Tuesday, June 19, 2018

API: US Crude Oil Inventories Fell This Past Week -- June 19, 2018

Link here.

Inventories fell 3 million bbls.

US crude oil inventories now stand at 430.6 million bbls according to the API. The EIA figures will be released tomorrow.

On another note, didn't Goldman Sachs say that with regard to the price of oil, we should expect "lower for longer"? Maybe that was someone else. Hard to keep track. Now, today, over at oilprice.com, "expect another bull run in oil." LOL.  Another day, another prediction.

Random Data Points Regarding EVs And Electricity Demand -- June 19, 2018


June 20, 2018: Vast majority of American voters say they do not want to pay others to buy EVs. From Rigzone:
AEA president Thomas J. Pyle said in a statement that “it is good to reaffirm that people don’t really want to pay for the toys of the rich. Those who seek to expand tax credits for electric vehicles should be aware of how the issue is viewed in the public’s eyes.”
Other survey results follow:
  • 72 percent said they did not trust the federal government to make decisions about what kinds of cars or transportation technologies should be subsidized or mandated.
  • 69 percent said that electricity customers should not be forced to pay for charging stations.
  • About 80 percent said that they prefer to make their own decisions about what kinds of cars or fuels they should buy and use.
  • With respect to the CAFE mandate, 51 percent think that it is unfair that those who purchase larger vehicles subsidize those who purchase smaller cars, and just 45 percent favor the program.
Original Post

A reader alerted me to a story suggesting that EVs are going to "suck up 9% of world's power demand." The headline catches one's attention but the graphic at the linked Bloomberg article is not all that impressive. Actually, I was quite surprised to see that with all the stories about EVs, electric demand generated by EVs worldwide would only account for 9% of total electricity produced.

This article was more surprising: an update regarding EVs from the EIA. I think I have previously posted this:

The verbiage:
Electrified vehicles (hybrid electric, plug-in hybrid electric, and battery electric) have been sold as high fuel economy alternatives to conventional gasoline vehicles for a number of years but collectively have been slow to gain market share in the United States.
From 2012 through 2017, electrified vehicles consistently accounted for between 2.5% and 4.0% of total light-duty vehicle sales, even as the number of available models increased from 58 to 95. Hybrid electric vehicles accounted for the largest share of electrified vehicles, but their share of sales has fallen as plug-in hybrid electric (PHEVs) and battery electric vehicle (BEVs) shares have slightly increased.
The BEV share of total light-duty vehicle sales has grown the most since 2012 but only accounted for 0.6% of 2017 sales. The PHEV share grew from 0.1% to 0.5% and non-plug-in hybrid electrics declined from 3.0% to 1.9% of total light-duty vehicle sales between 2012 and 2017, based on Wards Automotive sales data.
Several factors may account for the limited growth in these vehicles. Gasoline prices have remained relatively low in recent years, and the fuel economy of conventional vehicles has increased—factors that diminished the potential fuel savings of switching to electrified vehicles. Initial purchase prices for many electrified vehicles remain relatively high, especially for several PHEV and BEV models, despite federal and state incentives. Also, in most locations, limited charging infrastructure for plug-in vehicles has hindered wider adoption.
Data from the 2017 National Household Travel Survey conducted by the U.S. Department of Transportation offers insight into the use and ownership of electrified vehicles. Households that own BEVs and PHEVs tend to have more vehicles per household, owning 2.7 vehicles compared with the household average of 2.1 vehicles. BEVs and PHEVs also tend to be used about 12% less than other vehicles in terms of annual mileage per vehicle.

