Wednesday, June 21, 2017

Wells Coming Off Confidential List Later In The Week -- June 21, 2017

Friday, June 23, 2017
  • 24228, SI/NC, XTO, Nygaard Federal 13X-5E, Lost Bridge, no production data,
  • 31754, 762, CLR, Maryland 3-16H, Catwalk, 38 stages, 17.3 million lbs, t12/16; cum 74K 4/17;
  • 31755, 213, CLR, Maryland 4-16H1, Catwalk, Three Forks 1st bench, 38 stages, 11.4 million lbs, t12/16; cum 25K 4/17;
  • 32439, 586, Nine Point Energy, Little Muddy 19H, Williston, 31 stages, 4 million lbs, t1/17; cum 47K 4/17;
Thursday, June 22, 2017
  • 26430, 1,002, WPX, Beaks 36-35HX, Mandaree, Three Forks, 61 stages, 6.1 million lbs; t4/17; cum 17K 4/17;
  • 32017, 901, Oasis, Rolfson S 5198 14-29 12B, Siverston, 50 stages, 4.1 million lbs, t12/16; cum 144K 4/17;
  • 32920, SI/NC, XTO, Nygaard Federal 13X-5EXH, Lost Bridge, no production data,
*******************************

32017, see above, Oasis, Rolfson S 5198 14-29 12B, Siverston:

DateOil RunsMCF Sold
4-20172795550545
3-20173364569729
2-20173774165496
1-20173711966788
12-2016719011443

26430, see above, WPX, Beaks 36-35HX, Mandaree:

teOil RunsMCF Sold
4-2017168637774

 32439, see above, Nine Point Energy, Little Muddy 19H, Williston:

DateOil RunsMCF Sold
4-2017142324208
3-201797380
1-2017182200
12-201649290

31755, see above, CLR, Maryland 4-16H1, Catwalk:

DateOil RunsMCF Sold
4-201733206199
3-201738258325
2-201769377263
1-201794518458
12-20161111547

31754, see above, CLR, Maryland 3-16H, Catwalk:

DateOil RunsMCF Sold
4-20171481515358
3-20171983119532
2-20171290413937
1-20172103622207
12-201648695084

The Never-Ending Story, President Obama's Clean Coal Legacy -- June 21, 2017

Throwing in the towel. Pretty funny. This story is tracked here.
After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work on a deal that would have the Kemper plant fueled only by gas.
The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas and capturing emissions.
If I remember correctly, this was one of President Obama's pet projects (yes, see below, "from wiki." Add this to ObamaCare, ISIS, and "we can't just drill our way to lower gasoline prices." What a doofus.
**********************
From Wiki

The never-ending story:
The Kemper Project, also called the Kemper County energy facility, is a coal-fired electrical generating station currently under construction in Kemper County, Mississippi. Mississippi Power, a subsidiary of Southern Company, began construction of the plant in 2010.
The project was central to President Obama's Climate Plan, as it was to be based on "clean coal" and was being considered for more support from the Congress and the incoming Trump Administration in late 2016.
Once operational, the Kemper Project will be a first-of-its-kind electricity plant to employ gasification and carbon capture technologies at this scale. [Nope: it's a boondoggle gone wrong and will simply become one of a gazillion natural gas plants in the US.]

Project management problems have been noted at the Kemper Project.
The power plant was estimated to be in service by May 2014, at a cost of $2.4 billion. As of May 2017, the project was still not in service, and the cost had increased to $7.3 billion.
According to a Sierra Club analysis, Kemper is the most expensive power plant ever built, based on the watts of electricity it will generate.
Can't wait to see how Wiki edits this a year from now to make it "politically correct."

Yup, add this to the Obama legacy. This will end up lost in the dustbin of history. At most, it will be a footnote in the chapter on "Energy During The Obama Era." LOL.

Whiting With Six New Permits; CLR With Problematic Well -- June 21, 2017

Active rigs:

$42.566/21/201706/21/201606/21/201506/21/201406/21/2013
Active Rigs592777189189

Six new permits:
  • Operator: Whiting
  • Field: Stockyard Creek (Williams); Epping Creek (Williams)
    Comments: Whiting has permits for a 6-well pad in Lot 1 section 5-154-99 (NWNW quadrant), Epping oil field/Stockyard Creek -- see below (Stockyard Creek to the south; Epping oil field to the north)
One producing well (DUC) reported as completed:
  • 28802, 190, CLR, Florida Federal 5-11H, middle Bakken, Camp, t3/17; cum 4/17; stimulated 16 of 45 zones for this well. Will resume operations when plug & guns are fished out of this well. Well not producing
*********************************

See new permits above:


P Bibler wells are tracked here.

