today’s RBN blog, we look at the permitting issues that have kept MVP in regulatory limbo and how the FRA is designed to overcome them and bring the project back to life.
For a lot of us, efforts to amp up the amount of power generated by renewables are largely out of sight, out of mind. We might know that an increasing share of our electricity is being produced by wind- and solar-powered generation, especially if you live in a place like California or Texas, but the impact might be largely unseen because of where many of those facilities tend to be located. That’s beginning to change, however, as renewable projects get bigger and move closer to populated areas, causing all sorts of new issues for energy developers. In today’s RBN blog, we look at the unique challenges that renewable energy projects face, the slowing pace of project development, and some changes that advocates believe could accelerate the permitting process.
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.
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.
As environmental protection and decarbonization efforts have ramped up in the past few decades, policymakers around the world have come up with a variety of schemes to lower industrial emissions. The Kyoto Protocol in 1997 committed developed nations to reduce their greenhouse gas (GHG) emissions by a defined amount from 1990 levels by 2012. The treaty was never brought up for ratification in the U.S. Senate, which unanimously opposed it because developing nations — such as China — weren’t included. Across the Atlantic, the Kyoto Protocol was received much more favorably, with all 15 members (at the time) of the European Union (EU) ratifying the treaty in 2002. In 2005, the EU launched the Emissions Trading System (ETS) as a mechanism to help reduce emissions from power plants, industrial facilities and commercial aviation, covering nearly half of total EU emissions. In today’s RBN blog, we explain the European cap-and-trade system, examine how the ETS is affecting the EU’s refining industry as a whole, and drill down to the refinery level to discuss disparities in carbon-cost exposure from one refinery to the next.
The world is full of paradoxes and apparent contradictions, like the phrase “this page intentionally left blank” on an otherwise empty page in a government report, and the energy sector is no different. The U.S. is the world’s largest exporter of the “Big 3” petroleum products — gasoline, diesel/gasoil and jet fuel/kerosene — but it still imports significant volumes of those very same products. That paradox, which is not unlike the U.S.’s need to both export and import various grades of crude oil, is tied to a mismatch between where the product is produced and where it is consumed. In today’s RBN blog, we look at the factors that contribute to that mismatch and what it means for U.S. “Big 3” production and exports going forward.
If you follow developments in the energy industry, you know that news about permitting for major infrastructure projects can sometimes read more like a horror story: 14 years to build an electric transmission line, a decade to get a mining permit, and the reality that some projects can be constructed in far less time than it takes to secure the required permits and work through any legal challenges. It’s a known problem with a lot of contributing factors, but no easy answers. In today’s RBN blog, we look at how permitting difficulties have become a flashpoint for all sorts of stakeholders — industry groups, environmental advocates, the general public, and politicians of all stripes. Our focus today will be on the current poster child of permitting challenges, Mountain Valley Pipeline (MVP), but we’ll also discuss how permitting setbacks complicate the development of all types of projects, from traditional oil and gas pipelines to initiatives at the heart of the energy transition.
At first glance, the Environmental Protection Agency’s (EPA) proposal to facilitate increased sales of E15 — an 85/15 blend of gasoline blendstock and ethanol — by putting it on the same summertime regulatory footing as commonly available E10 in eight Midwest/Great Plains states might seem like a boon to corn farmers and ethanol producers. But as we discuss in today’s RBN blog, there are a number of economic, practical and even psychological barriers to broadened public access to — and use of — E15 that go well beyond the specific regulatory issue the EPA proposal addresses. As a result, as we see it, EPA’s plan is unlikely to boost E15 demand in any meaningful way, at least for now.
Oil and gas production in the Shale Era is a refined, controlled process — and a far cry from the early days of wildcatting a century ago. Modern drilling typically involves multiple wells on a single well pad, with each well going through a four-stage process to produce hydrocarbons that are then separated into distinct components. In today’s RBN blog, we look at how drilling-and-completion techniques have evolved over the years, from old-school vertical wells to the highly complex strategies targeting shale areas today, and how they set the stage for hydrocarbon production and recovery.
Over the next couple of years — and the next couple of decades — global supply/demand dynamics in refined products markets will be driven by two critically important factors. The first is the understandable reluctance of refiners to expand capacity in the face of climate policy and ESG headwinds. The second is a growing gap between policymakers’ aggressive energy-transition goals and the global pivot to a renewed focus on energy security brought about by the Russia-Ukraine war and worries about China’s global ambitions. These factors, which will fuel the prospects for constrained supply and higher-for-longer demand, have far-reaching implications, not only for refinery owners but also for E&Ps, midstreamers, exporters, energy industry investors and policymakers, all of whom need to gain a clearer understanding of what’s just ahead — and what’s over the horizon, just out of sight. In the encore edition of today’s RBN blog, we discuss key findings in “Future of Fuels,” a new, in-depth report by RBN’s Refined Fuels Analytics practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short-, medium- and long-term.