Magic & Wonders of Shale: Plastics, Petchem, Low Energy Costs, Exports, JOBS JOBS JOBS- The world’s biggest oil and chemical companies are about to unleash a tidal wave of plastic raw materials by the mid-2020s

Big Oil Plans to Unleash a Flood of Plastic From US Gulf
(Bloomberg) -- The world’s biggest oil and chemical companies are about to unleash a tidal wave of plastic raw materials by the mid-2020s, tapping cheap shale gas to meet growing demand from makers of everything from toys to plumbing to consumer goods.

Exxon Mobil Corp., Dow Inc., France’s Total SA, South Africa’s Sasol Ltd. and Saudi Basic Industries Corp. have built or announced at least $40 billion in new petrochemical facilities in Texas and Louisiana, according to data compiled by Bloomberg. The most recent is an $8 billion joint venture between Chevron Corp., Phillips 66 and Qatar Petroleum announced this week.

Companies involved | Projected cost | Location
Sasol | $11.8 billion | Louisiana
Exxon, Sabic | $10 billion | Texas
Chevron Phillips, Qatar Petroleum | $8 billion | U.S. Gulf Coast
Dow | $6 billion | Texas, Louisiana
LyondellBasell Industries NV | $2.4 billion | Texas
Exxon | $2 billion | Texas
Total, Nova Chemicals, Borealis | $1.7 billion | Texas

The investments in Gulf of Mexico coastal factories come amid a consumer backlash against plastic bags and straws for their environmental impact. The total amount of oceanic plastic waste is expected to more than double by 2030 if action isn’t taken now, the International Energy Agency said in a report last year.

In the U.S. alone, New York City, Seattle, Oakland and Miami Beach all have either banned straws or have pending proposals to do so. Boston, Chicago, Los Angeles and San Francisco prohibit plastic bags, while several other cities imposed fees for using plastic bags at grocery stores.

Mark Lashier, chief executive officer of the Chevron Phillips Chemical Co. joint venture that’s partnering with Qatar Petroleum, said he’s not worried about straw or bag bans hitting the plastics industry. Some forecasters see plastic demand growing quicker than oil, which is under threat from renewable energy and electric vehicles.

“We certainly take that into account in our supply and demand balances, but the demand in general for plastic materials is growing greater than 4% a year,” he said. “The world is going to need more and more of this as the world population grows.”

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Asia's affection for US crude not limited to low sulfur sweet grades

India's MRPL buys sour US crude Thunder Horse for first time

Medium sour Mars Blend, Southern Green Canyon also popular in Asia

Thunder Horse comes cheaper than Arab Medium in India, Platts data shows

 

Asia has demonstrated its strong appetite for a wide variety of US crude grades since late 2018, with India's recent purchase of Thunder Horse crude highlighting Asian refiners' flexible crude procurement strategy of keeping the door wide open for both sweet and sour US grades.

 

Lighter and sweeter US crude grades including WTI Midland, Eagle Ford crude and condensate have been among the most popular grades typically sent to Asia, but a mixed bag of high sulfur US grades have started to regularly attract customers across Northeast and South Asia in recent quarters.

In South Asia, India's Mangalore Refinery and Petrochemicals Ltd. recently bought via spot tender 1 million barrels of Thunder Horse crude from the US for delivery over October 11-20, company officials said Wednesday.

This latest North American spot crude cargo deal marked the Indian state-run refiner's first ever purchase of the high sulfur US grade.

"We are open to buying more US [sour] grades at competitive prices in the near future," a company official told S&P Global Platts Thursday.

In addition, Indian Oil Corp. currently holds a term supply contract to receive both light sweet US crudes, as well as medium sour Mars Blend grade, for 2019, Platts reported earlier, citing Asian trade sources with knowledge of the matter.

India's flagship state-run refiner has put in place "a robust sourcing plan" to replace Iranian volumes after the US lifted sanction waivers on key customer of Iran's oil, IOC Chairman Sanjiv Singh said in early May.

Singh confirmed at the time that the state-run company had secured deals to import an additional 4.6 million mt of US crude to help it replace just over half of its Iranian imports.