  • 29696, 2,645, P Bibler 155-99-16-31-7-16H3A, Stockyard Creek, 4 sections, t9/15; cum 165K 4/17;
  • 29695, 2,312, P Bibler 155-99-16-31-8-13H, Stockyard Creek, 2 sections, t9/15; cum 213K 4/17;
  • 188890, 721, 20711 Springbrook 58 1H, Stockyard Creek, 2 sections, t8/11; cum 345K 4/17;
  • 31685, 1,714, P Bibler 155-99-3-5-8-14H3, Stockyard Creek, 2 sections, t8/16; cum 125K 4/17;
  • 31686, 1,957, P Bibler 155-99-3-5-8-14H, Stockyard Creek, 2 sections, t8/16; cum 170K 4/17;
  • 23113, 1,896, P Bibler 155-99-1-5-8-15H, Stockyard Creek, 2 sections, 5/13; cum 279K 4/17;
  • 23112, 1,991, P Bibler 155-99-1-5-8-16H3, Stockyard Creek, 2 sections, 5/13; cum 212K 4/17;
  • 33677, loc, Flint 41-5-6H, Epping,
  • 33676, loc, Bibler Federal 41-5-6H, Stockyard Creek,
  • 33675, loc, Flint 41-5-6TFHU, Epping,
  • 33674, loc, Flint 41-5-1HU, Epping,
  • 33673, loc, Bibler Federal 41-5-6TFHU, Stockyard Creek,
  • 33672, loc, Bibler Federal 41-5-1HU, Stockyard Creek,

So, What's Eagle Ford Acreage Worth These Days? -- June 21, 2017

Data points from Zacks:
  • Sanchez Energy
  • Eagle Ford Shale Marquis
  • divests 21,000 net acres in Fayette and Lavaca counties, TX
  • $50 million 
Back-of-the-envelope: $2,380/net acre

**********************
North Dakota Land Lease Sales

It appears the North Dakota Department of Trust Lands has changed their URL. I have updated the new URLs at the appropriate spots on the blog (although I haven't updated past posts -- and doubt that I will get around to that any time soon). It looks like the URL was changed after the May, 2017, lease.

The new links:
Minerals Management: Lease Sales
The most recent ND lease auction was May, 2017, and summary of results posted here.

**********************
Watching a Train Wreck in Slow Motion

A reminder: it was a Democrat, a chief architect of ObamaCare, who first called ObamaCare, the finished product, a "train wreck." Senator Baucus retired soon after that. 

Today it is being reported that two more ObamaCare railcars left the track: health insurer Anthem will pull out of two more state ObamaCare markets as it shrinks its participation in the law, the latest such pullout by an insurer as companies finalize their coverage offerings for next year. The two states: Indiana and Wisconsin -- both voted for Trump in the 2016 election. Wisconsin, in fact, was one of three states that sealed the deal for Trump. Hillary says the Russians removed Wisconsin from her Rand McNally map app and she completely forgot to campaign in that state.

MDWise is also pulling out of Indiana.

Is anyone keeping track of the states that the major health insurers have exited? I'm trying to keep up but I'm sure I've missed a few.

****************************
The Trump Derangement Syndrome Page

I no longer subscribe to The New Yorker. I canceled my subscription during the 2016 presidential campaign when it was clear that The New Yorker had simply become a city magazine, and a mouthpiece for Hillary, and then morphed into a place where writers could vent, decompress, and openly weep. Many see this as simply another manifestation as the Trump Derangement Syndrome. 

I assume that the American Psychiatric Association will eventually get around to classifying TDS as a legitimate mental health disorder, giving it a DSM designation when they update the current fifth edition, the DSM-5. Once an individual meets the criteria of TDS, he/she/it will be eligible for social security disability. 

