There’s never been any reason to question the drivers for energy infrastructure development — until now. Historically, the drivers were almost always “supply-push.” The Shale Revolution brought on increasing production volumes that needed to be moved to market, and midstreamers — backed by producer commitments — responded with the infrastructure to make it happen. But now things seem to be different. U.S. energy infrastructure investment is soaring across crude oil, natural gas and NGL markets and, as in previous buildouts, midstreamers are bringing on new processing plants, pipelines, fractionators, storage facilities, export terminals and everything in between. We count nearly 70 projects in the works. But crude production has been flat as a pancake, natural gas is down, and lately NGLs are up — but as you might expect, only in one basin: the Permian. So what is driving all the infrastructure development this time around? In today’s RBN blog, we’ll explore why that question will be front-and-center at our upcoming School of Energy: Catch a Wave. Fair warning, this blog includes an unabashed advertorial for our 2024 conference coming up on June 26-27 in Houston.
In observance of Memorial Day, we are giving our analysts a break and replaying a recently published blog on oil, gas and NGL markets. If you didn’t read it then, this is your opportunity to see what you missed!
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Anemic Production Trends
Let’s start with the first part of our basic premise — production of what we refer to as the three drillbit hydrocarbons has been mostly flat. As shown in the left graph in Figure 1 below, U.S. crude oil production today stands at 13.1 MMb/d. In fact, it's averaged 13.1 MMb/d for the past 10 months. Lower 48 natural gas production (middle graph) inched higher last year, up to an all-time record of 105 Bcf/d in December, but has steadily declined this year to about 96 Bcf/d (dashed green circle), back to where it was two years ago, in May 2022. The one bright spot is NGLs (right graph), up about 7% from the first half of 2023 to an average of 6.7 MMb/d over the past 12 months.
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About the song
“Never Been Any Reason” was written by Mike Somerville and appears as the first song on side one of Head East’s debut album, Flat as a Pancake. It was released as a single in June 1975 and went to #68 on the Billboard Hot 100 Singles chart. Head East guitarist Mike Somerville wrote the song and it quickly became a staple on FM radio stations at the time. Regional club rock bands in the late 1970s — including Tulsa's Paradise, which included two future members of RBN —could attest to its ability to immediately fill any dance floor. The song continues to get constant rotation on classic rock radio stations today and has been certified Gold by the Recording Industry Association of America (RIAA). It was featured in the films Dazed and Confused and Sahara. Personnel on the record were: John Schlitt (lead vocals), Steve Huston (lead, backing vocals, drums, cowbell), Roger Boyd (synthesizers, backing vocals), Mike Somerville (guitar, backing vocals), and Dan Birney (bass).
Flat as a Pancake was recorded at Golden Voice in South Pekin, IL, in 1974. Originally released on the independent Pyramid Records label, it was picked up by A&M Records and re-released in June 1975. Produced by Head East keyboardist Roger Boyd, the album went to #26 on the Billboard 200 Albums chart and has been certified Gold by the RIAA. On a side note, the back cover photo of the band was taken at the Rite-Way Diner, still in operation as the Olivette Diner in Olivette, MO. One may assume that the mouth-watering front cover shot of a pancake was taken at the same location. Two singles were released from the LP.
Head East is an American rock band formed in Champaign, IL, in 1969 by singer John Schlitt, guitarist Danny Piper, bassist Larry Boyd, keyboardist Greg Boyd, and drummer Steve Huston. Danny Piper and Larry Boyd were replaced by Mike Somerville and Dan Birney. They are best known for their hit, “Never Been Any Reason.” The band remains popular in the Midwest and Deep South. According to founding member Steve Huston, the band’s roadie, Baxter Twilight, came up with the band’s name after an all-night LSD party at the band’s communal house/rehearsal space. Twilight went to the front yard of the house as the sun was rising and saw the sun turn into a giant talking head which proclaimed the band should be called “Head East.” (Rumors that the acid was extra-potent back in the day around the campus of the University of Illinois where the band attended school may be true.) Head East has released 10 studio albums, five live albums, and nine singles. Thirty-four members have passed through the band since its inception. Guitarist Mike Somerville died in 2020 at the age of 67. Drummer Steve Huston died in 2023 at the age of 73. Head East, with original member Roger Boyd, continues to record and tour and will be appearing at a few festivals in the U.S. beginning in July 2024.
