August 9, 2010
Anyone counting on stricter air emissions rules to drive a gas-fired power generation buildout and put a higher floor under natural gas prices is going to be disappointed -- or at least is going to have to wait a while, according to Bentek Energy LLC. In its latest Market Alert, Bentek continues to beat the drum for relatively low gas prices on the strength of growing supply from gas shale plays and an expectation that gas-fired generators are not waiting in the wings to save the day for the bullish case on gas prices. Bentek said all the coal-to-gas switching among power generators in 2009 was not a harbinger but a "head fake," and it won't be coming back. "The higher gas burn in 2009 was interpreted by some as evidence of a possible ongoing upswing in the demand curve to help offset the growth in shale gas production," said Rusty Braziel, Bentek Energy managing director. "But the dynamics of coal-to-gas switching in 2010 have turned out much different. And when we look forward to the 2011-2015 timeframe, the most likely scenario is for moderate levels of coal-to-gas switching and increases in gas-fired power generation demand." Fuel-switching to gas last year among power generators, according to Bentek, was due to: • Gas prices that were mostly below $4/MMBtu, leading to tighter coal-gas spreads; • Moderate weather and relatively weak overall demand, leaving generating capacity available for switching; and • Normal stockpiles of coal. This year gas prices have been higher, hot weather has led to higher demand from power generation -- limiting capacity available for switching -- and high coal stockpiles have forced utilities to burn more coal," Bentek said in its alert.
August 6, 2010
For more information, contact: Media: Gretchen Weis, 713-385-8912 Company information: John Lange, 303-988-1320
As natural gas producers continue to turn their efforts to high-Btu gas shale plays, it remains to be seen whether the resulting production growth of natural gas liquids (NGL) can be accommodated by existing and planned processing and fractionation capacity, not to mention demand from the petrochemical industry. Rusty Braziel, a managing director at Bentek Energy LLC, told attendees at his firm's Benposium in Houston that NGL production will grow to test the upper limits of U.S. fractionation capacity as well as demand from the petrochemical industry, which accounts for the lion's share of NGL demand. The industry could see ethane rejection -- when the price of the commodity drops below its equivalent Btu value in the gas stream, he noted. The producer interest in liquids-rich plays is obvious in this era of low gas prices. "There is absolutely no doubt...when you can add 300 to 500 to 600 bbl of NGLs or oil to an Mcf of gas, that's like selling that gas for $8/Mcf at the wellhead," said Crestwood Midstream Partners CEO Robert Phillips. If Braziel's outlook sounds pessimistic, Benposium audience members were even more skeptical of the ability of infrastructure and markets to absorb the NGL yield from producer enthusiasm for liquids-rich plays. Responding to an interactive poll, 63% of the audience said the market will need more fractionation capacity than what currently exists combined with the announced expansions. Assuming the announced expansions are completed, 20% of the audience said it thought that would take care of demand. Asked whether there will be enough olefin cracker capacity to absorb increasing ethane production, 49% said, "No. Ethane will be in surplus supply and producers will see frequent ethane rejection." However, 33% said there would be enough capacity assuming petrochemical interests "invest in significant expansions." Only 7% said enough capacity exists today. Further, 53% of the audience said the gas producer shift to higher-Btu plays "will become so prevalent as to depress prices in the NGL markets." About 25% predicted that producer interest in higher-Btu plays will accelerate "as current plays prove out." Only 8% said they expected the shift to liquids-rich plays to diminish as natural gas prices increase. The flurry of activity around NGLs -- several infrastructure projects have been announced for the Marcellus and Eagle Ford shales, for instance (see Daily GPI, June 3; May 28; May 10; April 28) -- is nothing new, according to Phillips. "Those of us who have been in the NGL business have been observing the growth of the NGL infrastructure and the NGL supply and the NGL demand for years now," he told conference attendees. "We don't have a problem today. Three or four years ago we had a real problem. When there was only 700,000 b/d of ethane demand from the petchem market and we were building 20-25 Bcf/d of new processing plants in the Barnett [Shale], in the Rockies, in Canada, in South Texas, and we were clearly building excess supply against a limited demand from the petrochemical sector. We had a problem then." Despite the perception of an oversupply threat held by some, today's NGL market is "reasonably in balance," Phillips said. He said markets are consuming about 820,000 b/d of ethane currently, an all-time high. He attributed this to economic recovery in the plastics industry as well as significant infrastructure spending in the petrochemical industry to accommodate ethane "to get ready for this onslaught of cheap ethane prices because natural gas prices are low. That's the way the market is supposed to