The Market, Energy, And Political Page, Part 3, T+19 -- June 19, 2018 -- Starbucks, GE, UPS, Social Security Disability And All That Jazz

Social Security Disability

Staggering. Link here
The number of Americans seeking Social Security disability benefits is plunging, a startling reversal of a decades-old trend that threatened the program’s solvency.
It is the latest evidence of a stronger economy pulling people back into the job market or preventing workers from being sidelined in the first place. drop is so significant that the agency has revised its estimates of how long the program will continue to be financially secure.
This month, the government announced that the program would not run out of money until 2032, four years later than its previous estimate last year. Two years ago, the government had warned that the funds might be depleted by 2023.
In case you missed that:
  • this month: Social Security Disability is projected to be solvent until 2032
  • 2017: Social Security Disability was projected to be depleted by 2028
  • 2015: Social Security Disability was projected to be depleted by 2023
  • there seems to be a trend here

Starbucks closing 150 stores. Link here.
Starbucks also plans to close about 150 company-operated stores in densely penetrated U.S. markets next fiscal year, three times the number it historically shuts down annually.
Something tells me the "densely-penetrated" areas are the same areas where the homeless need a place to hang out. This is not rocket science.

UPS: this story caught me by surprise. It was the headline that confused me. This was the headline:
UPS strays form electric with $130 million investment in natural gas fleet. 
The fact that the headline mentioned "electric" suggested to me they were talking about the neighborhood trucks you see every day near where you live. No, this has to do with long-haul. EVs might work well  for short-haul, last-mile delivery, but EVs would never do (at least not yet, no matter what Elon Musk says) for long-haul. This article was about long-haul. The writer of the article must have been a bit confused. From the linked article: 
United Parcel Service Inc. said Tuesday (today) it will build an additional five compressed CNG fueling stations, plus more than 700 new CNG vehicles, including 400 semi-tractors and 330 terminal trucks. The new CNG stations will be in Goodyear, Ariz.; Plainfield, Ind.; Edgerton, Kan.; Fort Worth, Texas; and Arlington, Texas. UPS said it plans to deploy the new CNG vehicles on routes to utilize the new CNG stations, as well as adding to existing natural gas fleets in other UPS locations.
Actually, I'm not even sure the neighborhood UPS trucks are good candidates for batteries. CNG makes better sense for their entire fleet -- for a number of reasons. One reason: it's a lot more cost efficient to have the entire fleet using the same fuel, instead of mixing/matching with gasoline, diesel, electricity, CNG. 

By the way, note that of the five new locations, two of them are just down the street from where I live: one in Fort Worth, TX; and, one in Arlington, TX (the latter sits between Fort Worth and Dallas).
  • one word: Amazon. Many Amazon fulfillment centers in this area
  • another word: airport. DFW. Huge UPS hub
  • a third word: Toyota. Toyota's US headquarters are now in Plano, TX -- just north of DFW. The area is crawling with subcontractors and suppliers for Toyota


GE booted out of the Dow: Link here. GEEEE -- I just blogged about this exactly one week ago:
Dow components: I will leave it up to the reader, but when you get right down to it, the Dow (30) is an incredibly stodgy, old white man's list. The best thing the makers and shakers could do, "modernize the Dow." Maybe they are waiting for leadership at Berkshire Hathaway to change. I would remove the following and replace with any number of other great candidates: GE; HD; IBM; INTC; JNJ; KO; MRK; PG; TRV; maybe others. Maybe change 15 of the 30. Without question the S&P 500 is a better market basket to follow.
GE will be replaced by a "non-industrial," "non-conglomerate" as it were. It will be replaced by Walgreens Boots Alliance, a "drugstore."

The Market, Energy, Political Page, Part 2, T+19 -- June 19, 2018


Energy 101: capacity factor vs substitution factor.
Capacity factor equals {(total actual power output)/(total rated capacity assuming 100% utilization)}. The Capacity Factor of wind power in Germany equals about 28%. However, capacity factor is not a true measure of actual usefulness of grid-connected wind power.
The true factor that reflects the intermittency of wind power is the substitution capacity, which is about 5% in Germany – a large grid with a large wind power component.
Substitution capacity is the amount of dispatchable (conventional) power you can permanently retire when you add more wind power to the grid. In Germany they have to add ~20 units of wind power to replace 1 unit of dispatchable power.
I assume on one needs to sort out costs involved in adding 20 units of wind power vs one unit of dispatchable power.



