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Too Wrong for Too Long? How 2011 Bakken Crude Forecasts Compare to Today

published by Sandy Fielden on Thu, 05/16/2013 - 20:00

Two years ago in June 2011 Bentek forecast that crude production in the Williston Basin would grow to 900 Mb/d by 2016. Today’s production in North Dakota and Montana is already at that level. What we are learning about US shale production is that it has been growing at twice the rate of every forecast out there.   Today we begin a new series looking at what we are learning about the accelerating pace of North American shale production.

Through the Looking Glass: NGLs, Condensates and Pentanes Part 1 – U.S. versus the World

published by Al Troner on Wed, 05/15/2013 - 20:00

By Al Troner, President Asia Pacific Energy Consulting (APEC)

U.S. production of field (lease) condensates is growing like crazy, especially in the Eagle Ford.  There is way too much of this material for it to be absorbed into traditional crude blending markets.  At the same time the production of plant condensate, a.k.a. natural gasoline, is also increasing along with the yield of all other products from natural gas processing plants.  A glut of condensates has developed and is getting worse. Clearly this is an opportunity for new market development, and the bizdev community is hard at work coming up with concepts, projects and proposals to use all of this material in the U.S. and in export markets.  But there is a problem. Condensate markets in different geographies seem to have little in common with each other.  It’s like walking through the looking glass.  One term can have several meanings.  One meaning can be ascribed to several terms. Today we launch a RBN blog series to make sense of it all.

ECHO and the Blending Men – Texas Terminal Wars

published by Sandy Fielden on Tue, 05/14/2013 - 20:00

Houston is getting swamped with crude that isn’t being consumed by area refineries. Light sweet crude prices are being discounted by up to $6/Bbl versus St James, LA. There is no pipeline capacity to move crude from Houston to Louisiana so it can only go by barge. The reconfiguration of terminalling and storage capacity on the Texas Gulf Coast to handle rising volumes of incoming crude more smoothly is underway but far from finished. Enterprise Product Partners (EPP) announced their latest expansion plans for their ECHO terminal earlier this month. Today we review progress on the Enterprise Texas crude network.

Big Surge Comes to Whoville – Northeast NGLs to Increase Six Fold

published by Kelly Van Hull on Mon, 05/13/2013 - 21:00

A few months back we introduced Whoville, the emerging NGL hub in a small corner of Pennsylvania and West Virginia.  Now that hub is coming on like gangbusters.  Between now and 2015 nearly 4.7 Bcf/d of additional cryogenic natural gas processing capacity is due to come online along with 500 Mb/d of fractionation capacity and 500 Mb/d of NGL pipeline takeaway capacity to support growing Utica and wet Marcellus production.  As a result, NGL production from the Northeast is due to exceed 400 Mb/d by 2015, a six fold surge from EIA’s 63 Mb/d February production number.  In today’s blog, we examine growing Northeast NGLs production.

Crude Loves Rock’n’Rail – 154 Terminals Operating – BNSF the Dominant Oil Transport Railroad

published by Sandy Fielden on Sun, 05/12/2013 - 20:00

During the past two years the US domestic crude transportation business has been revitalized by a huge increase in shipments of crude oil by rail. In the Bakken region alone over 600 Mb/d of crude is shipped to market by rail. The number of rail terminals in producing regions loading crude oil onto rail tank cars has increased from a handful at the end of 2011 to 88 and growing today. A further 66 crude oil unloading terminals have been built or are under construction. Today we summarize the crude oil terminal build out by region and by railroad.

Winter Styx Around – The Impact of a Late Cold Spell

published by Mike Patterson on Thu, 05/09/2013 - 20:00

Last week (May 3 2013) a very late winter snowstorm crossed the Rocky Mountains into the upper Midwest, dropping over a foot of spring snow from Colorado to Wisconsin.  So-called winter Storm Achilles smashed snowfall records across the Upper Midwest. The storm was only the second May snowstorm on record for Kansas City and Des Moines.  Today we look at the impact of this year’s late winter weather on energy markets.

Is The Price of Freedom Too High? Kinder Morgan’s Crude Pipeline to California Part 2

published by Sandy Fielden on Wed, 05/08/2013 - 20:00

The proposed $2 Billion Kinder Morgan Freedom pipeline project is conducting an open season for shipper commitments from West Texas to California. The California refining market has long operated like an island within the US and has so far received few supplies from new domestic production. To proceed with the project Kinder need shippers to make long term commitments but today’s unsettled markets place a premium on flexibility. Today we conclude our two-part analysis of the chances that the pipeline will get built.

Is the Price of Freedom Too High? Kinder Morgan’s Crude Pipeline to California

published by Sandy Fielden on Tue, 05/07/2013 - 20:00

Kinder Morgan is conducting an open season to convert an El Paso Natural Gas pipeline to crude oil service from the Permian Basin in West Texas to California refineries. The ”Freedom Pipeline” project would cost as much as $2 Billion. Before going ahead they need to convince crude producers in the Permian and/or refiners in California to make long term commitments to the pipeline. Today we begin a two part assessment of the chances that this pipeline will get built.

Set Fire To The Gas – The Fight to Limit Bakken Flaring

published by Sandy Fielden on Mon, 05/06/2013 - 20:00

Bakken gas flaring is still close to 30 percent of production. At the end of April the North Dakota State Assembly passed legislation providing tax incentives for producers to reduce flaring by finding alternative uses for gas that would otherwise be flared. Analysis by the North Dakota Pipeline Authority shows that 45 percent of flaring occurs from wells that are already connected to gas processing plants. Today we describe efforts to reduce gas flaring in the Bakken.

Crude Loves Rock’n’Rail – Brent, WTI and the Impact on Bakken Netbacks

published by Sandy Fielden on Sun, 05/05/2013 - 20:00

Last week (April 29, 2013) the economics of crude-by-rail began to get real interesting as the differentials between inland crudes priced against West Texas Intermediate (WTI) and coastal crudes priced against Brent narrowed to less than $9/Bbl. The Brent/WTI differential traded at about $17/Bbl on average during 2012 and helped to justify the expansion of crude by rail to allow producers to reach higher priced coastal markets. Now the spread is less than the cost of rail transport from the Bakken to the East Coast. Today we delve into the costs of rail transportation and build a netback comparison for Bakken producers.

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