Oil & Gas Prices - May 18
Posted: Wed May 18, 2022 8:53 am
Opening Prices:
> WTI is up $2.28 to $114.68/bbl, and Brent is up $1.77 to $113.70/bbl.
> Natural gas is up 20.6c to $8.51/MMBtu.
AEGIS Notes
Oil
The Biden administration plans to relax sanctions against Venezuelan oil so that more of the country's oil may reach Europe < dirtiest oil on Earth.
> European companies operating in the country might ship oil immediately as Chevron is allowed to negotiate a license with Venezuela’s national producer PDVSA
> The sanctions are being eased as global oil supply constraints drive up the cost of crude and fuels, threatening to exacerbate already high inflation < Team Biden is now out of ideas.
Russian crude production in April fell by nearly 9% from March, showed an internal OPEC+ report on Tuesday (Reuters)
> According to figures compiled by OPEC+ from secondary sources, Russia's oil output was 9.16 MMBbl/d in April, down roughly 860 MBbl/d from March
> The recent spike in crude prices pushed Russia’s oil and gas earnings to 1.81 trillion roubles ($27.92 billion) in April, compared to a total of 2.97 trillion roubles for the first three months of the year, as per the finance ministry.
Natural Gas
Natural gas prices are trading 20.6c higher this morning, near $8.510
> The lower-48 pop-weighted temperature for the 1-15 day range increased by 1.2°F, primarily driven by warmer temps in the Northeast region in the 1-5 day range
> This morning's pipeline nominations show lower-48 dry gas production is down again by 0.45 Bcf/d week-over-week at 94.1 Bcf/d. The fall over the last couple of days has been pretty evenly dispersed among the Northeast, Rockies, and South Central regions
Feedgas demand is back up at around 13.0 Bcf/d
> Cameron LNG flows increased by 0.5 Bcf/d, and it appears maintenance is wrapping up early. Corpus Christi LNG nominations are climbing higher as well
Permian supply growth outlook brightens as companies rush to announce pipeline expansions (none of this increases pipeline capacity in 2022)
> On May 16, Kinder Morgan declared the start of an open season for an expansion on its Gulf Coast Express Pipeline, which will run through June 6. The expansion project would add around 570 MMcf/d of spare capacity on its Gulf Coast Express Pipeline and is targeting an in-service date of December 2023
> The open season announcement for Gulf Coast Express comes just days after the developer wrapped up an earlier open season for a separate brownfield expansion on its 2.1 Bcf/d Permian Highway Pipeline, which has promised to expand the pipe's capacity by some 650 MMcf/d, or by more than 30%.
> Developer MPLX reached an FID on its own 2-Bcf/d Whistler Pipeline that adds around 500 MMcf/d of capacity to the pipe
> The expansion projects account for around 1.7 Bcf/d of new dry gas production in the basin and would allow producers to increase output further
Historically, drilling economics are driven by oil prices in the Permian basin but gas pipeline capacity has been the constraint that has limited growth in the past. According to S&P Global, Permian crude oil takeaway capacity is around 7 MMBbl/d, or around 1.8 MMBbl/d higher than current production levels
AEGIS notes If the ratio of gas to oil is 3.2 Bcf/d per 1 MMBbld, that means that the current crude oil takeaway capacity would support dry gas production growth of 5.76 Bcf/d, which is more than would be available with the recent expansions. Analysts say there is around 1.5 Bcf/d of takeaway capacity currently and another 1.7 of expansion announced, which would mean that growth may be capped at around 3.2 Bcf/d of growth or 1 MMBbl/day
---------------------------------
MY TAKE: Our government's blocking of pipeline projects is the primary reason we are on the verge of an Energy Crisis. We cannot keep LNG exports at capacity and refill our natural gas storage system before the next winter heating season arrives. This means that the utilities that bring gas to our homes for space heating will be in a Bidding War with the LNG exporters for physical supply. Double digit natural gas prices are one heat wave away. American consumers will pay for Europe's stupidity.
