Friday, July 10, 2015

Friday, July 10, 2015

Active rigs:

Active Rigs73189186212170

I track North Dakota's active rig count here

RBN Energy: changing patterns of refiners' oil input.This is another fascinating article from RBN Energy. This was a topic discussed at the blog in the very early days of the Bakken boom. No one outside the industry understood this at the time. I doubt many folks still understand it. (Archived)
The U.S. energy production renaissance isn’t just changing where we get our crude oil and natural gas from, it’s forcing major shifts in the domestic oil refining sector. Gulf Coast, East Coast and Midwest refineries that used to depend heavily on foreign oil are turning to domestic sources, refiners’ ability to process very light U.S. crude is being stretched, and traditional pipeline flow patterns—for crude and refined products alike--are being up-ended. Today, we continue our look at fast-changing petroleum products markets and the infrastructure that supports them.
The infrastructure developed over the past 70-plus years to move, store and export refined petroleum products is an unending work-in-progress that reflects (among other things) ongoing changes in the sourcing of crude, the types of crude being produced, and the demand for gasoline, diesel, heating oil, kerosene-type jet fuel (kero-jet, also known as jet-kero) and other refined products. The petroleum products-related infrastructure—how it fits together, and how it’s still evolving—is the focus of this series.
The U.S. produces and consumes more refined petroleum products than any other nation on earth. Production of finished motor gasoline (which includes ethanol) now averages more than 9.5 MMb/d, while distillates production (mostly diesel and heating oil) is approaching 5 MMb/d and production of kero-jet stands at about 1.6 MMb/d.
These fuels need to be moved as efficiently as possible from refineries to where they are stored and (ultimately) consumed domestically or exported. More often than not, they are moved much--or, in a few cases, all--of the way to market via petroleum product pipelines (more than 63,000 miles of them) to storage terminals in areas with significant fuel demand. From there fuels are generally distributed by tanker trucks to heating oil dealers and gas stations; many airports get their kero-jet delivered by smaller-diameter pipeline. In our series opener, we also explained how petroleum product pipelines typically transport specific products in a series of “batches” that are diverted to the proper tanks in sequence as they arrive at downstream storage facilities. In today’s episode, we’ll focus on refineries—where they are, and how their feedstock sourcing is changing.

Data points from the RBN Energy blog today (there will be a quiz later):

The top five US refiners by capacity:
  • Valero: 1.96 million bopd
  • XOM: 1.86 million bopd
  • MRO: 1.73 milion bopd
  • Phillips 66: 1.61 million bopd
  • Motiva Enterprises: 1.08 million bopd
In other words: four refiners each between 1.5 and 2.0 million bopd; and one refiner at about 1 million bopd. Total refining capacity in US about 18 million bopd.

Refineries are configured to operate most efficiently when processing certain types of crude
  • light oil: 32 - 40 degrees
  • above 40 commonly seen from shale basins such as the Eagle Ford and the Bakken
  • ultra-light: above 50 (again, from the Eagle Ford and the Bakken); generally known as condensates
  • diluted bitumen from Alberta oil sands: 22 - 31 degrees
  • heavier crudes require more complex refiners (think, more expensive)
  • sulfur must be removed during processing; heavier crudes, more sulphur
  • PADD 3: Gulf Coast
  • PADD 2: Midwest
  • PADD 5: West Coast
No cokers (except for one):
  • PADD 1: East Coast -- historically relied on imported light oil
Minor refining, has some coking
  • PADD 4: Rockies
The US is gradually shifting to lighter oil
  • in April 2015 (the most recent month for which EIA figures are available), the average API gravity of the crude refined in the U.S. rose to its highest level (32.18 degrees;) since March 1990
  • in July 2008, before the shale era began in earnest, the average API gravity bottomed out at 29.9 degrees. (That difference of 2.28 degrees may not sound like much, but in the refining industry it is huge.)
  • PADD 3: was 29.31; now 31.83
  • PADD 2: 32.13; now 33.61
  • PADD 1: was 31.53; now 34.99 (think Delta, think Bakken)
The Keystone pipeline was not mentioned.

Not mentioned: swaps make more sense than removing ban on US oil exports.
Talking About Lagged Data

EIA "energy cookie":
EIA develops state-level production estimates for selected states that are based in part on state-level data. However, data published by state agencies are often incomplete when first published because of a combination of late reporting and processing delays, mainly due to the filing of production reports that do not contain all required information...
Production data for Texas, the largest crude-oil producing state, published by EIA in the Petroleum Supply Monthly (PSM) and by the Texas Railroad Commission (TRRC) in its monthly reports, reflect differences in the treatment of incomplete and lagged data...
The need for EIA to calculate a true-up oil production volume for states, including Texas, will soon be replaced by a direct EIA survey of oil producers, just as it currently surveys natural gas producers in its EIA-914 survey.---EIA
North Dakota's data seems to be about the most transparent and most current of any state and is light-years ahead of the federal government's reporting of import data, which one would think would be easiest to track. Import data should be available in real-time.

So, Who Blinked?

The Drudge Report has the headline suggesting that the EU blinked. A SeekingAlpha contributor suggested that the market is surging because "Greece blinked."

In fact, the socialists played Europe like a fiddle. Of course, all the i's and all the t's have not been dotted, or the exact euro figures filled in, but as I said some weeks ago, the Greek government (i.e., the men at the top top) were not going to let $8.1 billion slip through their fingers. A fair amount of that $8.1 billion will be skimmed off the top to line the coffers of key government figures. The real losers are the poorest Greeks. The pensioners take a "haircut," and the government makes a few promises ("wink, wink") and then this Greek drama is over for the next five years.

Even Paul Krugman agrees: more money should have been sent to Greece, and it should have been sent much earlier, and all of this could have been avoided.

After all, the EU has not run out of money for the Greeks to spend.

(By the way, the linked Krugman opinion piece is one of the most poorly argued / most poorly written pieces I've seen by him -- I guess both he and I are getting tired.)

[July 18, 2015: see follow-up on Krugman at this link. At the linked post, way at the bottom.]

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