The next wave of Permian crude oil pipeline infrastructure is getting completed as we speak. In West Texas, several new pipeline projects are either finalizing their commercial terms and agreements, wrapping up the permitting process, or actually putting steel in the ground. In the Permian alone, there is a potential for 4.3 MMb/d of new pipeline takeaway capacity to get built in the next two and a half years. Along with those major long-haul pipelines, there are also crude gathering systems being developed to help move production from the wellhead to an intermediary point along one of the big new takeaway pipes. While we often like to give pipeline projects concrete timelines with hard-and-fast online dates, the actual logistics of how producers, traders and midstream companies all bring a pipeline from linefill to full commercial service are never clean and simple. There can be a lot of headaches, learning curves, and expensive — not to mention time-consuming — problem-solving exercises that come with the start-up process. In today’s blog, we discuss why new pipelines often experience growing pains, and how market participants navigate the early days of new systems.
Crude oil exports out of the U.S. are the topic du jour these days. At the heart of the discussion are the who, what, where and when of how the export capacity will be developed. Who is going to build the next crude oil export terminal, what type will it be (offshore or onshore), where are they going to put it (Corpus, Houston, Louisiana — the list goes on), and when will that new capacity be available? Everyone seems to have a different answer, and for good reason. Crude oil export terminals aren’t easy to develop, any way you look at them. Today, we examine the financial and logistical hurdles that export terminals must clear in order to reach a final investment decision, and what those obstacles mean for what kind of terminal gets built, where it gets built, who builds it and how soon.
Crude oil production in the U.S. continues to rise — it currently stands at 12.4 MMb/d, up more than 1.6 MMb/d from 12 months ago, according to the most recent data from the Energy Information Administration (EIA). New pipeline projects from Cushing and West Texas to the Gulf Coast are being developed to ensure there is enough flow capacity to move all those barrels from the wellhead to refineries and export docks. Which leads to two critical questions — namely, how much actual crude oil export capacity is already in place at the Gulf Coast, and how much more needs to be developed? Today, we begin a series presenting our latest analysis of crude oil export capacity in the U.S., our forecast for total export demand, and our view of what it all means for the large slate of potential projects.
It’s impossible to know for certain what will happen next in the international markets for propane, butane and ethane — there are too many variables and vagaries. What is very doable, though, is to gain a better understanding of the broader market forces at play. For example, the U.S. now has a few years under its belt as a major propane exporter, so it’s feasible to assess trends in where that propane is going — or no longer going — and to examine how propane exports to various parts of the world are impacted by everything from a high-stakes trade war to governmental efforts to encourage the use of cleaner cooking fuel. Today, we continue our deep-dive into propane, butane and ethane exports with a look at where propane exports from the U.S. East, West and Gulf coasts are heading, and why.
When it comes to getting crude oil to market, bottlenecks have always existed. Back in 2013-15, producers and shippers in the Rockies faced a serious lack of takeaway options. Midstreamers saw the problem and the money to be made, and quickly built more crude-by-rail capacity — and, over time, pipeline capacity — to fix things. Recently, major takeaway constraints emerged in the Permian, much to the detriment of netbacks at the wellhead. There was real concern for a few months that some producers might need to shut in production as there wasn’t any way to get incremental barrels out of the basin. Again, traders and midstream operators got savvy, restarted some dormant crude-by-rail options, initiated long-haul trucking out of Midland, and added more pipe capacity. But what if the next big bottleneck isn’t between two land-based trading hubs? What if there’s not enough export capacity at terminals along the Gulf Coast, the gateway to international markets? In today’s blog, we examine recent export and production trends, and discuss what those could mean for export infrastructure and logistics over the next five years.
With U.S. natural gas production levels near all-time highs and storage injections running strong, LNG exports will be a critical balancing item for the domestic gas market this year. Yet feedgas demand in recent months has been anything but stable; rather, it’s proving to be susceptible to volatility, driven by a combination of offshore weather conditions, maintenance events, start-up activity and global market conditions, among other factors. At the same time, timelines for the remaining 20 MMtpa (2.6 Bcf/d) of new liquefaction capacity still due online this year are moving targets as coastal weather, construction-related delays and other variables affect target completion dates. Today, we discuss highlights from our new Drill Down Report on the impacts of recent and upcoming LNG export capacity additions.
Ten weeks after an explosion crippled a key natural gas takeaway route out of the Marcellus/Utica, the capacity finally has been fully restored. Texas Eastern Transmission two days ago said it’s lifting all restrictions on the affected section of pipe. The outage began on January 21 and partial service resumed eight days later, but TETCO’s Northeast production receipts during the event averaged about 700 MMcf/d lower than usual and the line’s flows to the Gulf Coast were cut by 30-40%. That, along with two severe polar-vortex periods in January that overlapped with the outage, caused a reshuffling of flows across other pipelines in the region. Today, we wrap up this series with a look at the implications of the outage on the Northeast gas market and what to expect now that it’s ended.
