Whiting

The price discount for Western Canada’s benchmark heavy crude oil has seen yet another widening in the past few months. Increased pipeline access to the U.S. was believed to be the key to solving this problem in the long term, but more recent fundamental developments surrounding pipeline egress, refinery demand and increasing heavy oil supplies demonstrate that larger discounts can — and do — still happen. This problem could persist for several more months until a better balance is achieved in downstream markets. In today’s RBN blog, we discuss the latest drivers of the wider price discounts for Western Canada’s heavy oil. 

So far, most of the merger-and-acquisition activity among crude-oil-focused producers in the COVID era has occurred where you would expect it: the Permian, which seems to dominate almost every discussion about the U.S. energy industry. More recently, though, there has been an uptick in E&P consolidation in the Denver-Julesburg Basin in the Rockies and, earlier this month, in the Bakken. There, Whiting Petroleum and Oasis Petroleum — two once-struggling producers — have agreed to a merger of equals that will create the Bakken’s second-largest producer and the largest pure-play E&P. In today’s RBN blog, we discuss the companies’ stock-and-cash deal, which will result in a yet-to-be-renamed entity with an enterprise value of about $6 billion.

Motor gasoline, diesel, and jet fuel need to be delivered in large volumes to every major metropolis in the U.S. While most big cities are well-served, some by multiple pipelines or a combination of pipelines and barges, others are more isolated and susceptible to supply interruption. Nashville, the home of country music, is one such place; so are Chattanooga and Knoxville to its east. All three Tennessee cities depend heavily on stub lines off the Colonial and Plantation refined-products pipeline systems as they work their way from the Gulf Coast to the Mid-Atlantic states. When supplies on these pipes are interrupted — and they have been from time to time — these cities can experience shortages and price spikes, and be forced to turn to trucked-in volumes from Memphis and elsewhere. Today, we discuss a supply alternative now under development that will pipe motor fuels south from BP’s Whiting refinery in northwestern Indiana to a proposed Buckeye Partners storage and distribution terminal just west of Nashville.