Executive Summary: Rigs: The total rig count decreased by 2 for the September 22 week, down to 565 from 567. Flows: There are some minor puts and takes in several regions based on pipeline maintenance but all eyes are on the Permian. Infrastructure: First anecdotally, and now through data published by Dorian LPG, there is evidence of spot LPG dock loading fees greater than $0.20/gal. Purity Product Spotlight: Ethane production in the Northeast hit a record level in 2Q24 of 394 Mb/d.
Rigs: The total rig count decreased by 2 for the September 22 week, down to 565 from 567. Liquids-driven basins declined by 1 rig W-o-W.
- Anadarko (-2): Devon Energy and Mewbourne Oil (-1) each.
- Uinta (+1): Koda Resources (+1)
Flows: There are some minor puts and takes in several regions based on pipeline maintenance but all eyes are on the Permian. Matterhorn deliveries to Transco and TETCO in Katy are holding at ~550 MMcf/d. Matterhorn could be flowing gas into an EPD intrastate system in Wharton County. Flows are up on a Gulf South interconnect with EPD at Gulf South - Coastal Bend.
*W-o-W change is for the two most recent weeks.
Infrastructure: First anecdotally, and now through data published by Dorian LPG, there is evidence of spot LPG dock loading fees greater than $0.20/gal. As a point of reference, EDA estimates the average loading fee for companies that own and operate LPG docks is about $0.07/gal over the past 12 months (including term contracted rates).
The spike in dock loading fees seems preemptive considering estimated utilization at the dock for July ’24 was 73% (partially caused by disruptions from Hurricane Beryl). The spike in spot loading rates could be a baseline for spot rates heading into winter. PADD 3 LPG dock utilization from Oct’24 to Apr’25 is expected to average 94%, according to East Daley’s Propane Supply & Demand Report. There is upside to dock owners such as Enterprise Products (EPD), Energy Transfer (ET) and Targa Resources (TRGP).
Purity Product Spotlight: Ethane production in the Northeast hit a record level in 2Q24 of 394 Mb/d. There was robust throughput on Mariner West and record demand on the Utopia ethane pipelines feeding Sarnia’s petrochemical facilities. The key driver for an increase in ethane supply, however, was record demand at the Shell Monaco cracker. As East Daley has written about in the past, the Shell Polymers Monaca plant in Beaver County, PA is the only petrochemical complex located within the Appalachian Basin. The Monaca plant entered service in 3Q22, but Shell has struggled to keep the facility running and experienced significant downtime in 2023.
In follow-up to the status of Shell’s federal Title V operating permit for air emissions, the Pennsylvania Department of Environmental Protection (DEP) “conducted an administrative review and determined the application to be administratively complete on July 2, 2024.” What this means is there is another ~20 Mb/d of ethane demand that has yet to surface. Earlier this year, Shell’s CEO Wael Sawan revealed two of the three polyethylene trains are operating at capacity, and said the Monaca plant will not be fully online until 2025 or ’26.
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