Running near-record levels for US gasoline
The four-week rolling average production of gasoline by U.S. refiners and blenders was well above its five-year range, and has run near-record levels in the first seven months of 2017, according to the U.S. EIA. U.S. gasoline inventories area also high despite increasing domestic and foreign demand.
Map of gas price increase by state in Hurricane Harvey aftermath. Image courtesy of U.S. EIA
US average retail gasoline prices affected by Hurricane Harvey
U.S. retail gasoline prices Sept 4, averaged $2.68 per gallon (gal), 28 cents/gal higher than prices the week prior. Supply disruptions and refinery outages caused by Hurricane Harvey continue to affect gasoline supply and prices, particularly along the U.S. East Coast and the Gulf Coast. Prices also increased in the Central Atlantic and New England regions, up 37 cents/gal and 36 cents/gal, respectively, compared to the prior week.
Hurricane Harvey caused substantial disruptions to crude oil and petroleum product supply chains and prices because of the high concentration of petroleum infrastructure in the Gulf Coast, Petroleum Administration for Defense District (PADD) 3. Just over half of all U.S. refinery capacity is located in PADD 3; Texas alone represented 31% of all U.S. refinery capacity as of January 2017. These refineries supply petroleum products to local markets, domestic markets on the East Coast (PADD 1) and in the Midwest (PADD 2), and international markets. As of March 2017, PADD 3 accounted for 49% of total U.S. working crude oil storage capacity and over 40% of working storage capacity for both motor gasoline and diesel fuel. Furthermore, PADD 3 represented 62% of total U.S. crude oil production in 2016, with an additional 18% coming from the Federal Offshore Gulf of Mexico.
A trend in changing crude quality mix affects refining
Increases in the production of light crude oils have pushed the growth in liquid fuels supply since March, and have more than offset declines in the production of medium and heavy crudes, according to the U.S. EIA. This trend was also seen in narrowing price differences between crude oil qualities and costs across simple and complex refineries.
Monthly report notes increase in natural gas production
The U.S. EIA’s natural gas monthly report released data for August through June 2017. The report provided analyses from year-to-year for dry, natural gas, natural gas consumption levels, and gas deliveries for commercial, electric power and industrial. There was a year-to-year increase in the production of dry, natural gas in June 2017 for the first time in 15 months. The monthly production of crude oil and natural gas are estimates based on data from the following sources: the EIA-914, monthly crude oil, lease condensate and natural gas production report.
Appalachian natural gas processing and natural gas production increase
New midstream infrastructure, such as pipelines and natural gas processing plants, developed because of the shale gas production increase since 2010. Natural gas processing capacity is estimated to have grown from 1.1 billion cubic feet per day (Bcf/d) to 10.0 Bcf/d for Kentucky, Ohio, Pennsylvania and West Virginia. Within those states, the growth in production of natural gas plant liquids (NGPLs) also increased from 106,000 barrels per day (b/d) to 621,000 b/d between January 2010 to May 2017. To become separate, marketable products, NGPLs require further processing, or fractionation. The Energy Information Administration (EIA) estimates fractionation capacity in the Appalachian region has increased from 41,000 b/d in 2010 to nearly 850,000 b/d in 2016, and it could reach 1.1 million b/d in 2019.
Mexico publishes first monthly natural gas price index after moving to competitive market
The Mexican government converted to a liberalized natural gas market on July 1, 2017, as part of its ongoing series of energy reforms that reduce government market controls. Mexico’s Energy Regulatory Commission released its first monthly price report in August, which showed that Mexico sold natural gas at an average price of U.S. $4.10 per million British thermal units in July 2017. Mexico removed the price cap that PEMEX could charge for natural gas in June 2016, allowing other economic agents to offer supply options and for natural gas to be sold in Mexico on a competitive-market basis.
Mexico’s Burgos Basin opens to private investment
Mexico’s national energy ministry (SENER) opened the onshore portion of the shale-rich Burgos Basin in northeast Mexico for natural gas exploration and development by private companies, the U.S. EIA reported. For the first time, non-state entities have been offered access to the Burgos Basin for development since 1938, when the national oil company Petróleos Mexicanos (PEMEX) was created. SENER hopes that private investment will help reverse the decline in natural gas production and offset decreasing PEMEX investment in the region.
EIA’s Drilling Productivity Report covers Anadarko Basin
The U.S. EIA expanded its Drilling Productivity Report to cover the Anadarko Region to provide more complete coverage of U.S. crude oil and natural gas production. The Anadarko Region encompasses most of the production from the Anadarko Basin in 24 counties in Oklahoma and five counties in Texas. In the past five years, the area has seen an increase of activity primarily from the Sooner Trend Anadarko Canadian and Kingfisher and the South Central Oklahoma Oil Province plays.
Danish, Turkish straits transit crude oil
The Strait of Hormuz and the Strait of Malacca transited a combined volume of more than 30 million barrels per day (b/d) of crude oil and petroleum liquids supply, but other chokepoints are significant to specific regions in Europe. For example, The Danish Straits and the Turkish Straits transited a combined volume of more than 5 million b/d in 2016.
Oman’s petroleum reached record levels in 2016
In 2016, Oman’s annual total oil production exceeded 1 million barrels per day (b/d), This occurrence set a record for Oman, ranking as the largest oil producer in the Middle East that is not a member of the Organization of the Petroleum Exporting Countries (OPEC). Increased adoption of enhanced oil recovery (EOR) techniques and recent discoveries of oil contributed to the Oman’s oil production.
Natural gas-fired electricity conversion efficiency grows
The annual average heat rates of natural gas-fired electricity generations decreased 7 percent from 2006 to 2015. During this time, heat rates of coal-fired electricity generators remained stable, increasing only 1 percent.
