Locator: 48736B.
Oracle: to release earnings after market close later today.
EVs: Trump will sign bill to rescind California's EVs mandate. To sign legislation, tomorrow, Thursday.
Climate pledges? Major corporations go quiet on climate pledges. Link here.
Peak oil demand: narrative has flipped. Last ten years, forecasts were "oil demand has peaked." Now? Oil demand: o peak in sight; will reach 120 million bopd by 2050. OPEC expects a 24% increase in world's energy needs between now and 2050. Link at Reuters.
Permian: it's all about natural gas. And it's gonna last a long time.
The Ukraine effect? Pentagon slashes in half its request for USAF F-35s (Lockheed).
China-US trade talks: it surprises me how many folks on social media appear not to have read Trump's book, The Art of the Deal.
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Back to the Bakken
WTI: $66.42. Up another $1.44 overnight; up 2.3% overnight.
New wells (amazing how few new permits needed each year to maintain oil production):
- Thursday, June 12, 2025: 41 for the month, 194 for the quarter, 408 for the year,
- 41177, conf, CLR, Kenneth 4-17H1,
- 41120, conf, Oasis, Sawtooth Federal 5202 24-20 6B,
- 39979, conf, Zavanna, Collie 13-25 1H,
- Wednesday, June 11, 2025: 38 for the month, 191 for the quarter, 405 for the year,
- 41119, conf, Oasis, Sawtooth 5202 24-20 5B,
- 41011, conf, Oasis, Sawtooth 5202 24-20 4B,
- 40606, conf, Enerplus, Danielle 145-97-12-1-4H,
- 40605, conf, Enerplus, Danielle 145-97-12-1-5H,
RBN Energy: can US ethane survive without China? Note: story breaking today -- China and US have tentatively agreed on tariffs with which both can life. Headline releases did not mention ethane trade with China. Having said that, EPD was up a bit yesterday and is up again today, albeit not much. Same with Engergy Transfer.
Two-thirds of Gulf Coast ethane exports — about 225 Mb/d in 2024 — go to China via docks owned by Enterprise Products Partners and Energy Transfer.
These days, that’s a big problem. The Bureau of Industry and Security (BIS) has effectively banned ethane exports to China by requiring licenses that it won’t approve.
Ethane has become a bargaining chip in U.S.-China negotiations over rare earths and tariffs — in part because China has no alternative source of waterborne ethane feedstock for its petchems. But the U.S. has a reciprocal issue. While China isn’t the only market for U.S. ethane, there are very limited other destinations for the volumes they typically take. That could mean significant “rejection” of ethane into natural gas at U.S. gas processing plants — i.e., selling ethane for its fuel value instead of recovering it for petchems or export. Of course, the U.S. is actively negotiating with China on trade issues in London this week, and the ethane export ban could be lifted by the time you read this. But if it drags on, can the U.S. gas processing and pipeline system handle that much additional ethane rejection? That’s a huge, critically important question for NGL markets — and precisely what we’ll explore in today’s RBN blog.
The Shale Revolution has had many effects on U.S. energy production, but one of the most dramatic and far-reaching was the unprecedented growth in the volumes of ethane emerging from wells along with other NGLs, crude oil and natural gas. As we have blogged about extensively over the years, ethane — aka C2 because it has two carbon atoms (plus six hydrogen atoms) — is the quirkiest NGL for at least two reasons. First, it can either be “rejected” into natural gas and sold for its Btu value or separated (with other NGLs) from natural gas at processing plants and then fractionated into liquid ethane for use as a feedstock in steam crackers to make ethylene and other petrochemicals. Second, fractionated ethane — unlike propane, butanes and other so-called NGL purity products — has (with very limited exceptions) only that one use, as a petchem feedstock.
Note that, like the other NGLs, ethane is a byproduct of natural gas production, which likewise can be primarily a byproduct of crude oil production in some oil-centric basins like the Permian and the Bakken. That means that ethane gets produced regardless of its price! It comes out of the ground as a comingled stream, is extracted in a nearby gas processing plant, and then is, in almost all cases, transported by pipeline in the form of a Y-grade mix to a centralized fractionator that splits the mix into ethane and the four other purity NGL products. In 2024, U.S. fractionators churned out about 2.8 MMb/d of ethane; we estimate that another 1 MMb/d of ethane was rejected at processing plants into natural gas and sold as gas. (Much more on ethane rejection later.)
As shown in Figure 1 below, of the 2.8 MMb/d that was extracted from gas and produced as liquid ethane last year, about 2.3 MMb/d (or ~82%; orange layer) was piped to U.S. steam crackers, many of them built over the past few years to take advantage of the flood of cheap domestically sourced ethane coming their way. The other 500 Mb/d (or ~18%; blue layer) of produced ethane was exported, with more than two-thirds of those exports (~70%, or about 350 Mb/d) being shipped out of Enterprise’s Morgan’s Point, TX, export terminal near Houston and Energy Transfer’s Orbit terminal in Nederland, TX. The other 30% was either piped north to petchem plants in Canada or shipped out of Energy Transfer’s Marcus Hook terminal near Philadelphia. Most of the ethane exports out of Texas went to Asia (smaller volumes went to Europe and Latin America), while most of the exports out of Marcus Hook went to Europe.
Figure 1. U.S. Ethane Exports vs. Domestic Demand. Source: EIA
