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Permian Basin expected to drive fourth quarter U.S crude oil production increases


In its Short-Term Energy Outlook (STEO) update released this week, EIA forecasts that U.S crude oil production will average 9.4 million barrels per day (b/d) in the second half of 2017, 340,000 b/d more than in the first half of 2017.


EIA’s close monitoring of current rig activity in several producing regions shows continued production growth from tight-oil formations, such as shale in the Permian region, driving overall production increases (Figure 1).

Figure 1. Monthly U.S. crude oil productoin Jan 2016 - Dec 2018/Porjected change 2nd half vs half 2017

The STEO projects that the most significant production growth in the second half of 2017 will be in the Permian region. Permian production is forecast to grow to 2.6 million b/d in the second half of 2017, a 260,000 b/d increase from the first half of 2017. Production in the Permian continues to increase, in part as a result of West Texas Intermediate (WTI) crude oil average monthly prices that have remained higher than $45 per barrel (b) since the second half of 2016.


Extending across western Texas and southeastern New Mexico, the Permian region has developed into one of the more active drilling regions in the United States because its large geographic size and favorable geology contain many prolific tight formations such as the Wolfcamp, Spraberry, and Bonespring. Increases in proppant intensity, lateral lengths, and changes to slick-water completions are also among the factors that have allowed the Permian to remain one of the most economic regions for oil production despite the low-oil-price environment. WTI spot prices averaged $50/b in the first half of 2017, spurring deployment of more rigs to the Permian, which rose steadily from 276 rigs in January to 380 rigs in September. The STEO projects that the Permian region rig count will continue to grow from an average of 341 rigs in 2017 to 371 rigs in 2018, and the WTI price is forecast to average $49/b for the second half of 2017 and $51/b in 2018.


The STEO forecasts Niobrara and Anadarko production to grow by 75,000 b/d and 42,000 b/d, respectively, averaging 500,000 b/d and 460,000 b/d, respectively, for the second half of 2017. This growth makes these two regions the second- and third-largest contributors to the STEO’s projected growth between the first and second half of 2017. Production in the Niobrara and Anadarko regions has grown continuously since January 2017 in response to increasing rig activity and a monthly WTI price range from $45/b to $53/b during the year. With an expectation that prices will continue to be near this range, rig activity and production are expected to continue to grow.


In the STEO forecast, the Bakken region is expected to maintain production at slightly less than 1.1 million b/d through 2017, increasing by 31,000 b/d between the first and second half of the year. The Bakken region predominately spans the Williston Basin, which contains the Bakken and the Three Forks formations. Although the Bakken region is large in geographic size (23 million acres), it contains fewer identified prolific formations than the Permian. In addition, operators in this region are affected by winter weather and have greater transportation constraints in moving oil to refineries and markets. Rigs in the Bakken region grew from 35 in January to 44 in May of this year, increasing further to 51 in September.


The STEO forecasts production in the Eagle Ford region to remain relatively flat in the second half of 2017 at 1.2 million b/d, a 5,000 b/d increase from the first half of 2017. Compared with the Permian, the Eagle Ford region has a significantly smaller geographic area with fewer prolific stacked formations and fewer opportunities to drill. Rigs in the Eagle Ford region grew from 57 to 98 from January through May of this year, but declined to 83 in September, in part as a result of a lagged response to lower WTI prices in the second quarter of 2017. More recently, the Eagle Ford region experienced temporary outages in production and rig activity in August and September because of Hurricane Harvey.


EIA expects Alaska production to remain relatively flat, averaging 460,000 b/d in the second half of 2017, a 22,000 b/d decrease from the first half of 2017, because of seasonal maintenance on the Trans-Alaska Pipeline System during the third quarter.


Production in the rest of the United States is expected to remain fairly constant, with relatively modest production declines in California (30,000 b/d) and the Federal Offshore Gulf of Mexico (7,000 b/d) in the second half of 2017.


In the Lower 48 states, observed rig counts typically follow changes in the WTI price with an approximate four-month lag (Figure 2). In addition to responding to the WTI price, rig counts are related to cash flow and profitability. If returns are positive at a given price level, an operator could choose to add rigs. In that scenario, prices do not have to continually rise to support increases in rig counts. For most predominately tight-oil regions to see continued growth in production, rig activity must continue to increase because of the well dynamics, which on average have high initial production rates but very fast declines (e.g., 60% over the first 12 months of production). However, with the number of rigs continuing to increase, especially in the Permian, EIA has assessed that new wells are being drilled at a pace sufficient to maintain and increase production levels. If that trend changes, EIA will continue its process of adjusting its forecast in regular monthly STEO updates.