June 23, 2018: Germany Neglects Renewables, Set to Miss 2020 Climate Goals.
Earlier this month, the German government conceded that the country is on track on miss its 2020 climate goal targets to cut greenhouse gas emissions by 40 percent compared to 1990.
Due to the economic boom, immigration, and high carbon emissions from the transport sector, Germany is on track to cut emissions compared to 1990 by 32 percent—an 8-percentage-point gap short of the goal.
Companies from all energy sectors and environmental organizations have criticized the German government for failing to clearly state future policies, incentives, renewables targets, and emissions targets. Germany has been lately slowing down climate action “domestically and at the European level,” Simone Peter, president of the Renewable Energy Federation, told Clean Energy Wire.
Original Post 

 As noted over the weekend I am not watching any television for the next week or so until the current nonsense fades away. Exceptions: sports, movies, comedy. I guess when I say I'm not watching television it means no mainstream media with talk shows, news, business news, etc. That includes Fox Business News which I don't watch much at all any way.

It really is refreshing. I say that because my notes may be completely out of sync with what's going on in the real world. I certainly don't get any up-to-the-minute analysis of what's going on.

A reader sent me this story from Forbes: an EU-China-Canada climate summit is about to get underway. I saw the headline and thought only those three "countries" were going to attend, but then I read the entire article: 35 countries. After reading the article my first thought: I am embarrassed to say I used to subscribe to Forbes. Not only have I not subscribed to Forbes for a very, very long time, I never read it unless a reader sends me an article or some other source I'm reading links me to it.

I digress.

What an incredibly poorly written article.

The article says 35 countries are attending, but doesn't list the countries. We know that the EU, China, and Canada are attending. China needs to solve their a) pollution problem; and, b) their overall energy problem,but China has absolutely nothing in common with either the EU or Canada when it comes to CO2 emissions.

Apparently the meeting is to set the agenda for the next UN climate summit to take place in the dead of winter in one of the colder spots in the world that time of year: Katowice, Poland.

The writer never provided any journalistic rigor when he/she wrote the following paragraphs:
The summit caps off a week of climate diplomacy in Europe. Today the ninth Petersberg Climate Dialogue wrapped up in Berlin, co-hosted by the German and Polish governments.
The main purpose of the Berlin summit was to stump up money for the Green Climate Fund, the vehicle to mobilize $100 billion a year by 2020 from the developed world to help the developing world fight and adjust to climate change. The fund is almost out of the $19 billion in start-up contributions it received at its launch several years ago.
Just those two paragraphs raise these questions/observations:
  • Petersberg is not misspelled; it's a mountain/resort (apparently) near Bonn, Germany; I guess it's the equivalent of our Camp David; we lived near Cologne, Germany, for three years; never heard of Hotel Petersberg; must be for the really, really elite;
  • the goal: $100 billion / year each year from now until 2020;
  • the fund: it began with $19 billion in start-up contributions but is now gone; where did it go? who is accounting for it? what is there to show for that $19 billion? (my hunch: a lot of Hollywood and political celebrities made a lot of money giving speeches);
  • a goal of $300 billion: where is it to go? how will it be spent?
  • my understanding is that, seriously, there is a committee in South Korea that receives the money and then doles it out to atoll nations in the Pacific to help them combat raising sea levels; 
  • how much of that $19 billion went to Tuvalu? and,
  • of course, the blame for the failure to get any farther along rests almost completely on "Trump" -- who reneged on an American promise for $2 billion
I was surprised I read that far.

I was more surprised that the blame on Trump was not in the first paragraph. 

US Exits UN Human Rights Council

A good start.

Members include: China, Venezuela, and the Democratic Republic of Congo.

