Europe’s Role in Transport Markets Shrinking

Hellenic Shipping News:

Over the next year, Europe will import less gasoil while exporting smaller volumes of gasoline, according to ESAI Energy’s latest Global Fuels Outlook. In this publication, ESAI Energy analyst Ian Page points out that “this reduction in European diesel imports and gasoline exports will have a major impact on global trade flows in 2019.”

Permian Production Decelerates, Waiting for Pipelines

Hellenic Shipping News:

The Permian Basin’s rapid production growth is showing signs of deceleration, according to ESAI Energy’s recent North America Watch. An evaluation of shale producers finds that while Permian basin operating costs in the second quarter have fallen about 6 percent on average from this time last year, overall full-cycle breakeven costs are roughly 30 percent higher, due to increased capital spending. ESAI Energy analyst, Elisabeth Murphy, explains, “Acreage consolidation is key for achieving scale, and will be critical to some producers’ bottom lines, but it comes at a cost. Permian acreage can be expensive”.

Frac Spread: With Great LPG Supply Comes Great Exportability

Oil and Gas Investor:

The U.S. and Canada will produce about 3 million barrels per day (MMbbl/d) of LPG this year, a 200,000 bbl/d increase over 2017, with ESAI Energy LLC expecting considerable growth in 2019.

All told, output should rise by about 400,000 bbl/d from 2017 to 2019, said Andrew Reed, principal of ESAI Energy, during an Aug. 15 webinar. Of that 3 million bbl/d of production, exports of 1.1 million bbl/d are split between the Atlantic Basin and Asian markets.

Export Infrastructure to Strand U.S. LPG This Winter

Hellenic Shipping News:

The growth of U.S. LPG exports will outpace terminal capacity this winter, constraining LPG exports, according to ESAI Energy’s webinar U.S. Growing Pains to Upend LPG Trade & Demand. The export constraint will temporarily cause scarcity in Asia and the international market, driving up LPG prices relative to naphtha and causing feedstock switching in the petchem sector. Meanwhile, stranded LPG in the U.S. will push down LPG prices relative to ethane in the Gulf Coast, making propane a more attractive feedstock in that market.

New Russian Refining Subsidies Take Shape

Hellenic Shipping News:
Russia’s oil tax reform will cause refineries to adjust investment plans, causing some to abandon discretionary fuel oil upgrading projects, according to ESAI Energy’s newly released CIS Watch. Underinvestment in fuel oil destruction will exacerbate the oversupply of fuel oil following the introduction of new IMO regulations that will cause many ships to find alternatives to high sulfur fuel oil.yond 2021.

Capacity Glut to Trigger Refinery Closures after 2021

Hellenic Shipping News:

An excess of global refining capacity looms after 2021, according to ESAI Energy’s newly released, Global Refining Capacity Five Year Outlook. ESAI Energy projects a significant increase in new distillation capacity to 2023. After lagging demand growth in recent years, the coming capacity build cycle will significantly outpace demand. The resulting rise in spare capacity will reduce global utilization rates and put pressure on margins, particularly beyond 2021.

Crude Oil Outlook Shows Ample Supplies

Oil & Gas Journal:

The outlook highlights three trends that underscore the expectation that non-OPEC crude and condensate supply will increase by an average of 1 million b/d/year during 2019-23:

• Infrastructure catching up with US shale growth.

• Streamlined, cost-effective offshore projects from the Gulf of Mexico, Latin America, and the North Sea brought to production.
• Russia moving to a “coordinated” growth strategy.

Reality Check for Global NGL Demand

OilVoice:
Global investment in ethane crackers and other olefins units will lead to overcapacity and intensifying inter-fuel competition in the NGL and naphtha markets, according to ESAI Energy’s newly published Global NGL Five Year Outlook. As ESAI Energy describes, announced projects include a potential 58 million tons of ethylene capacity, far more than global ethylene demand can plausibly grow. However, a closer look at what will pan out leads to the unmistakable conclusion that feedstock demand growth and pricing will be less bullish than many believe.

Is Market Ready for Mariner East 2?

OilVoice:
Any delay to the Mariner East 2 project would impact LPG markets from Applachia to Asia, according to ESAI Energy’s analysis of the Mariner East expansion’s impact on U.S. NGL exports. In contrast, ethane exports are emerging much more slowly, according to ESAI Energy’s newly released Global NGL Outlook.