Locator: 50334B.
The best thing about the price of oil and the Strait of Hormuz: we've quit talking about the Fed.
Tea leaves: TSA impasse about to come to an end? We'll see. I'm hopeful. [Later: I may have spoken too soon. Now, 1:11 p.m. CT, Friday, March 27, 2027, renegade, hard-core right-wing Republicans are now against paying the TSA employees.] [My hunch: Trump is involved. It would be very unlikely that Trump would not be involved and he has made his feelings clear on this issue. If so, Trump may yet sign that executive order to get the TSA employees paid.][President Trump signs emergency order to pay TSA workers. Perfectly legal but now we wait for Judge Boasberg.]
Iran: Trump may yet thread this needle.
"Iran's statement this morning: the strait is closed.
Earthquakes: what's more likely to happen in the next ten years? A massive earthquake / tsunami taking out chip factories in Taiwan or China taking Taiwan?
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Back to the Bakken
WTI: $96.65. Back again to where we were. What happened? Just when things seemed to be getting better. Up $2.17; up 2.30%. If this holds, CVX should have another stellar day. CVX is my proxy for BIG OIL; MPC is my proxy for refiners; and, LNG (Cheniere) is my proxy for natural gas exports. By the way, speaking of MPC/refiners, hurricane season is just around the corner. [Early morning trading, $97.33.]
WTI, later, later afternoon:
New wells reporting:
- Sunday, March 29, 2026: 51 for the month, 155 for the quarter, 155 for the year,
- 42216, conf, CLR, Louisville FIU 4-7H,
- 42052, conf, Petro-Hunt, Tinjum 159-91-31C-19-1H,
- 41477, conf, Hunt Oil, State C156-90-3-36H-5,
- 41476, conf, Hunt Oil, State C 156-90-3-36H-4,
- Saturday, March 28, 2026: 47 for the month, 151 for the quarter, 151 for the year,
- 42245, conf, CLR, Addyson 7-23H,
- 42215, conf, CLR, Louisville FIU 3-7H,
- 42189, conf, BR, Abercrombie 8-8-12 MBH,
- 42053, conf, Petro-Hunt, Tinjum 159-91-31D-19-2H,
- 41503, conf, Hess, RS-Sorenson-155-92-0105H-1,
- 20595, conf, Devon Energy, Wahus Federal 152-97-13-24-1H,
- Friday, March 27 2026: 41 for the month, 145 for the quarter, 145 for the year,
- 42246, conf, CLR, Charleston 8-22HSL,
- 42054, conf, Petro-Hunt, Tinjum 159-91-31D-19-2H,
- 41501, conf, Hess, RS-Sorenson-155-92-0105H-3,
RBN Energy: "311" gas transportation: what is it, why is it, and how does it work? Link here. Archived.
The
natural gas industry and its regulatory structures can get confusing
sometimes, especially as they interact with a very active and
transparent market. One regulatory topic that’s been around for a long
time but has suddenly become enormously important is 311 transportation.
This relates to the transportation of gas by an intrastate pipeline
that is not regulated by the Federal Energy Regulatory Commission but
delivers into interstate commerce. As we discuss in today’s RBN blog,
311 transportation is in the spotlight because it applies to the slew of
new pipelines that have been built across Texas to get Permian gas to
market.
First, a little background. “311” refers to
Section 311 of the Natural Gas Policy Act of 1978, aka the NGPA. Yes, it
goes back that far. A half-century ago, the U.S. interstate natural gas
market was out of gas. The wellhead price of gas destined for the
interstate market had been regulated at very low levels, ever since
1954. Low prices had two consequences:
- Natural
gas was very in-demand, especially after the Clean Air Act became law
in 1970 and pretty much required anyone with a big boiler to cut their
pollution, with gas being the cheapest way to do so.
- The
producers who brought natural gas to market were deeply uninterested in
selling at low prices, especially when gas that did not get into
interstate markets — that stayed in the state where it was produced —
could be sold at whatever the market would bear. The difference for
producers was selling at $0.52/Mcf interstate or $2.50/Mcf in the
intrastate market.
As
a result, the interstate gas market suffered extreme, sometimes
catastrophic shortages throughout the 1970s. This came to a head in
1977, when newly inaugurated President Jimmy Carter got the Emergency
Natural Gas Act (ENGA) passed to fix as much as it could in short-term
emergencies. One of the problems that was pointed out and addressed in
that act was the ability of gas in intrastate markets to get out of
their states into interstate markets.
This problem
existed because, back then, if an intrastate pipeline even touched gas
destined for interstate markets, it suddenly became a federally
regulated interstate pipeline and had to redo everything — that is,
become fully regulated by FERC (actually, FERC’s predecessor, the
Federal Power Commission) under the Natural Gas Act of 1938 (NGA). This
meant that during the natural gas shortages of the 1970s, gas in Texas
intrastate pipelines could not leave the state, despite the rest of the
country starving for supply.
ENGA provided for
intrastate pipelines to feed interstates in an emergency without
becoming FERC-regulated. Then, the next year in the NGPA, Congress made
that permanent, creating a way to free up access from the intrastate
market to the interstate market, to help keep people from freezing in
New York. The new rules were written into Section 311 of the NGPA. It
allowed intrastates to transport to an interstate pipeline without
getting to experience the joys of federal regulation under the NGA.
Because
all this was happening under a different law than the NGA, 311 service
got its own set of rules at FERC. The intrastate pipelines could
continue to offer intrastate service — for example, a Texas pipeline
could use its Texas Railroad Commission tariff to move the gas that
remained in-state, and would use a “Statement of Operating Conditions”
providing rates and terms and conditions of service on file with FERC to
transport gas delivered to interstate pipelines.
The
311 transportation rates didn’t have to be “just and reasonable” — the
standard required for interstate rates — they had to be “fair and
equitable.” (Admittedly, it would be hard for anyone but a FERC expert
to tell the difference.) In any event, there were two ways an intrastate
pipeline could set its rates for 311 service into the interstate
market:
- If it had state-approved rates (as in
Texas), it could propose to FERC that it use those, and FERC would
“presume” the rates were “fair and equitable” when they took effect. If
the rate was challenged, i.e., the presumption was rebutted, FERC could
step up and review the work of its state regulator counterparts.
- If
there were no state-approved rates (as in Louisiana), the pipeline
would have to make a cost-based showing to support its proposed rates,
similar to what an interstate pipeline has to do in a rate case. Once
approved by FERC, these rates would be deemed “fair and equitable.”
Remember,
all this was going on against a backdrop of “freeing up” the intrastate
network (red lines in Figure 1 below) to help out the interstate market
(blue lines). So, 311 service was a useful, but somewhat secondary
thing going on in the gas market, not changing much even as the market
as a whole changed profoundly through restructuring and the Shale
Revolution.
