Follow-Up On ND "Hot Gas" And The Northern Border Pipeline -- September 5, 2020

This is in response to the story posted earlier today regarding "hot gas" and the Northern Border Pipeline.

A reader wrote that he/she had a I have a very dear friend from college. He managed gas plants throughout the OK/TX panhandle. His dad did the same in TX, NM and AZ. I've been lucky enough to have them each walk me through a plant, drive me through the country they were gathering, etc. I asked him for Cliff Notes on our "too hot" gas. This is the reply from that individual with extensive experience with this issue:

It is not uncommon to have some 1200 BTU gas in a field, depends on zone, depth, area, etc. 

It sounds like they need more gas processing in North Dakota. 

The regulation is dumb to me because the gas can be processed downstream.

Normally pipelines are NOT the end user, they are only the transporter and someone else can pull the BTU out of the gas.

Also it is important to gas processing plants to be able to leave the ethane in the gas if the market is paying more for the ethane in the gas rather than in the liquids stripped out of the gas.

All gas processing plants are designed to run in ethane rejection (leave the ethane in the gas rather than remove it with the propane, butane, pentane, etc. ) if the markets pays better for ethane in the gas rather than in the liquids removed. 

Every plant I ever worked in or managed was capable of ethane rejection even if not originally designed for it. Just warm up the tower temps and the ethane goes out the top with the methane rather than out the bottom with butane, propane, pentane, etc. 

If designed for it then they can do it more efficiently. 

It does sound like the ND gas is pretty hot overall. I saw / toured one plant in the Denver area years ago that BP ran and they sold to the pipeline that provided Denver. In order to cut the btu they actually injected air into the pipeline. It sounded insane to me because we spent a lot of time making sure we did not get air into our pipelines, we operated some lines at below atmospheric pressure so any leak pulled air into the system, and air can cause explosions, but at the Denver site they actually injected air into the system. Probably was no added compression on the system after the air injection. Air and compression don't mix well.

This was my reply, noting that is way above my pay grade, and far ahead of my headlights, to mix metaphors:

Two immediate thoughts come to mind: 

Political: someone is trying to keep ND gas out of the Northern Border Pipeline so the Canadians can ship more of their own gas; or, more likely, it's a matter of who pays: 

Financial: either the operators in ND pay to "dilute" their "hot gas" before it goes into the pipeline, or the end user (in Illinois, or wherever) pays for the process of doing that (sounds minimal). 

Regardless: it sounds like a manageable problem, and maybe this will spur ND to put in more natural gas processing plants.

Wow, this takes me to the early days of the Bakken: ethane rejection. I had forgotten all about it. I have a lot of problems with tags (bottom of page) but in this case, I'm glad I had an "ethane rejection" tag. 

******************************************
The Original Post

This was the original post:

From Geoff Simon's top stories of the week:

A tariff pending before the Federal Energy Regulatory Commission may place limits on the heat content of natural gas in the Northern Border Pipeline.

Justin Kringstad, director of the ND Pipeline Authority, told members of the ND Industrial Commission this week that the tariff would allow Northern Border to reject any gas that exceeds 1,100 BTU per cubic foot.

That could be a problem for North Dakota producers because natural gas produced in North Dakota is rich in ethane and other natural gas liquids.

Kringstad said the gas must be processed to remove those NGLs to reduce its heat content to the 1,100 BTU level.

North Dakota gas now makes up about 80 percent of the total moving through the Northern Border Pipeline, and "signs are pointing toward North Dakota being almost the exclusive shipper in the next three to six years," Kringstad said. He said achieving the 1,100 BTU threshold would require the removal of additional 80,000 bbl/day of ethane by the year 2027.

Industry sources say the ideal heat content for natural gas is between 950 and 1,100 BTU/cubic foot. Gas that burns hotter can damage appliances and other equipment that burn it. Kringstad said Northern Border interconnects with several downstream pipelines that limit heat content to 1,100 BTU or less.

"The downstream folks are concerned that North Dakota's gas is getting too hot," Kringstad said. "The marketability and safety issues downstream are what's driving pressure on Northern Border to implement the tariff change."

North Dakota may have a little time to adapt if FERC approves the new tariff. Kringstad said the change would not be immediate because the tariff would be phased in, starting at 1,155, stepping down to 1,140 and eventually down to 1,100. He said the near-term solution is balancing the hotter gas going into the pipeline with dryer gas that has had most of its liquids removed. Kringstad said one other possibility he's exploring that could provide opportunity to electric generators is injecting hydrogen gas in the pipeline.

Fascinating story on so many levels. 

