Cheniere Energy Gets Approval to Introduce Feed Gas into Train 2

Federal Energy Regulatory Commission gave Cheniere Energy the permission to start introducing feed gas into a production unit known as Train 2 at Corpus Christi LNG exporter terminal, in an order issued on Monday morning.

The startup process for Train 2 began in January. FERC officials already gave permission to Cheniere two weeks ago to begin commercial operations for Train 1 at Corpus Christi LNG.

Cheniere is bringing its second production unit at Corpus Christi LNG at a time of growing exports. U.S. LNG producers exported a record 483 shipments of LNG in 2018, an 84 percent increase from the previous year, figures from the Department of Energy show.


$18 Billion LNG Deal Expected Between Cheniere Energy and China's Sinopec

The Wall Street Journal and S&P Global Platts reported that the Cheniere Energy is close to signing an $18 billion long-term LNG supply deal with China's state-run oil company Sinopec.

The Journal reported that the deal could be announced end of March as part of a broader US-China trade deal at a summit between U.S. President Donald Trump and Chinese President Xi Jinping.

Recently FERC gave Cheniere the green light to put the first production unit at its Corpus Christi LNG unit into service and begin exports.

Cheniere signed two LNG supply deals with PetroChina International Co. a year ago and weeks after Trump’s trade mission to China in November 2017.

The Wall Street Journal also reported that the deal with Sinopec could also include financing from state-owned Chinese banks for Cheniere to further expand its export capacity.


OPEC Reaches Agreement to Increase Global Output of Oil by One Million Barrels Per Day

OPEC has reached an agreement on Friday to increase supply by one million barrels per day, which is one percent of global supply.

The agreement comes after OPEC leaders met in Vienna Friday, with diplomatic discussions starting as early as Wednesday. 

Initially, Saudi Arabia and Russia were happy to comply with China, India, and The United States’ requests to have OPEC increase the cap. 

Conversely, Iran strongly opposed plans of increasing oil output, however yesterday’s meetings with various ministers seemed to have brought them closer to coming to an agreement.

Certain countries too small to return to full quotas will struggle after underproducing oil in the past. Other countries will not be allowed to fill the gap to even out total output.

Iran spoke against having members with larger supply capabilities fill Venezuelan output gaps as well as demanding that U.S. sanctions be mentioned in the group’s post meeting.


OPEC to Make Production Cap Decision on Friday

OPEC will debate on Friday whether to lift production caps, reversing an agreement reached in 2016 to drain a worldwide oil glut and ultimately lift prices. 

It is uncertain what decision OPEC might lean towards, especially with members of OPEC not seeing eye to eye regarding whether the production cap should be lifted.

Saudi Arabia and Russia want the production cap to be lifted, while Iran’s Minister of Petroleum wants to leave the production cap in place. He vowed to reject any compromise that would result in an increase in output. Reluctance to increase output is something that Iran, Iraq, and Venezuela all have in common.

The decision will be made in Vienna and is critical to Houston's energy industry who has been a beneficiary to the previous production caps. West Texas’ Permian Basin has been the driving force behind the United States’ surpassing of Saudi Arabia as the world second largest producer in oil, only trailing Russia.

Houston Chronicle

U.S. Asking OPEC to Increase Oil Production by 1 Million Barrels Per Day

The U.S. government is quietly asking some OPEC producers to increase oil production by one million barrels a day, according to people familiar with the matter.

The secret request comes after U.S. retail gasoline prices rose to their highest in three years and Washington decided to reimpose sanctions on Iran's crude exports that had previously misplaced about one million barrels a day.

According to people familiar with the private matter, some Arab ministers debated the request over the weekend and published a statement that said they would pledge to "ensure stable oil supplies that are available in a timely manner to meet growing demand and offset declines in parts of the world."

The U.S. is hoping some OPEC producers will increase oil supply to offset the impact of U.S. sanctions on Iranian oil output.

Russia and Saudi Arabia last month proposed a gradual production increase as early as June to bring fuel prices down among other reasons, but not all parties of the group have agreed to the proposal.

OPEC and its allies will meet in Vienna in late June to discuss their production policy for the second half of this year.

