Computer generated audio of the latest Daily Energy Post Blog Articles.
My Favorite Mistake - Shifting Global Dynamics Affect Japanese LNG Players with U.S. Supply Contracts
Of the 10 Bcf/d, or more than 75 MMtpa, of nameplate LNG export capacity currently operational in the Lower 48, Japanese companies form the largest single group lifting U.S. cargoes. Their commitments total ~2 Bcf/d of U.S. liquefaction capacity. However, Japan’s LNG consumption has been falling over the past two years, and in 2019 and 2020, U.S. LNG accounted for only 0.6 Bcf/d and 0.8 Bcf/d of Japanese imports, respectively, or about 20% of the country’s total LNG demand in each year. In other words, Japanese companies have made commitments for incremental LNG from their remotest supply option against a backdrop of falling domestic demand. In all cases, the Japanese players have opted not to buy FOB from producer projects, but instead have booked capacity at the Cove Point, Cameron, and Freeport LNG export facilities — all plants that require offtakers to secure and transport the feedgas supply for LNG production. This type of arrangement carries with it the need to set up gas trading desks in the U.S., with front-, middle- and back-office personnel, plus operations staff, representing additional fixed costs. What was the motivation for these commitments, made by no less than seven of Japan’s major LNG buyers, how successful have they been, and what lies in store for these volumes that the country does not appear to need? Today, we look at where these volumetric commitments fit, not only in the portfolios of the capacity holders but within the broader context of LNG commerce and commoditization.
Any Way You Want It - Proposed 'Green,' 'Turquoise,' and 'Blue' Hydrogen Production Projects
We get the sense that many hydrogen-market observers are looking for a silver bullet — the absolute best way to produce H2 cheaply and in a way that has an extremely low carbon intensity. If anything has become clear to us over the last few months, however, there isn’t likely to be an “Aha!” or “Eureka!” moment anytime soon. Rather, what we have seen so far in regard to hydrogen production has been a veritable smorgasbord of production pathways, with varying degrees of carbon intensity. While costs vary by project, it is also fair to say that a front-runner has yet to emerge when it comes to producing inexpensive hydrogen at scale. There is a silver lining though, if not a bullet, and that is the realization that there are many options when it comes to procuring environmentally friendly hydrogen. Today, we provide an update of currently proposed hydrogen projects.
All Together Now - What You Need to Know About Energy Markets in One Place - Absolutely No Charge!
WTI crude finally closed above $70/bbl yesterday! Yup, change in energy markets is coming at us fast and furious. Whether it’s recovery from COVID, the return of Iranian supply, the changes in OPEC+ production, the majors being walloped by environmentalists, or a genuine upturn in crude prices, the big challenge is keeping up with what’s important, as it happens. That’s what we do at RBN, in our blogs, reports, conferences and webcasts. But many of our readers only know us through our daily blog, which confines us to only one topic each day. What if we had another no-cost service, where we would provide all our available info on energy news, market data, RBN analysis and just about anything that impacts oil, gas, NGLs, refined products, and renewables? Well, we’ve got that now. It’s called ClusterX Energy Market Fundamentals (EMF) channel. It’s an app for your phone or browser. It delivers to you everything our RBN team believes is important as soon as we can get the information into our databases. And all you need to get access to EMF is in today’s blog.
It's a Hard Knock Life - Appalachia Gas Outflows, Prices Take a Hit with TETCO Capacity Cut
This year has been a mixed bag for Appalachian natural gas producers. Outright prices in the region are higher than they’ve been in a few years, thanks to lower storage inventory levels and robust LNG export demand. However, regional basis (local prices vs. Henry Hub) is weaker year-on-year as higher production volumes have led to record outbound flows from Appalachia and are threatening to overwhelm existing pipeline takeaway capacity. Last month, Equitrans Midstream officially announced that the start-up of its long-delayed Mountain Valley Pipeline (MVP) project will be pushed to summer 2022 at the earliest. Then, just last week, outbound capacity took another hit as Enbridge’s Texas Eastern Transmission (TETCO) pipeline was denied regulatory approval to continue operating at its maximum allowable pressure, effectively lowering the line’s Gulf Coast-bound capacity by nearly 0.75 Bcf/d, or ~40%, for an undefined period. Today, we consider the impact of this latest development on pipeline flows, production, and pricing.
Come Clean, Part 4 - Is Biodiesel a Viable Low Carbon Fuel Pathway or a Fading Fashion?
Biodiesel has long constituted a small but stable portion of the diesel fuel diet in North America, its production being driven primarily by the U.S. Renewable Fuel Standard and Biodiesel Income Tax Credit (BTC). Produced from a variety of feedstocks, including soybean oil, corn oil, animal fats, and used cooking oils, biodiesel offers a low “carbon intensity,” or CI — a big plus in California and other jurisdictions with low carbon fuel regulations. The incentives for producing biodiesel are substantial, but there are two big catches with the fuel: a limited supply of feedstocks and properties limiting how much can be blended with petroleum-based diesel. Today, we continue our series on low carbon fuel standards with a look at biodiesel’s pros, cons, history, and prospects.
Only the Strong Survive, Part 2 - How COVID-19 Reshaped the Future of North American LNG Projects
Global gas prices are in the midst of the longest and strongest bull run since 2018 and fundamentals appear supportive of sustaining the rally through at least the upcoming winter. The higher international prices relative to Henry Hub have buoyed demand for U.S. LNG exports. Existing terminals are operating at or near full capacity, and their combined feedgas demand has been steady, averaging more than 6 Bcf/d higher than this time last year when economic cargo cancellations from COVID-19 were heading towards their summer peak. The improved economics for delivering U.S. LNG to international destinations have also renewed interest in offtake agreements for a handful of the second wave of North American LNG projects that had been sidelined because of the pandemic (many others still are). These projects are taking advantage of the less crowded market, which gives them a realistic path forward to reach a final investment decision (FID). In today’s blog, we continue the series on the status of the second wave of LNG projects.