xPortCon

A long-planned ship-channel deepening and widening project in Corpus Christi Bay is in its last innings and is about to start having a real impact. Later this summer, a 7-foot-deeper channel at Ingleside will enable terminals there to load additional barrels into VLCCs, assuming they’ve dredged their berths to match the deeper channel. Deepening the channel to 54 feet (from the old 47 feet) also will enable terminals that have deepened their berths to fully load 1-MMbbl Suezmaxes, up from the 800-850 Mbbl that can be loaded now. Crude oil export economics in South Texas will get another boost in late 2024 when the fourth and final portion of the $680 million dredging project is completed. In today’s RBN blog, we discuss the dredging project, its steady progress, and its impact on the “battle for barrels” among Corpus, the Houston area and a quartet of proposed offshore terminals.

A long-planned ship-channel deepening and widening project in Corpus Christi Bay is in its last innings and is about to start having a real impact. Later this summer, a 7-foot-deeper channel at Ingleside will enable terminals there to load additional barrels into VLCCs, assuming they’ve dredged their berths to match the deeper channel. Deepening the channel to 54 feet (from the old 47 feet) also will enable terminals that have deepened their berths to fully load 1-MMbbl Suezmaxes, up from the 800-850 Mbbl that can be loaded now. Crude oil export economics in South Texas will get another boost in late 2024 when the fourth and final portion of the $680 million dredging project is completed. In today’s RBN blog, we discuss the dredging project, its steady progress, and its impact on the “battle for barrels” among Corpus, the Houston area and a quartet of proposed offshore terminals.

Only 20 years after Colonel Edwin Drake drilled the first commercial oil well in Titusville, PA, in 1859, the U.S. was responsible for 85% of global crude oil production and refining. But over the next century, the country became increasingly dependent on oil imports — concerningly so at times. Thanks to the Shale Revolution, the U.S. is now on the verge of a sea change in the supply-and-demand dynamics for crude oil, gasoline, diesel, jet fuel and other petroleum products. In the coming years, as U.S. crude production continues to increase, essentially all incremental barrels will flow to export markets, possibly through one or more of the new offshore terminals under development off the U.S. Gulf Coast. Export growth — and the midstream infrastructure needed to facilitate it — was one of many topics covered at our recent xPortCon 2023 and the subject of today’s RBN blog, which also announces the availability of videos from last Thursday’s packed-to-the-gills conference.

For the U.S. oil patch, exports are the lifeblood of today’s market. U.S. refineries are operating at more than 90% of their rated capacity and using as much domestically produced light-sweet shale oil as their sophisticated equipment will allow. That means that virtually all of the incremental U.S. unconventional light-sweet crude oil production will need to be piped to export terminals along the Gulf Coast, loaded onto tankers, and shipped to refineries overseas. In today’s RBN blog, we discuss what this undeniable link between crude oil exports and production growth means for U.S. E&Ps and midstream companies — and the future of the oil and gas industry.

May the 4th be with you! Today — Star Wars Day to many of us — we borrow (and bastardize) one of the most memorable quotes from that epic collection of movies, “May the Force be with you,” to make the point that, like the “Force” that shapes events in the Star Wars universe, for the U.S. oil patch, exports are the lifeblood of today’s market. U.S. refineries are operating at more than 90% of their rated capacity and using as much domestically produced light-sweet shale oil as their sophisticated equipment will allow. That means that virtually all of the incremental U.S. unconventional light-sweet crude oil production will need to be piped to export terminals along the Gulf Coast, loaded onto tankers, and shipped to refineries overseas. In today’s RBN blog, we discuss what this undeniable link between crude oil exports and production growth means for U.S. E&Ps and midstream companies — and the future of the oil and gas industry.

The world is full of paradoxes and apparent contradictions, like the phrase “this page intentionally left blank” on an otherwise empty page in a government report, and the energy sector is no different. The U.S. is the world’s largest exporter of the “Big 3” petroleum products — gasoline, diesel/gasoil and jet fuel/kerosene — but it still imports significant volumes of those very same products. That paradox, which is not unlike the U.S.’s need to both export and import various grades of crude oil, is tied to a mismatch between where the product is produced and where it is consumed. In today’s RBN blog, we look at the factors that contribute to that mismatch and what it means for U.S. “Big 3” production and exports going forward.

Crude oil exports are hitting record volumes. Geopolitical dislocations, regional capacity constraints, and transport cost aberrations are upending global trade flows. These developments have a direct impact on U.S. export grades, prices, and the utilization of pipelines and terminals. Petroleum product exports have an equally formidable set of challenges. U.S. surpluses of refined products are growing as domestic demand falls and biofuel penetration increases. The impact will translate directly into shifts in flows between PADDs, the repurposing of infrastructure, and more exports from the Gulf Coast. We’ll be exploring these and many more developments at our upcoming conference, xPortCon-Oil 2023, to be held in Houston on June 8, 2023. In this blatantly advertorial blog, we will introduce the major topics to be covered at the conference, who will be participating, and why we believe this will be the most important industry gathering for crude and products markets this year.

Trading in the highly integrated US/Canadian crude oil market is undergoing a profound transformation, driven mostly by the pull of exports off the Gulf Coast. But the shifts in flows, values and even the trade structures being used today are not well understood outside a small cadre of professional traders and marketers. Consider a few examples: Domestic sweet oil traded at Cushing on NYMEX is not West Texas Intermediate — WTI at Cushing has averaged a hefty $1.80/bbl over NYMEX for the past year. Most spot Houston and Midland crudes trade as buy-sell swaps. WTI in Houston trades at a discount to Corpus Christi and sweet crudes in Louisiana. Crude in Wyoming trades at a premium to Cushing. And the Gulf Coast is the highest-value market for Canadian heavy crude. This is not your father’s (or mother’s) oil trading game. Our mission in this blog series is to pull back the curtain on physical crude trading in North America, explain how it works, what sets the price, and who is doing the deals. 

Trading in the highly integrated US/Canadian crude oil market is undergoing a profound transformation, driven mostly by the pull of exports off the Gulf Coast. But the shifts in flows, values and even the trade structures being used today are not well understood outside a small cadre of professional traders and marketers. Consider a few examples: Domestic sweet oil traded at Cushing on NYMEX is not West Texas Intermediate — WTI at Cushing has averaged a hefty $1.80/bbl over NYMEX for the past year. Most spot Houston and Midland crudes trade as buy-sell swaps. WTI in Houston trades at a discount to Corpus Christi and sweet crudes in Louisiana. Crude in Wyoming trades at a premium to Cushing. And the Gulf Coast is the highest-value market for Canadian heavy crude. This is not your father’s (or mother’s) oil trading game. Our mission in this blog series is to pull back the curtain on physical crude trading in North America, explain how it works, what sets the price, and who is doing the deals. 

U.S. production of renewable diesel (RD) is rising fast and production of sustainable aviation fuel (SAF) will soon follow suit, driven largely by federal and state incentives. But U.S. demand for both RD and SAF is growing at a more measured pace, mostly because they are throttled by a number of other governmental policies, including the level of blending mandates set by the Environmental Protection Agency (EPA). As we see it, the net effect of this disconnect between domestic supply and demand will be the U.S. becoming a net exporter of RD this year and a net exporter of SAF in 2025 — but only after a spike in SAF imports in 2023-24. Yes, it’s complicated, but with public-sector policies impacting both sides of the supply/demand scale, did you really expect it wouldn’t be? In today’s RBN blog, we look at two more energy products the U.S. will be exporting.