Fuel Fix

Analyst: OPEC Unlikely to Increase Production in June

Despite talks that OPEC may increase oil production as soon as June, an analyst at Fat Prophets told CNBC on Tuesday that it probably will not happen amid several ongoing geopolitical events that could impact broader global growth.

Reports that Russia and Saudi Arabia may increase oil production to ease supply concerns sent oil prices dropping last week to their lowest since early May.

Fat Prophets analyst David Lennox said the upcoming OPEC meeting in Vienna next month will probably result in no action because "there are a lot of other geopolitical events going on around the globe that could have an impact on broader global growth," he told CNBC.

If OPEC does decide to increase production due to the persistent rise in Brent Crude price, it probably will not take action until one of its following meetings after June, said Lennox.


Pipeline Companies Using More Additives to Increase Crude Flow Among Bottlenecks

As pipeline bottlenecks continue to burden North American oil producers, some companies are increasing their use of a little-known additive called a drag-reducing agent (DRA) that helps move oil through pipes more quickly.

DRA is injected into pipelines to reduce the contact between the oil and the wall of the pipe, which allows more crude to flow through.

Pipeline companies are increasing their use of DRA due to bottlenecks in booming production regions like the Permian Basin and Western Canada. Bottlenecks are causing crude grades to trade at largely discounted prices because of inadequate pipeline space.

Pipeline companies are looking for anything that cost-effectively allows them to increase capacity or reduce the energy pumping their pipelines, and DRA allows for a boost in flow and reduces power bills for these companies.

The DRA industry is tiny but has seen about $500 million in global sales, with half of that being in the U.S. The industry is also growing about 8 percent annually, according to the VP at Innospec Inc.


Cheniere Decides to Move Forward with Third LNG Unit in Corpus Christi

Cheniere Energy is moving forward with building a third unit to process liquefied natural gas at its export facility that is currently under construction in Corpus Christi.

Cheniere said this will be the first commitment to build new U.S. liquefaction capacity since 2015.

Bechtel is Cheniere's builder for this third unit and had started limited construction on it last year.

Two long-term deals to sell LNG to PetroChina International sparked Cheniere's decision to construct the third processing unit. The sale contracts extend through 2043.

Cheniere has been exporting natural gas through its Sabine Pass facility in Louisiana since 2016 and continues to expand in order to support more production and exports.

The number of foreign markets that receive LNG imports from the U.S. has been increasing. Freeport LNG and Kinder Morgan are scheduled to begin exporting LNG later this year.

Fuel Fix

Phillips 66 Partners to Move Forward with Gray Oak Pipeline in West Texas

Phillips 66 Partners said it has received enough commitments from oil producers in West Texas' Permian Basin to move forward with its Gray Oak crude oil pipeline.

The Gray Oak Pipeline will carry crude from West Texas to markets in Corpus Christi, Sweeny, and Freeport in South Texas, according to the Houston-based company.

The pipeline, which could have a capacity of 700,000 barrels per day starting by the end of 2019, will have the potential to expand capacity to about 1 million barrels per day if it becomes fully subscribed.

Gray Oak will connect to a new marine terminal being built by Buckeye Partners, Phillips 66, and Andeavor.

Phillips 66 owns 75 of the project while Andeavor owns 25 percent.

Fuel Fix

Infrastructure Investor Pays $1.75 Billion for Permian Pipeline Assets

Private Equity Fund Morgan Stanley Infrastructure Partners is paying $1.75 billion to purchase Permian Basin pipeline assets as production continues to rise in the area.

The firm is acquiring Boston-based Brazos Midstream and its pipeline network, including processing and storage assets in the Permian's Delaware Basin in West Texas.

The deal is through a Morgan Stanley investment fund called North Haven Infrastructure Partners II.

The Permian Basin is seeing a rise in production more quickly than any other oil and gas region in the world, which means acreage and pipelines in the area are selling at high prices.

A burst of private equity money is now flowing to invest in the area after several publicly traded companies have been skeptical to overspend due to the recent market downturn.