Daily Activity Report With One New Permit -- That Was All -- June 19, 2018

Active rigs:

Active Rigs61562877189

One new permit:
  • Operator: Lime Rock Resources
    Field: Murphy Creek (Dunn)
And that was all.

Peak Oil? What Peak Oil? -- US Overtakes Saudi Arabia In Recoverable Reserves -- June 18, 2018

I assume this had something to do with the Bakken revolution.

Under the Hubbert peak oil theory, this was not supposed to happen. The theory, of course, won't die. In fact, I doubt wiki will even update the facts.
The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.
Not only are we seeing individual oil wells in the Bakken not following a bell-shaped curve, neither are legacy oil fields. Companies like DNR are using tertiary recovery to rejuvenate old fields.

Now this: "US overtake Saudi Arabia in recoverable reserves." Under Hubbert's peak oil theory this was never supposed to have happened.

From oilprice.com:
The United States has again outstripped Saudi Arabia as the holder of the world’s biggest recoverable oil resources with current technology, largely due to the doubling of fracking operations in the Permian, according to data by research consultancy Rystad Energy.
The U.S. added nearly 50 billion barrels in 2017 and now has an estimated 310 billion barrels of recoverable oil, which are equal to 79 years of U.S. production at the current pace of output, Rystad said.
Apart from the Permian, where more reserves per well are drilled, new areas and formations that have been geologically proved boosted the U.S. recoverable oil resources last year, according to the Norway-based energy consultancy.
“Texas alone now holds more than 100 billion barrels of recoverable oil, 90% of which is from shale or other tight formations, ie. from wells that require hydraulic fracking to produce commercial quantities of oil,” said Rystad Energy.
The “recoverable oil” figures include expected production from future discoveries that Rystad deems likely.
Much more at the link. Including this:
In terms of oil that has already been discovered, Saudi Arabia continues to be the undisputed leader, holding 246 billion barrels of discovered oil, which is 90 billion barrels more than the discovered oil in the United States, according to Rystad Energy.
As far as commercially proved oil reserves—the industry’s closest definition of oil yet to be produced—are concerned, the world’s total such reserves are 388 billion barrels, equal to just 13 years of oil production. OPEC producers hold around 54 percent of the world’s commercially proved reserves.
Bottom line: one can use any number one wants, but right now, that number is pretty big for the United States.

Texas alone holds more than 100 billion bbls of recoverable oil, 90% of which is from shale or other tight formations. It should be noted that "from shale or other tight formations" actually means that most unconventional oil, as I understand it, comes from dolomite seams (sand) trapped between much tighter shale, the actual source rock. As I understand it, the tight shale formations are not yet providing much oil.

On another note, if the Bakken holds a trillion bbls of original oil in place, and primary production gets to 25% recovery, then we are looking at 250 billion bbls of recoverable oil.

Disclaimer: I am inappropriately exuberant about the Bakken.

By the way, many folks can take (some) credit for the Bakken revolution, but if I had to name just one individual it would have to be Harold Hamm. Not only did he play a great role in doing the "dirty" work, actually drilling, he a) had some kind of glimmer / intuition / genius that all those mineral acres he was buying in North Dakota would some day turn out to be a great investment; b) "sold" the idea to fellow oil drillers and, more importantly, to politicians, government officials, investors, etc. I can only imagine the number of times he was told he was wrong about the potential, either in North Dakota or Oklahoma. 

And, then again, he might have been just plain lucky. But I don't think so.

Federal Appeals Court Rules: Coal Industry - 1; Faux Environmentalists - 0 -- June 18, 2018

Wow, this is an important story. From The Hill. A reader alerted me to it. If you have time for only one post today this might be it. The fact that the article is in The Hill tells me it's an important ruling.