Figure 2. PADD 2 propane inventories


EIA models oil production monthly in the STEO at the state and regional levels. The STEO forecast is based on recent trends in drilling and production and on anticipated future changes, driven largely by the WTI price. EIA evaluates past production trends on a well-by-well basis for all production documented since 2014 and uses that history to estimate future well performance and decline rates at the state and regional levels.


As indicated above, EIA has observed that changes in the WTI price affect the number of active drilling rigs within about four months. Changes in the number of active rigs lead to changes in production volumes within about two months. Consequently, the STEO oil production forecast is based on the historical observation that changes in production volumes typically occur about six months after a change in the price of crude oil. The forecast is also influenced by estimates of cash flow and production costs, which vary by region and over time. In addition, the STEO makes assumptions regarding how the inventory of drilled but uncompleted wells responds to price and how that response affects production at the state and regional levels.


All historical production data are benchmarked monthly to the EIA-914 survey data and to EIA’s Petroleum Supply Monthly (PSM) estimates at the state level. The October STEO forecast for oil production is benchmarked to the PSM data for July 2017.


Since it started in 2016, the Dallas Fed Energy Survey quarterly business indicator of the share of exploration and production firms that think oil production will increase or decrease has moved consistently with EIA’s 914 survey of oil production. Consistent with the updated STEO forecast for U.S. oil production, the recently released 2017 third-quarter report from the Dallas Fed survey (July–September) shows expectations of an increase in oil production in Texas, New Mexico, and northern Louisiana from an index of 10.2 in the second quarter to 19.3 in the third quarter.


Forecasting crude oil production is a dynamic process because of many uncertainties. Not all operators respond to price movements at the same time, which leads to uncertainty in the timing and degree of change in the production trend. Constantly evolving drilling practices within the industry, changes in well performance, pipeline infrastructure, and weather events can also have significant influence on the short-term outlook for crude oil production in the Lower 48 states. Production estimates have shifted (and are likely to continue to shift) as new geological information is gained, long-term well productivity is observed, and technological advances and better operational practices improve well productivity and reduce costs. Potential changes in market dynamics, such as recent indications that investors may require companies to focus more on returns and less on production growth, also add uncertainty to the pace and level of future production.


U.S. average regular gasoline and diesel prices fall


The U.S. average regular gasoline retail price fell over 6 cents from the previous week to $2.50 per gallon on October 9, up 23 cents from the same time last year. The East Coast and Midwest prices each fell seven cents to $2.52 per gallon and $2.33 per gallon, respectively, the Gulf Coast price fell over six cents to $2.32 per gallon, and the West Coast and Rocky Mountain prices each fell three cents to $2.95 per gallon and $2.54 per gallon, respectively.


The U.S. average diesel fuel price fell nearly 2 cents to $2.78 per gallon on October 9, 33 cents higher than a year ago. The East Coast price fell three cents to $2.79 per gallon, the West Coast and Gulf Coast prices each fell two cents to $3.09 per gallon and $2.60 per gallon, respectively, the Midwest price fell one cent to $2.74 per gallon, and the Rocky Mountain price fell less than one cent, remaining at $2.86 per gallon.


Propane inventories gain


U.S. propane stocks increased by 0.9 million barrels last week to 78.9 million barrels as of October 6, 2017, 25.0 million barrels (24.1%) lower than a year ago. Midwest, Gulf Coast and Rocky Mountain/West Coast inventories increased by 0.5, 0.4 and 0.1 million barrels, respectively, while East Coast inventories dipped slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 3.8% of total propane inventories.


Residential heating oil price decreases, propane price increases


As of October 9, 2017, residential heating oil prices averaged $2.65 per gallon, 2 cents per gallon less than last week but 28 cents per gallon more than last year’s price at this time. The average wholesale heating oil price for this week is $1.83 per gallon, almost 7 cents per gallon less than last week but nearly 19 cents per gallon higher than a year ago.


Residential propane prices averaged almost $2.26 per gallon, nearly 3 cents per gallon more than last week and 21 cents per gallon more than a year ago. Wholesale propane prices averaged $1.02 per gallon, 2 cents per gallon higher than last week and over 33 cents per gallon more than last year’s price.