Fuel Fix

Tellurian: U.S. Needs to Invest $150 Billion in Infrastructure to Keep Up With Rising Gas Output

The U.S. needs to invest $150 billion in infrastructure in order to support rising natural gas production, according to the Tellurian Senior Vice President Amos Hochstein.

Shale producers are ramping up oil output and producing more associated gas as oil prices are on the rise, but there is not enough pipeline capacity to carry the gas to needed areas in the country or to export it, said Hochstein on Thursday at the International Energy Forum.

He added that shale oil producers are starting to face a dilemma where they have to decide if they should restrain production because there is not enough infrastructure to evacuate the gas.

The U.S. is also behind on an adequate number of liquefied natural gas terminals that would provide an outlet for surplus gas, Hochstein said at the forum.

West Texas Intermediate futures have been on the rise for the last two years and are currently trending at or above $65 per barrel.


Pennsylvania Judge Urges State Regulators to Reject Buckeye Partners Pipeline Reversal

Pennsylvania Administrative Law Judge Eranda Vero on Thursday urged the state's Public Utility Commission to reject Buckeye Partner's controversial request to reverse a section of its 350-mile product pipeline.

Buckeye Partners is looking to reverse a section of its Laurel Pipeline that currently moves westward from Philadelphia into Pittsburgh, a reversal that would offer Midwest refiners greater access to western Pennsylvania.

Although the Public Utility Commission has the final say in the decision, the judge's recommendation to reject the request could have a significant impact on the final ruling.

Judge Vero said Buckeye failed to prove that the pipeline was underutilized and that consumers would be uninjured, along with other conclusions.

Philadelphia refiners like Philadelphia Energy Solutions and a subsidiary of Delta Air Lines said the reversal would harm their business and lead to closures.

The reversal would help Midwest refiners move cheaper Canadian crude deeper into Pennsylvania.


Alliance Pipeline Proposes System Expansion in North Dakota

Alliance Pipeline is seeking commitments to expand its pipeline system, which runs through North Dakota, by 25 percent.

The expansion would require three more compressor stations in North Dakota and expects to put the expanded pipeline into service by the end of 2021.

The proposed expansion comes as North Dakota oil and gas regulators are encouraging an increase in infrastructure investment due to rising volumes of natural gas production.

The expansion, which would also include developing more gathering pipelines and processing plants, would help to reduce natural gas flaring, said Justin Kringstad, director of the North Dakota Pipeline Authority.

The Alliance Pipeline is a natural gas transmission system that runs 2,391 miles from the Western Canadian Sedimentary Basin and Williston Basin to the Chicago market hub, with 967 miles existing in the U.S.

Alliance Pipeline is owned by affiliates of Enbridge and Pembina Pipeline Corp.

ABC News
Alliance Pipeline

Cenovus Energy: Pipeline Bottlenecks from Canada to U.S. Hurting Production

Pipeline bottlenecks from Canada to the U.S. have hit production for Canada's Cenovus Energy, the company said Thursday.

Cenovus said it was running oil sands production below capacity and stockpiling the excess oil because of problems related to maxed-out pipelines to the U.S.

The company had predicted to double its first-quarter production from a year earlier but blamed the transportation bottlenecks for reduced prices of its crude.

Cenovus CEO Alex Pourbaix said the company was "taking steps to respond to a critical shortage of export pipeline capacity in Western Canada" that is beyond the company's control.

Pourbaix added that the pipeline shortage is having a negative impact on the industry as well as the broader Canadian economy.


Tellurian Seeks Shipper Backing for Proposed $3.7 Billion NatGas Pipeline

LNG firm Tellurian is looking for shippers to back its proposed Permian Global Access natural gas pipeline that would run from the Permian Basin in West Texas to southwest Louisiana.

The project would be part of Tellurian's $7 billion pipeline network of projects in Texas and Louisiana designed to support its Driftwood LNG, a proposed natural gas export facility near Lake Charles, Louisiana.

The proposed $3.7 billion, 625-mile pipeline would have the capacity to transport 2 billion cubic feet of gas per day. It is designed to take natural gas from Pecos County, Texas to Jefferson Davis Parish in Louisiana.

Tellurian CEO Meg Gentle said new pipeline infrastructure is needed to help reach growing export and industrial demand in Louisiana as natural gas production in the Permian is expected to spike.

