The Rocky Mountain region (PADD 4), with a population that is both smaller and more spread out than other parts of the Lower 48, consumes only around 650 Mb/d of refined products — just one-fourth the volume of the next-smallest PADD. That limits the need for refinery capacity, which matches the region’s average annual consumption and is only outstripped in the summer months. Yet, the Shale Revolution has impacted the Rockies as much as any other region, boosting production in the Denver-Julesburg (DJ) and Uinta basins, and the Montana portion of the Bakken. At the same time, the area has also seen increasing volumes coming in from PADD 2 and Canada. In today’s RBN blog, we’ll look at how PADD 4 dispenses these barrels and its role in balancing continental crude oil supply and demand.
Bakken
The U.S. energy industry’s midstream sector has experienced an extraordinary consolidation over the past few years. This undeniable trend has been driven by the widely held (and sensible) view that the winners in the industry’s next era will be the midstreamers with massive scale and the right assets in the best places. As evidenced by the extension of this buying spree into 2025, there’s still a lot more reshuffling to do. In today’s RBN blog, we discuss a few of the latest midstream deals in the Permian, the Eagle Ford and the Bakken, as well as highlights from our new Drill Down Report on midstream M&A.
As 2023 wrapped up one year ago, it seemed there were a lot of moving parts out there in energy markets. Capacity constraints were back on the radar screen, and while prices appeared stable, they were overshadowed by the looming threat of escalating conflicts in Ukraine and the Middle East. Opportunities abounded for energy projects, including natural gas storage, export terminals, and just about any pipeline that moved supply to the Gulf Coast. However, challenges kept popping up, from project delays like those faced by Canada’s Trans Mountain Expansion Project (TMX) to concerns about excessive nitrogen in Permian natural gas and what eventually evolved into the Biden administration's LNG “pause.”
Many of this year’s most popular RBN blogs gravitated toward familiar energy market themes — rising exports, shifts in oil production, weak natural gas prices, surprising NGL pricing dynamics and the like. However, we also noted a significant uptick in interest in topics beyond the traditional energy realm, including hydrogen, carbon capture and sequestration (CCS), electric vehicles (EVs) and even the role of artificial intelligence (AI) and data centers. It’s not that RBNers have shifted their focus away from oil, gas and NGL markets. Rather, it reflects a growing recognition that the renewable and alternative energy landscape — fueled by regulations, subsidies and tax incentives — is reshaping the energy world. For anyone in the energy business, staying one step ahead (or maybe three steps) means understanding how these trends intersect with traditional energy markets. In 2024, our readers made it clear: The interplay between renewable and conventional energy commodities is becoming increasingly important.
As 2023 was drawing to a close, folks with 401(k) plans and IRAs were wondering whether stocks would have another great year in 2024. Many of us tracking oil and gas E&Ps were asking a similar question about upstream M&A: Is there any way to match the consolidation frenzy that started in mid-2020 and didn’t let up? The answer is, yes — 2024 was another barn-burner year for acquisitions. (And for Wall Street and our investments!). In today’s RBN blog, we discuss highlights from our new Drill Down report on the past year in producer M&A.
Crude-oil-focused production in the Bakken still hasn’t fully recovered from its pre-COVID high, partly because the western North Dakota shale play continues to face takeaway constraints, especially for natural gas and NGLs. A couple of NGL pipeline projects in the works will certainly help, but will they be enough to enable the Bakken’s increasingly consolidated E&P sector to ramp up its crude oil production? And one more thing: How will the incremental NGLs flowing south on Kinder Morgan’s soon-to-be-repurposed Double H Pipeline find their way to fractionation centers in Conway and Mont Belvieu? In today’s RBN blog, we’ll look at the Bakken’s complicated production-vs.-takeaway conundrum and the ongoing efforts to address it.
There are two primary drivers for consuming more natural gas close to where it emerges from production wells. One is to eliminate routine gas flaring, which is wasteful and environmentally detrimental, and the other — especially true in takeaway-constrained plays like the Permian — is to add value to gas that otherwise would be sold downstream at steeply discounted prices. In today’s RBN blog, we discuss some innovative approaches to maximizing gas value by consuming it “in-basin” — and the potential for a lot more gas to be used in West Texas and southeastern New Mexico.
There’s been a frenetic scramble among oil and gas producers through the early 2020s to acquire top-tier acreage and production assets they think they will need to survive and thrive. Some of those acquisitions are still being done through smaller deals such as acreage swaps, but the expansion mode of choice for most has been big-time M&A, which in a single multibillion-dollar deal can add years to a company’s inventory life or perhaps give it a stronger foothold in a key production region or two. In today’s RBN blog, we discuss Devon Energy’s recently announced $5 billion acquisition of Grayson Mill Energy, yet another private-equity-backed E&P cashing in on the smart moves it has been making.