From the linked article:
A federal appeals court on Tuesday rejected environmentalists’ arguments that the Trump administration has to evaluate the climate change impact of leasing federal land for coal mining.
The three-judge panel of the Court of Appeals for the District of Columbia Circuit unanimously ruled that the Interior Department is not obligated to update its 1979 review of the environmental impact of the federal coal program, despite substantial new scientific findings about climate change and the significant role that coal plays in warming the atmosphere.
The judges said that the National Environmental Policy Act (NEPA) doesn’t compel a new environmental impact statement.
In addition to all the subjective comments one might make, in addition to the ruling itself, this is the most important observation: the ruling was unanimous.

The faux environmentalists? I'm sure the plaintiffs arrived in court every day having made their journey in gas-guzzling SUVs and using computers running on electricity produced by coal plants. Whatever.

Keeping North Dakota Great -- Update On The New Refinery In Southwest North Dakota -- June 19, 2018


June 20, 2018: partial text from an e-mail I received from a company representative -
Just thought I’d follow-up my note last week regarding Meridian Energy Group, Inc.
A true innovator, Meridian has just made history by receiving its Permit to Construct the Davis Refinery – the first US oil refinery to be constructed from the ground up in more than 40 years
To be built in the heart of the oil-rich Bakken play, Meridian will soon break ground on Davis in Belfield, ND, and will eventually add 49,500 bpd of local refining capacity to the area.
In terms of emissions, the Davis Refinery will be the cleanest in the world.
Leveraging the Best Available Control technology, it has been designed to meet and exceed stringent Class 1 Air Quality regulations. After more than than a year of review and analysis, the North Dakota Department of Health/Air Quality Division has given Meridian the green light to begin construction: Meridian Energy Group, Inc. Receives Permit to Construct for the Davis Refinery.
Original Post

From the list of top stories last week from Geoff Simon, a screen shot:

Keeping North Dakota Great -- June 19, 2018 -- Denbury, EOR, Southwest North Dakota

From a press release:
PLANO, Texas, June 18, 2018 -- Denbury Resources Inc. announced that the Company has sanctioned a CO2 enhanced oil recovery project at Cedar Creek Anticline. 
CCA is a massive geological feature stretching approximately 125 miles in length across parts of Montana, North Dakota and South Dakota.
Denbury's portion of CCA covers approximately 175,000 acres and is estimated to hold up to five billion barrels of original oil in place.

  • targets EOR potential greater than 400 million barrels, with initial tertiary production expected by late 2021 or early 2022
  • modest capital to first tertiary production of approximately $250 million (including CO2 pipeline) can be funded with cash flow
  • first two project phases are estimated to generate $3 billion of cumulative net free cash flow at $60 oil
If one gets 50% of that OOIP from primary production and EOR, we are talking about 2.5 billion bbls of oil.

One of the more pleasing observations from that press release: it's out of Plano, TX -- just up the road from us. Plano is home to many Fortune 500 companies, including Toyota, after it moved out of California a couple of years ago. Toyota has completely transformed Plano.

Denbury "needs" $60-oil long-term to make this project viable (after 2024 or thereabouts).

Outlet Mall
Near Seaside, Oregon -- Along The Coast
Tesla Charging Station

 Can you imagine if every car in Oregon was an EV? Wow!

Scotland's Highest Court Rules In Favor Of Government To Ban Fracking -- June 19, 2018

From Reuters via Rigzone:
Scotland's highest court has ruled in favour of a government ban on fracking which had been challenged by energy giant Ineos.

The devolved government said a moratorium on fracking - gas extraction via hydraulic fracturing of the ground - was in place. That meant no local authority could grant planning permission until an impact assessment process had been carried out.
Ineos had argued that the ban was imposed unlawfully, and that it contradicted evidence that shale gas could be produced safely by unconventional methods.
Scotland decided to outlaw fracking in October after a public consultation found overwhelming opposition to it.
Comment: more good news for the Bakken and the US. More at the link. Most interesting to me -- I did not realize I already had a tag, "Road_To_Scotland" -- LOL.
China At A Tipping Point

John Kemp, Reuters oil analyst based in London, has three interesting slides over at Twitter today.  Kemp has an agenda, by the way. As we all do.

