Automobile Association And The Open -- What They Both Lack In Common -- July 19, 2017

British.

This is pretty funny. When we were stationed in England, one of the first things I noticed is that for the British, the rest of the really doesn't count. Or at least the institutions outside of Great Britain did not mind. When we went to buy automobile road insurance, I noted it was not the "British Automobile Association" like the "American Automobile Association" but rather the "Automobile Association."

As in THE Automobile Association. The only automobile association.

LOL.

It was only a matter of time before someone else noted that. In The Wall Street Journal today,  this headline: "Dear American twits: this golf event's proper name is "The Open." THE Open. As in the only golf open. LOL. I will read the article later. It should be a hoot.

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The Bakken

Active rigs:

$46.48	7/19/2017	07/19/2016	07/19/2015	07/19/2014	07/19/2012
Active Rigs	59	30	73	195	207

RBN Energy: Really? New US cracker demand, exports will strain ethane supply. Really? Remarkable. Absolutely remarkable.

The last couple of years have been a wild ride for the U.S. ethane market, but look out ahead.  It’s going to get crazy. The onslaught of new, ethane-only crackers is upon us at the same time overseas exports are expected to ramp up. At first glance, it might appear there is enough ethane to meet all that demand, coming from molecules that today are being rejected — that is, sold as natural gas rather than liquid ethane. But the big question — will it be enough? Because not all that rejected ethane has access to pipeline capacity needed to get it to market, at least not right now. In today's blog, we begin a new series on rising ethane demand, how the new demand will be met, and what it all means for ethane prices.

Ethane is a unique market — it’s the only energy commodity that can morph from being sold as natural gas to being sold to petrochemical plants as a liquid feedstock.

It is this chameleon-like attribute that contributes to ethane’s volatility, both in terms of production volume and pricing. Because of ethane’s unique niche (and our fondness for the product here in the RBN blogosphere), we’ve been posting lots of blogs on the topic for years, going back to the original Ethane Asylum that heralded the ramp-up in ethane rejection in the Shale Era. Then in Ethane: Boat on the Water!, we discussed the growing supply of ethane, falling prices and the challenges that had to be overcome for the first ship of U.S. ethane exports to set sail. That finally happened on March 9, 2016, when the first ethane cargo departed the Marcus Hook, PA terminal near Philadelphia.

We examined ethane’s relationship to the price of natural gas, ethane rejection economics, and ethane’s competitiveness as a petrochemical feedstock in It’s Complicated. More recently, in Ain't Wastin' Time No More, we detailed Shell’s plans for a Beaver County, PA steam cracker and the regional supply and infrastructure necessary to support the cracker’s supply chain. 

Last night I read an article that discussed this very issue -- natural gas as a fuel vs a manufacturing feedtstack. I posted the link to that article but did not highlight this issue because I thought it a bit nerdy. Now, I see it's mainstream with RBN Energy. Cool. From this linked article:

As the US increases its shale gas production in the next 5 years, there should be enough to supply US manufacturers and to export the rest to foreign customers, [the IEA] said. “Manufacturing is taking over from power generation as the main gas demand driver."