Friday, October 25, 2019

Ford To Introduce All-Electric Mustang -- Date Not Given -- October 25, 2019

Link here.


Or ... available now ...


The price of gasoline in north Texas is trending down, now about $2.19/gallon.

Hess With Five New Permits -- October 25, 2019

Active rigs:

$56.6610/25/201910/25/201810/25/201710/25/201610/25/2015
Active Rigs5768543568

Five new permits, #37128 - #37132, inclusive:
  • Operator: Hess Bakken
  • Field: Beaver Lodge (Williams)
  • Comments:
    • Hess has permits for a five-well BL-Frisinger pad in section 28-156-95, Beaver Lodge oil field
Eight permits renewed:
  • XTO (4): two Roberta and two Lyla permits, all in Williams County
  • Nine Point Energy (3): three Lee permits in McKenzie County
  • Crescent Point Enegy: a CPEUSC Tami permit in Williams County
Seven producing wells (DUCs) reported as completed:
  • 23942, 122, XTO, FBIR Yellowwolf 21X-10E, Heart Butte, t8/19; cum --;
  • 34687, 536, XTO, FBIR Yellowwolf 31X-10DXA, Heart Butte, t8/19; cum --;
  • 34688, 13 (no typo), XTO, FBIR Yellowwolf 31X-10G, Heart Butte, t8/19; cum --;
  • 34686, 439, XTO, FBIR Yellowwolf 31X-10D, Heart Butte, t8/19; cum --;
  • 34685, 473, XTO, FBIR Yellowwolf 31X-10C, Heart Butte, t8/19; cum --;
  • 34473, 117, XTO, FBIR Ironwoman 31X-10G, Heart Butte, t8/19; cum --;
  • 34474, 171, XTO, FBIR Ironwoman 31X-10D, Heart Butte, t8/19; cum --; 
Others in the area:
  • 23941, SI/NC,
  • 19948, AB, t12/11; cum 265K 5/18;
  • 19940, AB, t1/12; cum 304K 5/18;
  • 23939, SI/NC,
  • 23940, SI/NC,
  • 23937, SI/NC,
  • 35031, SI/NC
  • 20114,  in next section, off the east, 0.6 miles (3,170 feet) away, 1,338, t12/11; cum 210K 8/19; subtle improvement in production starting in 7/19;

Insert Cachinnaton Here -- They're Reading The Blog -- Rig Counts Don't Matter -- HFI Research -- October 25, 2019

LOL funny.


To be honest, and I always am -- or at least try to be -- I do not recall HFI Research ever tweeting that rig counts don't matter but then again I don't catch all their tweets.

Petrogulf To Request A Total Of 14 Wells In One 1280-Acre Unit Under The River -- October 25, 2019

Abbreviated:
28080, Petrogulf Corp, Antelope-Sanish; amend order # 26411; very complicated amendment but bottom line, the company wants authority "for up to fourteen wells effective as of the first day of operations..."; McKenize, Mountrail
Full request: from the November, 2019, NDIC hearing dockets, this case (a case not a permit):
28080: Petrogulf Corp to amend order #26411 ... for the Antelope-Sanish pool, McKenzie and Mountrail counties, ND, to:
  • terminate two existing 640-acre units, in T151N-R94W, 
    • E/2 of sections 25 and 36; and,
    • W/2 of sections 25 and 36;
  • terminate the existing 1280-acre standup, north/south orientation-lease-line spacing unit 
    • sections 25 and 36
  • establish a 1280-acre unit 
    • sections 25 and 36, 151-94
    • for the existing horizontal wells (so existing wells would all 1280-acre spacing); 
  • as well as the ten wells yet to be drilled
  • Allowing up to fourteen wells effective as of the first day of operations 