work." Phillips said he knows of projects being considered that could take ethane demand above 900,000 b/d. "We don't know that that's doable or sustainable. "On the propane side we're actually exporting anywhere from 125,000 to 150,000 b/d of propane and mixed butanes when the market demand is there in Asia and Europe. And it frankly has been for most of the last couple of years. So the ethane and propane markets are very much in balance." Phillips said it is unlikely that the limits of fractionation capacity will be tested as capacity expansions are in the works. "Everybody that has a frac[tionator] out there is expanding it to the extent that it's engineering-possible to do that. It's not an economic issue right now because fractionators are getting paid two and a half to three times more than they were for fractionating product just a couple years ago. We've gone from one and a half to two cents plus fuel all the way up to five to seven cents per gallon plus fuel. "There's a significant amount of profit potential there. The market will build the fractionation capacity to handle the new NGL supply that comes on market," he added. For more information about this article go to: http://intelligencepress.com/
16 June, 2010 US interstate pipelines added nearly 6 Bcf/d (170mn m³/d) in west-to-east capacity since January 2009, forever altering long-standing basis differentials across the imaginary line referred to as the ‘Great Divide', according to Jim Simpson, vice president at Bentek Energy. The imaginary line, running from the Gulf of Mexico to the Great Lakes, follows long-haul interstate gas pipeline routes which have delivered supplies to major consuming markets in the east for decades. With no delivery options, supplies in the west were considered ‘captive'. But unconventional shale development has re-arranged delivery patterns on North America's traditional natural gas landscape, Simpson said. The current chase for higher value Btus in liquids-rich plays, primarily in the west, promises to shake up delivery patterns too. And depending on the rate and location of new gas production and prices over the next three years, displacement backhauls are likely to continue, Simpson said at a Bentek conference in Houston last week. Currently, supply is increasing east of the line and declining in the west, further tightening west-east basis spreads that averaged more than 40¢/mmBtu in 1999. Below-average breakeven recovery costs are now lower in east region shales compared to plays in the west. Breakeven costs in the Marcellus, Haynesville, and Fayetteville, all east of the divide, are below a 2009 average of about $3.92/mmBtu. At that price, midcontinent and western supply basins get priced-out, Simpson said. Haynesville and Marcellus shale production has impacted supply routes in the Gulf States and southeast and Marcellus supply continues to pressure southeast Canadian supply — creating backhauls by displacement. Haynesville production is up about 1 Bcf/d since 1 January 2009 and Marcellus production is just starting to ramp up, with an increase of nearly 0.6 Bcf/d increase in that period. Changing dynamics will continue to “teeter” natural gas delivery across the divide and future asset development will be regionally focused, Simpson said. Oil-to-gas pricing differentials now driving increased liquids-rich production in the west and coal-to-gas switching in the east will be critical in determining gas displacement patterns in the future. For more information about this article go to: http://www.argusmedia.com/
June 16, 2010 When word came that President Barack Obama was going to use the oil spill in the Gulf to push the clean energy agenda on which he came to office, those who support such a future grew excited. Anyone who believes that carbon dioxide emissions are not only polluting but adding to the problem of global warming began contemplating the action the president might take. Forcing government vehicle fleets onto hybrid vehicles or natural gas, ensuring all new government structures are energy efficient, and so on, were all floated as potential plans. But there were warnings that none of this might come to pass. Amy Myers Jaffe, energy expert at the James A Baker III Institute for Public Policy, said former President George W Bush missed a similar opportunity to move toward alternate sources of energy and promote energy efficiencies following the September 11 attacks, when he very easily could have done so under the guise of promoting energy security. And yet he took no action. Jaffe said in an interview that the spill in the Gulf presented President Obama with the same opportunity to forcefully move the country in that direction in a matter of three short years, not the decades lawmakers have been talking about: If President Obama misses the same window, he will go down in historical ignominy the same way. The spill should be the impetus (to move toward clean energy). It has to be aggressive. All we talk about is what we are going to do in 50 years. But after listening to President Obama come up with few details on Tuesday night, it seems he has missed his opportunity. Here are a few excerpts from the speech (full text here): The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now…. When I was a candidate for this office, I laid out a set of principles that would move our country towards energy independence. Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill — a bill that finally makes clean energy the profitable kind of energy for America’s businesses. Now, there are costs associated with this transition. And there are some who believe that we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy — because the long-term costs to our economy, our national security, and our environment are far greater. He did refer to the House climate bill, but not to ‘climate change’ itself, let alone pricing carbon. As demanding as President Obama got was insisting he would not allow the status quo to continue: So I’m happy to look at other ideas and approaches from either party — as long they seriously tackle our addiction to fossil fuels. Some have suggested raising efficiency standards in our buildings like we did in our cars and trucks. Some believe we should set standards to ensure that more of our electricity comes from wind and solar power. Others wonder why the energy industry only spends a fraction of what the high-tech industry does on research and development — and want to rapidly boost our investments in such research and development. All of these approaches have merit, and deserve a fair hearing in the months ahead. But the one approach I will not accept is inaction. Tough words but they would have had more impact if backed up by demands for a specific course of action. Those who follow the oil industry believe it will be decades before renewables can have any meaningful impact. They urge aggressive energy efficiency measures as the fastest way to reduce carbon emissions. And also the use of natural gas wherever possible. The US has abundant gas resources, thanks to new technology enabling it to be extracted from shale rock. And the country already has the infrastructure across the country to move and use gas. Natural gas is about 30 per cent less carbon intensive than oil and 50 per cent less than coal. But E. Russell (Rusty) Braziel, Managing Director of BENTEK Energy, which provides natural gas market analysis, said in an interview it is still a fossil fuel: All fossil fuels tend to get tarred with the same brush. Nonetheless, Credit Suisse said in a research note the oil spill should lead to lawmakers giving natural gas a chance: The combination of the oil spill and the Masey coal accident should further shine a light on gas. The administration HAS to think more about incentivizing use of clean, available, domestic natural gas, given the identification of massive shale resources in recent years. This could have been something the president advocated in his speech to the nation. But it appears he is going to stand to the side waiting for others to bring ideas to him. Like I said, a missed opportunity. For more information about this article at FT, go to: http://blogs.ft.com/energy-source/2010/06/16/obamas-big-oil-spill-speech-an-opportunity-only-half-seized/ .
June 9, 2010 Bentek Energy managing director Rusty Braziel sees a great divide developing in U.S. natural gas. Bentek are one of the leaders in tracking and analyzing American gas pipeline flows. Where gas is flowing, who's using it, and at what price. Speaking at the LDC Gas Forum Northeast in Boston this week, Braziel told industry professionals that America may have made some mistakes in designing its gas pipeline network over the past several years. He notes that the boom in shale gas has created a price disparity between east and west. Shale gas plays are located mostly in the east, and carry lower breakeven prices. Between $3.10 and $4.00 per mcf, according to Bentek estimates. By contrast, conventional gas plays are more concentrated in the west. And come with higher price tags, beginning in the $4.50 per mcf range. Cheaper gas in the east, expensive in the west. And yet, over the past years pipeline companies have been busy building new pipe like the Rockies Express to take gas from western producing areas to markets in the northeast. As Braziel summed up, "About $15 billion has been spent on taking gas from where it's more expensive to where it is cheap. It was a mistake." That's a pricey mistake. And one that's not easy to fix. Several pipeline companies are now looking at reversing directions on pipelines initially intended to run west-to-east. This "backhaul shipping" may become more prominent as shale gas development continues in the east. Yet another sign of the severe dislocation shale gas has caused in U.S. (and global) gas markets. Dislocations create mis-pricing, and mis-pricing creates investment opportunities. Here's to the beast in the east, For more information about this article, go to: http://oilprice.com/Energy/Natural-Gas/Great-Divide-Developing-in-U.S.-Natural-Gas.html
June 11, 2010
Discussions covering the effects of LNG imports on US supply were hard to find at BENTEK's BENPOSIUM energy conference in Houston yesterday, illustrating a turnaround in thinking from last year. It's like 'crickets' one participant put it - indicating LNG was a sleeping non-event this year. Last year, opening remarks by BENTEK president Porter Bennett warned that LNG could glut the US market in 2010 as a result of increased liquefaction capacity, shrinking Atlantic transportation costs, and LNG by-product revenues. LNG is not a concern, according to Tudor, Pickering and Holt's Dave Purcell. Robert Phillips, president of Crestwood Midstream partners put it this way, "The US is going to be swimming in gas for a while."