> WTI is up $2.28 to $114.68/bbl, and Brent is up $1.77 to $113.70/bbl.
> Natural gas is up 20.6c to $8.51/MMBtu.
AEGIS Notes
Oil
The Biden administration plans to relax sanctions against Venezuelan oil so that more of the country's oil may reach Europe < dirtiest oil on Earth.
> European companies operating in the country might ship oil immediately as Chevron is allowed to negotiate a license with Venezuela’s national producer PDVSA
> The sanctions are being eased as global oil supply constraints drive up the cost of crude and fuels, threatening to exacerbate already high inflation < Team Biden is now out of ideas.
Russian crude production in April fell by nearly 9% from March, showed an internal OPEC+ report on Tuesday (Reuters)
> According to figures compiled by OPEC+ from secondary sources, Russia's oil output was 9.16 MMBbl/d in April, down roughly 860 MBbl/d from March
> The recent spike in crude prices pushed Russia’s oil and gas earnings to 1.81 trillion roubles ($27.92 billion) in April, compared to a total of 2.97 trillion roubles for the first three months of the year, as per the finance ministry.
Natural Gas
Natural gas prices are trading 20.6c higher this morning, near $8.510
> The lower-48 pop-weighted temperature for the 1-15 day range increased by 1.2°F, primarily driven by warmer temps in the Northeast region in the 1-5 day range
> This morning's pipeline nominations show lower-48 dry gas production is down again by 0.45 Bcf/d week-over-week at 94.1 Bcf/d. The fall over the last couple of days has been pretty evenly dispersed among the Northeast, Rockies, and South Central regions
Feedgas demand is back up at around 13.0 Bcf/d
> Cameron LNG flows increased by 0.5 Bcf/d, and it appears maintenance is wrapping up early. Corpus Christi LNG nominations are climbing higher as well
Permian supply growth outlook brightens as companies rush to announce pipeline expansions (none of this increases pipeline capacity in 2022)
> On May 16, Kinder Morgan declared the start of an open season for an expansion on its Gulf Coast Express Pipeline, which will run through June 6. The expansion project would add around 570 MMcf/d of spare capacity on its Gulf Coast Express Pipeline and is targeting an in-service date of December 2023
> The open season announcement for Gulf Coast Express comes just days after the developer wrapped up an earlier open season for a separate brownfield expansion on its 2.1 Bcf/d Permian Highway Pipeline, which has promised to expand the pipe's capacity by some 650 MMcf/d, or by more than 30%.
> Developer MPLX reached an FID on its own 2-Bcf/d Whistler Pipeline that adds around 500 MMcf/d of capacity to the pipe
> The expansion projects account for around 1.7 Bcf/d of new dry gas production in the basin and would allow producers to increase output further
Historically, drilling economics are driven by oil prices in the Permian basin but gas pipeline capacity has been the constraint that has limited growth in the past. According to S&P Global, Permian crude oil takeaway capacity is around 7 MMBbl/d, or around 1.8 MMBbl/d higher than current production levels
AEGIS notes If the ratio of gas to oil is 3.2 Bcf/d per 1 MMBbld, that means that the current crude oil takeaway capacity would support dry gas production growth of 5.76 Bcf/d, which is more than would be available with the recent expansions. Analysts say there is around 1.5 Bcf/d of takeaway capacity currently and another 1.7 of expansion announced, which would mean that growth may be capped at around 3.2 Bcf/d of growth or 1 MMBbl/day
---------------------------------
MY TAKE: Our government's blocking of pipeline projects is the primary reason we are on the verge of an Energy Crisis. We cannot keep LNG exports at capacity and refill our natural gas storage system before the next winter heating season arrives. This means that the utilities that bring gas to our homes for space heating will be in a Bidding War with the LNG exporters for physical supply. Double digit natural gas prices are one heat wave away. American consumers will pay for Europe's stupidity.