An Open Season, Potential Interest Buy in Cheniere, and the Ballad of the SPR Motel

An Open Season, Potential Interest Buy in Cheniere, and the Ballad of the SPR Motel

RMR features the latest high-point news to keep you to up to date with midstream activities happening in the basins and shale plays that matter to you most.

Red Butte Pipeline Launches Open Season

Dallas-based Silver Creek Midstream has announced an open season for shipper commitments to make improvements on an eight-mile section of the company’s 495-mile Red Butte crude oil pipeline in Wyo. Deadline for bids is September 7. Red Butte is the largest transmission line to extend from the Big Horn and Wind River basins to Casper, Wyo. Upon completion of upgrades and refurbishments to the proposed section, the pipeline will offer 5,000 BPD of capacity. The Red Butte system includes two delivery points, multiple truck-loading stations, and more than 800,000 Bbls of storage.

PE Firms in Talks to Buy/Sell Large Interest in Cheniere

Private equity firm Blackstone began shopping its 41% interest in the nation’s largest LNG operator two months ago after investing $1.5 billion in Cheniere in 2012. Negotiations now appear to be on the table between Blackstone and alternative asset manager Brookfield for a stake in Cheniere valued at $7.8 billion. The company’s market value stands at about $18.9 billion. Amid demand destruction that has seen LNG exports nose-dive from a record-breaking 8.1 BCFD in January to 3.1 BCFD in July, and EIA projections of a serious recovery by the first of 2021, we’d love to see the calculus from each firm on this deal.

Producer Storage at the SPR Begins to Lighten

The nation’s Strategic Petroleum Reserve was never meant to be an extended-stay motel for producers’ crude oil supplies. Between the April oil glut and a near fever-pitch panic for storage wherever it could be found, the SPR offered up capacity in its underground salt caverns as a temporary sanctuary for U.S. oil whose price had free fallen into an abyss. While the Trump Administration advocated to purchase 77 MMBbls, Congress would have none of it. Instead, nine oil companies took advantage of the opportunity to store 23 MMBbls of oil in exchange for cheap rent and an eviction date of March 31, 2021. With the price of oil now rebounding, Exxon and the U.S. leg of Total this month have reclaimed 2.2 MMBbls of their crude. Take a load off, Fannie.

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U.S. LNG Export Leaders Hold on Tight, Move Forward in a World of Recovery

U.S. LNG Export Leaders Hold on Tight, Move Forward in a World of Recovery

Despite—or even in spite of—a pandemic that’s ravaged oil and gas demand across the globe, the U.S. remains on course to become the largest exporter of LNG in as little as five years. True, the world’s four LNG heavyweight suppliers (Qatar, Australia, the U.S., and Russia) all have reduced shipments due to decline in demand. This “ouch” period after more than two years of record growth, especially in the U.S. According to the EIA, the U.S. hit an all-time high in January of 8.1 BCFD LNG exported just before COVID-19 slammed the industry into a cliff.

Since then, we’ve experienced our share of woes, including cancellations of 46 cargos in June and 50 in July where Sabine Pass in La., and Corpus Christi and Freeport, Texas, terminals took the harshest brunt. We’ve seen July LNG exports fall to 3.1 BCFD ferried aboard a scant four vessels. And domestic LNG operators with plans to add new liquefaction terminals? They’re reaching for a bottle of Excedrin and a shot of Tequila to wait it out.

Still, the nation’s leading LNG exporters, while holding tight, also are moving forward to ramp up operations and growth projects. Our data-gatherers and prognosticators at EIA forecast U.S. LNG exports will return to pre-COVID levels by November and will remain high at about 8-9 BCFD this winter and into next year. The Trump Administration in July extended LNG export authorizations through 2050, compared with previous terms that lasted 20 years.

For now, here’s a brief look at the latest happenings among our largest LNG champions.

  • Sempra Energy’s Cameron LNG export terminal located in Hackberry, La., has begun full commercial operations. The 12 MTPA liquefaction facility has to date shipped nearly 100 LNG cargoes totaling more than 6 million tons. Planned expansions to Cameron also are on the whiteboard, as well as proposed LNG projects in Port Arthur, Texas, and Mexico.
  • Kinder Morgan has received the go-ahead to place its ninth train into service at the company’s Elba Island LNG plant near Savannah, Ga., with all 10 trains scheduled to begin service by this Fall.
  • Houston-based Cheniere announced earlier this month increased revenues during 2Q despite a reduced number of cargoes and volumes produced and loaded. Construction on the company’s Sabine Pass terminal is now 64% complete. Train 3 on its Corpus Christi liquefaction facility is a few winks away from final commissioning with startup services expected in 2021. And Cheniere’s Midship natural gas pipeline extending from the Cushing, Okla., hub to the Gulf Coast began service in April.

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