The Market, Energy, And Political Page, T+3 -- August 16, 2018

Judges: wow. Look at the lopsided votes. 

The Senate on Thursday confirmed the 25th and 26th appellate court judges during President Donald Trump's tenure, as Republicans continued reshaping the federal judiciary at a record clip.

The Senate approved A. Marvin Quattlebaum Jr. by a vote of 62 to 28, and backed Julius Ness Richardson on a vote of 81 to 8. Both will join the U.S. Court of Appeals for the 4th Circuit.

The GOP-controlled Senate has been approving appellate court judges at a rapid pace, already setting a record for the most confirmed during a president's first two years in office.

GOP leaders are installing jurists favored by conservatives who are likely to influence decisions on immigration, voting rights, abortion and the environment for decades.

Chinese LPG requirements: Wow -- trade wars? What trade wars? China Gas will boost LPG imports threefold. Link here.

• China Gas plans to increase its annual imports of liquefied petroleum gas from 2.8 million tons to 10 million tons during the next five years as it enters the petrochemicals industry
• the company’s plans also have to do with higher demand, with LPG sales to households forecast by China Gas to increase from 4 million tons in financial 2017/18 to 4.5 million tons in the current financial year, and further to 5 million tons in financial 2019/20
• how much of this increase in imports will come from the U.S., a major LPG supplier to China, remains to be seen and depends on the outcome of the trade war between Washington and Beijing -- this quote was not cited -- personal quote from the writer of the article?
• Comment: the trade war will be over long before five years are up 

Soybeans: see this Forbes article.

Trans Mountain Pipeline expansion project: update here. Protest camp is being dismantled by the Royal Mounted Canadian Police. Also here. It appears we are talking about eleven (11) malcontents holding up this construction.

Natural gas fill rate (link here):

Propane And Butane -- LPG -- Bakken 101 -- June 22, 2017

I track the US LPG export story here. This is truly an incredible story. I remember posting stories about the "great propane shortage" some years ago which was a huge problem for North Dakota farmers who were at risk of losing their crop because they could not dry what they had harvested. That was back in 2013 - 2014, and it was such a big story, it got its own tag. In less than five years, an incredible difference, all due to the Bakken.

From today's RBN post:

Propane and butane — the two natural gas liquids (NGL) products generally referenced as LPG — are produced by the processing of natural gas yielding mixed NGLs and the fractionation of those NGLs into purity products.

Refineries also produce LPG.

U.S. production of propane and butane has skyrocketed during the Shale Era, largely because of rising production of wet natural gas, which contains significant volumes of NGLs.

As result, the U.S. five years ago flipped from its long-time status as a net LPG importer to a net exporter.

By 2016, net U.S. exports had risen to an average of 855 Mb/d, more than 15 times the exporting pace in 2012, and in the first six months of this year, LPG exports averaged just above 1.0 MMb/d.

Where is all this LPG headed?

A lot of it is headed for Asia. In 2016, Asian markets were the destination for 372 Mb/d (or 44%) of the 855 Mb/d exported from the U.S., and so far in 2017 Asia’s share has risen to 50%; Latin America (excluding Caribbean) is second (22% of total exports in 2017 year-to-date), Europe is third (14%), and exports to the Caribbean (receiving 9% of the U.S. exports) account for most of the rest.

The flourishing Gulf Coast-to-Asia LPG trade — 484 Mb/d (51%) of the approximately 950 Mb/d of the propane/butane exported from Texas terminals so far this year went to Asia — was made possible in part by the perfectly timed expansion of the Panama Canal, which with its new, more commodious locks, can now accommodate each and every one of the world’s more than 200 Very Large Gas Carriers (VLGCs), which can carry up to 550 Mbbl of LPG and which because of their size and economies of scale are the LPG-movers of choice, especially for serving mega-markets like Japan. Before the expanded canal opened in June 2016, four-fifths of the world’s VLGCs were too big to squeeze through.

By the way, just like The New York Times hoax story on the US natural gas revolution, The New York Times was convinced that the Panama Canal expansion would fail. By the way, my posts on The New York hoax story was one of the top stories I ever posted, based on number of hits and google searches. Whatever.

But what about LPG exports and the Panama Canal?

But transiting the Panama Canal doesn’t come cheap — tolls, tug fees and other charges can top $200,000 per VLGC, and that's just for the one-way trip from Houston to Asia — and it takes about 25 days to make that journey, and time is money.

Which brings us to Petrogas’s Ferndale, WA, export terminal, which thanks to its West Coast location can reach Japanese and other Asian ports in 10 to 12 days — less than half the time it takes to sail from Texas ports, through the canal and across the Pacific.

