Computer generated audio of the latest Daily Energy Post Blog Articles.
Some Beach, Part 3 - LNG Demand Will Flip Natural Gas Flows and Basis Across the Texas-Louisiana Border
The Permian is set to send increasing volumes of natural gas to the Texas Gulf Coast next year, but it is unlikely to be the flood that was once expected. This year’s decline in oil prices has slashed budgets for West Texas producers and rig counts show no sign of a big rebound anytime soon. As a result, growth of oil and associated gas from the Permian will be tepid at best over the next few years, which is a major change from when oil prices hovered north of $50/bbl. Despite the moderation in gas volumes out of the basin, infrastructure changes in 2021 are likely to roil Permian gas markets and have important knock-on impacts for adjacent regions and end-users that depend on West Texas supply. With much less incremental gas from the Permian, there are likely to be significant shifts in gas flows, particularly across the Texas-Louisiana border, to help meet the big increases anticipated for LNG exports. Today, we continue a series that highlights findings from RBN’s new, Special Edition Multi-Client Market Study.
You Really Got Me - Crude Oil Export Volumes Hold Up Despite a Barrage of Storms
Last week, Hurricane Delta became the latest of a string of hurricanes and tropical storms that have assaulted the Gulf Coast this year and disrupted energy production in the Gulf of Mexico — and energy exports. A number of major storms made direct hits or glancing blows to crude export centers like Corpus Christi, Houston, Beaumont, and Louisiana, forcing marine terminals to either slow down their carrier-loading operations or shut down for a few days at a time. That led to a yo-yoing of weekly export volumes: way down one week, way up the next. Despite the short-term dislocations, however, total export volumes since the hurricane season started on June 1 are actually up slightly from the first five months of 2020, a testament to the resilience not only of the export market but to the marine terminals themselves. Today, we discuss how hurricanes and tropical storms have been affecting export-terminal activity.
Down by the Water - Rising LNG Exports From Texas Reshapes Gulf Coast Gas Flows
With the rise of U.S. LNG exports in recent years, southern Louisiana has become a focal point for natural gas demand, pulling in gas supply from near and far and all directions. That market was severely disrupted this summer as COVID-19 decimated global LNG demand and hammered the economics of U.S. LNG exports. Pipeline flows into southern Louisiana during those months went from record-breaking highs that pushed the limits of the area’s infrastructure capacity to levels consistent with 2018, when the Bayou State’s LNG export capacity was just 2.65 Bcf/d, compared with 4.9 Bcf/d now. More recently, an active hurricane season has also curtailed exports. But demand for U.S. LNG is rebounding, and as LNG feedgas heads back to its previous highs and beyond, a new flow dynamic is emerging along the Gulf Coast, driven by the 1.35 Bcf/d of new export capacity in Texas that came online this year. Flows between Louisiana and Texas are reversing as an increasing amount of gas is needed on the western side of the Sabine River to feed the Corpus Christi and Freeport LNG facilities. The incremental gas demand and flow reversal will create new challenges and constraints for the region’s pipeline infrastructure as steady exports resume. Flows into Louisiana will be higher than ever, but so will flows out of Louisiana heading west to serve additional LNG demand. Today, we begin a series discussing how LNG demand is changing gas flows along the U.S. Gulf Coast.
Good Times Bad Times - RBN's Outlook for Oil, Gas, and NGL Supply, Demand, And Prices
Six months on from the height of the crude oil price rout of April 2020 and the unprecedented market convulsions that followed, energy markets appear to be settling into a state of hyper-uncertainty amidst the ongoing pandemic. Crude oil prices have been downright equanimous, stabilizing near $40/bbl in recent months. Volatility has reigned in the gas market, but it has thus far managed to avoid a major collapse, and the NGLs market has dodged a complete derailment from norms, if barely. The relative calm provides the perfect opportunity to assess how COVID-era energy markets are operating and what lies ahead — which is what we’ll be doing next week at RBN’s Virtual School of Energy. There’s a new order taking shape, and we’re rolling out RBN’s freshly updated outlooks for U.S. crude oil, natural gas and NGL markets. As always, we’ll pull back the curtain on the fundamental analysis and models behind our forecasts, so you can understand how we arrived at our answers, and gain the skills and tools to adjust the assumptions as markets evolve. As you’ve gathered by now, today’s blog is an unabashed advertorial for our virtual conference, but read on if you’d like to hear more about the underlying premise behind our latest outlook.
Sultans of Swing, Part 2 - LNG Shipping Costs, Netbacks, and the Decision to Cancel Cargoes
Global LNG demand has picked up, cancellations for U.S. cargoes have subsided, at least for now, and there’s upside to U.S. cargo activity once tropical storm-related disruptions are resolved. But positive netbacks year-round are no longer a foregone conclusion for U.S. offtakers. As global oversupply conditions persist, at least on a seasonal basis, and supply competition intensifies, the economic decision to lift U.S. cargoes will be much more nuanced than it was in previous years. What do the economics for cargoes this winter and beyond look like? Today, we put the LNG economics model to work to understand what’s in store for U.S. LNG in the coming months.
Some Beach, Part 2 - New Permian-to-Gulf Gas Pipelines to Shake Up Regional Flows and Basis
Permian natural gas production is now expected to grow at a subdued pace over the next five years, as lower oil prices and a focus on capital discipline have slashed rig counts. Few observers see the Permian situation changing anytime soon, especially as crude oil prices continue to hover around $40/bbl. That said, the Permian gas market will be anything but dull over the months and years ahead. More than 4 Bcf/d of new outbound pipeline capacity from the Permian to the Gulf Coast will be coming online next year, throwing natural gas flows from West Texas into flux and deeply impacting neighboring markets. While natural gas basis at the Permian’s primary Waha hub should improve dramatically, outflow to the Midcontinent will likely fall sharply and potentially reverse, and the Texas Gulf Coast will see an influx of supply on the new pipelines. Today, we continue a series that highlights findings from RBN’s new, Special Edition Multi-Client Market Study.