True to Your School of Energy - Spring 2020: Oil, Gas and a Special Focus on NGLs

It’s almost Spring 2020 and energy markets are making another turn. Prices have been clobbered by a combination of low, weather-related demand and COVID-19. Tight capital markets have the E&P sector hunkered down and the pace of production growth is slowing. But at the same time, new pipelines out of the Permian and Bakken are under construction; some are already ramping up flows. Long-delayed LNG terminals and NGL-consuming petrochemical plants are coming online. Essentially all growth in crude and gas — plus most incremental NGL production — is being exported to global markets, and those markets are pushing back. All this has huge implications for commodity flows, infrastructure utilization and price relationships for oil, natural gas and NGLs. Which means that it’s time for RBN’s School of Energy, with all of our curriculum and models updated for the realities of today’s energy markets. Today — in a blatant advertorial — we’ll examine our upcoming School of Energy and explain why this time around we are concentrating even more than usual on NGLs.

What a difference a year makes. In February 2019, Henry Hub natural gas averaged $2.68/MMBtu and the forward curve anticipated a price of $3.09 for February 2020. LNG exports were expected to come on strong, lifting gas out of the doldrums. Oops. The average price of natural gas so far this month has been $1.86/MMBtu, down 30% from last year. A year ago, the WTI Cushing crude oil forward curve pegged February 2020 crude at $57.50/bbl, but here we sit at $49.90/bbl. Mont Belvieu propane at this time last year averaged 67 c/gal, while so far this year it has languished at 39 c/gal, down 42% over the past 12 months. Of course, it is no surprise that such a huge shift in prices should impact production and flows, and that’s just what has been happening. Production growth is slowing to a crawl. Pipelines that were counting on more volumes from producers are scrambling to attract flows to their systems. And exports, last year’s undisputed savior of U.S. markets, are now being threatened by a wild card right out of science fiction: the threat of a global pandemic.

Clearly, energy markets are going through still another upheaval. And that means it is time to take a new look at the relationships among energy commodities and prices that make this market tick. That is just what we’ll be doing in RBN’s School of Energy: Spring 2020.

If you are not familiar with RBN’s School of Energy, the conference is structured more like a classroom experience, where we work through current developments in some aspect of the market and then examine those developments in the context of Excel models that grapple with a wide range of issues, including production economics, production forecasting, crack and frac spreads, gas processing economics, ethane rejection, petrochemical feedstock selection and all sorts of similar topics. These models are similar to what we’ve used in past Schools, except that they have all been updated and upgraded. Likewise, the course content follows the same themes we write about each day in our blogs — namely, that the markets for natural gas, NGLs and crude oil are tied together in ways that are shifting dramatically due to today’s dominant role of exports. School of Energy is designed to integrate your knowledge of these three commodities with hands-on, practical instruction and training.

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