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Your Weekly Update: 2 - 6 December 2019

Market Watch  

Headline crude prices for the week beginning 2 December 2019 – Brent: US$61/b; WTI: US$55/b

  • As the posturing begins ahead of the OPEC meeting in Vienna, crude oil prices mounted gains as several OPEC members signalled that the club was prepared to deepen cuts to the existing supply deal
  • Data showing that the Chinese manufacturing sector growth jumped unexpectedly in November, although the see-saw messages regarding a potential US-China trade deal continue to cloud the market… especially given recent US legislation to sanction China for its policies in Hong Kong and against its own Uighur community
  • The discussion in Vienna by the OPEC nations and the wider OPEC+ club revolved around adherence and implementation of the current supply deal, focusing on cajoling errant members – ie. Russia – into meeting their quotas, in exchange for a deeper cut to prop up prices
  • This resulted in a decision to cut output by a further 500,000 b/d in Q1 2020 – formalising the supply reductions already in place and subject to all members of OPEC+ implementing all of their pledged curbs; further details on the new plan are expected to be released
  • OPEC’s outlook on the crude market in 2020 has changed slightly, as it expects that the US shale revolution will slow down considerably in the next two years; however, it also warns of additional output coming from non-OPEC members, including Norway and Brazil, the latter being a possible new OPEC member
  • Meanwhile, in the US, the chronic decline in the active rig count continues, with the Baker Hughes index falling by a net 1 last week – the loss of 3 gas rigs offset by the gain of two gas rigs – the 13th decrease in the past 15 weeks, with the active count down 274 y-o-y
  • The decision spinning out of OPEC’s Vienna meeting is broadly positive – not a great shot in the arm, but not detrimental to the current market; as such we see crude prices trading in their current range of US$62-64/b for Brent and US$57-60/b for WTI


Headlines of the week

Upstream

  • Norway’s Equinor has announced that it will scale back exploration activities in frontier areas in the Barents Sea, shedding risk to focus on drilling near existing discoveries such as Johan Castberg and Wisting, and therefore decreasing the chance of discovering a new Arctic oil region
  • Cairn Energy will be exiting Norway as it sells its entire stake in Capricorn Norge AS to Solveig Gas Norway AS for US$100 million
  • Libya’s El Feel – a key field operated by Eni and Libya’s National Oil Corp near the giant Sharara field – has restarted production at 74,000 b/d after clashing between rival fighting factions forced it to shut down
  • Woodside’s development plan for Phase 1 of the offshore Sangomar field in Senegal – targeting production of 100,000 b/d via FPSO – has been submitted to the Senegalese government, paving the way for FID
  • Spurred on by success, ExxonMobil is adding a fifth drillship in Guyana as it probes a new ultra-deepwater prospect just north of the Stabroek block
  • Equatorial Guinea’s latest licensing round was a boon to Lukoil, which walked away with the prime EG-27 block containing the Fortuna gas discovery, while US player Vaalco Energy won 4 blocks in the onshore Rio Muni basin

Midstream/Downstream

  • Pertamina has purchased US crude for the first time in a long while, inking a shipment for 950,000 barrels of US WTI crude with Total to be delivered over 1H 2020 to the Cilacap refinery, pivoting away from Middle East grades
  • Trafigura is looking to sell off its fuel station network in Australia – operated through its retail arm Puma Energy – as continued losses in the space since it entered the market in 2013 for US$850 million pile up
  • Construction on BASF’s giant US$10 billion integrated petrochemicals project in Zhanjiang, Guangdong has begun, with the first phase to be launched in 2022 as the first wholly foreign-owned chemicals complex in China
  • Equatorial Guinea has announced plans to build two new oil refineries – each with a processing capacity of 30-40,000 b/d using local Zafiro crude – along with other projects including a methanol-to-gasoline plant and LNG expansion
  • Bosnia’s sole refinery – the 25,000 b/d Brod site – should be operational by mid-2020, following a major overhaul that began in January 2019

Natural Gas/LNG

  • Algerian piped natural gas exports to Europe have been squeezed out by boosted supply of LNG from Australia and the US, as well as piped gas from Russia, which has forced Sonatrach to turn more of its gas into LNG sold by spot
  • Gunvor has agreed to market LNG from the Commonwealth LNG project in Louisiana internationally, as well as double its own purchases from the project to as much as 3 million tpa once the project begins operations in 2024
  • Norway’s BW Offshore insist that its Kudu natural gas project in Namibia is ‘alive and well’, with talks ongoing with the government two years after the FPSO specialist acquired a 56% stake in the license from NAMCOR
  • ExxonMobil is reportedly looking to sell its 50% stake in the Neptun Deep gas project in the Black Sea offshore Romania – the location of its major Domino discovery – for some US$250 million as it continues on a major asset sale
  • Petronas is sending its second FLNG unit – the PFLNG Dua – to the Rotan gas field in Sabah, beginning liquefaction operations there by February
December, 06 2019
Global Small-Scale LNG Market to Reach 48.3 Million Tons per Annum by 2022 : Energy cost advantage & Environmental Benefits are Major Drivers

