Friday, September 18, 2015

Zeits: shale oil wells will get bigger.

Pipeline conversion requested near Stanley, North Dakota. A number of consequences will follow if approved (which is likely). Story at The Dickinson Press:

The operator of a gathering pipeline is seeking approval from the Public Service Commission to convert the existing crude oil pipeline to a transmission line, allowing companies to transport less crude by rail.

Hiland Crude is proposing to expand a 42.5-mile pipeline in Mountrail County, which has already been constructed and operating since the end of 2014 as a gathering pipeline.

The company proposes to convert the pipeline to a transmission line to accommodate customer requests to connect more oil with the Double H Pipeline, said Andrew McCraw, director of midstream project management for Kinder Morgan, which recently acquired Hiland.

The Double H Pipeline, which began operating earlier this year, also was acquired by Kinder Morgan and sends oil from western North Dakota to a hub in Guernsey, WY, which connects with refineries in Oklahoma and the Gulf Coast.

Reversing the gathering line and converting it to a transmission line would decrease the amount of oil being transported by rail and truck.

The $15 million project, known as the New Town Expansion, involves construction of additional above-ground facilities, but no additional pipeline miles would be constructed.

The proposal includes connecting to a storage tank owned by another company and modifying equipment so the pipeline could transport 36,000 barrels of oil per day, double the current capacity.

The article goes on to to explain pros and cons. Much information.

Note: I track pipelines of interest here. 

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Active rigs:

	9/18/2015	09/18/2014	09/18/2013	09/18/2012	09/18/2011
Active Rigs	67	199	180	194	199

RBN Energy: continuing series on propane.

Traditional domestic propane markets were dominated by seasonal consumer demand in the Northeast and Mid-Continent and petrochemical industry demand in the Gulf Coast region. Today domestic demand is still dominated by these two sectors although consumer use is declining slowly while new propane dehydrogenation (PDH) plants look set to boost chemical demand. Meantime the bounty of shale production has swamped domestic consumer needs – making exports by far the largest growth sector. Today we continue our deep dive review of the propane market.

This blog and others in the series are based on an analysis recently completed by RBN for the Propane Education and Research Council (PERC).  PERC engaged RBN to assess market developments that could impact the prospects of disruptions similar to the one that occurred in the Perfect Storm winter of 2013-14, and to suggest actions that could alleviate the risk of such market turmoil.  The project was completed in August and with the permission of PERC, this blog series summarizes some of RBN’s analysis and conclusions.

This is the fifth episode in the series. Episode 1 provided an overview and introduction to the analysis – beginning with the dramatic increase in propane production over the past 7 years. Total U.S. propane output has increased by nearly 70% from an average of 0.8 MMb/d in 2008 to 1.4 MMb/d during the 1^st half of 2015. Most of that growth has been driven by production from gas processing plants that has more than doubled from 0.5 MMb/d in 2008 to 1.1 MMb/d in 2015. The overall growth in propane has outpaced domestic demand such that as much as 50% of the total is now exported to balance the market – even as inventories are at all time high levels. RBN’s analysis for PERC sought to understand changes to the propane market since the disruptive winter of 2013-14 as well as how susceptible today’s market is to similar events and what actions should be taken to reduce the risk of it happening again. Our approach to the analysis involved developing a monthly model of U.S. propane supply, demand, logistics and pricing at the PADD (Petroleum Administration District for Defense) level using historic propane market data.

In Episode 2 we outlined supply and demand scenarios for the model based on oil price Growth and Contraction as well as Normal and Severe weather patterns. Episode 3 took a closer look at propane production by PADD region – noting the dramatic growth in the Northeast as well as the Midwest. Episode 4 detailed regional historic and future projected propane demand by PADD. This time we look at domestic propane demand sectors and the projected influence of weather on consumption.

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Not Surprising

We get our electricity through an NRG subsidiary. They promote intermittent energy. It is not surprising that they are the worst-performing utility. I am quite surprised how high my monthly electricity bills are for a small (700-square-foot) one-bedroom apartment. The headline at the link and the content of the story seems a bit confusing. It sounds like NRG is going to spin off their solar energy division, and not the other way around.

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Not Surprising

(And I Think It's Been Posted By The EIA Before)

Results from second-quarter 2015 financial statements of a number of U.S. companies with onshore oil operations suggest continued financial strain for some companies. Low oil prices have significantly reduced cash flow for U.S. oil producers, and to adjust to lower cash flows, companies have reduced capital expenditures and raised more cash from debt and equity…With fixed debt repayments and the large reduction in cash from operations for these companies, the ratio of debt repayments to operating cash flow has increased recently. For the previous four quarters from July 1, 2014 to June 30, 2015, 83% of these companies' operating cash was being devoted to debt repayments, the highest since at least 2012. -- EIA