 

Northern Border Pipeline Could Reject US Natural Gas If ND Producers Don't React -- September 5, 2020

 From Geoff Simon's top stories of the week:

A tariff pending before the Federal Energy Regulatory Commission may place limits on the heat content of natural gas in the Northern Border Pipeline.

Justin Kringstad, director of the ND Pipeline Authority, told members of the ND Industrial Commission this week that the tariff would allow Northern Border to reject any gas that exceeds 1,100 BTU per cubic foot.

That could be a problem for North Dakota producers because natural gas produced in North Dakota is rich in ethane and other natural gas liquids.

Kringstad said the gas must be processed to remove those NGLs to reduce its heat content to the 1,100 BTU level.

North Dakota gas now makes up about 80 percent of the total moving through the Northern Border Pipeline, and "signs are pointing toward North Dakota being almost the exclusive shipper in the next three to six years," Kringstad said. He said achieving the 1,100 BTU threshold would require the removal of additional 80,000 bbl/day of ethane by the year 2027.

Industry sources say the ideal heat content for natural gas is between 950 and 1,100 BTU/cubic foot. Gas that burns hotter can damage appliances and other equipment that burn it. Kringstad said Northern Border interconnects with several downstream pipelines that limit heat content to 1,100 BTU or less.

"The downstream folks are concerned that North Dakota's gas is getting too hot," Kringstad said. "The marketability and safety issues downstream are what's driving pressure on Northern Border to implement the tariff change."

North Dakota may have a little time to adapt if FERC approves the new tariff. Kringstad said the change would not be immediate because the tariff would be phased in, starting at 1,155, stepping down to 1,140 and eventually down to 1,100. He said the near-term solution is balancing the hotter gas going into the pipeline with dryer gas that has had most of its liquids removed. Kringstad said one other possibility he's exploring that could provide opportunity to electric generators is injecting hydrogen gas in the pipeline.

Fascinating story on so many levels. 

 

Two Incredible Statistics -- February 22, 2020

Updates

Later, 11:16 p.m. Central Time: had this been a close race this would have been the story -- what's going on with the Nevada-tabulating app? The caucuses have now been closed for several hours, and only 27 percent of precincts has reported. What's taking so long? Only because Sanders won by such a lopsided margin no one is asking this question. But again, this is extraordinary, how long it's taking for the votes to come in.


Later, 10:33 p.m. Central Time: coming out of Nevada, this is what happens next:

• South Carolina shootout: Biden, Sanders, Steyer -- in that order
• Latino voters will be the surprise voting bloc: Sanders takes Texas and California
• African-American vote incredibly important in South Carolina, but everywhere else, it's all about the Latino/Latina vote -- and Bernie has that vote locked up

Later, 9:00 p.m. Central Time: I'm a political junkie. I can't stand MSNBC. Tonight I find myself defaulting to MSNBC. This is absolutely fascinating. Remember: these MSNBC talking heads were 1000% behind Hillary. They were supremely surprised / shocked that she lost, and subsequently severely depressed, some (most) suffering from Trump Derangement Syndrome. It appears it is happening again. These MSNBC talking heads are shocked at how well Bernie has done. This was never, never expected. It is a hoot to watch MSNBC talking heads trying to sort this out. And that's why I keep turning back to MSNBC tonight. It will be interesting to see how Rachel Maddow handles this shock Monday.

Later, 8:40 p.m. Central Time: wow, wow, wow -- will anyone hit the 15% threshold except Bernie and Biden?

• Bernie: 46%
• Biden: 24%
• Buttigieg: 14%
• Pocahontas: 9%
• but, think about this: Bloomberg was not on the ballot. Bloomberg would have taken a few votes from Bernie and Buttigieg, but he would have likely knocked out Biden and Pocahontas. 

Original Post

First incredible statistic: Nevada caucuses -- early results show Bernie Sanders taking upwards of 55% of the vote. That is incredible, on so many levels. Bloomberg is so lucky he did not enter this race.

By the way, speaking of Bloomberg, is it just me or do those Bloomberg ads look really, really pathetic now? Before the debate, the Bloomberg ads were "believable." The ads didn't say anything except "Mike can do it," but after the debate one really wonders if the only thing Mike can do is make slick ads. We'll see.

Bernie won (or came very, very close to winning) in Iowa and New Hampshire. Then he delivered a knockout blow in Nevada and will clearly win in South Carolina. He will win California on Super Tuesday, and unlike the other candidates won't even have to campaign in California. While his opponents will have to spend a huge amount of time and a huge amount of financial resources in California, he can spend his time in other states. 

Back on January 31 2020, I wrote:

The California poll, KQED/NPR, 1/25 - 1/27: if by Super Tuesday, we still have seven viable Democrat candidates, it's very, very possible Sanders takes all delegates.

