Stronger than the others

Transcription

1 Stronger than the others Natural gasoline demand, markets, and pricing Maria Mejia, NGL Analyst September 29, Platts, McGraw Hill Financial. All rights reserved.

2 Bentek Energy is a leader in energy market fundamentals 40% Majors, producers, marketers, industrials 22% Pipelines, utilities, midstream 33% Financial entities and Hedge Funds 5% Government, associations, consultants 2

3 Key Takeaways Natural gasoline prices have held stronger than other NGLs Canadian bitumen producers have generated strong demand for natural gasoline the diluent of choice Diluent demand is set to grow, but competition from domestic condensate and Canadian natural gasoline will create price challenges in the near future Unlike condensate, natural gasoline and naphtha are refined products and can be legally exported Midstream companies have announced at least 10 projects to build condensate splitters, but the attractiveness of these projects is under close evaluation 3

4 Natural gasoline prices have remained stronger than other NGLs $/MMbtu $30 $25 $20 $15 $10 Oil, gas and NGL prices on an energy equivalent basis $/Gallon $3.0 $2.5 $2.0 $1.5 $1.0 NGL prices in the USGC 5% 14% 35% 17% $5 $0 $0.5 $0.0 57% WTI Henry Hub MB NGL Ethane Propane Butane Isobutane N. Gasoline WTI Source: Platts

5 Natural gasoline production is seasonal and peaks in the summer Mb/d Pentanes plus production from gas plants Ethane Mb/d Propane Mb/d , , Source: EIA Butanes Mb/d

6 EIA definition of pentanes plus explains its production seasonality Pentanes Plus A mixture of hydrocarbons, mostly pentanes and heavier, extracted from natural gas Natural Gasoline A term used in the gas processing industry to refer to a mixture of liquid hydrocarbons (mostly pentanes and heavier hydrocarbons) extracted from natural gas Winter Plant Condensate Condensate Lease Condensate A natural gas liquid recovered from associated and non associated gas wells from lease separators or field facilities EIA Definitions: 6

7 Refineries do not produce natural gasoline; they produce naphtha Production Sources Gas plants 2,800 MMb/d 88% Refineries 360 Mb/d 12% 7

8 Location, location, location Processing plant API 81 Natural gasoline Pentanes plus Plant condensate Refinery Naphtha Export API 58 to 63 Export Wellhead API 45 Condensate The Energy Policy and Conservation Act of 1975 Crude oil: A mixture of hydrocarbons that existed in liquid phase in underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities and which has not been processed through a crude oil distillation tower. Source: 15 CFR 754.2(a) 8

9 The demand for these products is strongly interrelated 100% Refined product yields Condensate 80% 60% 30% 24% 44% 56% Natural Gasoline Naphtha 40% 20% Plant condensate Pentanes plus Demand 0% WTI (37ᵒ) Eagle Ford (47ᵒ) Eagle Ford (55ᵒ) Utica (60ᵒ+) Residue VGO Diesel Kerosene Naphtha LPG 9

10 Condensate growth will struggle to balance without exports US refinery runs 89.6 % 88.2 % US light sweet oil imports MMb/d % MMb/d Year Avg Source: EIA PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 Source: EIA 10

11 Companies have planned to build at least 10 condensate splitters Announced Capacity Owner/Operator Location Total Splitting Capacity (Mb/d) BASF/Total (Current) Port Arthur, TX 75 Kinder Morgan Galena Park, TX 50 Kinder Morgan Galena Park, TX 50 CCI Corpus Christi, TX 100 Marathon Canton, OH 25 Marathon Catlettsburg, KY 35 Martin Corpus Christi, TX 100 Magellan Corpus Christi, TX 50 Magellan Corpus Christi, TX 50 Targa Houston, TX 35 Phillips 66 TBD TBD Announced Capacity (Mb/d) 570 Source: Bentek s Petroleum Project Tracker Projects have been cancelled in favor of condensate stabilizers Williams installed a 5-Mb/d condensate stabilizer tower in early 2014 at its Markham, TX, gas plant. Source: Williams. 11

12 Natural Gasoline Supply/Demand Supply/Demand Balance Mb/d 18% Mb/d Exports Mb/d 12% 38% 44% 26% 0 Refineries Other Exports Total Supply 62% Refineries Exports Other 12

13 Bitumen production in Canada generates strong diluent demand Mb/d Pentanes Plus exports by destination MMb/d Canadian oil production 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Canada Other Source: EIA Bitumen Other Bitumen % Source: Bentek, Warren-Nickles, 13 Province data

14 Natural gasoline is the diluent product of choice 90 Southern Lights Diluent Cochin East API Gravity

15 Diluent demand is set to grow, and enjoys excess of competing barrels Mb/d Diluent Demand Base Case WC Condensate Supply US Natural Gasoline Available for Export Diluent Demand (100% dilbit) Source: Bentek s Market Call: North American NGLs, 3Q

16 Key Takeaways Natural gasoline prices have held stronger than other NGLs Canadian bitumen producers have generated strong demand for natural gasoline the diluent of choice Diluent demand is set to grow, but competition from domestic condensate and Canadian natural gasoline will create price challenges in the near future Unlike condensate, natural gasoline and naphtha are refined products and can be legally exported Midstream companies have announced at least 10 projects to build condensate splitters, but the attractiveness of these projects is under close evaluation 16

17 Thank you Maria Mejia NGL Analyst 2013 Platts, McGraw Hill Financial. All rights reserved.