Barge

Heightened worldwide competition among LNG exporters is forcing a reality check on projects. LNG buyers, most of them in the Asia/Pacific region, are pressing for prices that more closely track natural gas value at the source—plus the known or calculable costs of liquefaction and shipping. Projects whose capital costs put their LNG pricing out of the money will not find the buyers they need to make their projects a “go.” The 16 or more LNG export projects under development in Western Canada are going through a winnowing process of sorts right now, largely because all are greenfield efforts and all but the smallest projects require new, expensive pipeline capacity to move their gas to port.  Today in the third blog in our series on Western Canadian LNG exports, we examine the remaining field of contenders, including some floating or barge-based proposals that may gain an edge.

Midstream infrastructure companies are investing heavily in facilities to gather, store and transport condensate and natural gasoline range materials in the Utica. The expectation is that production of these light hydrocarbons from the wellhead and gas processing/fractionation plants will increase significantly in 2014. Today we take a deep dive into two company’s plans for condensate and natural gasoline takeaway.

The volume of crude moving out of Corpus by barge and tanker increased from 7 Mb/d in January 2012 to 370 Mb/d in May 2013. At the same time two 300 Mb/d plus pipelines from the South Texas Eagle Ford to Houston are running at less than half full. We know these stats because of information from a company called Clipper Data, which among other things provides detailed waterborne movements of Eagle Ford crude from the Port of Corpus Christi to Gulf Coast destinations. Today we examine the shipping data for clues.

Houston is getting swamped with crude that isn’t being consumed by area refineries. Light sweet crude prices are being discounted by up to $6/Bbl versus St James, LA. There is no pipeline capacity to move crude from Houston to Louisiana so it can only go by barge. The reconfiguration of terminalling and storage capacity on the Texas Gulf Coast to handle rising volumes of incoming crude more smoothly is underway but far from finished. Enterprise Product Partners (EPP) announced their latest expansion plans for their ECHO terminal earlier this month. Today we review progress on the Enterprise Texas crude network.

The Gulf Coast region is the biggest refining destination for the flood of new crude oil being produced domestically and in Canada. Large terminals are needed to receive, store, blend and redistribute this crude to refineries.

Last week the latest set of Bakken crude production numbers showed another big increase to reach 728 Mb/d. The challenge all along for this prolific land locked basin has been one of finding a ready market for growing production.

Most Americans only come into contact with the Jones Act when they wonder why their cruise ship stopped off at a foreign port. This maritime legislation from a bygone era (1920) is nearly a century old. The Jones Act increases costs for US coastal shipping. That constraint has restricted the availability of waterborne options to alleviate recent US energy supply bottlenecks. Today we look at the impact of the legislation in energy markets.

The US American Phoenix, a 339 MBbl oil tanker built in Mobile, AL was launched earlier this year on June 21, 2012 (see picture below). The American Phoenix is the only US built tanker to be launched so far in 2012. On her maiden voyage in August the American Phoenix delivered a cargo of gasoline from Lake Charles, LA to Port Canaveral FL, two United States ports.