Manifestations of TDS in the current issue of The New Yorker:
  • front cover: caricature of Donald Trump attempting to remove gears from a well-oiled US manufacturing military-industrial complex (I thought we were done with cover caricatures of POTUS -- after all, it's been almost a year)
  • talk of the town: of course, it's about James Comey, who is now Hillary's best friend
  • shouts and murmurs, attempt at humor: Jared and Ivanka's guide to mindful marriage -- Jared and Ivanka? Wow, the editors really do manifest TDS
  • book review: are the US and China on a collision course? Of all the great new books out there, this is the one they chose to feature?
  • what few articles there were that did not focus on Trump were not worth reading, which meant, of course, you went back to the articles on Trump, a classic feature of TDS-affected editors
On another note, my 30-second elevator speech when asked about Obama's legacy:
  • ObamaCare: took eight months to write; eight years to fail
  • the rise of ISIS: all agree -- perhaps the greatest foreign policy failure since December 7, 1941
  • science: we can't just drill our way to lower gasoline prices 
  • BLM: and we're not talking about the Bureau of Land Management (by the way, where is the Black Lives Matter movement these days?)

The Oasis Shepherd And Andre Shepherd Wells

The wells:
  • 27817, 1,170, Oasis, Andre Shepherd 5501 21-5 3T, Missouri Ridge, 32 stages, 4.1 million lbs, t11/14; cum 107K 4/17;
  • 27818, 1,215, Oasis, Andre Shepherd 5501 21-5 4T, Missouri Ridge, 32 stages, 4 million lbs, t11/14; cum 85K 4/17;
  • 27819, 77, Oasis, Andre Shepherd 5501 21-5 5T, t12/14; cum 63K 4/17;


  • 27803, 425, Oasis, Andre Shepherd 5501 14-7 1T, Missouri Ridge, 32 stages, 4 million lbs, t1/15; cum 67K 4/17;
  • 27802, 438, Oasis, Andre Shepherd 5501 14-7 2T, Missouri Ridge, 32 stages, 1 million lbs, t12/14; cum 65K 4/17;

  • 27613, TATD, Oasis, Andre Shepherd 5501 31-8 6T, 
  • 27614, 1,049, Oasis, Andre Shepherd 5501 31-8 7T, t12/14; cum 72K 4/17;
  • 27615, 589, Oasis, Andre Shepherd 5501 31-8 8T, t12/14; cum 70K 4/17;

  • 28051, 1,412, Oasis, Andre Shepherd 5501 14-5 4B, Missouri Ridge, 32 stages, 3.9 million lbs, t12/14; cum 116K 4/17;

Random Update Of An EOG Fertile Well -- June 21, 2017

Only because I am so obsessive-compulsive will I go back and finish what I started last night. These are now a "dime a dozen" and barely interest me any more (at least to spend hours posting); they become tedious and repetitious. The Parshall is going to be full of these examples. I'm talking about the EOG well, #17754, in this graphic below:


The index well:
  • 17754, 597, EOG, Fertile 10-09H, Parshall, open hole frack, 8 stages, 2 million lbs, t8/09; cum 182K 4/17; stripper well designation, January 24, 2017 (I believe I read somewhere that once a well is designated a stripper well, that designation does not change; don't quote me on that)
Recent production profile (see if you can spot the jump in production):
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-2017302062213135126904470
BAKKEN3-201755303092200
BAKKEN2-20170000000
BAKKEN1-20170000000
BAKKEN12-20160000000
BAKKEN11-20160000000
BAKKEN10-20160000000
BAKKEN9-201661211179955120
BAKKEN8-2016313644142663681160
BAKKEN7-2016315445262014942420


The two wells to the west of #17754:
  • 29821, 894, EOG, Fertile 74-0905H, Parshall, H&P Flex #524, 57 stages, 11.1 million lbs, t3/17: cum 31K 4/17; production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-2017302083620873251581217711429275
BAKKEN3-20173110216971522813417839360
  • 29823, 931, EOG, Fertile 76-0905H, Parshall, 57 stages, 10.6 million lbs, t3/17: cum 29K 4/17; production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-2017302007320050208731080910089243
BAKKEN3-2017318660823618360379435520

The two wells to the east of #17754:
  • 29915, SI/NC, EOG, Fertile 73-0905H, Parshall,
  • 29832, 1,362, EOG, Fertile 72-0905H, Parshall, H&P Flex #524, 42 stages, 6.4 million lbs, t3/17; cum 4/17; production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-2017297444751177073893337381
BAKKEN3-201729606953999426253923410

Crude Oil Drawdown: 2.5 Million Bbls -- At This Rate -- 62 Weeks To Re-Balance -- June 21, 2017

(Update: methodology was wrong in some parts of this table; it has been updated and corrected at this post):

