Posts from Jason Ferguson

Wednesday, 04/07/2021

When it comes to blogs on the developing hydrogen sector, many subjects can seem quite foreign to the traditional hydrocarbons expert. We have found ourselves spending a considerable amount of time over the last few months slowly peeling back the layers on this sector in an effort to be prepared should hydrogen enter a new phase of importance in the energy industry. Today’s blog is likely a much more straightforward one for the typical hydrocarbon-focused reader. That’s because, in our view, Monolith Materials’ unique process for transforming natural gas into “turquoise” hydrogen while sequestering the carbon, is easier to wrap your head around. This is not just because of the company’s clear goals and process, but also because what it does is proving to be economically viable. That’s not always the case when we discuss hydrogen, so covering Monolith’s operations is a welcome break. Today, we detail a truly one-of-a-kind method of low-carbon hydrogen production.

Thursday, 04/01/2021

When it comes to energy markets analysis, there’s nothing quite like spending the better part of an afternoon piecing together a long chain of unit conversions only to find the next day you’ve misplaced the sticky notes on which you wrote them. We’ve all been there, though for most of us it’s become commonplace to memorize the few hydrocarbon conversions needed to get through a lunch or happy hour. Unfortunately, the same cannot be said when it comes to hydrogen, which brings its own set of unique units of measure, many of them not usually bantered around your typical business development discussion. Crunching through them is tough, in our experience, and we find ourselves writing them down over and over again. Which gave us an idea: why not write a blog on the topic? Fortunately, we are in that business, and today we continue our series on hydrogen with a look a green hydrogen production projects and the math needed to make sense of them.

Wednesday, 03/24/2021

When it comes to energy markets analysis, there’s nothing quite like spending the better part of an afternoon piecing together a long chain of unit conversions only to find the next day you’ve misplaced the sticky notes on which you wrote them. We’ve all been there, though for most of us it’s become commonplace to memorize the few hydrocarbon conversions needed to get through a lunch or happy hour. Unfortunately, the same cannot be said when it comes to hydrogen, which brings its own set of unique units of measure, many of them not usually bantered around your typical business development discussion. Crunching through them is tough, in our experience, and we find ourselves writing them down over and over again. Which gave us an idea: why not write a blog on the topic? Fortunately, we are in that business, and today we continue our series on hydrogen with a look a green hydrogen production projects and the math needed to make sense of them.

Wednesday, 03/10/2021

In the world of public equities, nothing speaks relevance like a PowerPoint slide in the earnings call and conference decks that companies put together for analysts and investors. If a topic’s not important, then it probably didn’t “make the deck” — or even the appendix, for that matter. As consultants, we at RBN are familiar with this concept and we’ve been watching for some time to see just how long it would take hydrogen, one of our favorite recent subjects, to make its way into the slide-deck line-ups at some of the largest energy companies. Well, that time has arrived, with two energy stalwarts prominently featuring 2021’s darling subject over the last few days. However, with a new topic comes a need to put things in context. No problem, we are here to help on that. Today, we continue our series on H2 with a look at some recent hydrogen-focused slides from ExxonMobil and Enterprise Products Partners.

Wednesday, 02/24/2021

In many ways, the natural gas shortages and price spikes that came with last week’s Deep Freeze had nothing at all to do with hydrogen. There were no “green” hydrogen plants that froze up in the cold, no withdrawals of stored hydrogen into distributed local fuel cells backing the power grid, no shortages of fuel for hydrogen vehicles. None of that occurred because hardly any of that infrastructure exists just yet. But that doesn’t mean there was no link between last week’s natural gas market and existing forms of hydrogen production, namely “gray” hydrogen used to produce ammonia, most of which is used in the manufacture of fertilizers, and which makes up about a quarter of the hydrogen market. In fact, there was a strong connection, one that highlights the flexibility of industrial natural gas use during price spikes and possibly exposes a vulnerability in gray hydrogen production. Today, we continue our series on hydrogen with a look at how the ammonia industry responded to the recent spike in natural gas prices.

Wednesday, 02/10/2021

When it comes to hydrogen, it’s fair to say that hard data on what it costs to produce the fuel is difficult to come by, particularly for “green” hydrogen. If you’ve followed our current work on the fuel, we hope you know at least a few more facts than the average person on the street, though we must admit we’ve really just been scratching the surface so far. Diving deeper into the nitty gritty of hydrogen production costs and economics is not for the faint of heart, but it’s necessary, unless you are of the mind to dismiss the fuel altogether. (We are not.) While it’s very early days for many production pathways to hydrogen, especially green hydrogen, time will tell if the costs to produce it follow a downward trend similar to those for producing hydrocarbons from shale or remain at levels so high the current hydrogen bubble bursts like others before it. We’re optimistic the former may pan out, and in today’s blog we continue our series on hydrogen with a look at the factors impacting production costs.

Wednesday, 02/03/2021

It’s never easy in the commodity world, and despite oil prices comfortably above $50/bbl across the Permian, a new worry has come to the fore as we start the second month of 2021. No, it’s not a Reddit movement focused on the oil market, not even an OPEC+ action this time. The latest news that has wildcatters muttering through clenched teeth came from Washington D.C., where the Biden administration recently announced a pause on leasing federal lands for oil and gas development. While it’s far too early to discern what this decree — or future actions — will mean for the Permian, we get the sense that the headlines aren’t capturing the nuances of drilling activity in West Texas and southeastern New Mexico. In our view, at its worst, a long-term ban on drilling on federal lands would produce some clear winners and losers, while the near-term impact is potentially just a ripple in the ocean. Today, we examine what the latest drilling data from the Permian tell us about the possible outcomes of the new administration’s recent actions.