The Super Tuesday states:

Alabama, Arkansas, California, Colorado, Democrats Abroad, Maine, Massachusetts, Minnesota, North Carolina, Oklahoma, Tennessee, Texas, Utah, Vermont, and Virginia.

Finally:

The excitement in the Bernie camp is palpable. Everyone's eyes are on California. But when you look at the entire list of states voting on March 3, it's hard to believe he will do as well as the Bernie folks think he will. But by Super Tuesday, will Biden, Klobuchar, Pocahontas, Buttigieg, even have the resources to keep going? I'm not sure.

Anyway, that's longer than I had planned.

**********************************

Back to the Bakken

The second incredible statistic, which comes from the Bakken, and from a reader in response to this post. This is the comment from that reader regarding all the ethane coming out of the Bakken (a reminder for those who are receiving royalties: natural gas is primarily methane, a one-carbon gas; ethane, propane, and butane are the C2 - C4 gases).

An eerie point in this story that the EXTRA Bakken ethane that needs to be pulled out of the gas (not all of it, just the extra) would be enough to fill a cracker.

https://btuanalytics.com/bakken-gas-quality/. This is an incredibly good article, dated February 11, 2020. I will come back to this one. It's so important that I have archived it.

Later: I have spent the last hour or so trying to sort out this "BTU Analytics" story, and still haven't found what I wanted. A reader that really, really understands this, and really provides me helpful information, put this article into perspective:

Theoretically, a $6 billion cracker could be built in North Dakota and have an almost indefinite amount of 'free' ethane feedstock for decades. 

The qoutation marks surrounding 'free' are only due to the needed processing (fractionation) and piping to this theoretical cracker.

That 90,000 bbld rejected ethane is less than a single Appalachian Basin operator - Antero - rejects every single day.

Meanwhile, India (Gail and Reliance) has started a brand new industry - along with European Ineos - in constructing fleets of massive ships to transport American ethane/ethylene to their new crackers.

Huge new plants going up in Antwerp and in at least two cities in China.

The amount of gaseous hydrocarbons brought to market via this Shale Revolution is simply unfathomable.

I will post this article as a stand-alone post.

 

Richness, GPM, from a "white paper:

Associated gas is produced as a by-product of oil production and the oil recovery process. After the production fluids are brought to the surface, they are separated at a tank battery at or near the production lease into a hydrocarbon liquid stream (Crude Oil or Condensate), a produced water stream (brine or salty water) and a gaseous stream.

The gaseous stream is traditionally very rich (Rich Gas) in natural gas liquids (NGLs).

NGLs are defined as Ethane, Propane, Butanes, and Pentanes and “Heaviers” (higher molecular weight hydrocarbons) (C5+). The C5+ product is commonly referred to as Natural Gasoline.

Rich gas will have a high heating value and a high HDP. When referring to NGLs in the gas stream, the term GPM (gallons per thousand cubic feet) is used as a measure of hydrocarbon richness. The terms “rich gas” and “lean gas” are commonly used in the gas processing industry. They are not precise indicators but only indicate the relative NGL content.

HDP: hydrocarbon dew point --

the water dew point is the temperature at which water vapor will condense to liquid water. The water content in a pipeline is already covered by tariff provisions and is mentioned here for illustrative purposes. Similarly, the hydrocarbon dew point (HDP) is the temperature at which hydrocarbons will begin to condense; hence the expression "hydrocarbon liquid drop out."

Bakken Ethane And An Ethane Cracker, BTU Analytics, Readers' Comments -- February 22, 2020

See this news story also, link here. 

Hess Midstream Partners LP is expanding natural gas processing capacity at its 250-MMcfd Tioga gas plant in North Dakota, north of the Missouri River.

The planned 150-MMcfd expansion will add residue and y-grade liquids processing capacity to the existing full-fractionation and ethane-extraction capability of the current plant, Hess Midstream said.

The expansion—for which product takeaway has been secured and which will raise total gas processing capacity at Tioga to 400 MMcfd—is scheduled to enter service in mid-2021 at a total cost of about $150 million.

Following completion of its 100-MMcfd Little Missouri 4 gas processing plant in McKenzie County, ND—a joint venture with Targa Resources Corp.—scheduled for some time in third-quarter 2019 and the Tioga expansion, Hess Midstream said it will have 500 MMcfd of net gas processing capacity in the Bakken region.

The Tioga expansion comes amid continued Bakken growth from Hess and third parties that has created additional demand for processing capacity north of the Missouri River, said John Gatling, Hess Midstream’s chief operating officer.