Existing wells in drilling unit of interest:
  • 25948, 2,088, Petrogulf Corp, Sandstrom 151-94-1H, Antelope-Sanish, t12/13; cum 435K 8/19;
  • 25949, 1,367, Petrogulf Corp, Sandstrom 151-94-1HTF, Antelope-Sanish, t12/13; cum 592K 8/19;
  • 28522, 2,106, Petrogulf Corp, Three Tribes 151-94-3H, Antelope-Sanish, t12/14; cum 404K 8/19;
  • 28523, 1,572, Petrogulf Corp, Three Tribes 151-94-4HTF, Antelope-Sanish, t12/14; cum 435K 8/19;
Permitted sites at the northwest corner of the drilling unit, whose horizontals will go south into the drilling unit of interest:
  • 31920, conf, Petrogulf Corp, Three Tribes 151-94-7H, Antelope-Sanish, no production data,
  • 31921, conf, Petrogulf Corp, Three Tribes 151-94-8HTF, Antelope-Sanish, no production data,
  • 31922, conf, Petrogulf Corp, Three Tribes 151-94-18HTF, Antelope-Sanish, no production data,
  • 319238, conf, Petrogulf Corp, Three Tribes 151-94-19H, Antelope-Sanish, no production data,
Note the chronology / ordinal number in the legal names of #31922 and #39123

Summary: eight of the proposed fourteen wells are accounted for.

The graphics:




Notes From All Over, Part 3 -- October 25, 2019

Wow, who wudda thought?
At its highest point Friday morning, the S&P 500 rose to as much as 3,027.39, surpassing the closing high of 3,025.86 it reached in late July. It came within one point of its all-time intraday high of 3,027.98.
Here were the main moves in the market, as of 11:29 a.m. ET:
  • S&P 500: +0.53%, or 16.05 points
  • Dow: +0.72%, or 193.15 points
  • Nasdaq: +0.67%, or 54.81 points
  • 10-year Treasury yield: +1.8 bps to 1.784%
  • WTI crude oil prices: +0.2% to $56.34 per barrel
  • Gold: +0.43% to $1,511.20 per ounce
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.
  • SRE: the only disappointment; its regulated utility has shut off power to customers in southern California in accordance with the new California law mandating such if winds exceed a certain threshold; down as low as $143.72 but bounced back a bit, now at $144.80;
  • AAPL: up 3/4th of a percent; up $1.77; trading over $245
  • CVX: up almost a percent; up over a dollar; trading near $119
  • D: down 1.53% -- which is interesting; I thought SRE was down due to wildfires; maybe something else going on
  • EW: a little profit-taking; a small pause
  • ENB: down a bit
  • EPD: up a bit
  • UNP: up almost a percent; up $1.46; trading near $172

A Small Operator, Lincoln Energy Partners, With Request For Almost 20 Wells Near Canadian Border -- October 25, 2019

November, 2019, NDIC hearing dockets.

Bakken operators tracked here.
Lincoln Energy Partners
  • First blog post: February 22, 2019
  • Website for Lincoln Energy Partners 
    • 852 N. Broadway, Suite 300, Denver, CO 80203
    • non-operator
    • landmen
    • prior to recent foray into the Bakken, it appears they were concentrated on the :
    • DJ Basin Niobraraand Codell
    • Powder River Basin
    • the Bakken not yet mentioned (February 22, 2019)
From the November, 2019, NDIC hearing dockets, case, not a permit:
  • 28121, Lincoln Energy Partners, Noonan-Bakken, i) two 1920-acre units; 8 wells on each; ii) an overlapping 3840-acre unit; one well; Divide County; 
  • the 1920-acre units
    • sections 21/28/33-162-95
    • sections 22/27/34-162-95
The only well in the graphic:
  • 17651, 305, CLR, Tanberg 1-4H, Sadler, t12/10; cum 126K 8/19;
A well not in the graphic, but to the east, but in the Noonan oil field:
  • 27298, 699, CLR, Brodal 1-36H, Noonan, t4/14; cum 102K 8/19; 
The graphic:

November, 2019 Hearing Dockets: BR To Request 20 Wells In One 2560-Acre Stand-Up Unit -- Middle Bakken And First Bench Only -- October 25, 2019

From the NDIC, November, 2019, hearing dockets:
  • 28117, BR, Johnson Corner and/or Pershing-Bakken, twenty (20) wells on a 2560-acre unit, section 15/22/27/34 -150-96; McKenzie County
Thinking out loud:
  • currently nine horizontals running north in a 1280-acre unit
  • currently nine horizontals running south in a 1280-acre unit
  • plan for ten more horizontals running north through those two sections: a total of 19 horizontals running north (but the new wells will be spaced at 2560-acre spacing)
  • plan for ten more horizontals running south through those two sections: a total of 19 horizontals running south (but the new wells will be spaced at 2560-acre spacing)
  • these are all middle Bakken and first bench Three Forks wells
  • lower benches of the Three Forks yet to targeted (may or may not happen)
  • many, many ways to look at density
    • one way: 1280 acres / 19 wells = 67 acres (MB and TF1 combined)
    • another way: 1280 acres / 10 wells = 128 acres (MB or TF1 separately)
    • another way: vertical array of 19 horizontals is still less than the 24 or more that some have proposed
    • another way: spacing between horizontals, horizontally: 5280 feet / 10 wells = ~ 500 feet
    • note: about two years into blogging about the Bakken I opined that fracking was effective out to 500 feet radially; something tells me I may be off by a factor of 2 before this is all over
Wells in the graphics (not all wells are in these 1280-acre or 2560-acre spacing units; some of the wells below lie outside these spacing units):
  • 17529, 300, BR, Morgan 34-21H, Pershing, t2/09; cum 335K 7/19; off line as of 7/19; remains off line 8/19;

  • 29872, 1,443, BR, Kirkland 41-28TFH, Pershing, t11/15; cum 201K 8/19;
  • 29873, 2,084, BR, Kirkland 41-28MBH, Pershing, t11/15; cum 322K 8/19;
  • 29874, 2,004, BR, Morgan 41-28MBH, Pershing, t11/15; cum 201K 8/19;
  • 29875, 1,483, BR, Morgan 41-28TFH ULW, Pershing, t11/15; cum 262K 8/19;

  • 28272, 2,685, BR, Copper Draw 11-27TFH ULW, Pershing, t11/14; cum 264K 8/19;
  • 28273, 2,445, BR, Copper Draw 11-27MBH, Pershing, t11/14; cum 397K 8/19;
  • 28274, 2,485, BR, Lillibridge 11-27MBH NH, Johnson Corner, t10/14; cum 238K 8/19;

  • 27306, 1,523, BR, Lillibridge 21-27TFH, Johnson Corner, t10/14; cum 242K 8/19;
  • 27307, 2,244, BR, Copper Draw 21-27MBH, Johnson Corner, t10/14; cum 339K 8/19;
  • 27308, 1,683, BR, Lillibridge 21-27MBH, Johnson Corner, t9/14; cum 192K 7/19; off line as of 7/19; remains off line 8/19;
  • 27309, 2,004, BR, Copper Draw 21-27TFH, Johnson Corner, t10/14; cum 300K 8/19;

  • 23648, 2,725, BR, Copper Draw 24-22MBH, Johnson Corner, t7/13; cum 326K 8/19;
  • 23647, 2,886, BR, Lillibridge 24-22TFH, Johnson Corner, t7/13; cum 295K 8/19; off line as of 7/19; remains off line 8/19;
  • 23646, 2,325, BR, Copper Draw 24-22TFH 2SH, Johnson Corner, t7/13; cum 302K 8/19;
  • 23645, 2,926, BR, Lillibridge 24-22MBH 2NH, Johnson Corner, t7/13; cum 375K 8/19;

