Author: Robert Boslego

The Energy Information Administration reported that November crude oil production averaged 12.879 million barrels per day (mmbd), up 203,000 b/d from October. In addition, the October estimate was revised 21,000 b/d higher, and so the total gain was 224,000 b/d from the prior estimate.

The Gulf of Mexico rose by 91,000 b/d to 1.995 million barrels per day. Texas production reached a new high of 5.329 mmbd, up 65,000 b/d from October. And New Mexico’s production gained 59,000 b/d to 1.063 million barrels per day.

Plains All American Pipeline LP’s (PAA) Cactus ll pipeline was expected to ship at full capacity, 670,000 b/d, beginning in September. EPIC Midstream’s crude oil pipeline began shipping 400,000 b/d. It is designed to ship 440,000 b/d from the Permian and another 150,000 b/d from the Eagle Ford.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d. It began shipments and is expected to be in full service by the end of the first quarter of 2020.

The gains from last December have amounted 953,000 b/d. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For November, that additional gain is about 500,000 b/d. Continue reading "Strong US Crude Production Growth In November" →

The Energy Information Administration reported that October crude oil production averaged 12.655 million barrels per day (mmbd), up 171,000 b/d from September. In addition, the September estimate was revised 21,000 b/d higher, and so the total gain was 192,000 b/d from the prior estimate.

Texas production reached a new high of 5.273 mmbd, up 53,000 b/d from September. Other gains were 70,000 b/d in North Dakota, 39,000 b/d in Colorado, and 26,000 b/d in Alaska.
The gain in North Dakota established a new high for the state. The Gulf of Mexico remained about 100,000 b/d below the August high.

Plains All American Pipeline LP’s (PAA) Cactus ll pipeline was expected to ship at full capacity, 670,000 b/d, beginning in September. EPIC Midstream’s crude oil pipeline began shipping 400,000 b/d. It is designed to ship 440,000 b/d from the Permian and another 150,000 b/d from the Eagle Ford.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d. It began shipments and is expected to be in full service by the end of the first quarter of 2020.

The gains from last November have amounted 1.096 million b/d. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For October, that additional gain is about 600,000 b/d. Continue reading "Strong U.S. Crude Production Growth In October" →

The narrative a while back was that the world would face a shortage of heavy crude because sanctions on Iran and Venezuela had reduced production and exports. Some also implied that shale oil would fill up U.S. storage because American refiners were designed to process the heavy, high sulfur crudes from Venezuela, Saudi Arabia, and the like.

But the light, sweet crude is in high demand for export, and that appetite is likely to continue to grow with the implementation of IMO 2020 around the corner, going into effect January 1st. Freight rates from the U.S. Gulf to Europe have surged to record highs.

Equinor ASA and Unipec, the trading arm of China's top refiner Sinopec, have provisionally chartered Aframax tankers for $60,700 per day, an increase of almost 30 percent in a week, a new record high, according to shipbroker Poten & Partners. Aframax tankers are the “workhorse” of the U.S.-Europe oil trade, which has risen more than 60 percent in 2019 compared to 2018.

The EPIC pipeline began service in August. It has the capacity to deliver 400,000 b/d from the Permian Basin to terminals on the Gulf Coast.

The new Cactus II pipeline system also started shipping crude oil in August. It has the capacity to deliver 670,000 b/d of crude oil from the Permian.

And the Gray Oak pipeline began service in November and will be capable of delivering 900,000 b/d at capacity.

This new takeaway capacity will effectively reduce the production breakeven costs of substantial Permian crude oil because the pipeline charges are significantly lower than trucking costs.

This should provide stimulus to shale oil production growth, which had slowed due to takeaway pipeline capacity constraints. Continue reading "American Shale Oil In High Demand" →