Last updateWed, 18 Jul 2018 2pm


Enbridge Oil Sands Pipeline Moving Forward

Enbridge’s Line 3 Replacement Project has been approved by the Minnesota Public Utilities Commission. This decision is considered a win for the oil sands industry and clears the way for the project to move ahead as planned.

Based on the decision, the cost estimate of the Line 3 Replacement project remains materially unchanged at $5.3 billion in Canada and $2.9 billion in the U.S. with approximately $3.6 billion of capital spent to date on the overall project. Enbridge continues to anticipate an in-service date in the second half of 2019. 

Texas Energy Sector Expands in Second Quarter

Energy sector activity expanded strongly in 2nd quarter 2018, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—rose from 40.7 in the first quarter to 44.5 in the second—the highest level since the survey began in 2016. The increase was driven by both exploration and production (E&P) and oilfield services firms.

Oil and gas production increased for the seventh quarter in a row, according to executives at E&P firms. The oil production index advanced from 34.3 in the first quarter to 39.0 in the second. Furthermore, the natural gas production index moved up from 25.0 to 33.4. Both indexes are at their highest levels since the survey began and suggest that oil and gas production rose at an accelerated rate relative to last quarter. 

Gas Industry Has Bright Future Over Next Five Years

Strong demand growth from China, greater industrial demand, and rising supplies from the United States, will transform global natural gas markets over the next five years according to the International Energy Agency’s latest market forecast.

Major changes are also evident on the supply side, with the U.S. leading gas production growth worldwide to 2023, thanks to the on-going U.S. shale revolution. Most new U.S. supplies will be geared to export markets as LNG or through pipelines. The development of destination-free and gas-indexed US LNG exports will provide additional flexibility to the expanding global water-borne traded market. 

Chemical Activity Continues Upward Climb

The Chemical Activity Barometer (CAB) from the American Chemistry Council (ACC), rose 0.1% on a three-month moving average (3MMA) basis in June to 122.27. This marked the barometer’s tenth consecutive gain, following revisions. The barometer is up 4.1% on a 3MMA compared to a year earlier. The unadjusted CAB also increased, notching a 0.3% gain, pushing it to a 4.3% gain year-over-year. The March, April, and May readings were all adjusted upward. June readings indicate a continued expansion of U.S. commercial and industrial activity into early 2019. All four broad categories gained. 

Kinder Morgan Planning $2 Billion Gas Pipeline

Kinder Morgan, EagleClaw Midstream and Apache Corp. have signed a letter of intent for the development of the proposed Permian Highway Pipeline Project (PHP Project), which will provide an outlet for increased natural gas production from the Permian Basin to growing market areas along the Texas Gulf Coast. The approximately $2 billion PHP Project is designed to transport up to 2.0 billion cubic feet per day (Bcf/d) of natural gas through approximately 430 miles of 42-inch pipeline from the Waha, TX, area to the U.S. Gulf Coast and Mexico markets. Given the level of producer inquiry, Kinder Morgan is also evaluating the economic and hydraulic feasibility of a 48-inch pipeline with increased transportation capacity. The PHP Project is expected to be in service in late 2020, subject to the execution of definitive agreements and the receipt of construction permits. 



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