  • 28348, 1,920, BR, Copper Draw 41-27TFH, Johnson Corner, t3/15; cum 276K 8/19; off line as of 7/19; remains off line 8/19;
  • 28347, 1,656, BR, Lillibridge 41-27MBH, Johnson Corner, t3/15; cum 330K 8/19;
  • 28346, 2.400, BR, Lillibridge 41-27TFH-ULW, Blue Buttes, t3/15; cum 437K 8/19;
  • 28345, 2,880, BR, Copper Draw 41-27MBH-ULW, Croff, t4/15; cum 513K 8/19;

  • 17271, 312, BR, Copper Draw 34-34H, Blue Buttes, t6/08; cum 480K 8/19;

  • 17323, 110, BR, Mary Ann 1-15H, Johnson Corner, t8/08; cum 467K 8/19;
The graphics:








NDIC Hearing Dockets For November, 2019, Have Been Posted

The NDIC hearing dockets are tracked here.

Link here.

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

November 6, 2019: a single case

27124, Mach Energy, LLC, and M3 Resources, LLC, to rescind their election to participate in drilling STR1 22-15 163-90 B (#33148); require Petro Harvester Operating Co to issue a new invitation to participate in drilling that well;

Wednesday, November 20, 2019
Quick summary:
  • nine pages
  • cases 28076 - 28119 
  • no flaring cases
  • one legalese case
  • mostly pooling cases
  • an incredible BR case, #28117
Cases, list is complete:

  • 28076, Euinor, Cow Creek-Bakken; legalese, revoke a Zavanna permit, Leoopard 2018 4TFH, #37036; Williams County
  • 28077, Hess, Alkali Creek-Bakken; one well in a new 2560-acre unit; Mountrail County
  • 28078, Hess, Beaver Lodge-Bakken; three wells in a new 1280-acre unit, sections 18/19-156-95; Williams County
  • 28079, Hess, setback rules
  • 28080, Petrogulf Corp, Antelope-Sanish; amend order # 26411; very complicated amendment but bottom line, but company wants to authority "for up to fourteen wells effective as of the first day of operations..."; McKenize, Mountrail
  • 28081, MRO, Jim Creek and/or Murphy Creek-Bakekn; one well in a new overlapping 3840-acre unit; Dunn County;
  • 28082, Bruin, pooling;
  • 28083, Bruin, pooling
  • 28084, Bruin, pooling
  • 28085, Bruin, Ellisville-Bakken; two wells on a 2560-acre unit, Williams County
  • 28086, Kraken, pooling 
  • 28087, Kraken, pooling
  • 28088, Kraken, pooling
  • 28089, Whiting, pooling
  • 28090, Whiting, pooling 
  • 28091, Whiting, pooling 
  • 28092, Whiting, pooling 
  • 28093, Whiting, pooling 
  • 28094, Whiting, pooling 
  • 28095, Whiting, pooling 
  • 28096, Whiting, pooling 
  • 28097, Whiting, pooling 
  • 28098, Whiting, pooling 
  • 28099, Whiting, pooling 
  • 28100, Whiting, pooling 
  • 28101, Whiting, pooling 
  • 28102, Hess, pooling 
  • 28103, Hess, pooling 
  • 28104, Hess, pooling 
  • 28105, Hess, commingling 
  • 28106, Hess, commingling 
  • 28107, Hess, commingling 
  • 28108, Hess, commingling 
  • 28109, Hess, commingling 
  • 28110, MRO, pooling 
  • 28111, MRO, pooling 
  • 28112, MRO, pooling 
  • 28113, MRO, pooling 
  • 28114, MRO, pooling 
  • 28115, MRO, Murphy Creek-Bakken, seven wells on a 1280-acre unit, sections 21/22-145-96; Dunn County
  • 28116, BR, Pershing-Bakken, 20 wells on a 2560-acre unit; sections 16/21/28/33-150-96; McKenzie; see wells and graphics at this post;
  • 28117, BR, Johnson Corner and/or Pershing-Bakken, twenty (20) wells on a 2560-acre unit, section 15/22/27/34 - 15-96; McKenzie County; see wells and graphic at this post;
  • 28118, BR, commingling
  • 28119, Hydra, SWD
Thursday, November 21, 2019
Quick summary:
  • nine pages
  • cases 28120 - 28144
  • no flaring cases
  • no legalese cases
Cases, list is complete:
  • 28120, New Horizon Resources, new field, Harold Haugen well, #6900, section 25-161-103; temporary spacing, Divide COunty
  • 28121, Lincoln Energy Partners, Noonan-Bakken, i) two 1920-acre units; 8 wells on each; ii) an overlapping 3840-acre unit; one well; Divide County
  • 28122, Liberty Resources Management, East Tioga-Bakken, setback rules, Mountrail County
  • 28123, Liberty Resources Management, Northwest McGregor-Bakken, setback rules, Williams
  • 28124, Liberty Resources Management, Temple-Bakken, setback rules, Williams County
  • 28125, Liberty Resources Management, Temple-Bakken, 6 wells on an existing 2560-acre unit; Williams County
  • 28126, WPX, Squaw Creek-Bakken, terminate an existing 640-acre unit to proceed with drilling a section line well on an existing overlapping 3840-acre unit; McKenzie County
  • 28127, WPX, Mandaree-Bakken, three wells on an existing 1280-acre unit; McKenzie County
  • 28128, CLR, Indian Hill-Bakken; one well on an overlapping 2560-acre unit; McKenzieCounty
  • 28129, CLR, Alkali Creek-Bakken, two wells on a new 2560-acre unit; Mountrail, McKenzie
  • 28130, RimRock, Heart Butte-Bakken i) two wells on a new overlapping 1280-acre unit; ii) from two wells to one well on an existing 2560-acre unit; Dunn County
  • 28131, XTO, Cedar Coulee-Bakken, to use wells located in section 33-148-96 and section 4-147-96  as injection wells for an enhanced oil recovery pilot operation; Dunn County
  • 28132, XTO, Bear Creek-Bakken; to use wells located in sections 27/34-148-96 as injection wells for an enhanced oil recovery pilot operation;
  • 28133, XTO, pooling,
  • 28134, XTO pooling,
  • 28135, CLR, pooling,
  • 28136, Nine Point Energy, pooling,
  • 28137, Ballantyne, commingling,
  • 28138, Ballantyne, commingling,
  • 28139, Ballantyne, commingling,
  • 28140, Equinor, commingling,
  • 28141, Equinor, commingling,
  • 28142, Slawson, commingling,
  • 28143, Slawson, commingling,
  • 28144, Newfield, Siverston-Bakken; two wells on an existing overlapping 2560-acre unit; McKenzie County

Notes From All Over, Part 2 -- October 25, 2019

Pipeline bottlenecks and worthless acreage: the downsides of world-leading production -- from Forbes, yesterday. Another must-read article. I had trouble following some of the arguments/discussion but I read it quickly. Later I will go back and read it more closely. But it looks like a good article for the archives. I think the challenges analysts talk about now -- chokepoints and liquidity -- are minor and pale in comparison to what will happen under a Democrat administration.

Reason #45 why I love to blog: my original post on the John Svedrup discovery was dated March 19, 2018. At the time I did not pay much attention to the discovery; it appeared to be just another Norwegian success story. Same book, just a new chapter. But, wow, it has turned into quite a story. It reached 200,000 bopd ahead of schedule (and below budget, I suppose) and will, within a year or so, reach full production at about 400,000 bopd. And the Asians love it: low sulfur and mid-density. Bakken oil is a bit light for most global refineries, but global refineries are adapting.