Re-posting:

[An] incredible statistic, which comes from the Bakken, and from a reader in response to this post. This is the comment from that reader regarding all the ethane coming out of the Bakken (a reminder for those who are receiving royalties: natural gas is primarily methane, a one-carbon gas; ethane, propane, and butane are the C2 - C4 gases).

An eerie point in this story that the EXTRA Bakken ethane that needs to be pulled out of the gas (not all of it, just the extra) would be enough to fill a cracker.

https://btuanalytics.com/bakken-gas-quality/. This is an incredibly good article, dated February 11, 2020. I will come back to this one. It's so important that I have archived it.

Later: I have spent the last hour or so trying to sort out this "BTU Analytics" story, and still haven't found what I wanted. A reader that really, really understands this, and really provides me helpful information, put this article into perspective:

Theoretically, a $6 billion cracker could be built in North Dakota and have an almost indefinite amount of 'free' ethane feedstock for decades. 

The qoutation marks surrounding 'free' are only due to the needed processing (fractionation) and piping to this theoretical cracker.

That 90,000 bbld rejected ethane is less than a single Appalachian Basin operator - Antero - rejects every single day.

Meanwhile, India (Gail and Reliance) has started a brand new industry - along with European Ineos - in constructing fleets of massive ships to transport American ethane/ethylene to their new crackers.

Huge new plants going up in Antwerp and in at least two cities in China.

The amount of gaseous hydrocarbons brought to market via this Shale Revolution is simply unfathomable.

This was posted earlier but deserved a stand-alone post. 

Richness, GPM, from a "white paper:

Associated gas is produced as a by-product of oil production and the oil recovery process. After the production fluids are brought to the surface, they are separated at a tank battery at or near the production lease into a hydrocarbon liquid stream (Crude Oil or Condensate), a produced water stream (brine or salty water) and a gaseous stream. 

The gaseous stream is traditionally very rich (Rich Gas) in natural gas liquids (NGLs). NGLs are defined as Ethane, Propane, Butanes, and Pentanes and “Heaviers” (higher molecular weight hydrocarbons) (C5+). The C5+ product is commonly referred to as Natural Gasoline. 

Rich gas will have a high heating value and a high HDP. When referring to NGLs in the gas stream, the term GPM (gallons per thousand cubic feet) is used as a measure of hydrocarbon richness. The terms “rich gas” and “lean gas” are commonly used in the gas processing industry. They are not precise indicators but only indicate the relative NGL content.

Disclaimer: I absolutely don't understand so much of this. What little I understand: this is a huge, huge story for the Bakken. Yeah, I get the "chemistry," but what I don't understand is the economics of this. The BTU Analytics article and the input from readers is a great help. Thank you.

Possible BTU Restrctions On Northern Border Gas Pipeline -- December 24, 2019

Possible BTU restrictions on the all-important Northern Border gas pipeline was mentioned by RBN Energy  in its daily blog.

Other links:

• Background, general: EIA, October 14, 2014. 
• From Reuters, John Kemp, October 26, 2012.
• Overview, SourceWatch. 
• Wiki: link here.
• abarrelful: link here.

From the RBN Energy post:

What’s behind the possible shift at Northern Border? Rising production of associated gas in the Williston Basin, combined with more gas processing capacity there, has increased the volumes of basin-sourced gas flowing into Northern Border, and also squeezed out more gas from Western Canada, which generally has less rejected ethane in it and therefore has a lower Btu content. Thus, as the volumes of Williston Basin gas received by Northern Border have increased, so has the overall weighted-average Btu content of the gas flowing on the big gas pipe. Our understanding is that while Northern Border doesn’t necessarily mandate a maximum Btu content, if the Btu content were to get high enough to cause problems for the utilities and other end-use customers it serves, Btu restrictions on the pipeline may need to be put in place.

I'm not going to explain it because I'll probably screw it up again, but when you read the paragraphs from the EIA below, note:

• BTU or heat content of methane vs ethane and propane
• heat content desired by end user
• ethane rejection

From the EIA report linked above:

The primary constituent of natural gas is methane, which has a heat content of 1,010 British thermal units per cubic foot (Btu/cf) at standard temperature and pressure. 

In July 2014, the heat content of natural gas in the United States was around 1,030 Btu/cf, or almost 2% more heat content than pure methane, reflecting the composition of the gases in the natural gas stream.

Natural gas requires a certain fuel-to-oxygen mix to burn properly, so stoves and other gas-fueled appliances typically require natural gas to be within a certain range of Btu content.

Pipelines also have a range of acceptable Btu content for natural gas going through their systems, which can vary from one pipeline to another.

