Posts from Housley Carr

Over the past three-plus years, Corpus Christi has dominated the U.S. crude oil export market, largely because of the availability of straight-shot pipeline access from the Permian to two Corpus-area terminals at Ingleside — Enbridge Ingleside Energy Center (EIEC) and South Texas Gateway (STG) — that can partially load the huge 2-MMbbl VLCCs (Very Large Crude Carriers). But capacity on the pipes to Corpus is now nearly maxed out and, with Permian production rising and exports strong, an increasing share of West Texas crude output is instead being sent to Houston on pipelines with capacity to spare. The catch for Permian shippers with capacity on Permian-to-Houston pipes is that the Midland-to-MEH (Magellan East Houston) price differential for WTI has been depressingly low —$0.22/bbl on average this year, compared to almost $20/bbl for a few months in 2018 and averaging $5.50/bbl as recently as 2019. However, the Midland-to-MEH WTI price spread looks to be on the verge of a rebound of sorts, as we discuss in today’s RBN blog.

Clean ammonia, which is produced by reacting clean hydrogen with nitrogen and capturing and sequestering the resulting carbon dioxide (CO2), is gaining momentum. In just the past few months, several more new clean ammonia production projects have been proposed along the U.S. Gulf Coast, many of them made possible by commitments from Japanese and South Korean companies that see the low-carbon fuel as an important part of the Far East’s future energy mix. Taken as a group, the dozen-plus projects now under development have the potential to produce tens of millions of tons of clean ammonia annually, and to create yet another massive energy-export market for U.S. producers. In today’s RBN blog, we discuss the new projects moving forward — and one being put on hold — and what’s driving the clean ammonia market.

A draft environmental impact statement (DEIS) tied to a key water crossing along the Dakota Access Pipeline (DAPL) has finally been completed and made public, thereby ending another chapter in the long-running drama about the ultimate fate of DAPL, which is by far the largest crude oil pipeline out of the Bakken. While the DEIS doesn’t finish the story, the document provides hints about possible outcomes — and an opportunity to review just how important the 750-Mb/d pipeline really is to Bakken producers and shippers. In today’s RBN blog, we discuss the latest developments regarding DAPL and Bakken production.

The M&A boom in the Permian and Eagle Ford continues unabated. Lately, a multitude of E&Ps have built scale and increased profitability by acquiring other producers that control acreage and produce crude oil, natural gas and NGLs themselves. But it’s also possible for an E&P to boost its holdings by acquiring incremental working interests in its operated assets or by having an affiliate acquire royalty and mineral interests in acreage the producer plans to develop. In today’s RBN blog, we discuss the most recent M&A activity in two of the U.S.’s leading production areas, including Viper Energy Partners’ planned $1 billion purchase of mineral and royalty interests in the Permian; Crescent Energy’s plan to acquire incremental working interests in South Texas; and an old-school, bolt-on acquisition by Magnolia Oil & Gas, also in the Eagle Ford.

Permian producers are churning out ever-increasing volumes of associated gas, all of which needs to find a home. New or expanded takeaway pipelines to Gulf Coast markets are an obvious option — and a few projects are in the works — but locking in capacity requires long-term commitments that many producers are loathe to make. As a result, the balance between Permian takeaway capacity and the volumes of gas that need to exit the basin is always on a knife’s edge, often resulting in a Waha basis so ugly that producers are essentially giving their gas away. But what if there was a way to put more Permian gas to good, economic use within the basin, and ideally very close to where it’s produced? Better yet, what if the producers could garner some environmental cred in the process? In today’s RBN blog, we discuss a trio of Permian projects — a couple of them involving top-tier E&Ps — that would use local gas to make gasoline, sustainable aviation fuel (SAF) and electricity.

The level of activity at crude oil export terminals from Corpus Christi to the Louisiana Offshore Oil Port (LOOP) is nothing short of extraordinary — a record 4.8 MMb/d was loaded the week ended August 25, according to RBN’s Crude Voyager report, and Houston-area terminals loaded an all-time high of 1.4 MMb/d. But there’s a lot more to the crude exports story. When you live this stuff day-in, day-out, you see subtle changes that often extend into trends and, if you’re lucky, you sometimes get signals that things you’d been predicting are actually happening. In today’s RBN blog, we discuss highlights from the latest Crude Voyager and what the weekly report’s data and analysis reveal about the global oil market.

The global push to slash methane emissions from natural gas-related operations — from production wells to end-users — and certify gas as being “responsibly sourced” has been accelerating and broadening. It now seems possible that within the next two or three years the majority of gas produced in the U.S. will be certified as responsibly sourced gas, or RSG, and that large numbers of gas buyers — power generators, industrials, LNG exporters and local distribution companies (LDCs) among them — will be buying RSG, or at least moving toward doing so. Further, an RSG market is developing (a handful of trading platforms have already been launched), as are tracking systems to ensure that gas sold as RSG is fully accounted for and legit, with no double-counting or fuzziness. In today’s RBN blog, we begin an in-depth look at RSG and its emergence from a relative novelty to the cusp of wide acceptance.

It’s only natural that deals like Chevron’s $7.6 billion acquisition of PDC Energy and ExxonMobil’s $4.9 billion purchase of Denbury grab the market’s attention. After all, the buyers are names known to everyone — even those who only think about hydrocarbons when they’re filling up at their local gas station. But a lot of other, lower-profile M&A action is happening too, especially in the Permian and also in the Eagle Ford. You might say these are cases of “Eat or be eaten” — or, in one recent case, “Eat and be eaten.” In today’s RBN blog, we discuss the plans by Permian Resources to acquire Earthstone Energy; Civitas Resources to buy assets in the Permian’s Delaware and Midland basins from Tap Rock Resources and Hibernia Resources, respectively; and SilverBow Resources to scoop up Chesapeake Energy’s last remaining assets in the Eagle Ford.