The Global Small-Scale LNG Market is projected to grow from 30.8 MTPA in 2016 to 48.3 MTPA by 2022, at a CAGR of 6.7% between 2017 and 2022. The small-scale LNG market across the globe is driven by their increasing LNG demand from remote locations by applications, such as industrial & power, and the ability to transport LNG over long distances without the need for heavy investment such as pipelines. By terminal type, regasification terminal is expected to grow at a highest CAGR between 2017 and 2022. The increasing demand for LNG from the remote locations and global commoditization of LNG are some of the major factors that are driving the demand for small-scale LNG in this segment.

Downlolad PDF Brochure @ https://www.marketsandmarkets.com/pdfdownloadNew.asp?id=226707057

The Linde Group (Germany), Wärtsilä (Finland), Honeywell International Inc. (U.S.), General Electric (U.S.), and Engie (France), among others are the leading companies operating in the small-scale LNG market. These companies are expected to account for significant shares of the small-scale LNG market in the near future.  

Critical questions the report answers:

Growth Drivers are : 

  • Energy cost advantage of LNG over alternate energy sources for end users
  • Environmental benefits
  • Fiscal regime and subsidies

small-scale-lng-market-226707057

Energy cost advantage of LNG over alternate energy sources for end-users

Heavy duty transport companies save approximately 30% on fuel costs on LNG-fueled trucks, compared to diesel fueled trucks, and produce 30% lower emissions. Air pollution from diesel engines is one of the biggest concerns, especially in areas that struggle to meet air-quality standards. On the other hand, natural gas causes complete combustion and fewer emissions than diesel. It is estimated that increasing environmental concerns from the utilization of diesel vehicles is likely to increase the adoption of green fuel technologies such as natural gas. In the case of electric power generation, natural gas engines below 150 KW are more cost effective than oil fueled engines. Fuel cost is one of the major cost for road transportation, which is strongly subject to excise taxation. Typically, an LNG-fueled Volvo FM truck can travel up to 600 km with LNG. With an additional 150 litres of diesel, it can travel up to 1,000 km without refuelling. Thus, reducing the cost of travel. With additional LNG liquefaction capacity expected to come online in the next few years, an oversupply of LNG is expected, which will drive the price of LNG further lower. Considering all these factors, both developed and developing countries are undertaking feasibility studies to recognize the techno-economics of shifting their economies from diesel to natural gas. Therefore, the cheap price of small-scla LNG over others alterantive fuels will drive the growth during the forecast period. 

Small-scale LNG terminals are regarded as facilities, including liquefaction and regasification terminals, with a capacity of less than 1 million tons per annum (MTPA) within the scope of this study. It includes the LNG produced from small-scale liquefaction terminals and regasified at small-scale regasification terminals for catering to applications such as LNG-fueled heavy-duty transport, LNG-fueled ships, and industrial & power generation. 

North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period.

The North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period. In North America, most of the small-scale LNG demand in industrial & power applications is met through peak shaving facilities. The peak shaving facilities are used to meet adequate supply of LNG to address the peak demand. In 2015, there were more than 100 peak shaving facilities in the U.S., among which one-half of the peak shaving facilities were located in the Northeast, while a quarter of them were located in the Midwest. Currently, the U.S. has among the highest number of peak shaving plants. However, less than 10% of them are available for any other use due to the current electricity demand. The commissioning of small-scale liquefaction plants can expand the peak shaving capacities in the region.

Speak to Analyst @ https://www.marketsandmarkets.com/speaktoanalystNew.asp?id=226707057

Major Market Developments: 

  • In December 2016, SkanGas AS signed an agreement with Statoil ASA, an oil and gas company in Norway for the reloading of small-scale LNG at Klaipeda LNG Terminal in Lithuania
  • In November 2016, Wärtsilä signed a Memorandum of Understanding (MoU) with ENGIE, a French multinational company to develop services and solutions in the small-scale LNG sector. The agreement includes LNG distribution in remote areas and islands, LNG for ships, small-scale LNG and bio-liquefaction, and LNG to power stations
  • In October 2016, GAZPROM announced to develop a program for a small-scale LNG production, which includes a list of gas distribution stations and liquefaction technologies for LNG production. The program involves the construction of mobile LNG filling stations and cryogenic filling facilities.
  • In June 2014, The Linde Group developed a small-scale LNG technology namely StarLNG™ for the integration into natural gas liquids (NGL) plants. Some of the benefits of this technology includes zero impact on the reliability of the NGL plant production and monetizing the stream of the residue gas through small-scale LNG.

