Energy Transfer mulls Marcellus gathering project
Energy Transfer Partners (ETP) is contemplating a newly proposed natural gas gathering and processing project in the Marcellus shale region.
The Revolution project, expected to cost about $1.4bn, would bring gas to the company's Rover pipeline and additional NGL products to Sunoco Logistics' Mariner East pipeline project. ETP said details surrounding the project could be released as soon as next week.
"We've already secured capacity on Rover from this project. We also have secured capacity from Mariner East … for this project, and it'll do nothing but continue to feed residue volumes into Rover and other products into projects," ETP said today on an earnings call.
Additionally, ETP said it is pursuing the Bayou Bridge project with Phillips 66, which will directly link the Nederland, Texas, facility to refining markets in Lake Charles and Saint James, Louisiana. ETP completed its open season on the crude project with hopes of making an official announcement in the near future.
ETP said it realizes the need to export more propane and ethane from the US and is optimistic that the LPG export terminals in Nederland and Marcus Hook, Pennsylvania, will play a significant role in alleviating that need.
ETP's 200,000 b/d Mariner South pipeline project transports export grade propane and butane from Lone Star NGL's storage and fractionation complex in Mont Belvieu, Texas, to Sunoco Logistics' terminal in Nederland, Texas. Butane capabilities came online in the second quarter.
In addition to the propane and butane, Mariner South could be available for other NGLs and petroleum products depending on shipper interest.
In March, ETP acquired the $370mn King Ranch project from ExxonMobil which includes a 42,000 b/d NGL fractionator and a NGL pipeline that transports product from Kingsville, Texas, to Corpus Christi, Texas.
Earlier this week, ETP announced its subsidiary LST will build a fourth 120,000 b/d fractionator at its site at Mont Belvieu.
The announcement comes about five months after LST announced the construction of a third 100,000 b/d fractionator. Both fractionators are currently under construction and once completed will bring total fractionation capacity to 440,000 b/d.
NGL transportation volumes for the first quarter increased year-on-year by more than 131,135 b/d to 438,646 b/d, while average daily fractionated volumes increased more than 69,000 b/d to 226,041 b/d due to the ramp-up of its second 100,000 b/d fractionator at Mont Belvieu.
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Shale to emerge leaner from M&A boom
Shale to emerge leaner from M&A boom
New York, 1 July (Argus) — The recent flurry of deals in the US shale patch is poised to deliver significant productivity gains, potentially offsetting a drilling slowdown and suggesting that it might well be a mistake to bet against the sector any time soon. Ownership of top shale basins, such as the Permian in west Texas and New Mexico, is increasingly falling into the hands of fewer but larger operators, with the necessary resources to chase technology breakthroughs and drive economies of scale that could support further output growth. The flood of deal-making comes as shale growth is likely to slow after defying all expectations last year. Even as acquirers look to fine-tune their combined portfolios and slow activity in favour of shareholder returns, they will still be targeting ever longer lateral wells that reduce the need for more rigs and hydraulic fracturing (fracking) crews. Fracking multiple wells at the same time and shifting to electric fleets will also help them become more efficient. All in all, shale could continue to be a thorn in Opec's side for years to come. Underestimate US shale at your peril was the title of a recent report from analysts at bank HSBC. "We expect the mergers and acquisitions to result in substantial capital efficiencies," they wrote. Concentrated operations have reduced inefficiencies in the supply chain, and the elimination of downtime has also helped producers become leaner, according to consultancy Wood Mackenzie. But costs remain 15-30pc higher than 2020-21 levels, suggesting scope for further improvements. And while efficiency gains will inevitably become exhausted at some point, opportunities to tackle unproductive processes might still crop up. "The will and the technology are there for some operators, who should be able to keep cutting capex while modestly growing and maintaining shareholder distributions for a while to come," Wood Mackenzie research director for the Lower 48 Maria Peacock says. ExxonMobil flagged $2bn in annual savings from its $64.5bn takeover of shale giant Pioneer, with two-thirds to come from improved resource recovery and the rest from efficiencies. Leading US independent ConocoPhillips says improved technology will help it extend its inventory of top-quality drilling locations in both the Eagle Ford and Bakken basins after its $22.5bn tie-up with Marathon Oil. Return to spender Productivity gains are hardly the preserve of firms that have been active participants in the $200bn of shale deals seen over the past year. For example, US independent EOG, which has sat out the mergers and acquisitions (M&A) boom so far, plans to deliver the same level of growth for this year as seen in 2023 with four fewer rigs and two fewer fracking fleets. "Technology has evolved so much that you can go and drill horizontal wells in these and exploit that technology and you can get just absolutely outstanding returns," chief operating officer Jeff Leitzell says. Still, almost half of oil and gas executives recently polled by the Dallas Federal Reserve think that US oil output will be "slightly lower" if consolidation continues over the next five years. But the answer differed by company size. All executives from E&P firms that produce 100,000 b/d or more envisaged "no impact". Service company executives are more concerned: "Consolidation by E&P firms has curtailed investment in exploration," one said. "Our hope is that it's a temporary situation that will work itself out as the integration is completed." And even though the prolific Permian basin is due to peak before the end of the decade, analysts forecast robust growth in the intervening years. Relatively high oil prices that remain above breakeven costs and efficiency gains — which will shift the mix of wells to newer and more productive ones — will be the main drivers, according to bank Goldman Sachs. By Stephen Cunningham US tight oil production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan mulls seeking more gas-fired capacity in auction