March 22, 2010
February 1, 2010 New website provides energy market alerts, news headlines, natural gas data and access to BENTEK product information. EVERGREEN, CO – BENTEK Energy has introduced a new source of information for the energy industry that incorporates daily abstracts from each of the company’s highly respected market reports, key indices of market dynamics and detailed descriptions of BENTEK product information. To celebrate the complete overhaul of the company’s website at www.bentekenergy.com, BENTEK is providing a no-cost pipeline map download and a free trial to its innovative new report, the Natgas Price Matrix. “Our new public website is an information resource for the energy industry, where anyone can tap into the breaking headlines from our reports and data resources,” noted E. Russell (Rusty) Braziel, BENTEK managing director. "Visitors can check out important market developments on the site or subscribe to an RSS feed. And we tweet! You can now follow BENTEK alerts on Twitter." The new website provides extensive information resources and BENTEK product summaries – all without charge. The website includes: • Major market developments and headlines, summarized in the “Top Stories” section of the site, such as BENTEK Market Alerts, news stories, report headlines, and important industry notices. • New U.S. interstate natural gas pipeline receipt or delivery points, plotted each day on BENTEK’s GEOFlo™ mapping system. • BENTEK’s market indices and historical natural gas storage statistics. • A user-friendly “Product Finder” tool that gives visitors the ability to explore BENTEK products with a quick scan of features, capabilities and formats. • Invitations to receive a free map of U.S. natural gas pipelines and a free trial to BENTEK’s new Natgas Price Matrix report. For more information on the Price Matrix, go to the ‘Free Giveaway’ section of bentekenergy.com. “Producers, investors, utilities, end users and a wide range of other energy industry players can use this website to track market developments, and to quickly determine which of our data resources, reports and analytics applications best meet their specific needs,” says Braziel. “We will be building many more data resources into bentekenergy.com in the months ahead, so stay tuned!” BENTEK clients can access their subscription services on the company’s BENport™ platform using a valid ID and password via the new website. The new web site is also the source for information about BENPOSIUM™, BENTEK’s annual energy conference, which will be held in Houston, TX, June 7-10, 2010.
By Jason Womak
The development of several shale gas plays in the eastern US could force a fundamental shift in how gas flows through pipelines across North America, an industry analyst said Friday. Gas flows in the US are closely watched by the global LNG industry because they play a major role in determining where the highest-priced points would be for delivering cargoes to the US. “The economical motivation to move gas on all of these pipelines from west to east that have been built over all these years is becoming less of a motivation than it was when we first looked at this two years ago, BENTEK Energy Managing Director and Vice President Rusty Braziel said at the Platts Pipeline Development and Expansion Conference in Houston. “Gas in the East is cheap and gas in the West is expensive,” Braziel said. “Gas in the East is going to be more profitable to produce and gas in the West is going to be less profitable to produce. It’s been a long time since this industry has seen that sort of dynamic.” For a complete copy of this report from Platt’s LNG Daily, please click on the following link: http://www.platts.com/
The answer: A production cut of about 2 billion cubic feet per day, says Rusty Braziel of Bentek Energy. But don't hold your breath on that happening, or demand ratcheting up from the other direction.
August 18, 2009
HOUSTON - Massive natural-gas inventories will keep downward pressure on prices in the coming months, and not even a major hurricane in the Gulf of Mexico would likely change that, according to two new forecasts.
In a new report for its clients, Bentek Energy says natural-gas in storage is likely to reach a record near 4 trillion cubic feet by the end of November.
As of Aug. 7, U.S. storage amounted to 3.152 trillion cubic feet, 23.1 percent above year-ago levels and 19.6 percent higher than the five-year average, the Energy Information Administration reported Thursday.
The main culprit is the recession, which has hammered energy demand and contributed to huge inventories of natural gas, oil and gasoline.
Bentek, which tracks natural gas production and shipments, said weather is likely to have the biggest impact on gas markets.
"A sequence of severe weather events - possibly including extended late-summer heat, major Gulf hurricanes and a cold winter - would temporarily reverse the current oversupply trend," Bentek says in its report. "However, over the longer term, production efficiency gains ensure quicker supply responses to rising prices."
Bentek said it has seen an increase in industrial demand for natural gas since July, "but even a fast recovery would have a relatively minor impact on prices."
The suburban Denver-based company says large supplies of natural gas should keep prices below $3.50 through October.
For a complete copy of this report from the Associated Press, please click on the following link: http://www.ap.org
August 3, 2009
Daily cash prices in CenterPoint Energy Gas Transmission's East zone have surged this summer relative to the other Midcontinent points and to Henry Hub as new pipeline capacity alters traditional flows out of the region.
CenterPoint East has historically traded at a large discount to Natural Gas Pipeline Co. of America's Texok zone and the Carthage Hub. But since June 1, that spread has rapidly closed.
"In June, The Midcontinent Express started flowing a little bit more gas, and Gulf Crossing came back from maintenance on July 1," BENTEK analyst Jack Weixel explained. Those developments allowed more gas out of southern Oklahoma and across Texas into the Perryville hub and Delhi, Louisiana. Gas is flowing across Natural's zone, connecting CenterPoint East with the producing region, he said.
