August 25, 2020

August 25, 2020
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  • WTI is up 92c to $43.54/Bbl, and Brent is up 91c to $46.04/Bbl
  • Oil prices rose for the third straight session partly due to oil and fuel supply concerns as tropical storms force offshore oil output to be cut by 82%, or 1.5 MMBbl/d
    • Oil and Chemical facilities on the Gulf Coast are shuttering, securing equipment or running through emergency protocols ahead of Hurricane Laura
    • Some of the largest U.S. refineries are winding down in advance of the storm – potentially shutting in more than 1 MMBbl/d of capacity
  • Canadian crude-by-rail (CBR) exports fell to their lowest level in eight years in June as the pandemic shutdown arbitrage opportunities to U.S. markets (Argus)
    • CBR shippers exported 43 MBbl/d in June, down by 15 MBbl/d from May and the lowest since June 2012, according to the Canada Energy Regulator
    • Right before the virus breakout, Canada exported a record high 412 MBbl/d in February
    • In February the price of WCS at Hardisty, Alberta, was more than $19/Bbl lower the same grade in Houston. For June delivery that spread narrowed to within $4/Bbl, a historically low spread that makes the export uneconomic
  • Natural gas is up 1.5c to $2.528/MMBtu
  • Kinder Morgan announced Elba LNG Unit 7 has started production
    • Total capacity at the Elba Island LNG site will be 0.3275 Bcf/d
    • Kinder Morgan said that the unit would be ready to begin commercial operations on August 27
    • AEGIS notes that this is the final unit to begin operations as part of the “first wave” of U.S. LNG export terminals that was launched in 2016
  • Tropical Storm Laura strengthening as it heads for the U.S. Gulf Coast
    • Tropical Storm Laura is forecast to become a category 3 hurricane prior to making landfall
    • The majority of U.S. LNG export capacity lies in the storms expected path, as Cheniere Energy’s Sabine Pass LNG site, Sempra Energy’s Cameron LNG, and Freeport LNG (FLNG) account for nearly 75% (6.68 Bcf/d) of U.S. LNG export capacity
    • S. gas production hit a 30-day low of 85,173 MMcf/d as The Bureau of Safety and Environmental Enforcement (BSEE) stated on August 23 that 44.6% of offshore natural gas production (1,205 MMcf/d) in the Gulf has been shut-in
  • The U.S. has added 5 Bcf/d of pipeline capacity in 1H2020, but cancelled 8.7 Bcf/d (EIA)
    • The EIA noted that much of the new capacity brought online has occurred in the South Central and Mountain regions
    • The well-publicized cancellations of the 1.5 Bcf/d Atlantic Coast Pipeline (ACP) and William’s 0.65 Bcf/d Constitution Pipeline were both expected to serve the Appalachian basin, but the EIA has said that the majority of the cancellations occurred in the South Central and Mountain regions

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