High-Btu natural gas contains higher concentrations of natural gas liquids (mostly ethane and some propane) that have higher heat content than methane.

Pure ethane has a heat content of 1,770 Btu/cf and pure propane 2,516 Btu/cf.

Natural gas liquids are often removed during natural gas processing. However, because of the low price of ethane, many natural gas processors are choosing to leave ethane in the natural gas stream, a practice known as ethane rejection, rather than remove it for sale as a distinct product. A relatively high Btu content in a given state may be indicative of ethane rejection.

Background, Update, And Comments From A Reader On The Hess Ethane Pipeline -- The Vantage Pipeline -- To Alberta -- April 27, 2019

A reader was nice enough to remind me of some data points regarding the Hess Vantage pipeline.

I replied that I was lazy this week/this weekend -- just too much to blog and I did not take the time for a proper update. Sorry. This all started with updates on Hess yesterday, these two links:

• Hess, 1Q19 earnings;
• Hess reclaims bragging rights to largest NG processing plant in North Dakota

and then readers' comments regarding the "Hess pipeline to Alberta."

The "Hess pipeline to Alberta" is the Vantage Pipeline.

So, let's do a blog search and provide some background:

• the Vantage Pipeline, from an October 13, 2014, posting:

With regard to ethane and ethane pipelines, a reader recently commented:

The Vantage pipeline to Alberta from the Hess plant is probably the longest ethane pipeline in North America. OneOK y-grade pipe line takes Bakken NGLs to Conway, Kansas, where the propane is fractionated and sent to north to Iowa and points north. The rest of the NGLs are sent to Mt Belvieu, TX, where the rest of the fractionations occur. 

The Vantage pipeline:

The Vantage Pipeline is a high vapour pressure (HVP) pipeline carrying ethane from a source near Tioga, North Dakota, extending northwest, through Saskatchewan, Canada, and terminating near Empress, Alberta, Canada. The pipeline links a growing supply of ethane from North Dakota to markets in Alberta. 

The Vantage Pipeline is 445 miles steel pipeline, with an outside diameter of 10 inches.

• the Vantage Pipeline, from a September 2, 2014, posting:

The Wall Street Journal is reporting:

Pembina Pipeline Corporation is pleased to announce that it has entered into agreements to acquire the Vantage pipeline system and Mistral Midstream Inc.'s interest in the Saskatchewan Ethane Extraction Plant for total consideration of US$650 million.
 
Vantage is a recently constructed, approximately 700 kilometre ("km"), 40,000 barrel per day ("bpd"), high vapour pressure pipeline that originates in Tioga, North Dakota and terminates near Empress, Alberta. Vantage provides long-term, fee-for-service cash flow and strategic access to the prolific and growing North Dakota Bakken play for future natural gas liquids (NGL) opportunities. 

The Vantage pipeline can be increased to 60,000 bpd with minimum costs. 

• From July 16, 2013: Canada's biggest plastic producer will purchase all the ethane that Hess produces at its Tioga plant; US State Department approved the international pipeline to complete the deal. 

Now, new today: to say the least, the Vantage Pipeline really excited me when it was announced and then completed. But I was remiss re-posting all that for newbies. Again, a big apology. The notes above might be a bit disjointed, but one can probably sort it out.

Now, putting all that together from the reader today:

Hess moves ethane on this pipeline from Tioga to Empress, Alberta, where the Alberta Ethane Gathering System takes it to Nova Chemical's petrochemical complex at Joffre, Alberta. 

Hess is just completing the fifth year, I believe it is, of a ten-year deal supplying ethane to Nova. 

So I doubt they want to move ethane off this pipeline in the immediate future. 

And then this, which I had completely forgotten:

You may recall you previously mentioned one Bakken "tidbit", that Nova Chemicals is a subsidiary of IPIC (International Petroleum investment Company) which is wholly owned by the government of Abu Dhabi, United Arab Emirates. Another Bakken amazement - supplying the UAE ethane! 

And for the post on that, see this September 19, 2018, entry. 

Progress At Williston's New Airport, XWA, Continues Despite Polar Vortex -- February 10, 2019; Answers To That "Pop" Quiz On Ethane

Link here at The Williston Herald.

*******************************

Answers To That Ethane "Pop" Quiz

I find this fascinating. Posting the answers to the quiz posted yesterday. 

Link here for answers.

Ethane is a "feedstock" for just about "everything."

1. How many countries export ethane internationally? [That's redundant, obviously, but that's how the EIA phrased it.]  Two.

2. Name the top five countries that export ethane internationally. [Ditto,] Trick question. There are only two: the US and Norway.

