A drilled but uncompleted well (DUC) is a new well that has been drilled but not completed. Completion costs are higher than drilling costs and operators routinely drill but do not complete wells for various reasons. Operators are drilling new wells to hold leases and meet the contracts with the land owners. In fact, the […]
LNG shipping rates: What fuels the spike?
The U.S. is rapidly emerging as a major exporter of LNG, and especially of cargoes sold on a spot basis to various countries around the world. In light of this, LNG shipping rates are important to the sector’s competitiveness. Daily LNG charter rates are increasing surprisingly and quickly after being stable and low for two […]
Much ado about gas: Qatar’s exit from OPEC
Qatar recently announced plans to leave OPEC starting January 2019, ending its nearly six-decade long membership. The decision comes amid tensions with neighboring countries as a trade and travel embargo was imposed last June by a group of Middle Eastern countries led by Saudi Arabia and including Bahrain, Egypt, and United Arab Emirates. Political considerations […]
U.S. refiners double down on capital spending
The recent profitability of U.S. oil refineries has been buoyed by the high demand of petroleum products, distillates in particular, both at home and abroad, prospects of IMO 2020, Tier 3 gasoline mandates and most importantly significant price discounts on rapidly growing volumes of light, sweet U.S. crude oil, and heavy Canadian crude. These drivers […]
Bakken Flaring: Opportunity or Obstacle?
Flaring is the controlled burning of natural gas that cannot be processed or sold. When natural gas is vented, the pollutant that enters the atmosphere is methane. Although flaring is less environmentally damaging, it is still a waste of valuable energy resources. Because natural gas is valuable, companies would rather capture than flare it. Due […]
Iran sanctions: Will oil prices reach $100?
The U.S. has imposed sanctions on OPEC’s third-largest oil producer, Iran, which are expected to come into effect November 4, 2018. The oil market has already started seeing a shortfall in global supply even as overall global oil demand has been rising rapidly and, in fact, anticipated to top 100 million barrels per day (bpd) […]
CAFE Standards: Is big beautiful?
In 2012 the Obama Administration updated the Corporate Average Fuel Economy (CAFE) Standards which regulate the miles-per-gallon of light-duty vehicles e.g., vehicles weighing less than 10,000 lbs. CAFE standards aim to increase fuel economy to 54.5 mpg for light-duty vehicles by 2025 as illustrated in Figure 1. Each vehicle did not need to meet the target […]
Impact of Trade Tariffs on the U.S. Ethanol Industry
The U.S. has imposed trade tariffs on imports from China, Mexico, Canada, and the EU which is having a huge impact on trade of several commodities one of which is ethanol. In response to the U.S. sanctions, multiple countries have also levied tariffs on U.S. products. Apart from exports, U.S. produces ethanol for blending with […]
Assessing the shift of ethane from rejection to net exports in the U.S. market
Ethane is a unique market — it’s the only commodity that can either be sold as a fuel with natural gas or be sent to petrochemical plants as a feedstock. It is this chameleon-like attribute that contributes to ethane’s volatility both in terms of production volume and pricing. Limited demand and rising supply depressed ethane […]
Is the pipeline shortage in Permian short-lived?
Crude oil production in the U.S. has been increasing steadily with a major contribution from the Permian. This is expected to continue, and, in two years, ADI expects Permian production to be nearly 50% of total U.S. crude oil production as shown in Exhibit 1. However, a major challenge to this growth will be the […]
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