“Houston, we have a spot market”

Houston has long been the US capital for the oil and gas industry, a place where office towers full of geologists, accountants and engineers look out on a horizon dotted with refineries and storage terminals. The Houston Ship Channel has been one of the world’s largest hubs for refining, where crude flows in via pipeline and ship, and tankers stream out laden with refined products.

Despite all the activity, there hasn’t been a widely traded crude oil spot market in Houston in decades. But that’s changing.  Continue reading

Posted in Oil

Midstream merger mania just getting started

The 60pc collapse in crude prices has kicked-off what’s expected to be a busy period in energy mergers and acquisitions.

In October Enterprise Products Partners said it would acquire Oiltanking Partners in a $6bn deal that would combine two major operators of crude storage and pipelines on the US Gulf coast. In November Halliburton said it would acquire energy services rival Baker Hughes for $37bn, a reaction to what was then a more modest price drop.

Enlink Midstream said it would acquire hedge fund-backed Coronado Midstream, which owns natural gas and processing facilities in the Permian basin, for $600mn. And US independent producer Pioneer Natural Resources said it is looking to sell its Eagle Ford midstream business, a trend that other exploration and production companies may follow, Fitch Ratings said.  Continue reading

Posted in Oil

Echoes of the boom

The crude price crash has producers scrambling and lawmakers planning, but from Cushing to the Atlantic coast the US oil production boom still echoes loud and clear.

A flood of US oil may once again be flowing to that key storage and pricing hub in Oklahoma thanks to new pipeline construction, setting up a repeat of the glut that widened the Brent/WTI spread to as much as $20/bl.

“It’s déjà vu all over again and it looks like it’s happening,” Lipow Oil Associates president Andy Lipow told the Argus Crude Summit in Houston this week. “Cushing could physically once again get overwhelmed if production continues to rise and rise quickly.”

Crude could be backed up all the way into the Rocky Mountains and North Dakota, where the growing crude-by-rail infrastructure will still be waiting, ready to take advantage, Plains All American Pipeline chief executive Greg Armstrong said. The midstream company has sharply cut back its expectations for crude-by-rail for 2015, but rail will still have a fighting chance as the market continues to flex. Continue reading

Posted in Oil