Morning Note -- September 21, 2018

First a shout-out to a reader who knows more about natural gas than I'll ever know, commenting on my recent post regarding US glut of natural gas -- and the widening gap between US energy and the rest of the world.

The reader suggests that the one-hundred-year supply of US natural gas can be put into perspective by looking at the new hardware and processes reflecting this new reality, specifically:

... the deployment of ultra efficient Combined Cycle Generating Turbine (CCGT) power plants that provide low cost, abundant, reliable electricity wherever they are in operation.

Currently about two dozen are in various stages of development in Ohio and Pennsylvania alone, with rapid growth in many other regions.

The Finnish company, Wartsila, is rapidly introducing a wide array of regassification units, notably its Floating Storage and Regassification Barge - FSRB - to economically deliver LNG to smaller markets. 

A Jones Act compliant articulated tug boat is currently being built in Mississippi using this structure.

A February, 2018, Reuters article describing the smaller, modular oriented LNG facilities portends the future wave of flexible, more economic iterations of these historically expensive plants.

Biggest enchilada looming in the not-so-distant future?

MOFs. Metal Organic Frameworks.

An explosion of new devices - 6,000 a year right now - will usher in a dizzying array of new stuff all across our societies.

Specific to the oil/gas world, having onboard fuel tanks that enable CNG vehicles to range as far as current gasoline models in an efficient manner would be a game changer.

Iranians just claimed success at exactly this.

To enable homeowners to fuel their CNG vehicles directly from residences already supplied with natgas would be paradigm shattering. 

US has 53 million homes supplied with natgas.

Final data point ... 4 million EVs on road globally. 26 million natgas vehicles globally.

NGV Global site has some interesting data.

Disclaimer: this is not an investment site. Years and years ago I read about an obscure type of computer chip in Wired or Scientific American. It sounded intriguing. I knew nothing about it except what I read in a very, very early article. On a whim I bought a few shares in a company that made that particular type of computer chip. I bought the shares for my younger daughter. That one company alone has "made" her portfolio twenty years later. It was such a good company, I ended up buying shares in that same company for my portfolio about two years ago. I am reminded of that story when I see "metal organic frameworks" -- something I had not heard of until yesterday.

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Back to the Mundane

Supposedly a big day on Wall Street: lots of "fake" volume

• quadruple witching hour
• reconfigure sectors (some tech companies will move to the communication sector; ETFs have to move companies around; managed funds need to change holdings; lots of man-made busy work)

SRE: unloads its non-operating renewable assets; Con Edison must need the tax breaks; the latter will pay $1.54 billion to buy SRE's non-utility operating solar assets, battery storage, etc; amounts to less than 1,000 MW capacity (NV, AZ, CA, NE) -- and get this: assumes $576 million in existing debt

• $1.54 billion / 981 MW = $157,000 / MW; of course, non-operating, so how does that one compute that  -- to infinity and beyond
• 0.03% x $576 million =  $17 million 
• over 15 years, at 3%: 180 payments, $195 million total payback; $12 million annually

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Back to the Bakken

Wells coming off the confidential list today -- Friday, September 22, 2018 --

• 34616, 1,612, Hess, EN-Sorenson A-LE-154-94-0211H-1, Alkali Creek, 4 sections, Three Forks, 60 stages, 8.3 million lbs, t8/18; cum --; 
• 34560, SI/NC, Abraxas, Ravin 12H, North Fork, no production data,

Active rigs:

$70.84😀	9/21/2018	09/21/2017	09/21/2016	09/21/2015	09/21/2014
Active Rigs	66	57	33	68	196

 
RBN Energy: NGL production growth vs constrained fractionation capacity -- drilling down into the details.

To fire on all cylinders — especially during a period of strong high crude oil prices and rising production — the U.S. energy sector depends on midstream infrastructure networks that can efficiently handle the transportation and processing of every type of hydrocarbon that emerges from the wellhead. It’s no secret that rapid production growth in the Permian has left the red-hot West Texas play short of crude-oil pipeline capacity, and midstream companies there have also struggled to keep pace with natural gas takeaway needs too. What’s less well known is that fractionation capacity at the all-important NGL hub in Mont Belvieu, TX, is nearly maxed out, and that some Permian producers — and others — are now scrambling to find other places to send their incremental NGL barrels for fractionation into purity products. We put this issue front-and-center earlier this week in Hotel Fractionation.  Today, we discuss highlights from the first of two planned Drill Down Reports on fractionators and other key assets at the nation’s largest NGL hub, and the potentially broader effects of a fractionation-capacity shortfall.

Let’s cut to the chase. The U.S. NGL market has entered uncharted territory, with what may turn out to be significant implications for producers of crude oil (in places like the Permian, SCOOP/STACK and the Niobrara) and “wet” natural gas (in the Utica and wet Marcellus, for example). The mixed NGLs — or y-grade — that are separated out from natural gas at gas processing plants have no direct uses on their own, and only gain value when they are fractionated into NGL purity products like ethane, propane, butanes and natural gasoline for use at Gulf Coast petchem plants or refineries, or for export. The problem is, U.S. NGL production has been climbing for some time now, and the fractionation capacity at Mont Belvieu — the world’s largest fractionation and NGL storage hub, and located close to purity product end users and export docks — is now fully utilized (or nearly so). This raises some need-to-be-answered questions. For example, if the pace of fractionation cannot pick up until more fractionation capacity comes online, what happens to those incremental barrels of y-grade being produced? How much more y-grade can be squirreled away in underground storage caverns? And what happens if y-grade storage capacity eventually fills up?