3. Name the country that is #1 in ethane exports. The US.

4. Name the country that is #2 in ethane exports. Norway.

5. The US exports how much ethane?

a. 50,000 bpd
b. 250,000 bpd
c. 500,000 bpd
d. 1 million bopd

6. The country that exports the most ethane, exports how much ethane?

a. 50,000 bpd
b. 250,000 bpd
c. 500,000 bpd
d. 1 million bopd

7. The #2 country in ethane exports, exports how much ethane?

a. 50,000 bpd
b. 250,000 bpd
c. 500,000 bpd
d. 1 million bopd

8. The #3 country in ethane exports, exports how much ethane? Trick question. Only two countries export ethane.

a. 50,000 bpd
b. 250,000 bpd
c. 500,000 bpd
d. 1 million bopd

9. In what year did the #1 country overtake the #2 country (questions 3 and 4 above). 2015.

10. The United States exports ethane to how many countries? Ten.

11. In 2014, the US exported ethane to only one country. Name that country that was the only country to import ethane from the US. Canada.

12. Extra credit: American Ethane, when given federal approval, will supply ethane to a number of petrochemical crackers in China, from a new terminal on the Neches River in Beaumont, TX. "Who" funds American Ethane? Russia. Don't you just love all that talk about sanctions on Russia!

See also this post.

Now, Another Bottleneck In The US Ethane Story -- October 27, 2018

I assume the four major processes involving ethane:

• production at the well-head
• fractionation
• transportation
• end user (petrochemical plant)

I believe back in the early days of the Bakken boom, the ethane was not wanted because there was inadequate demand by the end user (not enough petrochemical plants).

See ethane rejection.

Now it appears there is not enough ethane available to meet end user demand: not enough capacity to separate ethane from the other natural gas liquids (NGLs).

If I that correct, imagine all the petrochemical plants that have sprung up over the past few years, or expansion of existing plants.

See this article in the Houston Chronicle.

By the way, I haven't heard a thing about NGLs Badlands in a long, long time. It seems I was sent a note on it recently but if so I lost it. I did ask for an update on April 16, 2018, but no response (at least nothing that I posted). See this post, from June 21, 2016:

North Dakota’s top oil producer—Continental Resources Inc.—has signed a long-term agreement to supply ethane to a proposed $6.5 billion polyethylene plant that Badlands NGL plans to build in the state.

“The interesting thing is that the Continental announcement is leading to very serious dialogues with other producers in North Dakota,” William Gilliam, Badlands CEO, told The Bakken magazine. “We are also pursuing very serious discussions in Canada.”

He cited a recent report by the Canadian Energy Research Institute (CERI) which said Canada could produce 350,000 barrels of ethane per day. Gilliam noted that he will be in Alberta this week for meetings with potential ethane suppliers.

“We’re actually looking at building a bigger ethane cracker in North Dakota because of the fact that we think we can be successful in gaining an important amount of ethane from Canada,” Gilliam said.

My thoughts: nice problem to have. "They" will solve it. Lots of jobs. If Proposition 112 in Colorado passes, there will be a lot of experienced workers ready to help out in Texas. 

Update On Bakken Ethane Production -- June 28, 2016

Updates

Later, 1:40 p.m. Central Time: after posting the story below, I went back and did a search on "Hess Ethane Canada" on the blog. Some of the posts:

• updates on all the crackers being considered, back in January, 2012
• expansion of the Hess Tioga plant, October 30, 2011
• Canada's biggest plastics producer will purchase all the ethane Hess produces at its Tioga plant, July 16, 2013
• $4 billion plastics plant announced for North Dakota, October 13, 2014
• connecting some dots, October 1, 2015
• Bakken ethane reaching Canadian feedstock facilities in Alberta, June 24, 2014
• this might have been the first, February 14, 2022

And that's just a small sampling.

Original Post

 

If you have time to read only one detailed report today, make it the RBN Energy post: US ethane exports to Asia and Latin America are about to pop.

Link here.

The entire post is eye-popping.

For newbies, it provides a lot of background to ethane.

When I first started blogging, I had no idea what "ethane rejection" meant. At risk of explaining it incorrectly, ethane is "more valuable" when used as feedstock rather than simply burned. Producers achieve a "higher margin" on ethane when it is used as feedstock for plastics and other derived products, than when it (ethane) is burned for heat or electricity. But because there is not enough midstream infrastructure to process all that ethane, much of it is currently being "rejected" and put back into / or left in the natural gas pipeline. Operators are "leaving money on the table" as they say.

The RBN Energy post at the link above provides an incredible update on the ethane situation. For folks interested in the Bakken, note this:

Let’s take a detailed look at all this capacity, beginning with a recap of the two ethane-only pipelines that for two years or more have been transporting U.S. ethane to Canada. 