Week
Date
Drawdown
Storage
Weeks to RB
Week 0
Apr 26, 2017

529
180
Week 1
May 3, 2017
0.9
528
178
Week 2
May 10, 2017
6
522
29
Week 3
May 17, 2017
1.8
520.2
95
Week 4
May 24, 2017
4.4
515.8
38
Week 5
May 31, 2017
6.4
509.9
41
Week 6
June 7, 2017
-3.3
513.2
60
Week 7
June 14, 2017
1.7
511.5
63
Week 8
June 21, 2017
2.5
509
62

When the mainstream business media talks about "re-balancing," they are talking about getting back to the "5-year-average," whatever that is. I don't know if I've ever seen the "5-year-average" noted by a mainstream journalist.

John Kemp, Reuters, continues to use the much better metric: 10-year averages and range. The 10-year average is around 350 million bbls of US crude oil (not including the SPR). 

Whatever it is, it's skewed by the Saudi surge from 2014 to 2016, the first of two trillion-dollar mistakes by the Saudis. In fact, for meaningful "re-balancing" to occur and a return to more bullish crude oil prices we need to see US crude oil supplies fall back to the "historical average" -- a 21-day supply or about 350 million bbls.

Right now, the rate of drawdown, averaging 2.55 million bbls/week since April 26, 2017, means that it will take 62 weeks to "re-balance." That would be late 2018.

Note: in the table above, a "negative" number in the "drawdown column" (the third column) means that there was a build in the crude oil inventories. Drawdown and storage (columns three and four) are in millions of bbls.

Disclaimer: my own data may very slightly from official sources for various reasons. I often make simple arithmetic errors.
***************************
The Whisky Page

I first read about the peculiarities of Talisker in Whiskypedia: A Compendium of Scottish Whisky, Charles MacLean, c. 2010, page 307. I bought the book used through a third party seller at Amazon; I think it cost less than $5, plus shipping. New, it was an $18 book. The book arrived shrink-wrapped and in perfect condition. The best thing about it: the spine is not broken or bruised or cracked but the pages lie flat, suggesting the previous owner really enjoyed the book. But not one extraneous mark or dog-eared page. But I digress.

Page 307: a unique characteristic of Talisker is the peppery, even chilli-peppery (sic) 'catch' as you swallow. Nobody knows where it comes from.

After I read that I was determined to find a Talisker to taste. I assume it's easy to find, but surprisingly my go-to spirits store -- which has a very, very large collection of Scotch -- did not carry Talisker.

Last night, traveling a bit out of the local area, I visited another spirits store, and low and behold, they had two bottles of the 10-year Talisker.

Some other data points regarding Talisker:
  • the distillery was founded in 1830
  • the Talisker house was where Johnson and Boswell stayed in 1764 -- somewhere I have a copy of A Journey to the Western Islands of Scotland
  • multiple owners since
  • absorbed by D.C.L. in 1916
  • at one time, triple distilled; 1925, double distilled
  • one of only a handful of malts bottled as singles in the early 20th century
  • until 1988, bottled at 8YO; thereafter at 10YO
  • an oddity: it is traditionally bottled at slightly higher than standard strength
  • very few independent bottlings have been done, since the malt is extensively used in the Johnnie Walker blends
  • Robert Louis Stevenson, 1887: "The King o' drinks as I conceive it -- Talisker, Islay, or Glenlivet."
  • barley comes from eastern Scotland; adds greatly to the cost of Talisker
  • at one time there were seven distilleries on the isle of Skye, but now there is only one: Talisker
I have not opened the bottle; I have not tasted it. I do not know when I will open the bottle. I have to really be in the right mood to try it for the first time. I'm looking for the best food pairing. Perhaps English crisps, or perhaps sushi. 

Beyond the Pale? -- June 21, 2017

Australia:
  • Australia is a huge continent with massive amounts of coal and LNG.
  • Australia is about to overtake Qatar as the world's largest exporter of LNG
  • Australia, 2013, fifth largest producer of coal, world's second largest coal exporter
  • Japan: small island-nation with essentially no natural resources necessary for energy production
  • Japanese are close to paying less for natural gas than Australians pay for their own natural gas
  • Australia will restrict LNG exports due to domestic shortage
  • why? decommissioning coal-fired utility plants and replacing them with wind and solar
Hold those thoughts.

Venezuela:
  • the proven oil reserves in Venezuela are recognized as the largest in the world (2017). Venezuela is now approaching the economies of North Korea and Cuba. 
  • why? socialism, corruption
Hold those thoughts.