Wednesday, 01/27/2021

Based on the response we received to our first-ever hydrogen blog last fall, it’s fair to say we didn’t waste this space on a fringe subject. To be honest, the level of interest in hydrogen far exceeded our expectations, and suggested that we might have even been a little bit late to the party — but fashionably so, if you ask us. In the weeks since then, we’ve spent a fair amount of time distilling the tremendous amount of news flow and reading material that was either sent our way or popped up in the daily news feeds. You could go a lot of different directions with hydrogen and it’s still very easy, in our view, to get lost in the forest of green energy technology. So, as we are wont to do, we have stuck to our simple approach of tackling this fuel just like we do with hydrocarbons, and we are first turning our attention upstream. Today, we continue our series on hydrogen with a look at the top production methods for the fuel.

Sunday, 01/17/2021

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Thursday, 01/07/2021

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Wednesday, 12/09/2020

Closing midstream deals has been a bit of a challenge in 2020, to say the least. In fact, this has been a year when many projects have been sidelined or cancelled outright, with most decisions on even the best prospects getting pushed to next year. But it hasn’t been all bad news. In a few cases, assets with advantages have made it across the finish line, even in the land of liquefied natural gas (LNG) export projects. Despite this summer’s collapse in U.S. LNG exports, driven by a compression of the spreads in global gas prices, Sempra Energy recently announced that it is going ahead with Phase 1 at its Costa Azul liquefaction project in Mexico’s Baja California. How did they pull this off in such a tumultuous year? Well, Costa Azul isn’t your everyday LNG export project. Today, we detail the most recent U.S. LNG export project to receive a final investment decision (FID) to proceed.

Thursday, 11/12/2020

Everywhere you look these days, someone is talking about hydrogen and, if you’re not well-versed in emerging technologies aimed at reducing carbon, you may not know what any of it means. A quick internet search isn’t much help either, as you will likely get lost quickly in discussions of fuel cell efficiency and electrolysis technology developments, not to mention the various “colors” of hydrogen and the myriad of ways it can be stored and transported. Don’t bother turning to your traditional green energy gurus either, as hydrogen is just one of many competing approaches to reducing the world’s carbon footprint, and electric vehicle folks like Elon Musk aren’t big fans. All the same, hydrogen news and investment plans seem to proliferate daily, and understanding this fuel — which, by the way, is not new to the energy space — seems prudent. At least that’s our view, which is why we today start a series to help us hydrocarbon experts unravel the mysteries behind the recent hydrogen ruckus.

Sunday, 10/18/2020

The Permian is set to send increasing volumes of natural gas to the Texas Gulf Coast next year, but it is unlikely to be the flood that was once expected. This year’s decline in oil prices has slashed budgets for West Texas producers and rig counts show no sign of a big rebound anytime soon. As a result, growth of oil and associated gas from the Permian will be tepid at best over the next few years, which is a major change from when oil prices hovered north of $50/bbl. Despite the moderation in gas volumes out of the basin, infrastructure changes in 2021 are likely to roil Permian gas markets and have important knock-on impacts for adjacent regions and end-users that depend on West Texas supply. With much less incremental gas from the Permian, there are likely to be significant shifts in gas flows, particularly across the Texas-Louisiana border, to help meet the big increases anticipated for LNG exports. Today, we continue a series that highlights findings from RBN’s new, Special Edition Multi-Client Market Study.

Sunday, 10/11/2020

Permian natural gas production is now expected to grow at a subdued pace over the next five years, as lower oil prices and a focus on capital discipline have slashed rig counts. Few observers see the Permian situation changing anytime soon, especially as crude oil prices continue to hover around $40/bbl. That said, the Permian gas market will be anything but dull over the months and years ahead. More than 4 Bcf/d of new outbound pipeline capacity from the Permian to the Gulf Coast will be coming online next year, throwing natural gas flows from West Texas into flux and deeply impacting neighboring markets. While natural gas basis at the Permian’s primary Waha hub should improve dramatically, outflow to the Midcontinent will likely fall sharply and potentially reverse, and the Texas Gulf Coast will see an influx of supply on the new pipelines. Today, we continue a series that highlights findings from RBN’s new, Special Edition Multi-Client Market Study.

Monday, 10/05/2020

Expectations for Permian natural gas are far from what they were when this year started. Lower crude oil prices and a focus on capital discipline have slashed rig counts by about two-thirds since January and there are few signs of a recovery on the horizon. As a result, just about everyone’s forecast for Permian gas growth is much lower than just a few months ago, with tepid gains through the early 2020s now the industry’s consensus view. However, if you think all this means that Permian gas markets have lost their relevance, think again. Despite the modest production growth anticipated, the basin’s gas flow patterns will soon be thrown into shock as 4 Bcf/d of new outflow capacity to Gulf Coast markets starts up next year, when the Permian Highway and Whistler pipelines begin operation. And that shock will reverberate through regional basis relationships, including at the Waha Hub, which we expect to end 2021 much stronger than it is currently. Today, we begin a series that looks at Permian, as well as Gulf Coast, gas markets over the months and years ahead, highlighting findings from RBN’s new, Special Edition Multi-Client Market Study.