Risk

When carbon dioxide (CO2) is captured and stored deep underground, a process known as carbon capture and sequestration (CCS), it’s supposed to remain there permanently. Although much of today’s emphasis is on moving carbon-capture projects from aspirational to operational, there are long-term challenges to making sure those emissions stay put away for good, even if the odds of a significant leakage are considered remote. In today’s RBN blog, we look at the common risk factors for carbon-capture projects, explain why a site’s post-injection care-and-monitoring period can last for several decades, and detail the leakage risks that project planners must be prepared to handle.

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.

Welcome to 2021! We finally have that train wreck of a year 2020 behind us, and it’s time to look forward.  At RBN, we have a long-standing tradition of doing just that in our annual Top 10 Energy Prognostications, where we lay out our expectations for the most important developments for the coming year. But how is that possible amid the chaotic market conditions still ahead? So much has changed, so many market factors have been disrupted, and so few guideposts remain unscathed, there is just no way to predict what is going to happen next, right? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2021 has in store.

The energy industry in North America is in crisis. COVID-19 remains a remarkably potent force, stifling a genuine rebound in demand for crude oil and refined products — and the broader U.S. economy. Oil prices have sagged south of $40/bbl, slowing drilling-and-completion activity to a crawl and imperiling the viability of many producers. The outlook for natural gas isn’t much better: anemic global demand for LNG is dragging down U.S. natural gas prices — and gas producers. The midstream sector isn’t immune to all this negativity. Lower production volumes mean lower flows on pipelines, less gas processing, less fractionation, and fewer export opportunities. But one major midstreamer, Enbridge Inc., made a prescient decision almost three years ago to significantly reduce its exposure to the vagaries of energy markets, and stands to emerge from the current hard times in good shape — assuming, that is, that it can clear the major regulatory challenges it still faces. Today, we preview our new Spotlight report on the Calgary, AB-based midstream giant, Enbridge, which plans to de-risk its business model.

In observance of today’s holiday, we’ve given our writers a break and are revisiting a recently published blog on our last Spotlight Report on Enbridge, Inc. If you didn’t read it then, this is your opportunity to see what you missed! Happy Thanksgiving!

The energy industry in North America is in crisis. COVID-19 remains a remarkably potent force, stifling a genuine rebound in demand for crude oil and refined products — and the broader U.S. economy. Oil prices have sagged south of $40/bbl, slowing drilling-and-completion activity to a crawl and imperiling the viability of many producers. The outlook for natural gas isn’t much better: anemic global demand for LNG is dragging down U.S. natural gas prices — and gas producers. The midstream sector isn’t immune to all this negativity. Lower production volumes mean lower flows on pipelines, less gas processing, less fractionation, and fewer export opportunities. But one major midstreamer, Enbridge Inc., made a prescient decision almost three years ago to significantly reduce its exposure to the vagaries of energy markets, and stands to emerge from the current hard times in good shape –– assuming, that is, that it can clear the major regulatory challenges it still faces. Today, we preview our new Spotlight report on the Calgary, AB-based midstream giant, Enbridge, which plans to de-risk its business model.

In 2019, there has been a significant shift in crude oil and natural gas markets. Prices have remained stubbornly low, even when faced with the risk of significant turmoil like the Saudi drone attacks. Investors are far less forgiving, and energy-related equity values continue to lag most other sectors, despite most companies returning more of their earnings to shareholders. Oil and gas producers are focused on their sweetest of sweet spots, wringing every crumb of financial return from their investments. The risk-return equation has changed. All this makes now a good time to examine the strategies and tactics necessary for survival in this challenging phase of the Shale Era. That is especially true for the players who seem to be doing everything right, because some of the worst management mistakes can occur when performance is good.

For the past decade or more, master limited partnerships (MLPs) have been one of the most popular forms used by energy companies to capitalize themselves and one of the most rewarding for their investors. These investments offered income, in most cases steadily growing, at a time of historically low interest rates.  They also offered capital appreciation as the sector more often than not was one of the best performing in terms of equity returns.  So what explains the rapid collapse in value that has been experienced over the past few months?  Today in Part 2 of RBN’s series on MLPs, we delve further into that question, looking at Incentive Distribution Rights (IDRs) and our friends at Alerian provide a list of 118 MLPs including the “IDR splits”.