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. 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."

******************************

Other

DUCs. Huge 300,000 bopd fracklog could derail oil policy recovery. From Oilprice.com. 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