Mont Belvieu, TX and Conway, KS, are the two most significant U.S. hubs for NGL trading, storage and fractionation, with the much bigger Mont Belvieu hub primarily serving Gulf Coast and export demand, while the smaller Conway hub is focused on Midwest/Great Plains demand, especially for propane. The pricing dynamics between the two hubs are a key indicator of the supply/demand balance between the regions, but they don’t have the same kind of influence over the direction or magnitude of flows as price differential dynamics often do for other energy commodities. In today’s RBN blog, we will examine the gap between the price of the NGL “basket” in Mont Belvieu versus Conway and what that price spread tells us.
Another day, another mega-deal between top-tier oil and gas producers — or so it seems. Now, it’s ConocoPhillips and Marathon Oil’s turn, and you’d be hard-pressed to find a more logical pairing among the ever-shrinking list of big E&Ps that hadn’t already found a partner during the ongoing frenzy to consolidate. In today’s RBN blog, we examine ConocoPhillips’s newly announced, $22.5 billion agreement to acquire Marathon Oil with a look at their similar histories, their complementary assets, and what will now be their joint effort to boost shareholder returns.
On the surface, the Bakken story in the mid-2020s may seem as boring as dirt. The boom times of 2009-14 and 2017-19 are ancient history. Crude oil production has been rangebound near 1.2 MMb/d — well below its peak five years ago. And that output has been getting gassier over time, creating natural gas and NGL takeaway constraints that have put a lid on oil production growth. But don’t buy into the view that the Bakken is yesterday’s news. Beneath the surface (sometimes literally), the U.S.’s second-largest crude oil production area is undergoing a major transformation that includes E&P consolidation, production (and producers) going private, the drilling of 3- and (soon) 4-mile laterals, novel efforts to eliminate flaring, and even a producer-led push for CO2-based enhanced oil recovery (EOR). As we’ll discuss in today’s RBN blog, these changes and others may well breathe new life into the Bakken and significantly improve the environmental profile of the hydrocarbons produced there.
The demand for ethane by Alberta’s petrochemical industry has experienced a slow expansion in the past 20 or so years. However, that demand is likely to increase sharply by the end of the decade now that Dow Chemical has sanctioned a major expansion at its operations in Fort Saskatchewan, AB, that will more than double the site’s ethane requirements. As we discuss in today’s RBN blog, this will call for an “all-hands-on-deck” approach to increasing Alberta’s access to ethane supplies from numerous sources.
Think energy markets are getting back to normal? After all, prices have been relatively stable, production is growing at a healthy rate, and infrastructure bottlenecks are front and center again. Just like the good ol’ days, right? Absolutely not. It’s a whole new energy world out there, with unexpected twists and turns around every corner — everything from regional hostilities, renewables subsidies, disruptions at shipping pinch points, pipeline capacity shortfalls and all sorts of other quirky variables. There’s just no way to predict what is going to happen next, right? Nah. All we need to do is stick our collective RBN necks out one more time, peer into our crystal ball, and see what 2024 has in store for us.
Rumors about potential oil and gas mergers are always swirling, but the announcement of ExxonMobil’s record-breaking deal to acquire Pioneer Natural Resources a couple of weeks ago generated a fever pitch of speculation about potential matchups. In the past week, we’ve seen media reports of possible courtships between Devon Energy and Marathon Oil and then Chesapeake Energy and Southwestern Energy. However, it was Chevron that shocked the oil patch by swiping right on former integrated oil company Hess Corp., opting for a $60 billion acquisition of an E&P with no Permian Basin exposure. In today’s RBN blog, we analyze the drivers and implications of what is now the second-largest U.S. upstream transaction ever.
Even now, three-plus years after the start of the oil and gas industry’s biggest consolidation in a quarter century, hardly a month goes by without another major M&A announcement. Just this week, Civitas Resources said it will acquire acreage and production in the Permian from Vencer Energy for $2.1 billion. The primary drivers of these deals — many of which are valued in the billions of dollars — are clear. Among other things, E&Ps are seeking scale and the economies of scale that come with it. They also have come to believe that it makes more sense to grow production through M&A than through aggressive capital spending. And, for some producers not yet involved in the all-important Permian, acquiring even a smaller E&P there provides a foothold to build on. In today’s RBN blog, we discuss highlights from our newly released Drill Down report on the past 12 months of upstream M&A activity in the U.S. oil patch.