Fuel Fix

OPEC: Oil Market Rebalance Occurring Faster than Anticipated

The longstanding OPEC deal to cut oil production in order to rebalance the global market is closer than ever to meeting its goal with OECD inventories just 74 million barrels above the five-year average recorded in January 2017.

When the OPEC deal went into effect in early 2017, inventories were 340 million barrels above the benchmark figure, according to OPEC research group leader Ayed Al Qahtani.

OPEC members and some non-OPEC nations such as Russia have been significantly reducing output by about 1.8 million barrels a day to push prices upwards after a major January 2016 market crash and subsequent oil glut.

Both the OPEC and non-OPEC producers are in talks to draft a plan for long-term cooperation this year as a way to institutionalize their current collaboration into a supergroup of oil producers, which would be led by Russia and Saudi Arabia.


U.S. Shale Players Look to Technology to Open Up New Fields

With U.S. shale growth at an all-time high, companies are using latest technology techniques to figure out how to squeeze more oil from each well.

Some producers are now putting sensors on drill bits to better access oil deposits. Some companies are also using artificial intelligence and remote operators to get the most out of equipment and trained engineers.

Advanced technology will help producers add wells in less productive regions and still make those plays profitable, according to CEO of Warwick Energy Group Kate Richard.

Higher oil prices are also allowing suppliers to buy new equipment in anticipation of new work, like Keane Group and Liberty Oilfield Services that provides hydraulic fracturing services.

Top U.S. oil majors like Exxon Mobil and Chevron are also focusing more of their investment in U.S. shale as production hits an all-time record, which is driving up costs for labor and drillable land in the region and boosting wages.


U.S. Oil Production to Surpass Levels Not Seen Since 1970, the EIA Reports

U.S. crude oil production is expected to rise above 10 million barrels per day next month, the highest level of oil production seen in the U.S. since 1970.

Production levels that high were not expected to be reached in the U.S. until the fourth quarter of this year, but the Energy Information Administration (EIA) said in a report Tuesday that the expected production increase to 10.04 million barrels per day would be reached in February.

A monthly average of more than 10 million barrels per day has not been seen since 1970 in the U.S. Since then, levels decreased as the U.S. began to more heavily rely on imported crude. But that dependence changed over the last few years due to the shale revolution.

In its report, the EIA estimates that U.S. output will continue to increase to more than 11 million barrels per day by the end of 2019.

Much of the growth will be seen in the Permian Basin, which is well supplied with pipelines and projects in progress that will help maintain capacity increase.


Oil Price Opens Year at Highest Since 2014 Amid Iranian Unrest, Production Cuts

Oil prices started their highest opening this year since 2014 amid anti-government rallies in Iran and a supply cut extension led by OPEC and Russia.

U.S. WTI crude hit $60 a barrel near the end of 2017 and maintained its rise into the New Year. It's the first time since January 2014 that WTI crude opened the year at above $60 a barrel.

Unrest in Iran, a leading oil exporter, has been a big contributor to the bullish start to 2018 as Iranian forces struggle to contain the biggest challenge to the clerical leadership since 2009.

Production cuts led by OPEC and Russia have also contributed to market growth. The cuts began in January 2017 and are scheduled to continue through the end of 2018.

Strong demand growth in China has also helped strengthen the market, but rising U.S. production is predicted to hamper growth into 2018.


Oil Price Rises to Highest in Two Years

Oil rose to a two-year high in anticipation for OPEC's decision on whether to extend output cuts and as U.S. industry data showed that crude stockpiles have resumed declines.

U.S. inventories fell by 6.36 million barrels last week, and January futures rose as much as 2.2 percent in New York, which is the highest since mid-2015.

The Organization of Petroleum Exporting Countries (OPEC) and its partners will decide whether to prolong supply cuts beyond the March deadline when they meet next week in Vienna.

Investors anticipate that OPEC and its partners will extend cuts, which is causing oil to climb. OPEC's de facto leader Saudi Arabia has been reducing exports and productions.

"It does appear the only way is up for oil," said Michael McCarthy, a chief strategist at CMC Markets.

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