Thursday, March 30, 2017

The California LPG Story -- The Energy And Market Page, T+68 -- March 30, 2017

Disclaimer this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.


Enbridge. Enbridge buys Spectra, strengthens hold in North America. From Zacks.
The $126 billion merger brings together Enbridge’s liquid-weighted midstream assets from Western Canada and the U.S Midwest and Spectra's network of primarily gas-related midstream assets.
The assets include Spectra’s holdings in the U.S. North, Midwest and Gulf Coast and the British Columbia’s Canadian province. We note that a total of 1,000 jobs were cut by the merged company.
The merged company has $74 billion in secure projects and inventory. By 2019, the company is expected to start up $26 billion worth projects. Enbridge believes that the company will yield a 3–5% compound annual growth rate with the inclusion of Spectra’s projects.
The company is also expanding its platform for renewable power generation.
Comment: this has become a personal favorite of mine. Enbridge was one of the first companies that caught my interest when I started following the Bakken. I noticed early on (July 23, 2010) that this company was involved in intermittent energy in Canada; it was one of the first links at the sidebar at the right. That told me the company was able to ace an open-book test. And there it is again, the last sentence in the segment above -- "expanding its platform for renewable power generation."


DUCs. Huge 300,000 bopd fracklog could derail oil policy recovery. From Old story. I don't buy it. Many reasons. Previously discussed.

Mexico. From Reuters, data points:
  • Italy's Eni
  • major gas finds in Mozambique and Egypt; holds one of the best discovery track records in the industry
  • Eni's gas discovery off Egypt was the biggest gas field every found in the Mediterranean
  • organic reserve replacement ration:
    • industry average: 35%
    • ENI: 193%
  • first international company to drill off coast of Mexico after 2013 reform opening up Mexico to foreign investors
  • recent oil discovery in Mexican GOF: original estimate -- more than 800 million bbls of light oil
  • now says the field will hold more than original estimate -- number not given
  • Shell, Chevron, Exxon Mobil all interested in returning to Mexico's deep waters
Permian. Swaps. From Bloomberg, data points:
  • drillers drilling longer horizontals -- 2-mile horizontals
  • slivers of land owned by another operator create issues; solution: swaps
  • acreage can run as high as $60,000 / acre in the Permian; swaps -- almost no cost
  • the slivers of land would probably not be wide enough for second company to drill
  • swaps: win-win for both companies
  • reminder: Double Eagle selling 71,000 Permian acres to Parsley for $2.8 billion (previously reported; $40,000 / acre)
  • SM Energy: "doubling the lateral length, combined with other techniques, can make a well about four and a half times more valuable 
  • SM Energy: last year bought 35,700 acres in the Permian from QStar LLC
California. California's production of propane and butane continues to decrease; the decrease in production is offset by an increase in rail shipments. This is an interesting story for the archives with regard to many, many story lines. EIA data points:
  • many, many story lines including CBR; the state's fossil fuel regulatory environment
  • total US production of propane and butanes (liquified petroleum gases - LPG) increases to over 2 million bopd
  • increased in all regions of the country except for the West Coast
  • unlike other regions, West Coast LPG production has been decreasing since 2010, driven by declining refinery production
  • production in the region totaled 80,000 bopd in 2016, 10,000 less than in 2010
  • as a result, rail shipments have become a growing means of transporting LPG to the region
  • the amount of LPG production in the US has surged (except along the West Coast)
  • West Coast import/export data: the increased ability to transport LPG by rail has allowed Western Canadian producers, who can no longer ship LPG by pipeline to the Midwest following the repurposing and reversal of a key pipeline, to ship more LPG to the West Coast, where it can then be exported to overseas markets
  • the West Coast has only one major LPG export terminal; it accounts for nearly all overseas LPG exports
  • as LPG exports continue to increase, two other terminals on the West Coast have been proposed, but the permitting phase of development is not finished yet

No comments:

Post a Comment