For most of its 41-year history, Ferndale — located in the northwestern corner of Washington State, an hour’s drive south of Vancouver, BC — was a minor player in the NGL universe, handling small volumes of seasonal refinery butane storage and occasional exports of butane to Latin America and Asia.

Interest in Ferndale grew, though, as U.S. and western Canadian NGL production increased, as the U.S. flipped from being a net LPG importer to a net exporter, and — for Alberta producers in particular — when a portion of Kinder Morgan’s Cochin Pipeline (which moved up to 95 Mb/d of propane and other NGLs southeast from Fort Saskatchewan, AB, to the U.S. Midwest and Ontario) was repurposed to move diluent northwest from Illinois to the oil sands (for blending with bitumen to make dilbit, a diluent/bitumen combo that can flow through pipelines). Without Cochin, western Canadian propane and butane has to be transported by rail or truck into the Midwest or Northeast and, with U.S. NGL production rising fast, it made more and more sense for LPG producers and marketers to pursue export opportunities.

Much, much more at the linked RBN story. Archived.

The California LPG Story -- The Energy And Market Page, T+68 -- March 30, 2017

Disclaimer:  this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

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Enbridge

Enbridge. Enbridge buys Spectra, strengthens hold in North America. From Zacks.

The $126 billion merger brings together Enbridge’s liquid-weighted midstream assets from Western Canada and the U.S Midwest and Spectra's network of primarily gas-related midstream assets.

The assets include Spectra’s holdings in the U.S. North, Midwest and Gulf Coast and the British Columbia’s Canadian province. We note that a total of 1,000 jobs were cut by the merged company.

The merged company has $74 billion in secure projects and inventory. By 2019, the company is expected to start up $26 billion worth projects. Enbridge believes that the company will yield a 3–5% compound annual growth rate with the inclusion of Spectra’s projects.

The company is also expanding its platform for renewable power generation.

Comment: this has become a personal favorite of mine. Enbridge was one of the first companies that caught my interest when I started following the Bakken. I noticed early on (July 23, 2010) that this company was involved in intermittent energy in Canada; it was one of the first links at the sidebar at the right. That told me the company was able to ace an open-book test. And there it is again, the last sentence in the segment above -- "expanding its platform for renewable power generation."

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Other

DUCs. Huge 300,000 bopd fracklog could derail oil policy recovery. From Oilprice.com. Old story. I don't buy it. Many reasons. Previously discussed.

Mexico. From Reuters, data points:

• Italy's Eni
• major gas finds in Mozambique and Egypt; holds one of the best discovery track records in the industry
• Eni's gas discovery off Egypt was the biggest gas field every found in the Mediterranean
• organic reserve replacement ration:
• industry average: 35%
• ENI: 193%
• first international company to drill off coast of Mexico after 2013 reform opening up Mexico to foreign investors
• recent oil discovery in Mexican GOF: original estimate -- more than 800 million bbls of light oil
• now says the field will hold more than original estimate -- number not given
• Shell, Chevron, Exxon Mobil all interested in returning to Mexico's deep waters

Permian. Swaps. From Bloomberg, data points:

• drillers drilling longer horizontals -- 2-mile horizontals
• slivers of land owned by another operator create issues; solution: swaps
• acreage can run as high as $60,000 / acre in the Permian; swaps -- almost no cost
• the slivers of land would probably not be wide enough for second company to drill
• swaps: win-win for both companies
• reminder: Double Eagle selling 71,000 Permian acres to Parsley for $2.8 billion (previously reported; $40,000 / acre)
• SM Energy: "doubling the lateral length, combined with other techniques, can make a well about four and a half times more valuable 
• SM Energy: last year bought 35,700 acres in the Permian from QStar LLC

California. California's production of propane and butane continues to decrease; the decrease in production is offset by an increase in rail shipments. This is an interesting story for the archives with regard to many, many story lines. EIA data points:

• many, many story lines including CBR; the state's fossil fuel regulatory environment
• total US production of propane and butanes (liquified petroleum gases - LPG) increases to over 2 million bopd
• increased in all regions of the country except for the West Coast
• unlike other regions, West Coast LPG production has been decreasing since 2010, driven by declining refinery production
• production in the region totaled 80,000 bopd in 2016, 10,000 less than in 2010
• as a result, rail shipments have become a growing means of transporting LPG to the region
• the amount of LPG production in the US has surged (except along the West Coast)
• West Coast import/export data: the increased ability to transport LPG by rail has allowed Western Canadian producers, who can no longer ship LPG by pipeline to the Midwest following the repurposing and reversal of a key pipeline, to ship more LPG to the West Coast, where it can then be exported to overseas markets
• the West Coast has only one major LPG export terminal; it accounts for nearly all overseas LPG exports
• as LPG exports continue to increase, two other terminals on the West Coast have been proposed, but the permitting phase of development is not finished yet