More Natural Gas To Hit The Market; Companies Buying Oil From SPR For Trading / Profit --September 15, 2017

Updates

September 22, 2017: see RBN Energy note below regarding the Nexus pipeline. Argus Media is reporting that the pipeline has received a key water permit from the Ohio EPA.

The $2.1 billion Nexus pipeline project, jointly owned by Enbridge and Michigan utility DTE Energy, will transport Appalachian shale gas to Ohio, Michigan, and Ontario, Canada. One can assume this would not have happened had Hillary been elected president.

Original Post

Active rigs:

$49.92→	9/15/2017	09/15/2016	09/15/2015	09/15/2014	09/15/2013
Active Rigs	56	34	71	199	178

RBN Energy: ETP's Rover pipeline sends more Marcellus / Utica shale gas west.

In another key milestone for Northeast pipeline takeaway capacity expansions, Energy Transfer Partners’ beleaguered Rover Pipeline project began partial service on its Phase 1A portion on gas day September 1. The 3.25-Bcf/d project, which is due for completion in early 2018, is expected to provide relief for constrained Northeast producers while exacerbating oversupply conditions and gas-on-gas competition in the Dawn, Ontario, storage and demand market area and surrounding region.

Within days of initial start-up, flows on Rover ramped up to 700 MMcf/d, and both Ohio and overall Northeast production already have posted record highs since then as a result. Today, we take a look at the project, including initial flows and the expected timing of full completion.

It’s been a long, tumultuous road for ETP’s Rover Pipeline project so far. From its inception, the project was competing head-to-head for shipper commitments and investment dollars against the DTE Energy Co./Enbridge 1.5-Bcf/d NEXUS Gas Transmission project which would begin in the same general gas-supply area (eastern Ohio) and serve the same general markets (southeastern Michigan and Ontario). 

Then, in late 2016/early 2017, ETP found itself racing against the clock to secure its final certificate of approval and finish clearing trees along the project route before some endangered bats — yes, bats — came to roost . The developer managed to beat the clock on that, with the Federal Energy Regulatory Commission (FERC) issuing the certificate in early February 2017, just one day before the departure of Commissioner Norman Bay broke the quorum needed to get that final approval.

With the certificate in hand, Rover construction proceeded at break-neck speed, and for a while the project seemed unshakable — that is, until disaster struck in May 2017 in the form of a two-million gallon spill of fluid containing diesel in a protected wetland area near the Tuscarawas River in Stark County, OH, which prompted FERC to issue an order halting any new Rover-related drilling activity pending a third-party review.

Can't turn it off! Canada gas set to strike back against US shale as glut eases.

Canadian natural gas, locked in a fierce battle for market share with U.S. shale, may stage a modest recovery as output from some longtime producers wanes and pipeline maintenance ends.

While Canadian gas will almost always trade for less than U.S. gas -- due mostly to the cost of moving the fuel to markets in Texas and the American Midwest -- the discount recently widened to the most since 2005. The culprits are prolific new wells that are hard to shut off, along with outages on a network of pipelines that move gas around Alberta.

But with the pipeline repairs that caused those disruptions mostly completed and producers like Royal Dutch Shell Plc and Petroliam Nasional Bhd's Canadian unit dialing back on output in British Columbia, the glut of Canadian gas may ease. Higher prices would be a boon for Canadian producers that have been forced to cut costs and seek new outlets in the face of escalating competition from the U.S. shale gas boom.

Canadian gas, which is tracked using benchmark Alberta Energy Company prices -- AECO for short -- traded at $2.70 per million British thermal units less than the U.S. benchmark Henry Hub gas price on Tuesday, the steepest discount since December 2005. It narrowed to $1.33 on Wednesday.

That project, which is nearing completion, will increase the capacity of the northwest portion by about 700 million cubic feet a day, the Calgary-based company said in an emailed statement. Many sections are completed and operating again, and others will be back in service this month.

The work hurt Canadian prices because many producers weren't able to stop output. For some, the cost of shutting down and reactivating fields would have been more burdensome than taking a short-term hit. For other wells, a complex ownership structure and varying types of contracts with pipeline companies kept them producing even if one partner would have preferred to stop.

Buy low, sell high. Six companies buy oil from SPR. Data points:

• 14 million bbls sold/bought
• the six companies:
• BP Oil Supply
• Exxon Mobil
• Phillips 66
• Shell Trading
• Valero Marketing and Supply
• Macquarie Commodities
• bought: range from $46.91 to $47.91/bbl; slightly below current futures price of about $49.70

Reading between the lines: the companies had no need for the oil -- they were buying it for trading, arbitrage.

Job watch, link here:

• dropped: 14,000
• at 284,000
• affected by hurricanes
• better than the forecast of 300,000