Natural Gas Sell-Off -- Did The US EPA Have A Hand In It? September 6, 2022

There was a headline today that "natural gas sold off today." I don't know accurate that headline is/was. Oilprice.com suggests natural gas fell 1.65% to $8.011, about a buck lower than recent highs and as much as almost two dollars lower from just a few months ago, all this coming at a time that the energy crisis worsens in Europe.

From yesterday on the blog:

Natural gas: I've said from the beginning, I have a pretty good understanding of oil -- understanding maybe five percent of all there is to know, but I have no understanding of natural gas. After years of blogging, I have learned one thing about natural gas. Producers can produce a lot of it very quickly, if necessary. And today, we see it again. From Charles Kennedy:

And that's why I've never been a big fan in investing in pure-play natural gas producers. From the linked article:

U.S. natural gas futures shed around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts drags prices down, despite the fact that inventories are 11% lower than their five-year norm. Output is still holding strong after the latest report from the Energy Information Administration (EIA) for the week ending August 26, which showed a natural gas inventory build of 61 billion cubic feet. While that brings inventory to 2,640 Bcf, it is still 228 Bcf below levels at the same time last year–heading into the winter season. 

Also prompting the decline is the outage at the key Freeport LNG export plant on the Gulf coast. 

That outage means traders are calculating some 2 billion cubic feet of gas per day that is not being consumed by Freeport for export and is remaining on the domestic market.

Freeport–which accounts for some 20% of U.S. LNG export capacity–looks set to remain offline until sometime in the first half of November, at which point we could see only a partial startup, ramping up to full capacity by the end of that month. Freeport, however, has already pushed back a restart date several times since declaring force majeure–and then revoking it–in June. 

I anticipated this on August 20, 2022. 

It now appears there may be more to the story and that the US EPA may have had a hand in it.

I'm too tired to post any more tonight. I assume if this is accurate -- that there is more to the story and the US EPA may have had a hand in it -- we'll hear more about it tomorrow. 

As for me, I'm headed off for some reading and for some old Perry Mason television.

From 2019, A Saudi Analysis Of The Bakken -- September 6, 2022

Locator: 10010SAUDI.

Tag: Saudi analysis of the Bakken. 

This was first posted back in 2019 / 2021. It took a little time to find. I don't want to lose it again, so I'm re-posting it for the archives and tagging it.

Nothing new here; for my personal archives only. 

Links:

• a PDF, August 19, 2019; 
• Saudi watch -- August 20, 2021; 
• a technical analysis of the Bakken; Saudi appraisal, November 16, 2019.

Five New Permits; A Horizontal Re-Entry Approved; Fifteen Permits Renewed; Two Permits Canceled; One DUC Reported Completed -- September 6, 2022

Natural gas: I've said from the beginning, I have a pretty good understanding of oil -- understanding maybe five percent of all there is to know, but I have no understanding of natural gas. After years of blogging, I have learned one thing about natural gas. Producers can produce a lot of it very quickly, if necessary. And today, we see it again. From Charles Kennedy:

And that's why I've never been a big fan in investing in pure-play natural gas producers. From the linked article:

U.S. natural gas futures shed around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts drags prices down, despite the fact that inventories are 11% lower than their five-year norm. Output is still holding strong after the latest report from the Energy Information Administration (EIA) for the week ending August 26, which showed a natural gas inventory build of 61 billion cubic feet. While that brings inventory to 2,640 Bcf, it is still 228 Bcf below levels at the same time last year–heading into the winter season. 

Also prompting the decline is the outage at the key Freeport LNG export plant on the Gulf coast. 

That outage means traders are calculating some 2 billion cubic feet of gas per day that is not being consumed by Freeport for export and is remaining on the domestic market.

Freeport–which accounts for some 20% of U.S. LNG export capacity–looks set to remain offline until sometime in the first half of November, at which point we could see only a partial startup, ramping up to full capacity by the end of that month. Freeport, however, has already pushed back a restart date several times since declaring force majeure–and then revoking it–in June. 

I anticipated this on August 20, 2022.

***************************
Back to the Bakken

Active rigs: 43.

WTI: $86.75.

Natural gas: $8.021

Five new permits, #39224 -- #39228, inclusive:

• Operator: Hess
• Field: Beaver Lodge (Williams)
• Comments:
• Hess has permits for three BL-Herfindahl wells and two BL-Domy wells, all in NENE 30-156-95; 
• to be sited 655 FNL and between 762 FEL and 894 FEL. 