Sunoco Logistics’ 50 Mb/d Mariner West Pipeline (blue layer in graph to the right of the figure below) since December 2013 has been moving ethane from the heart of the wet Marcellus/Utica (Houston, PA) to near Detroit (MI), and from there to steam crackers in Sarnia, ON.

Similarly, since May 2014 Pembina Corp.’s 40 Mb/d Vantage Pipeline (green layer) has been moving ethane from the Williston Basin in western North Dakota to the Alberta Ethane Gathering System (AEGS) near Empress, AB, again for use by Canadian ethylene plants.

Pembina is just finishing up a Vantage expansion project that (with a new lateral and pumping stations) will boost the pipeline’s capacity to 70 Mb/d this summer (note that the green layer thickens).

Here's the graphic:

One will find multiple posts regarding Pembina Corporation and its ethane pipeline on the blog. In addition, back in 2013, it made the top ten list for fastest growing energy companies in North America.

From RBN Energy:

As you can see from looking at the mid-2016 points in the two graphs in the figure above, the run-up in ethane demand from exports and from incremental ethylene plant capacity is only just beginning.

By late 2017/early 2018 (a year and a half from now), ethane exports could be approaching 300 Mb/d (200 Mb/d over today) and demand for ethane from new or expanded steam crackers could rise by 300 Mb/d—taken together, that’s some 500 Mb/d in new ethane demand!   

That rising demand will pull a lot more ethane out of volumes being rejected into natural gas today and increasingly move the ethane barrels through fractionators and into pipelines for deliver to petrochemical crackers, mostly crackers along the Gulf Coast.

But there is a catch. 

For ethane to be extracted instead of rejected, the price of ethane must be high enough to make the economics work.  That means higher than natural gas at the processing plant.  And that means high enough to cover the cost of transporting mixed NGLs (also know as Y-grade) to market (from a nickel per gallon all the way up to more than 25 cents per gallon) and fractionating that ethane out  (another nickel or dime per gallon).  And that means that all that new demand will not be satisfied unless ethane prices are higher. 

Perhaps a lot higher. 

One may want to take another look at Badlands NGLS. 

From RBN Energy, October 19, 2017:

 

Monday -- January 21, 2014; Oil Is Back

Active rigs:

	1/21/2014	01/21/2013	01/21/2012	01/21/2011	01/21/2010
Active Rigs	186	186	203	165	82

RBN Energy: the future of ethane. A continuation of the series.

There simply is not enough petrochemical demand to absorb all of the ethane that the U.S. can produce.  The result is rejection - ethane sold as natural gas at fuel value rather than being extracted and used as a petrochemical feedstock. Today around 250 Mb/d of ethane is being rejected, and that number could increase by 200% over the next three years.  Yes, you read that right.  Rejection could triple.  As NGL production from the big shale plays increases, the U.S. petrochemical industry will not be able to use most of the incremental ethane - thus rejection.  But it may not play out that way.  All that ethane could be exported - perhaps as liquid ethane. Or is there another possibility: Spiking ethane into the soon to be exported volumes of LNG from terminals like Cheniere Sabine Pass, Freeport, ETP/Southern Union at Lake Charles and Dominion at Cove Point?  Today we continue our exploration into the possibility that surplus ethane could be exported in the form of “hot” LNG.

The Wall Street Journal

Target tried antitheft cards.

Target Corp. TGT -1.98% Chief Executive Gregg Steinhafel is calling on retailers and banks to adopt chip-based credit-card technology to better protect shoppers. But the debate was different a decade ago, when the executive was on the other side of the issue as Target pulled the plug on a $40 million, three-year program that did just that.

Chip-based credit cards—in which a smart chip in the card works with special readers installed at stores—are widely used in Europe and Canada, making it more difficult for thieves to profit from the sort of massive data breach that hit Target over the holidays. 

Executives in Target's credit-card division tried to keep the program but lost out to the concerns of executives responsible for store operations and merchandising, a group that included Mr. Steinhafel, who worried the technology slowed checkout speeds and didn't offer enough marketing benefits, according to a person familiar with the decision.

It's interesting. I've always been amazed at check-out speeds at Target. One never shows an ID, one never signs anything. It comes as no surprise Target was hacked. I will never use a credit card at Target again, and will seldom shop there any more.

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High-tech monitors often miss oil pipeline links.

Energy and pipeline companies like to point out they use high-tech sensors and remote-monitoring systems to automatically alert engineers when a pipeline starts to leak oil.

