A few days ago, I posted a long commentary on winners and losers with the pipeline story for 2013. I say that is it still in "draft" because I am still sorting out winners and losers, but I now have one more data point. At the link, note that I could not decide whether refiners would be winners or losers with all the pipeline projects coming on line in 2013 - 2015.
Well, here's the second story of the "two-fer." Mike Filloon suggests that it should be a wash for refiners. At least that's how I read it. Mike has been bullish on refiners due to the wide spread between Bakken and WTI but he still feels that the additional pipeline won't change his mind with regard to refiners. Again, that's how I read it, but it is subject to interpretation. Mike is very clear in stating that Bakken oil will always sell at a discount to WTI and Brent.
Filloon's article includes a quick, short overview of pipeline activity affecting the Bakken.
Upcoming pipeline projects by Enbridge Inc. and Enbridge Energy Partners are levered to the Bakken. Both are funding the Superior to Flanagan project. The most important expansion for EEP is its Sandpiper Project starting in Minot. Other rail expansions include the Bakken Berthold Rail and Philadelphia Rail JV.He doesn't mention the Seaway reversal and expanded capacity. I think the ENB/EPD Seaway project will have huge effects on the Bakken.
With regard to pricing:
There are a wide range of oil price estimates for 2013.
Raymond James believes WTI will average $65/Bbl. [Raymond James] estimates a hard landing in China, continued macroeconomic issues in Europe, and weak demand in the United States. In response, OPEC will cut production. While these variables are possible $65/Bbl is unlikely.
My [Mike Filloon's] estimate is $88/Bbl. Bakken differentials to WTI will tighten to $8/Bbl. Expectations are for significant volatility. WTI's low for 2013 will be short lived and bottom around $75/Bbl. This will be a buying opportunity.Disclaimer: this is not an investment site. Don't make any investment decisions based on what you read here.
"Recently, the service sector of the exploration and production industry made news when a story appeared in The Wall Street Journal revealing that the three largest service companies — Schlumberger, Baker Hughes, and Halliburton — are spending millions of dollars to retrofit pumps and drilling-rig engines to run on natural gas instead of diesel."
ReplyDeletehttp://www.timesrecordnews.com/news/2013/jan/13/service-companies-spending-millions-to-run-on/
Between them, they have zero drilling rigs, but oh well.
anon 1
They were probably confused by my original post that was horribly wrong, but hopefully now corrected:
DeleteApache Looking to Use Natural Gas, Not Diesel, To Power Pumps
I have to chuckle: someone sent in a comment that suggested I was being racist by using the word "Apache." I did not post the comment. I did not want to embarrass "anonymous."
DeleteFor newbies: Apache in this case is the name of an oil company.