Over the past four years, Energy Transfer (ET) has completed several major acquisitions, all aimed at giving the company the additional size and reach it will need to compete in an increasingly consolidated midstream sector. On Wednesday, ET announced one of its biggest purchases yet: a $7.1 billion deal to acquire Crestwood Equity Partners, which has extensive gathering and processing assets in the Permian, Powder River and Williston basins, as well as NGL terminal and storage facilities east of the Mississippi. In today’s RBN blog, we look at how the addition of Crestwood’s holdings will extend ET’s value chain and complement its fractionation assets at Mont Belvieu and its export capabilities at both its Nederland and Marcus Hook terminals.

It may be hard to believe, given the furnace-like temperatures that many of us have been dealing with the past few weeks, but the 2023-24 propane heating season is on the horizon — its official start is October 1, only seven weeks away. To quote Bill and Ted from their Excellent Adventure movie franchise, it could be argued that, for the U.S. propane market, “The best place to be is here. The best time to be is now.” Production is at or near an all-time high — so are exports. Propane inventories are well above their five-year average, which should help ward off winter-supply concerns. And propane prices? They’re up from where they were a few weeks ago, but only in the 70-cents/gal range, well below the $1/gal-plus levels that were the norm between Q3 2021 and Q3 2022. The temptation may be to yell, “Party on, dudes!”, but as we discuss in today’s RBN blog, the reality is, the propane market is an ongoing and unpredictable adventure, and you never know for sure what’s ahead.

Just a couple of years ago, TC Energy finally threw in the towel on its long-planned, long-delayed Keystone XL pipeline project, which would have substantially increased the flow of Western Canadian heavy crude to Gulf Coast refineries and export docks. It was a bitter loss. Since then, however, two other companies headquartered north of the 49th parallel have assumed leading roles in the U.S. crude oil market or, more specifically, crude exports. First, Enbridge acquired the U.S.’s #1 oil export terminal — now called the Enbridge Ingleside Energy Center (EIEC) — and related assets for US$3 billion and then, on August 1, Gibson Energy announced that it had closed on the US$1.1 billion purchase of the nearby South Texas Gateway (STG), which is #2 in crude export volumes. In today’s RBN blog, we discuss the increasing role of Canada-based midstream companies along the South Texas coast.

With so many low-carbon, carbon-neutral and carbon-negative shipping fuels being touted as the next big thing, it can be hard to determine which are for real and which are mostly hype. Some folks have been talking up LNG, biofuels, clean ammonia, fuel cells ... the list goes on and on. One way to separate the most promising prospects from the also-rans is to keep track of where big shipping companies are placing their bets — and how they’re hedging those wagers, just in case it takes longer than expected to develop fuel-production facilities. Clean methanol in particular is showing signs that it may be one of the frontrunners on both the supply and the demand sides, with an increasing number of firm orders being placed for massive container ships and other vessels that can be fueled by either methanol or low-sulfur fuel oil (LSFO) — there’s the hedge — and a number of new clean methanol production facilities being planned in the U.S. and overseas. (But still, a healthy dose of skepticism about it all is warranted.) In today’s RBN blog, we discuss recent developments in the clean methanol space.

Enterprise Products Partners doesn’t just extract mixed NGLs from associated gas at processing plants, transport that Y-grade to the NGL hub at Mont Belvieu, and fractionate NGLs into “purity products” like ethane, propane and butanes. The midstream giant also distributes purity products to Gulf Coast steam crackers and refineries, converts propane to propylene at its two propane dehydrogenation (PDH) plants, distributes ethylene and propylene, transports propane and butane to wholesale markets across much of the eastern half of the U.S., and exports a wide range of products — ethane, LPG, ethylene and propylene among them — from two Enterprise marine terminals on the Houston Ship Channel. (Another export terminal in Beaumont, TX, is in the works.) Talk about a value chain! In today’s RBN blog, we continue our series on NGL networks with a look at Enterprise’s NGL and petrochemical production, distribution and export assets.

Less than a handful of U.S. midstream companies own and operate extensive NGL networks that do it all: extract mixed NGLs from associated gas at their processing plants, transport that “Y-grade” to their underground salt-cavern storage facilities in Mont Belvieu, fractionate mixed NGLs into so-called “purity products” at their fractionators, then pipe that ethane, LPG and other products either to domestic end-users or to company-owned export docks. Enterprise Products Partners is a member of that select group and, as we discuss in today’s RBN blog, its NGL network — which stretches from Appalachia to the Permian to the Rockies — is the most extensive.

The energy industry is evolving rapidly, spun forward by a wide range of forces: a pandemic and its aftershocks, tensions with China, a land war in Europe and a push to decarbonize, to name just a few. What’s emerged in the last couple of years is an industry starkly different than the one that existed before. Every link in the value chain — from the producers upstream, to midstreamers, to the refiners and exporters downstream — has had to drastically adjust their strategies and, if anything, these changes have only intensified the connectivity across the markets for crude oil, natural gas, NGLs and refined products. It has underscored the need for industry participants to see and understand those links and how they impact their businesses. There’s a lot at stake. The energy industry of the mid-2020s — yes, we’re already in the middle third of the decade! — is vastly different, and so are the challenges, as we examine in today’s RBN blog.