Weixel suggested that on top of the new takeaway capacity in the region, the opening of the East leg of the Rockies Express pipeline also may have contributed to the upswing in prices as it began transporting gas to Ohio that had been delivered to Oklahoma off RES-West.
"Natural's Midcontinent zone collects gas in Oklahoma while CenterPoint East collects gas east of there. When REX came through it gave a relief valve to all of the load-serving pipes, increasing demand and allowing more export capacity there," Weixel explained.
For a complete copy of this report from Gas Daily, please click on the following link: http://www.platts.com
May 12, 2009
Completion this year of 3 Bcf/d of pipeline takeaway capacity within the 13-state Midcontinent natural gas market will give producers new marketing opportunities and improve regional pricing differentials, but the plunge in onshore gas drilling activity may have consequences, Bentek Energy said in a new report.
In its report titled "Mayhem in the Midcon," Bentek cited several factors converging this year that will result in "major shifts" within the Midcontinent. As new capacity is placed into service, the Rockies Express (REX) East pipeline expansion is scheduled for completion, bridging markets in Chicago, Michigan and Ohio with the supply areas of the Rockies, Midcontinent and the southeastern/Gulf Coast area.
Complicating the capacity markets, however, is the reduction in onshore gas drilling activity from a year ago, Bentek noted.
The result, said the Colorado-based consultant, is gas market mayhem.
"Midcontinent gas flow patterns have been in a state of flux over the past two years because of the REX West pipeline and the rapid growth of unconventional production across the region," said Bentek Managing Director Rusty Braziel. "As a result, the Midcontinent production zone basis dropped to an average of minus $1.73 in 2008, compared to only minus 88 cents in 2007.
"But new pipelines out of the region are changing things fast," he said. "Two major pipeline expansion projects, Midcontinent Express (MEP) and the Gulf Crossing project, recently began service and are providing Midcontinent producers with new outlets into the Southeast/Gulf region. In addition, Texas Gas has brought two laterals on-line to deliver more than 1 Bcf/d of Fayetteville Shale gas to pipelines serving markets in the Midcontinent, Northeast and Southeast."
For a complete copy of this story from Natural Gas Intelligence, please click on the following link: http://intelligencepress.com/
April 24, 2009
Senior level industry executives to participate in BENPOSIUM, the premiere natural gas industry conference presented by BENTEK Energy, June 2 - 4, 2009, Houston, Texas
HOUSTON, TX (April 24, 2009) - BENTEK Energy announced today the panel participants for its natural gas industry conference, BENPOSIUM 2009, June 2-4, 2009, in Houston, Texas. Industry panelists represent majors, independent producers, pipelines, banks, private equity firms, traders, government officials, midstream companies, analysts and associations to speak on a variety of current issues impacting the natural gas industry. "BENTEK is very pleased to be joined by 18 of the most knowledgeable, pragmatic executives in the industry," said BENTEK Chief Executive Officer Porter Bennett. "BENPOSIUM will provide in-depth analysis to explore current national and regional market dynamics, as well as expected twists and turns in the coming months and years ahead as infrastructure projects are completed and continue to reshape the industry's supply/demand balance. We're in a very complex market environment, with unprecedented challenges. BENTEK industry analysts will provide their most rigorous assessment of the current environment and industry outlook. We have selected a group of industry panelists to challenge our assumptions and contribute their insights on the issues. We expect compelling industry dialogue and insights at this industry forum." The BENPOSIUM conference will explore the most important developments in North American natural gas markets, including analysis of natural gas production forecasts, impacts of new pipeline and storage infrastructure, LNG market trends, the outlook for natural gas demand, and more. BENPOSIUM panelists will participate on the final day of the conference -- the Energy Markets Forum -- where BENTEK's senior executives and top analysts will present key findings from BENTEK's in-depth industry research followed by round-table discussions to debate conclusions and shed light on long-term market and pricing consequences. Panel One, titled "Shifting Basis - New Pipelines, Flow Displacement, Regional Competition" will be chaired by Jim Simpson, BENTEK Vice President and Managing Director and will cover the impact of new pipeline capacity on interregional flows and bottlenecks, the limits to production growth, and why basis will trade at variable transportation costs across much of the U.S. Panelists will include:
Following Panel One, Dr. Vincent Kaminski, Professor, Jesse H. Jones Graduate School of Management, Rice University will present the luncheon keynote "New Developments in Natural Gas Market Forecasting."
Panel Two will be cha