Keystone pipeline and Marcellus/Utica

I'm confused. How does the Keystone Pipeline affect us here in the Marcellus/Utica region? Will it interfere with the drilling here?

Thanks!

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Permalink Reply by Mike Fulper on November 18, 2015 at 12:43pm

The Keystone pipeline will take OIL from Canada to Gulf coast and be SOLD.. TO THE CHINESE..  !!

WE are not buying Canadian oil..... why would we.... Out West they have more Oil then

anyone..

In OHIO We have more Oil then Saudi Arabia.....

Why should the USA let Canada sell there oil to the Chinese by using OUR LAND  ??

the ONLY reason for the Keystone Pipeline is the INDIANS IN CANADA... stopped the

Western Canadian pipeline.... so Canada is BUYING off our Politicians ....

NOTHING positive for the USA.... only temporary construction jobs....

Keystone pipeline is a JOKE....

Besides that. .the SIOUX said NO WAY... across their land....  

Remember the PHOTO OP PIC of Obama setting with the Indians out WEST this summer  ?

they told him    ...NO....

Warren Buffet has nothing to do with the stopping of the pipeline.... Sioux Indians do.. and

the fact we don't need Canadian oil going to CHINA.. across our land...

We have MORE OIL THEN ANYONE... why would we "buy" Canadian oil....we are not...

Screw the CHINESE...

Permalink Reply by Joseph-Ohio on November 18, 2015 at 2:55pm
Thought I read on here earlier that our heavy oil refineries wanted the Tar Sands Production to make fuel for us (much earlier).

It was because our heavy oil suppliers (some South American Country / Countries along with Mexico were going to be supplying less).

That's what I recall reading awhile ago anyway.

BTW, I also recall reading that the Chinese own 1/3 of the Permian Basin Oil Fields - how about all that stuff ? ?
Permalink Reply by Daryl Brown on November 17, 2015 at 11:27am
While I do not support the current administrations radical assault of free enterprise via the blockade of the Keystone P/L I also do not favor infrastructure projects that allow more Canadian produced hydrocarbons to enter the US market. This truly becomes a turf war. Canada has the means to solve their own problems via a westward bound pipeline to their own coastal export terminal (yet to be constructed of course) yet they face stiff opposition from the native tribes so traversing the US seemed to be the easiest most cost effective solution. Accuse me of American protectionism and I would plead guilty but the facts are we have enough hydrocarbons in place in the lower 48 to easily supply our own needs plus some and any encroachment of Canadian oil into the US simply robs market share from the American producer. I disagree with the reasoning behind the opposition to the Keystone but can't say I'm crying foul as a red-blooded American in the energy biz who also owns minerals. My two cents.......
Permalink Reply by Joseph-Ohio on November 17, 2015 at 1:07pm

Thanks for your input Daryl Brown.


Don't get me wrong, I'm all for more 'Market Share' for the USA too.


As I understand it the Keystone XL would provide some.


Right now we've only infrastructure improvements to count on for more 'Market Share' and Keystone XL looks to be one of them.

 

As I understand it we'd be sending diluent gleaned from our wells to Canada to dilute their Tar Sands Product.


Also, the Canadian Rockies stand in the path from the Tar Sands to Canada's West Coast ports.

 

The Canadian Rockies present a formidable (if not impossible) barrier.


Keystone XL still makes great sense for both the USA and our Canadian Allies.


Much more sense than anything (which is NOTHING) we stand to gain anywhere in the Middle East.


JMHOs

Permalink Reply by Daryl Brown on November 17, 2015 at 2:56pm
Appreciate your reply as well. Yes the path to the west is a difficult one to be sure but probably not impossible. As it stands a high mountain may be more easy to overcome than a puppet with power and a pen if you know what I mean. I digress.......... As for diluent this argument is partly true but as I understand it much of the diluent that is mixed in in Canada is then separated back out once it arrives at its destination and is then return trip back to Canada to repeat the process again so this probably isn't a major consumption of light oil/ngl's that some would hope for. I'm not anti-Canada but do not misunderstand, we are in competition for market share with their resources and our resources. So while they may be our allies.... in the energy space their shale resources are formidable foes to the Marcellus and Utica and will certainly fight for spot of lowest cost supply. Back to your point however about Keystone....... I personally don't see it as a positive in any way for Appalachian production. The pipe is expected to be full when it crosses the border from what I hear and there will be little to any on-ramp opportunities for Rockies/Bakken oil so I just can't see how this would be a major factor in debottle-necking the NE from a Crude/Condensate perspective. My opinion as well.....
Permalink Reply by Joseph-Ohio on November 17, 2015 at 4:34pm

Darryl,

On the origin of 'Diluent' sent to Canada to dilute their Tar Sands Product.