A reader opines that the US could very likely be another Venezuela in 50 - 60 years as the populism of Bernie Sanders, Pocahontas, and Pelosi catch on. When I first got that note, I thought there was no way that the US could go down the path that Venezuela has gone.

But then when the news about Australia came out, I began to wonder. Australia, like the US:
  • is a former British colony
  • is very, very educated
  • has a very, very strong democratic constitution
  • has very strong "western" values
But if Australia, simply by buying into the global warming scam, is now "energy-depleted" one begins to wonder whether there might be some concern about where the US might be in 50- 60 years.

Americans have no idea how fortunate they were when they elected Trump and not Hillary.

But like Barack Obama, it's very possible Trump could be a one-off, and come 2020 or 2024, a non-Trumpian-global-warming-populist could re-ignite the global warming scam, and then yes, it could put us on the road to Venezuela.

It will be interesting to watch Australia, to see if it can, in fact, reverse course. And, if all else fails, fortunately, Elon Musk is waiting in the wings. He has said he could solve Australia's energy problems in 100 days.

By the way, on a side note: looking globally, I am unable to find one country, or one region, or one continent that can now compete with the US on energy:
  • Venezuela: a basket case
  • Russia: at best, status quo
  • Mideast: Saudi Arabia fighting for its very continued existence (economically, politically, militarily)
  • Europe: bans fracking; says "no" to fossil fuel; will be only continent totally dependent on imported energy within the next decade
  • Canada: can complement US energy but won't out-compete
  • Mexico: a niche player
  • Africa: say what?
  • Britain: see yesterday's story on natural gas (linked above) 
  • Norway: a niche player
  • Brazil: a niche player

Fracking In The Permian -- June 21, 2017

This Rigzone article touches on fracking across all plays in the US but for the most part it concentrates on fracking in the Permian. I will post the data points from the article, again, which seem to be focused on the Permian; readers can decide for themselves how much these data points reflect reality in the Bakken:
  • for US rig count to linger above 900, E&P companies would have to increase spending by 70% -- not going to happen; or well costs would have to flip and actually decline -- also, not going to happen
  • most E&Ps and majors have already met their production targets for the year (and it's only June)
  • operators are now drilling longer laterals (this obviously refers to the Permian; the Bakken is "steady" at two-mile laterals)
  • takes twice as long to complete a well as to drill a well (an irrelevant observation; readers understand why)
  • in the Permian where operations are moving into the Delaware, pad drilling is used less than elsewhere in the basin
  • overall, well costs appear fairly flat this year, though signs of increase are starting to build
  • completions make up about two-thirds of a well's cost
  • completions need to catch up to a rig count that got ahead of itself
  • analyst: the meme that "shale is economic below $50/bbl is false" but I guess, like global warming, if you say it enough times, it becomes the truth

The Market And Energy Page, T+152 -- June 21, 2017

Bull: This bull market is in its 9th year (?). It is said that this is the second longest "expansion" in US history. From wiki:
  • Mar 1991 - Mar 2001: 120 months -- exactly ten years; Dot Com bubble ended it
  • Feb 1961 - Dec 1969: 106 months -- the ongoing Vietnam War contributed to expansive fiscal policy, at the cost of rising inflation as the 1960s drew to a close
  • current expansion: 96+ months; followed the Great Recession
  • Dec 1982 - July 1990: 92 months --  at the time it was the second longest expansion on record; influenced by low and stable oil prices
Premium selling at a premium:
The difference between U.S. average retail prices for premium and regular gasoline reached 50 cents per gallon in late 2016, and it has remained near that level so far in 2017.
This price difference, or spread, has been generally increasing since 2000. Many factors on both the supply and demand sides are influencing this trend...
The combination of increasing demand for premium gasoline and market challenges to further increases in ethanol blending has led refiners and blenders to acquire more expensive sources of octane, leading to an increase in the price differential between premium and regular gasoline in recent years. --- EIA
Focus on China: Ford will move Focus production to China. No link; story everywhere.

Deep doo-doo: Saudi Arabia reverses salary cuts after succession shakeup. The cuts were made due to oil dropping to $60/bbl. The cuts were designed to help balance the Saudi budget. In addition to severe discontent among Saudi's workers -- including oilfield workers -- the austerity measures had deepened oil-related economic showdown. And now, oil is nearly $40/bbl.