In a world where Marcellus/Utica natural gas supplies and Gulf Coast gas demand are increasingly interdependent, what would happen if flows along a critical route connecting the two regions were disrupted? The market caught a glimpse of that on January 21, when an explosion on Texas Eastern Transmission’s 30-inch line in Noble County, OH, shut down flows through its Berne compressor, which serves as a key gateway for Gulf Coast-bound gas out of Appalachia. Partial service was restored a few days later, but a chunk of the capacity remains offline as repairs are completed, and southbound volumes are running at 60% of what they were prior to the outage. Not too long ago, an outage severing Northeast producers’ access to a major takeaway route to the Gulf would have hammered Northeast supply prices, even during the peak winter demand months. But as expansion projects have vastly improved pipeline connectivity within Appalachia and takeaway capacity out of the region, they’ve transformed how some of those legacy long-haul pipelines function and even the role they play in the market. The TETCO outage provides a glimpse into what that will mean for the Northeast and its downstream markets. In today’s blog, we begin a series looking at the implications of a well-connected Marcellus/Utica, starting with a recap of the TETCO event and its immediate impacts on southbound flows.
In the past month, two integrated majors with strong footprints in the Permian Basin announced plans to increase their refining capacity along the Texas Gulf Coast. During the last week of January 2019, ExxonMobil announced a final investment decision to expand its Beaumont, TX, facility’s capacity by 250 Mb/d, making it the largest U.S. refinery, and then confirmed an investment with Plains All American and Lotus Midstream to build a 1-MMb/d pipeline to ship crude to its Beaumont and Baytown, TX, refineries. In the same week, Chevron announced its purchase of the 110-Mb/d Pasadena, TX, Houston Ship Channel refinery from Brazil’s national oil company, Petrobras. Both Exxon and Chevron boasted record Permian production in their fourth quarter 2018 earnings calls. Today, we review Chevron’s purchase and Exxon’s expansion in light of Permian production growth and the changing Gulf Coast refining market.
The dam has broken on the “second wave” of U.S. LNG export projects. ExxonMobil and Qatar Petroleum last week announced a final investment decision on their joint venture liquefaction and export project — called Golden Pass Products — at the brownfield site of the Golden Pass LNG terminal on the Texas side of the Sabine-Neches Waterway. That’s a skipping stone’s throw from Cheniere Energy’s Sabine Pass LNG and Sempra Energy’s Cameron LNG terminals on the Louisiana side of the Gulf of Mexico outlet, as well as a number of other second-wave contenders. With construction slated to begin late next month, the Golden Pass project expects to become operational and begin taking feedgas by 2024. Today, we provide an update on Golden Pass, its potential feedgas needs and how it will be supplied.
The U.S. Treasury Department last week announced new sanctions on Petróleos de Venezuela, S.A. (PDVSA), the national oil company of Venezuela, that effectively halts imports of Venezuelan crude oil into the U.S. Given that the Venezuelan crude imported to the U.S. is of the heavy sour variety, which is not produced in large amounts in the U.S. (except for California), certain refineries along the Gulf Coast are left scrambling to find alternative sources of feedstock for their facilities. Today, we evaluate historical crude oil imports from Venezuela, the refineries that are most heavily impacted, and the potential effects of the sanctions on U.S. refiners.
LPG export terminals along the Gulf Coast account for more than nine of every 10 barrels of propane and normal butane that are shipped from the U.S. to foreign buyers. That makes perfect sense, given the terminals’ proximity to major NGL production areas like the Permian, the Eagle Ford and SCOOP/STACK, and to the world-class fractionation hub in Mont Belvieu, TX. But, increasingly, LPG terminals on the East and West coasts, are growing in significance. On the Atlantic side, Marcus Hook, near Philadelphia, is enabling more and more volumes of Marcellus/Utica-sourced propane and butane to reach overseas markets. And, as we discuss in today’s blog, West Coast exports are on the rise as well, with Petrogas’s Ferndale terminal in Washington state providing a straight shot across the Pacific to Asia for propane and butane fractionated in Western Canada, plus a good bit more LPG export capacity under development in British Columbia.
U.S. production of natural gas liquids is projected to increase by 17% this year, and by another 10% in 2020, according to RBN’s forecast. These gains will result in similar increases in the output of propane and normal butane — two NGL purity products generally referred to as LPG — and, with U.S. demand for LPG expected to stay relatively flat, most of the incremental volumes will be sent to export terminals for shipment to foreign buyers. The question is, will the nine U.S. marine terminals that are equipped to send out LPG have enough capacity to handle the much-higher flows? Today, we continue our series with a review of four smaller export terminals along the Gulf and East coasts.
LPG exports out of Gulf Coast marine terminals averaged 1 MMb/d in 2018, a gain of 12% from 2017 and 35% from 2016. And, with U.S. NGL production rising steadily, 2019 is looking to be another banner year for LPG shipments to overseas buyers. The increasing volume of propane and normal butane — the NGL purity products generally referenced as LPG — is filling up the existing export capacity of the Gulf Coast’s six LPG terminals and spurring the development of a number of expansion projects. Today, we continue our blog series on propane and butane export facilities along the Gulf, West and East coasts, and what’s driving the build-out of these assets.
In 2018, a handful of midstream companies started racing to develop deepwater export terminals along the Gulf Coast that can fully load Very Large Crude Carriers (VLCCs) with 2 MMbbl of crude oil from the Permian and other plays. While some of those companies are moving toward final investment decisions (FIDs) that would bring their plans to fruition in the early 2020s, terminal operators with existing VLCC-capable assets — both onshore and offshore — turned up the volume in a major way in December. Today, we outline the strides made in recent days by the export programs of the Louisiana Offshore Oil Port (LOOP), Seaway Texas City and Moda Midstream.