Midstream Monitor

As E&Ps become more efficient at finding ways to grow production, the midstream sector is getting ready to handle what comes its way when commodity prices rise by improving infrastructure. Meanwhile, the primary drivers of the crude-hauling business are the producers of crude and the truck drivers themselves, and the vaunted Permian Basin is the preferred venue for both.
Midstream Monitor cover, May 20, 2016
Commodity price woes have stung even the Permian Basin, but superior economics in the play’s sweet spot keep the midstream buildout humming. "We are just as busy today as we have ever been,” Matt Vining, chief commercial officer and co-founder of Dallas-based Navigator Energy Services LLC, told Midstream Business. “By the end of the third quarter, we will have installed over 450 miles of pipe and are now looking at building in excess of 600,000 barrels (bbl) of crude storage. We’re in full operation and moving a lot of crude.” Vining’s company, which has grown from a group of four industry veterans with big dreams in 2012 to a staff of 60 to execute those dreams in 2016, is not alone. Brett Wiggs, CEO of Midland, Texas-based Oryx Midstream Services LLC, has his team working at full throttle as well in the Permian.
Is the state of the midstream as positive as claimed or as negative as feared? That’s what the editors of Midstream Business sought to determine when we created The Midstream 50, the first-of-its-kind published ranking of the top publicly owned players in the sector. With the help of experts at Barclays Capital Inc., we dug into the hard, cold data of Form 10-K annual reports filed with the U.S. Securities and Exchange Commission to ascertain who was at the top of the midstream pile, how they got there and whether they are likely to stay.
Julian Lee, a London-based oil strategist for Bloomberg News, offered some salient points on OPEC’s role in today’s world.  OPEC’s goal has always been to safeguard the interests of its member countries, noted Lee. The organization’s members are diverse, consisting of one group of countries with low-cost, high per-capita production: Kuwait, Qatar, United Arab Emirates (UAE) and Saudi Arabia, and a second group with mixed-cost, low per-capita production: Angola, Venezuela, Libya, Ecuador, Iraq, Algeria, Iran, Nigeria and Indonesia. 
The New York State Department of Environmental Conservation (DEC) denied Williams Partners LP’s proposed 124-mile Constitution Pipeline approval, stating the project failed to meet the state’s water quality standards. In other news, proving that bigger is not necessarily better, tanker companies are beginning to place an emphasis on lower costs of operation. Also, when it comes to restructuring one expert says  companies will need to pick their poison when deciding how to proceed. But companies in need of debt restructuring have some strategies available, said Ron E. Meisler, partner, Skadden Arps, at a recent event hosted by Davis, Graham and Stubbs LLC. 
The oil and gas industry’s rapid Permian Basin expansion could push the power transmission and distribution capacity of the region’s electric system to its limits by 2020, a new GPA Midstream Association technical committee report cautions. To forestall potential power service limitations or reliability problems, midstream operators and upstream producers should contact their respective transmission and distribution service providers (TDSP) to discuss projections for future power needs over the next five or more years, James Meier, vice president of Permian gas and power infrastructure for Pioneer Natural Resources Co. and vice-chairman of GPA’s technical committee, said.
There’s light at the end of the long, dark ethane tunnel, according to a leading midstream consultant. Peter Fasullo, principal at Houston-based EnVantage Inc. told a standing-room-only crowd April 12 at the 95th annual GPA Midstream Association convention that the supply-demand balance for ethane has led to giveaway prices and large ethane-rejection volumes in which much of the ethane extracted from raw natural gas goes into the gas transmission system for consumption by gas users. Meanwhile, The topsy-turvy nature of the oil and gas prices over the past two years caused the INGAA Foundation to update its midstream infrastructure development forecast through 2035 to reflect the new market dynamics and austerity from both producers and midstream operators.
The already complicated relationship between Energy Transfer Equity LP and Williams Cos. Inc. is headed to counseling—the legal kind. The two companies, which are engaged in a nearly $38 billion merger, will now square off in the courts after Williams said April 6 that Energy Transfer and the company’s CEO, Kelcy Warren, violated terms with an equity sale made in March. Meanwhile, Adam Sieminski, head of the federal Energy Information Administration told the University of Oklahoma, Price College of Business Energy Institute annual Energy Symposium that “the end of fossil fuels is not on the horizon."
The Energy Information Administration reports that total exports of domestic petroleum products in general continued increasing in 2015 due to higher exports of distillate fuel, motor gasoline and propane specifically. Meanwhile, California refiners’ efforts to increase badly needed crude-by-rail service seem to have been derailed, but It wasn’t supposed to be this way, according to a new RBN Energy research report. In addition, Tallgrass Development LP is buying out its partner's stake in the Rockies Express Pipeline.
The U.S. Energy Information Administration (EIA) projects that 2016 is the tipping year from coal to natural gas in the fueling of U.S. power generation facilities. The EIA’s Short Term Energy Outlook forecasts that gas will provide 33% of electricity this year while coal’s share dips to 32%—the first time that gas will have the largest share for a year. The share of non-hydro renewables is expected to rise to 8%. Hydropower’s share is forecast to be 6%. 

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