Latest / The Gathering Line / Gern-zee Holds Its Premium as Southbound Exits Choke

Transcript

Gern-zee Holds Its Premium as Southbound Exits Choke · The Gathering Line

• 0:00
  Thursday, October twenty second.
• 0:02
  Here's what moved.
• 0:04
  Global first.
• 0:05
  Brent spot settled Tuesday at a hundred fifteen dollars and twenty two cents,
• 0:10
  down three percent on the day, per Refinitiv through the E I A.
• 0:14
  Prompt futures sit around a hundred eleven to a hundred twelve.
• 0:18
  Middle East escalation is still holding the premium.
• 0:21
  The number that matters to us is freight.
• 0:23
  R B N reports a V L C C from the Gulf Coast to China fixed above eighty million
• 0:28
  dollars earlier this month, and Goldman puts average crude freight near twenty
• 0:32
  dollars a barrel, against three a year ago.
• 0:35
  Spot Brent over W T I is only about seven dollars thirty three.
• 0:39
  My read is that freight is well above that spread, which is why a fat Brent premium
• 0:44
  isn't pulling Rockies barrels toward the water.
• 0:47
  OPEC plus quotas are unchanged ahead of the November first ministerial.
• 0:52
  J O D I data, via OilPrice, has Saudi output at six point two four million barrels
• 0:57
  per day in August with exports at four point four five million.
• 1:02
  That means Riyadh is covering exports by drawing stocks, not by producing more.
• 1:08
  Consumer side, the I E A and G7 stock release continues, and the U.S.
• 1:13
  S P R is at two hundred eighty two point seven million barrels,
• 1:17
  the lowest since nineteen eighty two.
• 1:20
  Indian Oil also plans to cut Middle East term purchases for fiscal twenty seven,
• 1:24
  twenty eight.
• 1:25
  North America.
• 1:27
  November W C S at Hardisty is flat at twenty five fifty under W T I.
• 1:32
  Canadian export lines run near ninety three percent utilization.
• 1:36
  Trans Mountain is stuck near sixty percent, roughly four hundred twenty five
• 1:40
  thousand barrels per day, because Pacific freight keeps the Asia arbitrage shut.
• 1:46
  Enbridge's Express is full at two hundred eighty thousand barrels per day into
• 1:49
  Casper, feeding the Gernzee corridor.
• 1:52
  Mexico, nothing material.
• 1:54
  United States.
• 1:56
  Yesterday I told you to wait for the official print.
• 1:59
  It's out, and it confirms the structural warning.
• 2:02
  Commercial crude fell three point oh six one million barrels to four hundred twelve
• 2:07
  point five one seven million, three percent under the five year average.
• 2:12
  The desk notes put consensus at a draw of about one point three million,
• 2:16
  so that's a bigger draw than expected.
• 2:18
  But look where it came from.
• 2:20
  The Gulf Coast, PADD three, drew five point oh four one million barrels,
• 2:25
  more than the entire national draw, on lingering storm shut ins.
• 2:30
  Everyone inland built.
• 2:32
  PADD four, the Rockies, built seven hundred eighty six thousand barrels to twenty
• 2:37
  three point four nine six million.
• 2:39
  The Midwest built six hundred thirty five thousand.
• 2:42
  Cushing added one million barrels to twenty seven point six million,
• 2:47
  its fourth straight build.
• 2:49
  The coast is short and the interior is long, and the pipes between them aren't
• 2:53
  closing that gap.
• 2:55
  Production fell four hundred ten thousand barrels per day to thirteen point two
• 2:59
  seven million, most likely storm related.
• 3:02
  Refinery utilization slipped a tenth to ninety three point four percent.
• 3:07
  Gasoline fell three million barrels, distillate built one point seven million.
• 3:12
  W T I spot closed Tuesday at a hundred seven eighty nine, down one point nine
• 3:17
  percent, while futures are near ninety nine fifty to a hundred.
• 3:20
  That spot to futures gap is wide, so check which one you're quoting on the call.
• 3:25
  Corporate.
• 3:26
  Devon is selling its Eagle Ford assets to Crescent Energy for four point two two
• 3:31
  billion dollars cash, sharpening its focus on the Delaware and the Williston.
• 3:36
  Enbridge's two point five five billion dollar Tallgrass crude purchase,
• 3:40
  including a seventy five percent stake in Pony Express, and Hess Midstream's two
• 3:45
  hundred million dollar deal for Chevron's DJ Basin gathering and twenty percent of
• 3:49
  Saddlehorn are both still under regulatory review.
• 3:53
  Baker Hughes has the national rig count at six hundred three.
• 3:57