Deep doo-doo: Brent prices are now lower than they were immediately before OPEC announced its plan to cut production back on November 30, 2016 -- John Kemp via twitter.

Oil: setting up for worst H1 since 1997. This is the question: oil industry is a boom-and-bust industry with ups/downs lasting two to three years (or less); this time it feels different; will the oil bear market last a decade? Everything points to the price of oil being demand driven, not supply driven. Demand will grow in India but I don't think it's going to grow particularly fast -- certainly not enough to make a difference in my investing lifetime. Demand in both US and China seems to be trending .... (your thoughts here).

I can't make this stuff up: US meat processor Tyson to test new method to stun chickens.

After Hess Pulls Out, OXY Is Now Dominant US Producer Of Oil Via Carbon Injection -- Reuters -- June 21, 2017

Data points:
  • Hess will sell its stake in EOR projects in the Permian Basin of West Texas and New Mexico to Occidental Petroleum for $600 million in cash
  • the deal cements OXY's status as the dominant US producer of oil via carbon injection
  • carbon injection: favored by faux environmentalists and oil producers alike
  • carbon injection: could grow if Congress expands tax credits this summer
  • OXY also gets complete control of naturally occurring sources of underground CO2
  • this naturally occurring source: boosts OXY's bottom line 
  • cost of carbon is generally the largest expense in EOR projects

The Political Page, T+152 -- June 21, 2017

The Georgia race is worse news for Nancy Pelosi's party than most analysts (and that word is use liberally) are reporting. If one reads the reports about the Georgia race closely, one can note:
  • the Party of Pelosi raised over $17 million; the winner raised about $7 million
  • overall, the Party of Pelosi outspent the winner by maybe 5 - 1
  • despite record amount of money spent on this election, and vast majority of that money probably came from California, the Party of Pelosi lost
  • Trump won the district by 1.5 percentage points; Pelosi's party lost by about 6% votes -- a landslide loss; in other words, Handel handily beat her opponent; it wasn't even close -- except perhaps in the eyes of Wolf Blitzer -- and, of course, "close" only counts in horseshoes and nukes (speaking of which, what is NK up to these days?)
  • in the south, men generally do better than women. The winner will be the only female in the Georgia delegation
  • the winner is not a particularly strong candidate in Georgia; she lost two previous races, only to come back to win against an opponent who ran as a conservative (despite belong to the Party of Pelosi)
  • despite record early voting, the Party of Pelosi lost
  • in the five months that Trump has been president, his record in special elections is now 5 - 0

Update On The East Coast Laurel Pipeline -- RBN Energy -- June 21, 2017

Active rigs:

$43.486/21/201706/21/201606/21/201506/21/201406/21/2013
Active Rigs592777189189
 
RBN Energy: PADD 1 refiners fight to keep Laurel Pipeline flowing west.
... for years they relied almost exclusively on waterborne imported crude for feedstock and therefore had little or no competitive advantage over their European refined-product rivals.
Then, when the Great Recession of 2008 whacked East Coast demand for motor fuels, PADD 1 refining margins suffered and a number of refineries there were shut down.
Then there was shale, and at first it was a godsend — midstream companies and some PADD 1 refineries developed supply networks to move then relatively cheap Bakken crude by rail to the East Coast, giving them a feedstock-price edge over their international competitors.
But by 2015-16, several factors (among them, the build-out of pipeline infrastructure to relieve Midwest congestion, the oil price crash and the end of the ban on most U.S. oil exports) combined to make most crude-by-rail deliveries uneconomic and put PADD 1 refineries back where they were pre-shale — or worse.
This spring, all eyes — especially those of refinery owners in PADD 1 — are on the controversial second phase of Buckeye’s plan, which (if approved by the Pennsylvania Public Utilities Commission, or PUC) would reverse the western portion of its existing Laurel Pipeline and allow midwestern gasoline and diesel to flow as far east as Eldorado, PA, near Altoona, in the middle of the state.
Laurel is a nearly 60-year-old pipeline system that moves refined products west from the Philadelphia area (starting in Eagle Point, NJ) to near the Pennsylvania/Ohio line west of Pittsburgh. The pipe is about 350 miles long, and its diameter ramps down from 24 inches to 12 inches as Laurel moves west; according to Buckeye’s pipeline-reversal filing with the PUC; in the 12 months ended October 31, 2016, westbound flows on the pipe averaged 230 Mb/d.
Graphic at the link.