If one thinks about the graphics above and Kemp's thesis, it comes down to this:
  • China will have to become energy independent over the next few years
  • the US will have to start making its own televisions and plastic toys or find another international source
This is not rocket science.

The Market, Energy, And Political Page, T+19 -- June 19, 2018

Shell: cool story. Over at Bloomberg via Rigzone: Shell is getting its "swagger" back in Texas shale. Wow.
Shale oil hasn’t always been Royal Dutch Shell Plc’s best friend, but they’re working on the relationship.
Shell is said to have bid, with partner Blackstone Group LP, on a portfolio of U.S. shale assets BHP Billiton Ltd. wants to sell for about $10 billion. If it wins, the Anglo-Dutch oil major could exceed its goal of doubling its American onshore output, according to JPMorgan Chase & Co.
That would boost the unit’s free cash flow -- currently on track to grow by $2 billion by 2025 -- and turn around a shale portfolio that is currently “mid-lower ranked."
At the heart of Shell’s shale problem has been the lack of a coherent strategy. It has irregularly acquired various bits of U.S. acreage, including a large stake in the low-cost and highly desirable Permian.
In the Permian’s Delaware basin Shell was pumping fewer than 100,000 barrels a day per 1,000 feet (300 meters) of well length in the first 30 days of production -- about 20 percent lower than the industry average at the time. In contrast, shale specialist EOG Resources Inc.’s wells in the same area were about 50 percent more productive.

The company, with partner Anadarko Petroleum Corp., has started improving productivity by drilling longer wells and implementing a technology program called iShale, which has reduced costs by 60 percent since 2015. BHP’s Permian portfolio, which overlaps Shell’s current acreage, could solidify those gains and allow it to take advantage of existing infrastructure.
JPMorgan estimates Shell’s overall shale production would rise to 630,000 barrels of oil equivalent a day by 2020 if it acquires the BHP assets, from 270,000 now. It could emerge into an “upper-quartile” operator in the area.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

Venezuela: tick, tick, tick:

Tracking Venezuela here.

Reuters via Rigzone is reporting that the big Venezuelan refinery is operating at minimum capacity while waiting for new crude shipments to arrive:
The 335,000-barrel-per-day Isla refinery operated by Venezuela's state-run PDVSA in Curacao is working at minimum capacity while awaiting new crude shipments and as a tanker backlog in the country's ports began to ease.
PDVSA's operations this year have been mired by problems ranging from fast-declining crude production and poor refining due to a lack of equipment, to obstacles for exporting oil amid port congestion and financial sanctions.
Only a few units at the Curacao refinery have been operating during U.S. producer ConocoPhillips' moves to seize PDVSA's inventories, cargoes and facilities following a $2 billion arbitration award by the International Chamber of Commerce in April.
No shipments of Venezuelan oil have been sent to Isla since late April and none were planned this month.
Much more at the link. By the way, every Reuters news story about Venezuela imploding seems to imply that Venezuela's government can blame ConocoPhillips as the cause of their problems.

The trade war. The other day I posted a graphic that told me all I needed to know about the trade war with China. From Bloomberg via Rigzone:
In punching back against U.S. tariffs, China included almost all energy-related commodities on a list of its retaliatory actions. The exception: liquefied natural gas.
That’s not surprising, according to a report Monday by Wood Mackenzie Ltd., a U.K.-based research firm. After an aggressive coal-to-gas switching policy was put in place by China’s government last year to fight the country’s smog issues, U.S. LNG supplied 4 percent of that country’s demand.
U.S. President Donald Trump announced $50 billion in tariffs against China on June 15, and China retaliated with a $34 billion list. Oil was included, but not LNG. The reason: China’s LNG demand will grow by 10 million tons this year, and 9 millions tons in 2019, the Wood Mackenzie report said. The U.S., meanwhile, is set to generate 30 percent of incremental supply growth in LNG.
"In the event of an escalation, LNG is likely to remain outside the bounds of any additional tariffs," Nicholas Browne, head of Asia-Pacific gas and LNG at Wood Mackenzie, wrote in a note to clients. "Tariffs on U.S. LNG would increase costs and potentially limit availability of LNG."