  Uinta Basin.
• 3:58
  Yellow wax wellhead postings hold ten to fourteen dollars under Cushing.
• 4:02
  Delivered Gulf Coast wax is indicated around W T I plus three twenty.
• 4:07
  Take insulated railcar freight at sixteen to eighteen dollars and the basin netback
• 4:12
  works out to eighty five fifteen to eighty seven fifteen, twelve eighty to fourteen
• 4:16
  eighty under Cushing.
• 4:18
  That's no better than the local posting and mostly worse.
• 4:21
  Salt Lake's five refiners are running about eighty thousand barrels per day of local
• 4:25
  wax at max.
• 4:26
  Rail loadings hold near one hundred fifteen thousand barrels per day,
• 4:30
  all on minimum volume commitments.
• 4:32
  Spot transloading is idle.
• 4:34
  Wildcat's Helper terminal keeps expanding toward one hundred thousand.
• 4:38
  Energy Transfer's Price River project is still in Utah permitting,
• 4:41
  targeted for late fourth quarter.
• 4:44
  The Uinta Basin Railway has laid zero track, stalled in S T B remand and Forest
• 4:48
  Service review.
• 4:50
  Operators are on steady schedules.
• 4:52
  Bakken.
• 4:53
  The latest Director's Cut has production around one point one five three million
• 4:57
  barrels per day, thirty three rigs, ninety six percent gas capture,
• 5:02
  and roughly one hundred thirty M M C F per day flared.
• 5:06
  Dakota Access is full at seven hundred fifty thousand barrels per day,
• 5:10
  with walk up tariffs at nine seventy five against committed rates of five sixteen to
• 5:15
  seven fifty six.
• 5:17
  Kinder Morgan's Double H conversion to N G L service keeps sixty five to eighty
• 5:22
  eight thousand barrels per day of crude egress off the board,
• 5:25
  so DAPL, Enbridge, and Bridger stay under pressure.
• 5:29
  Rail to the Pacific Northwest and East Coast runs ten to fifteen dollars per barrel
• 5:34
  all in, before tank car leases and rack fees.
• 5:37
  Spot crude by rail doesn't pencil.
• 5:39
  Throughput is pipeline overage contracts and utility commitments.
• 5:44
  Chevron trims its Williston program from three rigs to two by December to focus on
• 5:49
  three mile laterals, and Hess Midstream sees twenty twenty seven gathering
• 5:53
  throughput down five percent before leveling off.
• 5:56
  Powder River.
• 5:58
  Anschutz, Continental, Devon, EOG, and Peak are steady.
• 6:03
  Gathering has room.
• 6:04
  The bottleneck is receipt points into Gernzee.
• 6:07
  Plains continues integrating Silver Creek.
• 6:10
  Now Gernzee, the section that matters.
• 6:13
  A caveat first.
• 6:14
  These are desk indications, not published settlements, so treat them as soft.
• 6:20
  Gernzee Sweet is indicated about eighty five cents over Cushing,
• 6:24
  near a hundred dollars eighty outright, unchanged on the day.
• 6:28
  Clearbrook is a dollar fifty to two ten under Gernzee, which is sixty five cents to
• 6:34
  a dollar twenty five under Cushing.
• 6:36
  Inflows are heavy.
• 6:38
  Express brings two hundred eighty thousand barrels per day of Canadian heavy into
• 6:42
  Casper and Gernzee, while Bridger and Belle Fourche deliver over three hundred
• 6:46
  thousand of Bakken crude south into Gernzee tankage.
• 6:50
  Outflows are the problem.
• 6:51
  Pony Express is moving roughly two hundred thirty thousand barrels per day against
• 6:55
  four hundred thirty thousand nameplate on allocation constraints.
• 6:59
  Platte, at one hundred forty five thousand eastbound to Wood River and Patoka,
• 7:03
  is heavily prorated.
• 7:05
  Saddlehorn and Grand Mesa are full with DJ barrels headed to Cushing.
• 7:09
  Put that against yesterday's print.
• 7:11
  The Gulf Coast needs crude, yet Gernzee's southbound exits can't deliver it.
• 7:17
  With the Rockies building and Cushing building, uncommitted barrels are blocked from
• 7:21
  Gulf export pricing.
• 7:23
  They either go north to Clearbrook at a discount or sit in tankage.
• 7:27
  That's why Gernzee holds a premium while the exits are choked.
• 7:31
  It's the pipe, not the price.
• 7:33
  Three things for your morning.
• 7:35
  Watch shell capacity, and don't take spot receipts without a confirmed downstream
• 7:40
  nomination or a local buyer.
• 7:42
  Watch the manifold, because heavy Canadian streams off Express can contaminate light
• 7:47
  sweet batches on sulfur and gravity.
• 7:50
  And audit nominations, and bill deficiency fees on unused minimum volume capacity.
• 7:56
  That's the brief.
• 7:58
  Back tomorrow.