Latest / The Gathering Line / Crude Brief: Guernsey Chokepoints, Freight Surges, and Rockies Bottlenecks

Transcript

Crude Brief: Guernsey Chokepoints, Freight Surges, and Rockies Bottlenecks · The Gathering Line

• 0:00
  Monday, October twenty sixth.
• 0:02
  Here's what moved since Friday morning.
• 0:04
  Screens first.
• 0:06
  Brent settled Friday at one hundred sixteen dollars and seventy two cents,
• 0:10
  the highest settlement since April twenty ninth, per CNBC.
• 0:14
  This morning, Reuters has Brent down a dollar ninety at one hundred fourteen eighty
• 0:18
  two as of nine fifty nine GMT, and W T I down two dollars and eight cents at one
• 0:24
  hundred one nineteen.
• 0:26
  The catalyst is diplomacy.
• 0:28
  Qatari mediators traveled to Tehran Sunday, coordinating with Washington,
• 0:32
  and officials from Saudi Arabia, Turkey and Pakistan meet Iran's leaders today.
• 0:38
  Now the physical side.
• 0:40
  Over the weekend the Houthis claimed strikes on pumping stations on Saudi Arabia's
• 0:44
  East West crude pipeline and on Riyadh airport, and Saudi Arabia said it intercepted
• 0:49
  more missiles and drones.
• 0:51
  PVM's John Evans told Reuters any dip back toward last week's lows will find
• 0:56
  grateful buyers.
• 0:58
  So the paper pulled back.
• 0:59
  December pipeline nominations are still locked, and the logistics bottlenecks are
• 1:04
  still binding.
• 1:05
  On freight, RBN reports the cost of a very large crude carrier from the Gulf Coast
• 1:10
  to Asia topped eighty million dollars in early October.
• 1:14
  Cosmo Oil chartered one on October eighth for eighty one million to move two million
• 1:18
  barrels.
• 1:19
  That's roughly forty dollars a barrel against a historical four to five.
• 1:23
  It was still sixty five point three nine million as of October nineteenth.
• 1:28
  RBN's framing is that freight, not crude price, is now the swing cost for Atlantic
• 1:33
  Basin barrels going east.
• 1:34
  My read: that keeps a lot of crude at home.
• 1:37
  Quick global housekeeping.
• 1:39
  IEA chief Fatih Birol said in Singapore today he doesn't expect markets in twenty
• 1:44
  twenty seven to return to prewar levels.
• 1:47
  Aramco will start storing crude in Singapore in the second half of twenty twenty
• 1:51
  seven.
• 1:52
  OPEC plus quotas are unchanged heading into the November first ministerial.
• 1:57
  The strategic petroleum reserve sits at two hundred eighty two point seven million
• 2:01
  barrels, the lowest since nineteen eighty two.
• 2:04
  North America.
• 2:05
  November W C S at Hardisty settled Friday at twenty five fifty five under W T I,
• 2:11
  per CalRock via Reuters, thirty five cents wider than Thursday.
• 2:15
  Against this morning's screen, that's my arithmetic, not a posted price,
• 2:19
  about seventy five sixty four outright.
• 2:22
  Desk figures have Trans Mountain around sixty percent full,
• 2:25
  which fits the freight story, so heavy barrels are pushed south.
• 2:29
  Enbridge's Express is pinned at its two hundred eighty thousand barrels per day
• 2:33
  capacity into Casper and GERN zee.
• 2:36
  Nothing material from Mexico.
• 2:38
  United States.
• 2:39
  No new E I A report since Friday, so the latest weekly numbers stand.
• 2:44
  Commercial crude drew three point oh six one million barrels to four hundred twelve
• 2:49
  point five one seven million, bigger than the consensus draw of one point three
• 2:53
  million.
• 2:54
  But the draw was coastal.
• 2:56
  The Gulf Coast fell five million barrels on storm shut ins.
• 2:59
  Inland built.
• 3:01
  Cushing rose one million to twenty seven point six million,
• 3:04
  a fourth straight weekly build.
• 3:06
  The Rockies, PADD four, built seven hundred eighty six thousand barrels to twenty
• 3:10
  three point four nine six million.
• 3:13
  Production is thirteen point two seven million barrels per day,
• 3:16
  and refinery utilization eased to ninety three point four percent.
• 3:20
  Baker Hughes Friday: total rigs flat at six hundred three, a second straight week
• 3:25
  unchanged.
• 3:26
  Oil rigs rose one to four hundred sixty, gas fell one to one hundred thirty two.
• 3:32
  A hundred dollar screen is not accelerating drilling.
• 3:35
  Corporate: Devon is selling its Eagle Ford assets to Crescent for four point two two
• 3:40
  billion dollars in cash, per RBN, to concentrate capital on the Delaware and the
• 3:44
  Rockies.
• 3:46
  Regulatory reviews continue on Enbridge's two point five five billion dollar
• 3:50
  Tallgrass crude deal, which includes seventy five percent of Pony Express and the
• 3:54
  GERN zee terminals, and on Hess Midstream's roughly two hundred million dollar
