tariff

The looming threat of a 10% tariff on U.S. imports of Canadian crude oil hasn’t just angered Canadians — and understandably so, we might add. It’s also put a spotlight on PADD 2 — the Midwest/Great Plains region — whose pipelines transport the vast majority of Canadian exports and whose 25 refineries (combined capacity 4.3 MMb/d) are, in many cases, significant consumers of heavy and light crudes from up north. Put simply, to assess the impacts of the still-possible trade war on U.S. refiners and producers on both sides of the border, you need to understand PADD 2’s crude oil supply/demand balance and the options Midwestern refineries that currently run Canadian crude would have if a tariff were put in place. In today’s RBN blog, we’ll discuss these dynamics. 

China exceeded Canada as the largest buyer of U.S. crude exports for the first time in February 2017 and in year-to-date 2018 has averaged 378 Mb/d versus Canada’s 347 Mb/d. Ramping up purchases from virtually nothing in 2015 to more than 500 Mb/d in June 2018 was no small feat — the logistics in getting that much oil across the world include multiple ship-to-ship transfers, several weeks at sea and a whole lot of negotiating between U.S. crude marketers and the major Chinese buyers: Unipec and PetroChina. That already complicated process has recently been made just a little more complicated by the escalating trade war rhetoric between the U.S. and China. In today’s blog, which launches our new Crude Voyager service, we explain how crude flows to China are evolving.

Yesterday (August 3, 2015) Brent crude closed under $50/Bbl for the first time since January 2015. At that price expensive crude-by-rail (CBR) freight costs to the East Coast leave Bakken producers with netbacks not much over $30/Bbl. Yet CBR shipments to the East Coast were still over 400 Mb/d in May 2015 according to the Energy Information Administration (EIA). By 2017 there should be adequate capacity to get all Bakken crude to market by pipeline. But direct pipeline competition against rail to the East Coast is not expected until at least 2020. Today we look at the future of East Coast CBR.

Recently there has been a spate of pipeline tariff filings to the Federal Energy Regulatory Commission concerning crude oil quality specifications for Bakken crude in North Dakota.  While the immediate disagreement between pipeline company Enbridge and shipper Plains Marketing appears to have been resolved, it has highlighted an issue which has not received much attention until now. Today we detail the concerns.

The generation of power from natural gas will be the most important growth sector for the gas industry for the foreseeable future – certainly for producers, but also for the pipelines that provide the transportation service to deliver the gas to power generators. Handling the infrastructure and service challenges that come with increased power burn is therefore a priority. This is true for the nation as a whole, but was specifically raised this year by the Midwest Independent System Operator (MISO) in the heart of coal country - where coal-to-gas switching was most significant during 2012. We covered the MISO reports detailing their infrastructure concerns previously (see Hooking Up the Next Generation). This blog post is a review of challenges that the industry must address on both the regional and national level.