"Lower For Longer" -- Maybe Goldman Sachs Was Correct -- June 19, 2018; But For Australia, "Higher For Longer" -- Electricity Surged To $14,000/MWH Late Last Week

ExxonMobil Sees An Opportunity
Coals To Newcastle 

This is pretty coincidental. Three things:
  • weather forecasters forecasting one of the colder winters ever for Australia this year; winter has just begun (that was about a week ago; I did not post)
  • grid "crisis" in Australia; could not handle heating demand for cold snap; link here;
  • today, oilprice.com reports that ExxonMobil plans to build LNG import terminal off Australia's east coast
Other notes:
  • Australia sits on some of the world's largest coal reserves
  • Australia is saying "no" to coal to save the world from global warming; trying to "make do" with renewable energy; obviously not working
Australia's cold snap yesterday (from the linked article above):
  • energy prices surge 160x normal; up to $14,000 / MWH (US average: about $100/MWH)
  • several major electricity power stations went down, unprepared for spike in demand caused by cold snap along Australia's east coast
  • one of Australia's largest aluminium shelters forced to shut down
  • on three separate occasions, Tomago, the state's largest single energy user, was forced to halt production as spot prices soared to a staggering $14,000 per megawatt hour
  • Tesla's battery: the largest battery in the world would power the smelter plant for all of eight minutes
Back to the Bakken

Active rigs:

Active Rigs61562877189

RBN Energy: Enterprises fractionators and other NGL-related assets at Mont Belvieu.
The fractionation and NGL storage complex in Mont Belvieu, TX, would surely qualify as one of the Seven Wonders of the Energy World, if there were such a list. With more than 250 million barrels of NGL storage carved — by water! — out of an enormous subterranean salt dome formation, and nearly two dozen fractionation plants with a combined capacity of more than 2 MMb/d, Mont Belvieu not only serves as the largest receipt point for mixed NGL streams on the planet, it is also the key hub of distribution for the ethane, propane, normal butane and other NGL purity products that are either consumed by Gulf Coast steam crackers and refineries or exported to foreign end-users. But unlike wonders of the ancient world like the Great Pyramids at Giza, Mont Belvieu is still very much a work in progress, with new storage caverns and new fractionators now under development to try to keep up with the breakneck pace of U.S. NGL production growth. Today, we begin a company-by-company review of fractionation capacity and other key infrastructure there.
Enterprise owns all or part of nine fractionation plants in Mont Belvieu (see photo below), the newest of which (Frac IX) is an 85-Mb/d facility that has been ramping to full operation this month (June 2018). The nine fractionators’ total capacity is 755 Mb/d, or 36% of the total existing fractionation capacity at the NGL hub. Enterprise — its holdings in Mont Belvieu  — has been a major fractionator there for many years. By 2010, it had 245 Mb/d of capacity up and running in Mont Belvieu, and this decade it’s added six 85-Mb/d plants: one each in 2010, 2011 and 2012; two in 2013 and — as we said above — another this month. The seventh and eighth fractionation units at Enterprise’s Mont Belvieu complex (the ones that came online in 2013) were joint projects with Western Gas Partners (WGP), a master limited partnership formed by Anadarko; Enterprise owns 75% of the two units and WGP owns 25%. Enterprise owns about 130 MMbbl of existing salt dome storage capacity at Mont Belvieu and is in the process of developing 38 MMbbl of additional storage capacity there. The company’s Mont Belvieu assets also including a propane dehydrogenation (PDH) plant, isobutene dehydrogenation (iBDH) capacity, propylene splitters, and an octane-enhancement unit that produces methyl tertiary butyl ether (MTBE) for the export market.