Midstream Monitor

Boosted by a global recovery in oil prices, the Bakken Shale will surpass the Eagle Ford Shale as the leading U.S. tight oil formation by 2040, the U.S. Energy Information Administration projects. Also, Mexico's energy reforms offer opportunities to U.S. firms and investors; the world's leading LNG importers have cut back on their demand; and a former member of The Williams Cos. Inc. seeks to take over the company's board of directors.
Analysts tell Hart Energy, however, that the worst is past, at least for the bulk of upstream companies. For those in the oilfield services realm, on the other hand, the next several months could be rough. Also, Elizabeth Ames Coleman, former chairman of the Texas Railroad Commission, said she believes three “missing pieces will bring equilibrium to the market going forward”; Debbie Conway discusses regulatory challenges in a Midstream Connect video; and NGL prices are slogging through the summer.
The Lone Star State is a big land of contrasts and surprises. Like the state’s topography, its multiple unconventional plays vary widely and midstream rises up to all of these challenges. If the proposed Sandpiper Pipeline Project is canceled, the result could actually brighten the outlook for the Bakken's supply and demand balance; also, the Middle East and North Africa—an energy producing powerhouse—is primed to become one of top importers of LNG; and the oilfield service sector is facing a $110 billion debt wall in the next five years.
The Williams Co. Inc. chopped its dividend by 69% and investors approved, providing a 13.9% lift over three days of trading. Also, captains of very large LNG carriers might want to be wary while sailing through new lanes of the Panama Canal, lest they literally hit the wall; Alerian offers insight to investors worried about MLPs; and LyondellBasell is planning a new polyethylene plant on the Gulf Coast.
  There is both broad agreement among federal regulators and industry trade groups on their commitment to improve natural gas pipeline safety, and a sharp divergence on whether the Notice of Proposed Rule Making (NPRM) introduced in March and known as the Natural Gas Mega Rule, represents the correct approach. Recently, both the American Petroleum Institute (API) and the Interstate Natural Gas Association of America (INGAA) have voiced displeasure with aspects of the proposal from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). Also, midstream M&A activity plunged in the second quarter, PwC reports; Shell and Phillips 66 expanded their interest in the Explorer Pipeline; and Tesoro's Gregory Goff called for an easing of federal regulations.
There are no shortages of changes to commodity markets as a result of increased unconventional gas and oil, many of which are tied to long-time hydrocarbon-importing countries like the U.S. becoming net exporters. That and more on the LNG export market from the recent EIA conference in Washington, as well as a midyear report how The Midstream 50 companies are performing in the stock market, an analysis by Bracewell attorneys on the changing tax burden for pipeline MLPs and an ethane recovery comparison of Targa Resources and ONEOK.
Southern Co., the largest customer of Kinder Morgan Inc.’s (KMI) Southern Natural Gas (SNG) pipeline is buying a 50% stake in the line for $1.47 billion cash, the companies said July 10. The joint venture (JV) puts the value of the SNG line at about $4.15 billion. SNG is a 7,600-mile natural gas pipeline system that serves multiple states and will help Southern continue to supply hydrocarbons to gas-powered power generation in the southeast. 
Reeling from the failure of its proposed merger with Energy Transfer Equity LP, Williams Cos. Inc. has turned to a former U.S. Department of Commerce official and chief economist of ExxonMobil Corp. to serve as its new chairman. Also, at Hart Energy's DUG East conference, a U.S. Department of Energy official said that the United States was primed to become a major exporter of hydrocarbons, a new study shows that U.S. oil reserves exceed those of Saudi Arabia and a new multimedia feature exploring the sweet spot of the Permian Basin is now online.
Production of crude from Canadian oil sands will rise by 1 million barrels per day (bbl/d) between now and 2025 despite a likely halt in construction of new projects, analytical firm IHS said in a new report. Also, Energy Transfer Equity LP elected to walk away from its merger with The Williams Cos. Inc., though Williams is pursuing compensation in court, the first LNG tanker is set to sail through the expanded Panama Canal and TransCanada Corp. is asking for $15 billion in damages over the permit denial for the Keystone XL Pipeline.
Those with clear vision—specifically, 2020 vision—will see a resurgence in the NGL market, particularly in the ethane segment. That’s because 2020 is when Shell’s long-awaited Appalachian petrochemical complex near Monaca, Pa., is expected to begin operations and add about 100,000 barrels per day (Mbbl/d) of demand for ethane. Major projects like that, and incremental additions to others on the Gulf Coast, will absorb all or most of the estimated 800 Mbbl/d of ethane rejection plaguing the industry at the moment, Greg Haas, director of integrated oil and gas for Stratas Advisors, told attendees at this week's DUG East Conference in Pittsburgh.