However, most leaks usually aren't discovered that way, according to a review of four years of liquid pipeline accident records. The overwhelming majority of these pipeline spills, ruptures and leaks were discovered by somebody near the accident site, a Wall Street Journal review of a database of more than 1,400 accident reports collected by the federal Pipeline and Hazardous Materials Safety Administration found. 

Most are found by farmers harvesting or seeding their fields. 

The Los Angeles Time

Oil demand increases.

Worldwide demand for oil will increase 1.4% this year as developed economies strengthen, building off a strong final three months of 2013, the International Energy Agency said Tuesday.

The projections in the organization's monthly oil market report add to forecasts of a global economic pickup in 2014.

Unexpectedly higher demand in the U.S. in the fourth quarter of last year helped boost global oil deliveries by 135,000 barrels a day to an estimated 92.1 million barrels, the report said.

The increase meant that, after declining 1.1% in 2012, oil demand grew 0.2% last year in the 34 advanced economies that are members of the Organization for Economic Cooperation and Development.

The last time the OECD nations had recorded a yearly increase in oil demand was 2010, the agency said.

Just before I left the house I heard a report on NPR that US oil demand now exceeds that of China, the first time this has happened in many years. I can't find a source yet to confirm that. I will watch for it. But oil is back.

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A Note to the Granddaughters

The blog is full of references to the current political climate. It turns out that what is happening in the United States is not new. From Athens: A Portrait of the City in its Golden Age, Christian Meier, c. 1993, pp 58 - 59.

In this situation Solon, son of Execestides, tried to convince his fellow citizens that their society was fundamentally flawed, that they were living in "misorder" (dysnomia). Indded, he said, they were heading toward catastrophe, but they were not helpless. He reportedly urged all parties to entrust the city to a wise man who might reestablish order.

There are no equivalents in English for the Greek words katartister or euthynter, used to describe a person given the powers Solon was given. "Arbitrator" would come closest, if the term were not so closely associated with mediation. In this case, however, mediation was at most a fortunate side effect of the reforms, because what mattered to Solon was the establishment of a new "right order," not a mere compromise between conflicting interests. (Solon considered improper the very notion that these interests could be at odds.) The best translation is the cumbersome "he who puts things right again."

Solon was ultimately elected to public office, possible directly to the post of archon (chief magistrate), mostly likely in 594 BC (although it may have been as late as 575). When elected, he was given almost unlimited powers as well as a substantial treasury, which could have been procured only by taxes on the wealthy. He was almost certainly allowed to hire a staff and may have undertaken to build a rudimentary police force.

This marked the beginning of something entirely new in Attic history. Previous efforts to bring about a better and more just social order had been limited in scope. Now, for the first time, the entire structure of the polis underwent reform.

Nothing comparable had ever happened  in world history: a profound transformation of existing conditions, initiated not by a monarch, or an aspiring monarch, but by an individual chosen by the citizenry. Solon did not relieve the citizens of their own responsibility but merely enacted what they seemed to want. In all likelihood people were willing to entrust their fate to him because their fear of violence and murder left them no choice. But whatever their motivation, they placed immense trust in Solon.

Just as there are no equivalents in English for the Greek words katartister or euthynter, used to describe a person given the powers Solon was given, there are no English words to describe ObamaNation.

Another LPG-Export Terminal

In the process of searching for something else, I ran across this, as reported by Argus Media.

Data points:

• new LPG-export terminal; Beaumont, Texas; Japan + European joint venture
• exports predominantly to Asia-Pacific
• hinted at this project in 2011 due to glut of propane but didn't say anything until yesterday
• Japan: 34% stake
• first phase: $500 million; will include a 100,00 b/d de-ethanizer (strip ethane from propane)
• to be completed by 4Q14
• differential between US propane / Asian propane: $452/t
• several other LPG-export facilities mentioned in the linked article

Note: the ethane will be stripped out, adding to even more ethane stateside. (Corrected: see comment from "anon 1.")

Ethane Rejection

Updates

February 27, 2013: if folks want to see how low price of ethane and propane are affecting the industry in real time, read pages 5 and 6 of ONEOK 4Q12 earnings call transcript.  ONEOK says things will improve when the price of ethane and propane improve (rise in price). Everything I've read suggests that things will get worse (lower ethane and propane prices) before they get better -- and it could last a long, long time.

Original Post 

Yesterday, a reader sent in a great comment on "ethane rejection." RBN Energy has also written extensively on this subject. For those who missed it, I highly recommend you look at the linked post, and, if you have time, explore the site for RBN Energy stories on "ethane rejection." It's a huge story for investors and the US economy. There will be winners and losers. And plenty of investing opportunities.