Japan mulls seeking more gas-fired capacity in auction
Osaka, 1 July (Argus) — Japan is considering further adding to gas-fired power generation capacity through its long-term zero emissions power capacity auction, given forecasts of rising electricity demand with the rapid adoption of artificial intelligence. A working group under the trade and industry ministry Meti has proposed to look for an additional 4GW of gas-fired capacity over two fiscal years from April 2024-March 2026 via a clean power auction. This came after awarded gas-fired capacity reached 5.76GW in the first auction held in January , with the auction seeking about 6GW over three years. The second auction — which Tokyo plans to hold in January 2025 — could seek 2.24GW, including the remaining 0.24GW in the first auction, for 2024-25 and another 2GW for 2025-26 in a third auction, the working group suggested. It has also proposed to extend the period within which awarded gas-fired projects have to start operations to eight years from the previous six years, given current resource shortages at plant manufacturers. Japan has launched the auction system to spur investment in clean power sources by securing funding in advance to drive the country's decarbonisation towards 2050. This generally targets clean power sources — such as renewables, nuclear, storage battery, biomass, hydrogen and ammonia. But the scheme also applies to new power plants burning regasified LNG as an immediate measure to ensure stable power supplies, subject to a gradual switch from gas to cleaner energy sources. These measures will not necessarily lead to increased demand for LNG, as Japanese import demand for the fuel would further come under pressure from expanded use of renewables and nuclear power. But the power sector will have to secure enough capacity to meet peak demand, especially with power consumption by data centres and semiconductor producers expected to continue to increase. Japan's peak power demand in 2033-34 is forecast at 161GW, up from an estimated 159GW in 2024-25, as the country's digital push will more than offset the impact of falling population and further energy saving efforts, according to the nationwide transmission system operator Organisation for Cross-regional Co-ordination of Transmission Operator. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Borealis to keep pyrolysis options open
Borealis to keep pyrolysis options open
London, 28 June (Argus) — Austrian chemical company Borealis continues to weigh up the technology pathways for expanding pyrolysis chemical recycling capacity. A plan to build a plant in Stenungsund, Sweden, was put on hold earlier this year, and the company might opt for a different location altogether. The Stenungsund project has yet to get past the feasibility stage as it had "not yet met the performance requirements expected". The company said earlier this year that it was evaluating different technology options for the site, including the Blue Alp pyrolysis process in use at its majority-owned Renasci plant in Ostende, Belgium, and parent company OMV's ReOil technology, which is to be deployed at small commercial scale in Schwechat, Austria, this year. Borealis vice-president of circular economy Mirjam Mayer told Argus at PRSE that the chemical recycling investment environment has become more challenging: "A lot of projects across the industry have been delayed... with capital expenditure increases seen recently." But she said Borealis remained committed to adding chemical recycling capacity and was looking at investment options. These could include new technologies or different locations, Mayer said, noting that there was "greater flexibility for chemical recycling scope in the Nordic area". Stenungsund was initially due to start up this year, providing recycled feedstock to count towards Borealis' target of producing 600,000 t/yr of recycled and bio-based polymers by 2025. Mayer said the company is still committed to its goal, but acknowledged it could be challenging in current market conditions. In the last few years Borealis has acquired both chemical and mechanical recyclers and Mayer said Borealis was "still open to mergers and acquisition opportunities, as long as they made sense, but a starting point going forward would be to expand on opportunities from recently bought companies, including Rialti, Renasci and Integra Plastics". "We have made some good progress, especially with acquisitions in the last year or so, and there seems to have been a real step change in the last year... with current capacity of around 200,000 t/yr [for these products]," Mayer added. Rising costs, including new projects' capital expenditure requirements and energy prices, have checked progress in recent years, Mayer said, as has competition from cheap virgin material. Meyer also said EU Packaging and Packaging Waste (PPWR) regulations have bought "clarity and security" to the industry for 2030, but that volatile energy costs might contribute to weak market conditions in the short term. "Regulatory support, like PPWR is something we need to make progress and make these targets a reality," she said. Some companies have announced closures or strategic reviews of European petrochemical assets in recent months, highlighting the challenge facing the industry, but Mayer said Borealis feels it is in a better position in Europe as it covers "a specialty segment which is valued by customers and sells products that actively support the energy transition". This includes its focus on building a portfolio of sustainable products, including its Borcycle-M mechanically recycled polymer range and Borcycle-C chemically-recycled product line, she said. Borealis recently achieved US Food and Drug Administration approval for some Borcycle-M grades, which Mayer called a "very important step" in being able to take recyclates to a wide variety of consumer applications, including cosmetic, personal care and dry food packaging applications. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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