Horizontal, re-entry, approval:

• 38417, Liberty Resources, Az W 158-93-13-24-1MBH,

Fifteen permits renewed:

• Enerplus (9): the following permits in Dunn County: Troop; Skulk, Canidae, Fennec, Sly, Vulpes, Kit, Renard, and Swift
• XTO (3): three Carus State Federal permits in Dunn County;
• Petro-Hunt (3): three State permits in McKenzie County;

Two permits canceled:

• Whiting: a KCH Murphy LW permit (Mountrail County) and a Cymbaluk Federal permit, Stark County;

One producing well (a DUC) reported as completed:

• 38599, 761, Murex, Borstad 34-10H-1 2MB, West Tioga, Williams County; t--; cum no production data;  --;

Hess cancels five SC-Bingeman permits.

Off The Net For Awhile, But Tell Me Again, Gasoline Demand Is Below That Of 2020 -- September 6, 2022

Link here.

I spent a lot of time in this area many decades ago. I don't miss it. At all.

Several Wells Coming Off Confidential List -- September 6, 2022

The Far Side: link here.

WTI: $87.06. Volatile.

Natural gas: $8.395.

Active rigs: 46.

Wednesday, September 7, 2022: 8 for the month, 58 for the quarter, 397 for the year

• 38006, conf, Hess, CA-E Burdick-155-95-2932H-5, Capa, t--; cum 61K 7/22;
• 37371, conf, Petro-Hunt, Jorgenson 158-94-2B-11-1HS, East Tioga,

Tuesday, September 6, 2022: 6 for the month, 56 for the quarter, 395 for the year

• 37372, conf, Petro-Hunt, Estby 159-94-35C-26-1HS, East Tioga,

Monday, September 5, 2022: 5 for the month, 55 for the quarter, 394 for the year

• 35443, conf, Whiting, Lapica 34-23TFH, Alger, t--; cum 80K 7/22;

Sunday, September 4, 2022: 4 for the month, 54 for the quarter, 393 for the year

• 36643, conf, Hess, BL-S Ramberg-155-95-0601H-4, Beaver Lodge, t--; cum 130K 7/22;

Saturday, September 3, 2022: 3 for the month, 53 for the quarter, 392 for the year

• 37339, conf, Whiting, Ark 21-15-2H, Dollar Joe, t--; cum 90K 7/22;
• 35444, conf, Whiting, Lapica 34-23HU, Alger, t--; cum 90K 7/22;

RBN Energy: piping refined products from the Midwest to the East Coast, part 2. Archived.

Since the century turned, there’s been a big buildup in refining capacity in the U.S. Midwest, primarily to process the increasing volumes of heavy sour crude being piped in from Western Canada. Over the same period, refining capacity in the Mid-Atlantic region has declined by more than half, mostly for economic reasons — including the lack of pipeline access to favorably priced U.S. shale oil — but also due to events, such as the devastating June 2019 fire at Philadelphia Energy Solutions’ 330-Mb/d refinery in Philadelphia, which led the facility’s owner to shut it down. In addition to spurring more refined product imports to the Mid-Atlantic and increased flows to the region on Colonial Pipeline, the changing market dynamics prompted a push to increase pipeline flows of gasoline and diesel east from the Midwest to markets in Pennsylvania and beyond. In today’s RBN blog, we continue a review of the U.S.’s still-morphing refined product pipeline networks with a look at recently added capacity from PADD 2 to PADD 1.

In this blog series, our aims are to provide an overview of the U.S.’s major refined product pipelines and to describe how the network continues to be reworked — extended, expanded, repurposed and/or reversed — to reflect changing market dynamics. In Part 1 we took a big-picture view, looking at many of the large pipelines and pipeline systems that transport gasoline, diesel and jet fuel long distances from refineries to refined product terminals throughout the U.S. We noted that, in addition to these long-haul, higher-volume pipelines, there are scores of shorter, lower-volume pipes that fan out from these lines to distribute refined products to terminals in smaller cities and towns. In most cases, gasoline and diesel are transported “the last mile” to service stations by truck.

Today, we begin a review of significant changes that the midstream sector has been making to existing networks to reflect major market shifts, such as the combination of declining refining capacity in the East Coast (PADD 1) and the push by refineries in the Midwest (PADD 2) to transport more of their refined products to the East Coast. In an upcoming blog, we’ll look at market shifts instigating a number of refined product pipelines in Texas and other states in PADDs 3 and 4 (Gulf Coast and Rockies, respectively).

Midwest refineries made a big bet on Western Canadian heavy sour crude in the 2000s, investing billions of dollars in expansions and equipment upgrades (such as new cokers) that increased their ability to break down low-API oil into valuable products such as gasoline, diesel and jet fuel. Commitments to make these big investments — BP spent $4.2 billion to add a coker and make other improvements to its Whiting refinery in northwestern Indiana and Marathon Petroleum spent $2.2 billion on a coker project at its Detroit refinery — were made as several oil sands producers in Alberta were bringing new production online and before the Shale Revolution took hold and Bakken production of light sweet crude took off. Back then (in “the aughts”), the prevailing opinion was that easier-to-process lighter crudes were becoming scarcer and likely to get more expensive and heavy crude would be more abundant and cheaper.