API: for newbies, the link at this post will provide a nice pdf that graphically depicts the various types of oil. For those who want to direct:
Biden's autobiography: Joe Biden may well steal this autobiography book title from Leonard Woolf (Virginia Woolf's husband): Downhill All The Way, c. 1967. It will cover the years from 2016 - 2019.

Hillary's next book: Hillary can also steal an autobiography book title from Leonard Woolf: Beginning Again, c. 1975 [1964]. It will cover the months from August, 2019, to December, 2019.

Notes From All Over, Part 1 -- October 24, 2019

First things first: a belated "Happy Diwali!"

Word for the day: cachinnation.

We're number one! From the Powerline -- all about the success of the US shale revolution.  A must read, very short, two minutes. 

Los Angeles: huge wildfires.

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

The market, before the opening: quiet, quiet, quiet. Everything slightly negative. Looking for good news. Hard to find. Even TSLA is down slightly before the market opens.

Dividends: three sites I find very, very useful:
Slow. Things are so slow I am looking at consumer sentiment in Germany, based on a telephone survey of 2,000 Germans:
  • Germany: consumer sentiment, released today --
    • prior: 9.9
    • consensus: 9.8
    • actual: 9.6
    • I have no idea what those numbers mean but the chart at this site should help. It looks like the Germans are in a dour mood. 
  • monthly consumer sentiment in the US will be released later this morning, about 9:00 a.m. CT
  • Americans are in a much better mood (at least based on the last two surveys)
**********************************
The Book Page

Along with Camille Paglia's Provocations, which I mentioned yesterday, I am also re-reading The Plausibility of Life, Resolving Darwin's Dilemma, Marc W. Kirschner and John C. Gerhart, c. 2005, Yale University Press.

I've read the book before but I had trouble enjoying it. My notes at the time are posted here.

I'm trying again, to give the book a second chance. Already I'm enjoying it more, reading it from a different perspective.

One of the problems I have with the book is a personal problem and probably not dissimilar from others. We are taught how things are, or at least how we think things are. What is often missing is the history of how we got there (or how we got here). 20/20 hindsight often make things appear so simple, but the struggle to find answers is the bigger story, and if told well, would help students understand the subject matter, regardless of the discipline: biology, literature, math, history, art, physics, music.

It took me a long, long time to sort out what was meant by neo-Darwinists. Or is Neo-Darwinists? Whatever. That's because all those years in high school and college I was a Darwinist; in fact, my colleagues and I were neo-Darwinists and we did not know that. Our teachers in high school and our professors in college never made the distinction between Darwinism and neo-Darwinism.

In hindsight, it's such an obvious "thing" that no one really gives it a thought, the difference between Darwinism and neo-Darwinism.

I'm not going to define the latter at risk of really screwing things up. But at least I feel much more comfortable with my worldview, my myth, regarding evolution.

Scientists have answered many of the little questions, like how to breed horses, dogs, and wheat, but the answers to the big questions are still out there.

Re-Posting Pipeline Activity Affecting The Bakken -- October 25, 2019

This is very old news. All of this has been previously posted. The purpose is to help me keep track of the various pipelines in the Bakken. From oilandgas360, July 3, 2019:
  • Liberty Pipeline LLC: a 50/50 joint venture of Phillips 66 and Bridger Pipeline LLC
    • constructing a 24-inch crude oil pipeline 
    • Guernsey, WY, to Cushing OK
  • Red Oak Pipeline LLC: a 50/50 joint venture of Phillips 66 and Plains All American Pipeline
    • system with origins in Oklahoma and Texas
    • terminals at the Gulf Coast to include Corpus Christi, Ingleside, Houston, and Beaumont, TX
    • JV initiated in June, 2019, to construct the Red Oak Pipeline with initial service from Cushing, OK, to Texas Gulf Coast
    • planned in-service date: 1Q21
  • True companies
    • based in Casper, WY
    • Bridger Pipeline LLC: 
      • Poplar System in eastern Montana; 
      • the Four Bears Pipeline System in North Dakota
      • the Parshall Gathering System and the Powder River System in wyoming
    • Belle Fourche Pipeline Company
      • gathers and transports crude oil in the Williston Basin of western North Dakota and the Powder River Basin of Wyoming
    • Butte Pipe Line Company
  • owns the transmission line from Baker, MT, to Guernsey, WY
True Companies website: http://www.truecos.com/

