WTI Below $49 -- December 17, 2018 -- Activity Along The Gulf Coast Staggering

King of the Permian: this is really quite amazing. This speaks volumes about short-cycle projects (Chevron's term). I mentioned some time ago that Exxon came late to the Permian and overpaid. Whether they overpaid or not is yet to be seen, but certainly they made up for lost time. Bloomberg is now reporting that Exxon has overtaken rivals to become the most active driller in the Permian Basin, showing the urgency with which the world’s biggest oil company by market value is pursuing U.S. shale. [Insert shout-out to Art Berman here.]

Even after a slow start in the region of West Texas and New Mexico, Exxon is now operating more drilling rigs than Concho Resources Inc., which merged with RSP Permian Inc. earlier this year to create one of the biggest Permian-focused explorers.

For Exxon, the Permian is still small when placed in the context of its global reach. In the third quarter of this year it produced just a fraction of the oil titan’s total production. But CEO Darren Woods expects strong growth each year through 2025. By then, he’s targeting as much as 800,000 barrels a day from the Permian and the Bakken in North Dakota, which would be about 20 percent of today’s overall production.

Woods’ escalation in the Permian is essentially a bet that Exxon can drill wells so cheaply that they’ll be profitable despite crude’s 26 percent in just 10 weeks time.

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Back to the Bakken

Only one well coming off confidential list today -- Tuesday, December 18, 2018:

• 33690, 984, Oasis, Lite 5393 41-11 11B,  Sanish, 50 stages, 9.8 million lbs, t7/18; cum 92K 10/18;

Active rigs:

$48.66	12/18/2018	12/18/2017	12/18/2016	12/18/2015	12/18/2014
Active Rigs	67	51	40	64	183

RBN Energy: new liquefaction trains, pipeline capacity revving up gulf coast feedgas demand.

Feedgas demand at U.S. LNG export terminals has climbed 1.3 Bcf/d, or ~40%, in just three months to an average 4.4 Bcf/d in December to date and hit an all-time single-day high of over 4.6 Bcf/d last Tuesday. The big jump in demand came as U.S. Gulf Coast LNG operators have begun commissioning three new liquefaction trains, including the initial trains at two new export terminals. At the same time, pipeline expansions targeting both existing and newly active terminals have been completed to meet that demand. How are the new trains being supplied and what’s the effect on gas flows? Today’s blog takes a closer look at recent changes in liquefaction and feedgas delivery capacity and their effect on feedgas flows, starting with Cheniere Energy’s Sabine Pass Liquefaction.

U.S. Gulf Coast LNG exports are a fast-changing landscape. After somewhat of a lull in LNG export growth through the first three quarters of 2018, incremental demand for feedgas has revved up this fall.

In late September (2018), feedgas receipts totaled an average of about 3.1 Bcf/d. More than 80%, or ~2.6 Bcf/d, of that was going to Cheniere’s Sabine Pass Liquefaction (SPL) in Cameron Parish, LA. The only other export facility in operation at the time — Dominion’s Cove Point terminal in Maryland — was down for maintenance and averaged just 0.4 Bcf/d in September, about half of its capacity.

Since then, SPL has begun taking feedgas for commissioning its Train 5. The facility also now has access to a new feedgas interconnect following the full in-service of Kinder Morgan Louisiana Pipeline’s Sabine Pass Expansion Project last week. In the meantime, two pipeline expansions — Williams/Transco’s Atlantic Sunrise and TransCanada/Columbia Gas Group’s WB Xpress — improved Cove Point’s access to Marcellus/Utica gas.

Further, commissioning activities began for the first trains at two brand new facilities — Cheniere’s Corpus Christi Liquefaction began taking feedgas for the commission of its first train, and Cameron LNG has begun commissioning its Train 1, with feedgas flows expected any week now.

Next, we look at each of these developments in turn by facility, starting today with SPL.