In Northeast Asia, Japan imported 1 million barrels of medium sour Southern Green Canyon crude from the US late last year and the country received 995,663 barrels of another medium sour Mars Blend crude in March, according to latest data from the Ministry of Economy, Trade and Industry.

South Korea's crude imports from the US have already surpassed the 50 million-barrel mark for the year, with the country receiving 51.73 million barrels over January-May, more than a fivefold surge from 11.09 million barrels received in the same period a year earlier, latest data from state-run Korea National Oil Corporation showed.

Out of the 51.73 million barrels received so far this year, close to one fifth of the total intake consists of high sulfur US grades including Mars Blend, Southern Green Canyon and Poseidon, trading sources at SK Innovation, Hyundai Oilbank and GS Caltex said.

Light-medium sour offshore grade Thunder Horse has an average API gravity of 33.75 degrees and typical sulfur content of 0.73%.

Southern Green Canyon is a medium sour crude with an average API gravity of 28.2 degrees and typical sulfur content of 2.3%, according to crude assays from BP seen by Platts. Mars Blend is a medium density grade with gravity of API 29 and sulfur content of 1.8%.

US SOUR CRUDE DISCOUNT

MRPL's maiden purchase of the Thunder Horse crude cargo may prove to be an economical feedstock procurement deal, as the high sulfur US grade is seen to be cheaper than many of the flagship Middle Eastern export grades, Asian trade sources said.

The outright price spread between Thunder Horse and Saudi Arab Medium crude official selling prices, with both grades calculated on a West Coast India delivered basis, averaged minus $1.26/b in June, minus $1.76/b in May and minus 97 cents/b in April.

Sources at Japanese integrated trading companies indicated that other US sour grades like Southern Green Canyon also appear to be highly economical options to replace Iranian Heavy crude, which Japanese refiners typically bought on a regular basis prior to the re-imposition of US sanctions on Tehran last November.

"Iranian Heavy is one of the cheapest medium/heavy sour oil in the world but it's not accessible right now... US sour oil seems more competitive than many medium sour Middle Eastern grades though," said a source at a Japanese oil and gas trading company.

The outright spread between Platts Southern Green Canyon crude assessments and Qatar's medium sour Al-Shaheen crude, both on an India delivered basis, has consistently been hovering in negative territory, averaging minus 73 cents/b in June, minus $1.58/b in May and minus 56 cents/b in April, Platts data showed.

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Without the level of shale production, a shut in from the GoM would have probably boosted crude prices by 1-2$/bbl and probably even more given the tensions in the Mid-East, problems in Libya, Venezuela etc

Again, shale saves the day!!!!

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Tropical Storm Barry shuts about half of Gulf of Mexico oil, gas output: US BSEE

 

US offshore drillers have shut 1 million b/d, or 53%, of Gulf of Mexico oil production and 1.2 Bcf/d, or 45%, of natural gas output as Tropical Storm Barry heads toward Louisiana's coast, the Bureau of Safety and Environmental Enforcement said Thursday.

 

BSEE said 191 platforms and seven non-dynamically positioned rigs have been evacuated, and 11 dynamically positioned rigs have been moved off site.

The figures were based on operations reported to BSEE as of 11:30 am CDT (1630 GMT) Thursday.

 

More oil, gas production halted, one refinery shuts, as US Gulf Coast prepares for Tropical Storm Barry

The National Hurricane Center expects Barry to reach hurricane strength late Friday or early Saturday and make landfall in Louisiana.

Barry could cut Gulf of Mexico crude production by 140,000-230,000 b/d in July, according to S&P Global Platts Analytics estimates.

Offshore drillers including Chevron, Anadarko, ExxonMobil and BP on Wednesday started shutting production and evacuated staff from drilling platforms.

Phillips 66 is preparing to shut its 253,600 b/d Alliance refinery in Belle Chasse outside New Orleans, while other Gulf Coast refiners said they are keeping an eye on the storm.

BSEE plans to update the production data daily, as long as the storm remains a threat to Gulf Coast energy infrastructure.

 

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Evolving global markets affect US LNG exports, Senate panel told

Evolving global markets clearly are having impacts on proposed US LNG export projects, witnesses told the Senate Energy and Natural Resources Committee on July 11.