"Ready Availability Of Low-Cost Propane" -- Remember The Days Of Propane Shortages? -- Just A Few Years Ago -- Four Wells Coming Off The Confidential List Today -- October 25, 2019

Active rigs:

$56.0810/25/201910/25/201810/25/201710/25/201610/25/2015
Active Rigs5668543568

Four wells coming off the confidential list today -- Friday, October 25, 2019: 85 for the month; 85 for the quarter:
  • 35684, conf, Whiting, Norman 21-30H, 
  • 35623, conf, Liberty Resources, Garnes 159-93-14-2-1MBHX, 
  • 35397, conf, Hess, RS-Aadnes-157-91-2829H-3, 
  • 35054, conf, CLR, Rader 4-24HSL1,  
RBN Energy: more propane-consuming PDH plants are on the way
The ready availability of low-cost propane, the expectation of renewed growth in global propylene demand and other factors are spurring development of another round of propane dehydrogenation plants in North America. Three PDH plants — two in Alberta and one in Texas — already are under construction and scheduled to come online in the 2021-23 period. Now, Enterprise Products Partners has committed to building a second PDH plant at its NGL/petchem complex in Mont Belvieu, TX, and PetroLogistics — which completed the U.S.’s first PDH plant in 2010 — has selected the technology it will use for a new facility it now plans to build along the Gulf Coast. Today, we discuss planned PDH capacity additions in the U.S. and Canada and what’s driving their development.
Propylene is a particularly useful chemical building block. About two-thirds of the propylene produced is used to make polypropylene (PP) — one of the best-selling plastics, second only to polyethylene — which is used to make (among other things) automotive parts, reusable shopping bags and plastic storage containers. Most of the rest is used to produce acrylonitrile, propylene oxide, oxo alcohols, cumene and isopropyl alcohol, which are used to make polyurethanes, polycarbonates and other materials that are part and parcel of a myriad of everyday products.
Global demand for propylene has been increasing at an average of about 5.2 million metric tons per annum (MMtpa) — a 3.6% compound annual growth rate (CAGR) — while North American demand is growing at a more modest average of 390,000 metric tons per year (Mtpa), for a CAGR of 2.2%. The problem is that the traditional “co-product” sources of propylene supply (steam crackers and refineries) have not kept up with demand. This is largely due to two Shale Era-related changes. First, refineries have been shifting their crude slates to lighter oils. And second, the steam-cracker sector has been shifting from old-standby feedstocks like propane, normal butane and naphtha, each of which produce 40 pounds or more of propylene for every 100 pounds of ethylene (the primary product of steam crackers), to ethane, which typically produces only 4 pounds of propylene for every 100 pounds of ethylene.
To help fill the gap between propylene supply and demand, a number of PDH plants have been built this decade — not just in the U.S. and Canada, but in Europe and Asia. Earlier this year we discussed the latest PDH project to reach a final investment decision (FID), namely, the plan by a joint venture of Canada’s Pembina Pipeline and Kuwait’s Petrochemical Industries Co. (PIC) to build a large PDH/PP complex in Alberta’s Industrial Heartland northeast of Edmonton. As we said then, the 550-Mtpa Pembina/PIC project, which is scheduled to begin operating in 2023, comes on the heels of a 525-Mtpa PDH/PP project by Inter Pipeline, also in the Industrial Heartland, that reached FID in 2017 and is slated to start up in late 2021. Each of the PDH plants will consume about 23 Mb/d of Western Canadian propane, which has been selling at a significant discount in recent years due largely to takeaway constraints.