Chicago

The prospect of a massive buildout of data centers across the U.S. has utilities preparing for a surge in power demand. And while access to an uninterrupted power supply is a critical factor for companies deciding where to build a data center, it’s not the only variable — power prices and proximity to customers also play a major role. In today’s RBN blog, we’ll look at where data centers are deployed across the U.S., the major factors that determine where a facility gets built, and how the sudden expansion is playing out in the major U.S. technology hubs. 

There was a lot of hand wringing and gnashing of teeth last week in energy markets, and it had nothing to do with the OPEC non-event.  Instead, the focus was Kinder Morgan (KMI), granddaddy of U.S. midstream companies, and usually a darling of analysts and media.  Not this time.   Over the past few days the stock has been hammered, Moody’s downgraded its debt, and a lot of folks in the market have been trying to figure out what is going on.   Particularly since all the hubbub would seem to be about a relatively minor investment (in energy infrastructure terms) in a pipeline called Natural Gas Pipeline of America, or NGPL, one of the oldest of the long-line systems in the U.S., which came online 84 years ago and Kinder Morgan has owned all (or part of) since 1999.  In today’s blog, we look at this pipeline system and what it tells us about the current state of the natural gas markets.

Since the start of the shale oil boom in 2011 crack spread margins for Midwest refiners have averaged about $23/Bbl. Once written off refineries on the East Coast have averaged $16/Bbl this year so far (2015) and California refiners are currently enjoying average $24/Bbl crack spreads. Refinery utilization at the Gulf Coast has averaged close to 90% for the past 4 years and 92% in the Midwest. Today we review buoyant margins and operating levels at U.S. refineries.

The U.S. Midwest region is slated to get an infusion of cheaper Northeast natural gas supply later this year as the first of five new westbound pipeline expansions is expected to begin service in November. Already a couple of projects are moving gas to the Midwest from the Northeast.  The Northeast-to-Midwest capacity will have a huge impact on the Midwest supply stack and consequently on prices. The Chicago Citygates forward curve shows prices flipping from premiums to discounts later this year. Today’s blog continues our look at how new pipeline capacity will re-shuffle the Midwest’s supply stack and change regional pricing.

Much of RBN’s forecast 1.4 MMb/d expansion in Canadian crude production between 2014 and 2019 is expected to come from oil sands bitumen in Western Canada. An increasing proportion of this crude has to find its way to refineries configured to process this type of crude on the Gulf Coast. But pipeline capacity on that route is in critically short supply.  An important set of expansions to existing Enbridge and Enterprise pipelines between Canada and Texas, parts of which are set to come online soon, hopes to alleviate the situation. Today we wrap up a two part series describing these projects and their impact.

Increasing production of naphtha range material such as condensates and natural gasoline in the southeastern Ohio section of the Utica shale will soon exceed the capacity of local refineries to process such light hydrocarbons. Midstream logistics companies like MPLX are developing infrastructure to transport condensate, natural gasoline and the more limited supplies of crude produced in the Utica to refineries further afield. There is also demand for condensate and natural gasoline to be used as diluent to reduce the viscosity of Western Canadian heavy crude bitumen. Today we describe MPLX and its sponsor Marathon Petroleum Corporation’s (MPC) recently announced long term takeaway transportation plans.