 

 

Jul 11th, 2019
 
 

Evolving global markets clearly are having impacts on proposed US LNG export projects, witnesses told the Senate Energy and Natural Resources Committee on July 11. Overseas customers are moving away from long-term contracts and toward investing in US terminals that can export US-sourced gas to Asia-Pacific customers at competitive prices, they said.

“The impact of ongoing gas production gains, and the national security and economic prosperity they have ushered in, should not be underestimated,” said Steven Winberg, assistant secretary for fossil energy at the US Department of Energy.

“We now are in our third consecutive year as a net exporter of gas, and projections from [the US Energy Information Administration] estimate that the US will be an overall net exporter of energy next year. These exports are not only reducing our trade deficit by billions of dollars each year, but are also increasing our national security,” he said.

Since LNG exports began from the Lower 48 US states in February 2016, more than 2.4 tcf of gas equivalent has been exported, Winberg said. “US exported cargos have landed in Europe, Asia, Africa, the Middle East, South America, North America, and the Caribbean—36 different countries in all. Europe has been the top destination for US LNG so far in 2019, receiving 55 cargos through April. And, led by imports into South Korea and Japan, Asia has been the top importing region of US LNG over the last 3 years,” he said.

Domestic production incentive

Because US gas supplies are so abundant, operating and planned export capacity are helping stabilize the domestic market, another witness said. “Exports provide another demand outlet and thus help to keep natural gas production steady and predictable,” said Charlie Riedl, executive director of the Center for Liquefied Natural Gas.

“In fact, growth in exports sends market signals to incentivize domestic production, which benefits consumers here at home and industries involved in the gas supply chain such as construction and manufacturing, spurring even more economic growth,” Riedl said.

“The US is entering a global market that is changing, and its entry will accelerate that change. But change is evolutionary and multilayered—thus, broad generalizations can mislead rather than illuminate,” said Nikos Tsafos, a senior fellow at the Center for Strategic and International Studies.

“There are new players, new business models, and new trade routes, but these exist alongside business practices and patterns that have persisted for decades. More than ever, it is important to understand each region and market on its own terms, with due regard to the idiosyncrasies that make it special,” Tsafos said.

Dennis V. Arriola, an executive vice-president and chief sustainability officer for Sempra Energy in San Diego, said that while most US LNG exports are from the Gulf Coast and take too long to reach Asia-Pacific customers at competitive prices, his company is developing two projects in Baja California that would solve that problem for otherwise stranded gas in western US states.

“When those two projects are completed, they will connect with pipelines from Texas to help form the “Permian-to-Pacific highway” and reduce the time it takes for US gas to reach Asian markets to approximately 12 days,” he said. “As a result, Asian LNG buyers will have increased options with the ability to access multiple gas producing regions, with different pricing mechanisms. This will help the US be even more competitive in the global LNG market.”

Alternatives are needed

Another witness, Melanie Hart, a senior fellow and director of the China Program at the Center for American Progress, said transporting US LNG there by tanker is prohibitively expensive and alternatives to long-term contracts need to be considered.

“US LNG would be a short-term fix for China when the country has its own gas resources. It already is the third-largest shale gas producer behind the US and Canada,” she said. “If China agrees to buy more US LNG or invest in projects, the US could lose leverage with one of its biggest global competitors.”

Sen. Joe Manchin (D-W.Va.), the committee’s ranking minority member, warned that Chinese investments in US LNG export projects potentially could imperil plans for an energy and petrochemical hub in his home state. “Chinese companies have said they are ready to invest $84 billion over 20 years. My gut tells me they want propane, ethane, and other building stock,” he said.

“We now are leading the world in natural gas production, and hopefully soon we will also lead in exports,” Committee Chair Lisa Murkowski (R-Alas.) said.

“Global demand for LNG, we know, is increasing. More US LNG export facilities are coming online and more of our friends and allies around the world are building import facilities. For the first time since the 1950s, we are now a net exporter of this abundant resource, and our production is driving the formation of a global spot market for natural gas,” Murkowski said.

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