Wednesday Morning

Wells coming off the confidential list have been posted today; two nice wells.

Wow, this is nice. We talked about this some time ago. Now RBN Energy has a nice post on Kinder Morgan, following the diluent trail from Eagle Ford to Canada.

The last episode of our Gulf Coast crude oil terminals series covered the Plains All American St. James, LA terminal. In particular we described the way that Plains is using St. James as a staging post to send condensate from the South Texas Eagle Ford basin as diluent to Western Canada via the Capline pipeline to Chicago and the Enbridge Southern Lights system to Edmonton. Having covered Plains’ condensate plans we felt it appropriate to update you with details of a similar project planned by Kinder Morgan (KM) in this blog. In the next and final episode in this series we will round out the Gulf Coast crude terminals with a look at yet-to-be-built projects and a summary of what we covered so far.

This is not an investment site, but some readers will look past that disclaimer and see some opportunities in what RBN Energy sees:

The “diluent trade” is a growing business for US Gulf Coast producers and refiners. The business consists of sourcing condensates in the Gulf Coast region and shipping them to Western Canada by pipeline. In Canada the condensate is mixed with heavy tar sands “bitumen” to make a “dilbit” crude light enough to flow back to the US (or Eastern Canada) in a pipeline. Canadian demand for condensate as diluent is expected to grow rapidly in the coming years. The chart below is based on National Energy Board (NEB) estimates published in 2011 for condensate/diluent demand in Canada. Total Canadian demand (blue line) is forecast to expand from 300,000 b/d in 2012 to 670,000 b/d by 2020. 

A lot of story lines here, especially in light of the new routing for Keystone XL 2.0 moving forward, now approved by the Nebraska governor.