Get 10% FREE Customization on this Study @ https://www.marketsandmarkets.com/requestCustomizationNew.asp?id=226707057

December, 05 2019
Cryogenic Tanks Market - Global Forecast to 2024

The report "Cryogenic Tanks Market by Raw Material (Steel, Nickel Alloy), Cryogenic Liquid (Liquid Nitrogen, LNG), Application (Storage, Transportation), End-use Industry (Metal Processing, Energy Generation, Electronics), and Region - Global Forecast to 2024" The global cryogenic tanks market size is projected to grow from USD 6.2 billion in 2019 and expected to reach USD 8.1 billion by 2024, at a CAGR of 5.5%.

Browse 121 market data Tables and 36 Figures spread through 147 Pages and in-depth TOC on "Cryogenic Tanks Market by Raw Material (Steel, Nickel Alloy), Cryogenic Liquid (Liquid Nitrogen, LNG), Application (Storage, Transportation), End-use Industry (Metal Processing, Energy Generation, Electronics), and Region - Global Forecast to 2024"
View detailed Table of Content here - https://www.marketsandmarkets.com/Market-Reports/cryogenic-tanks-market-26811967.html

The global industry for cryogenic tanks is driven primarily by the increasing demand for LNG. An increase in infrastructure spending, space applications for cryogenic technologies, and cryogenic energy storage systems represent promising growth opportunities for the market. Improving healthcare services in the developing economies is boosting the cryogenic tanks market.

The steel segment is estimated to lead the cryogenic tanks market, by raw material, during the forecast period.

Steel is primarily used in the manufacturing of cryogenic tanks. Most of the materials are ductile at room temperature and abruptly lose their ductility when a given threshold is exceeded. They then become brittle even at relatively low temperatures. The austenitic stainless steel is majorly used for working in the low-temperature range. Carbon and alloy grade steels used for low-temperature service are required to provide high strength, ductility, and toughness in vehicles, vessels, and structures that must be used at –49°F and lower. These factors are contributing to the growth in demand for steel for the manufacturing of cryogenic tanks.

Liquid Nitrogen is the fastest-growing cryogenic liquid segment of the cryogenic tanks market.

Liquid nitrogen is primarily used in metal processing, food & beverage, electronics, and healthcare industries. The steel manufacturing industry is one of the major consumers of nitrogen. Nitrogen is used in the food & beverage industry for food preservation and packaging applications. The use of liquid nitrogen in this industry enables cost savings during storage and transportation and improves food quality. Liquid nitrogen is used to cool normally soft or heat-sensitive materials, such as plastics, tires, and certain metals. The increasing demand for liquid nitrogen from metal processing, food, and medical industries is expected to drive the market in this segment.

Metal processing is expected to lead the end-use industry segment for cryogenic tanks market during the forecast period.

Metal-processing industry was the largest end-use industry for the cryogenic tanks industry. Cryogenic tanks are increasingly being used in the metal processing industry, especially steel the industry. Huge quantities of nitrogen and other industrial gases are used during the steel manufacturing process. Nitrogen is also known to be largest consumed gas in the industry. It is used as a high-pressure gas for laser cutting of steel and metal. The inert properties of nitrogen facilitates its use as a blanketing gas. Some gases, including hydrogen and oxygen, are also used in the metal processing industry.   Cryogenic tanks are commonly used in the storage and transportation of these gases in manufacturing plants, which drives the market demand.

High economic growth rate and growing metal processing and energy generation industries in China, Australia, and India are projected to lead the cryogenic tanks market in APAC during the forecast period.

APAC is the fastest-growing market, in terms of both production and demand. Higher domestic demand, easy availability of raw materials, and low-cost labor make APAC the most preferred destination for the manufacturers of cryogenic tanks. The cryogenic tanks market in India, China, and Australia is expected to witness significant growth during the forecast period. The market is primarily driven by the demand from the energy & power sector. APAC is emerging as a leading consumer of cryogenic tanks, owing to the increasing demand from domestic as well as international markets.

The key players in cryogenic tanks market are Chart Industries (US), Cryofab (US), INOX India (India), Linde PLC (UK), Air Products (US), Cryolor (France), Air Water (Japan), Wessington Cryogenics (UK), FIBA Technologies (US), and ISISAN (Turkey). These players have established a strong foothold in the market by adopting strategies, such as expansion, new product launch, and merger & acquisition.

Don’t miss out on business opportunities in Cryogenic Tanks Market. Speak to our analyst and gain crucial industry insights that will help your business grow.

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December, 05 2019