• 3:58
  purchase of Chevron's D J Basin gathering plus a twenty percent stake in Saddlehorn.
• 4:03
  Uinta Basin.
• 4:05
  Treat these as indicative desk postings, not assessments.
• 4:09
  Yellow wax holds ten to fourteen dollars under Cushing at the wellhead.
• 4:13
  Delivered Gulf Coast waxy trades three dollars and twenty cents over W T I.
• 4:19
  With insulated railcar freight at sixteen to eighteen dollars a barrel,
• 4:23
  the delivered netback lands twelve eighty to fourteen eighty under Cushing.
• 4:28
  Spot crude by rail is deeply underwater against Salt Lake City postings.
• 4:33
  The five refiners are near their waxy processing cap of about eighty thousand
• 4:37
  barrels per day.
• 4:38
  Rail loadings average about one hundred fifteen thousand, all under long term
• 4:43
  minimum volume commitments, and spot racks are dark.
• 4:46
  Wildcat's Helper expansion toward one hundred thousand continues.
• 4:50
  Energy Transfer's Price River terminal is under Utah review,
• 4:54
  decision expected in the fourth quarter.
• 4:57
  The Uinta Basin Railway has no track laid.
• 5:00
  The D C Circuit remanded the approval to the Surface Transportation Board this month
• 5:04
  over environmental review gaps, and the Forest Service right of way through Ashley
• 5:09
  National Forest stays halted pending that supplemental review.
• 5:13
  Operators are drilling to match their commitments and local refinery quotas.
• 5:17
  Bakken.
• 5:18
  Output holds near one point one five three million barrels per day on thirty three
• 5:23
  rigs, with ninety six percent gas capture and roughly one hundred thirty million
• 5:27
  cubic feet per day flared.
• 5:29
  No new Director's Cut over the weekend.
• 5:31
  Dakota Access is full at about seven hundred fifty thousand barrels per day,
• 5:36
  and the walk up spot tariff is nine seventy five against committed rates of five
• 5:40
  sixteen to seven fifty six.
• 5:42
  Double H's conversion to N G L service took sixty five to eighty eight thousand
• 5:47
  barrels per day of crude takeaway out permanently, pushing barrels to DAPL and south
• 5:51
  on Bridger and Belle Fourche.
• 5:53
  Spot rail is closed at ten to fifteen dollars before car and unloading costs.
• 5:58
  Chevron drops a Williston rig by December, three to two, and Hess Midstream guides
• 6:03
  twenty twenty seven gathering volumes down about five percent.
• 6:06
  Powder River.
• 6:08
  Operators are on steady schedules and gathering is unconstrained.
• 6:12
  The choke is downstream, at the receipt manifolds and transfer pumps into GERN zee
• 6:18
  storage.
• 6:19
  Now GERN zee, the one that matters.
• 6:21
  Guernsey Sweet held flat over the weekend at eighty five cents over Cushing,
• 6:26
  about one oh two oh four outright on this morning's screen.
• 6:30
  Clearbrook sits one fifty to two ten under GERN zee, sixty five cents to a dollar
• 6:34
  twenty five under Cushing.
• 6:37
  Inflows are heavy.
• 6:38
  Express pushes two hundred eighty thousand barrels per day of Canadian crude,
• 6:42
  and Bridger and Belle Fourche bring over three hundred thousand of Bakken.
• 6:47
  Egress is the problem.
• 6:49
  Pony Express is moving about two hundred thirty thousand out of GERN zee against
• 6:53
  four hundred thirty thousand nameplate, held back by Midcontinent refinery limits
• 6:57
  and upstream proration.
• 6:59
  Platte, at one hundred forty five thousand eastbound, is heavily prorated.
• 7:04
  Saddlehorn and Grand Mesa are full of D J Basin barrels bound for Cushing.
• 7:08
  With December nominations locked, barrels cut out of prorated southbound lines have
• 7:13
  two choices: dump northeast into Clearbrook at that one fifty to two ten discount,
• 7:19
  or take GERN zee tankage and pay carry.
• 7:22
  Meanwhile, enforce minimum volume commitment deficiency charges on shippers
• 7:26
  apportioned down by downstream constraints.
• 7:29
  That's contract execution, not a concession.
• 7:32
  And with Express at full rate into the headers, heavy Canadian barrels raise gravity
• 7:37
  and sulfur contamination risk at shared manifolds.
• 7:40
  Downstream refiners will reject off spec sweet batches, so hold strict cut points
• 7:45
  and segregation.
• 7:47
  Watch for filings after the Tallgrass and Bridger open seasons on Pony Express and
• 7:52
  Seahorse, launched August twenty first with no rates or volumes disclosed.
• 7:57
  Bridger's proposed five hundred fifty thousand barrel per day line to GERN zee,
• 8:02
  targeted July twenty twenty seven, can't be absorbed without Pony expansion or new
• 8:07
  southbound steel.
• 8:09
  That's the brief.