I don't know if it would be sent back to Canada from LA / TX or not. ? . ?

I've read elsewhere on these GMS pages that there's a market for it overseas; so I've asked myself why it wouldn't ship from our Gulf ports (if the law would permit it to be exported / sold to foreign flags as it may be considered the same as a 'Crude Petroleum') and perhaps prohibited to be exported by laws in place.

If that could happen I would think it would be more economical to send fresh 'Diluent' to Canada (shorter route from our Wells / 'Crackers' / 'Separators'); and beyond that I was thinking all of that ought to translate to more well development and JOBS up and down the eschelons of the O & G businesses / involved industries. 

But, I don't know if my ideas hold water with the O & G powers that are and to be.

Just my guesses on that score. 

Permalink Reply by Daryl Brown on November 17, 2015 at 4:44pm

The oversupply of light condensates has definitely upset the mix and the ability of the industry to blend the lights in with the heavies was exhausted some time ago thus we saw the steep discounts emerge for light condensate.  There were several splitter plants built and currently under construction to take the light condi and make it into Naptha that can easily be exported without running afoul of the export ban.  To my knowledge there has been no mass adoption of exporting light crude as condensate or NGL to get around the export ban although there are some who do this but the problem still exists.

As for the diluent issue, I do know that with regard to rail transport of Tar Sand oil into the US the diluent is in fact seperated out loaded back onto the rail cars and returned to Canada for reuse.  Partly because diluent supply was short in Canada and the return of empty rail cars made that an easy fix.  The refineries along the gulf want the heavy crude as they are setup to refine a heavy barrel.

Permalink Reply by Joseph-Ohio on November 17, 2015 at 4:49pm
As you've written then :

'The refineries along the gulf want the heavy crude as they are setup to refine a heavy barrel.'

So....enter the Canadian Tar Sands production - correct ?

Also.... It seems to me that a pipeline full of Tar Sands product is a different (and safer) animal than rail cars full of it. Maybe another reason for not sending recycled Diluent back to Canada ? Also, wouldn't that take another / different pipeline ?
Permalink Reply by Daryl Brown on November 17, 2015 at 4:58pm

Yes I believe they value this type of a barrel more so than a medium or light barrel.  The historical facts are these refineries made significant investments in their equipment/configurations some time back to enable them to take advantage of the heavy imported crude from foreign sources which was often discounted and also yielded more of diesel cut which greatly improved their economics.  When the shale revolution hit the new found supply was often medium to light and so for some time this was conveniently hidden in the blending process but eventually the ability to blend was overwhelmed by the increasingly light nature of the new shale production.  That is when the steep discounts began to emerge for light condensates as there was simply nowhere to hide this problem and the refineries demanded deeper discounts for accepting this blend as it hurt their economics.  I am no refining expert so what I am stating is simply gleanings from conversations and articles I have read over the past 5-10 years.  There may be more to the story than what I have enumerated but this is my understanding.  I am a natural gas guy primarily so take it for what it is worth.  haha

Permalink Reply by Joseph-Ohio on November 17, 2015 at 5:35pm
I'm a curious, thoughtful, analytical type; trying to connect the dots / fill in the blanks with only my noodle and guesswork to apply to the task.

Great discussion this - if you can confirm any theories / happen to learn something important to help clear things up please share here.
Permalink Reply by Joseph-Ohio on November 18, 2015 at 10:06am

Daryl Brown,

You've written earlier : '..........so take it for what it is worth. haha'

I find a modicum of honesty (and a modicum of humor) in that.

haha

I write thus, as, after all, you are a Gas Professional; your job comes first; and potential lessors / landowners (perhaps) somewhere further down the line !

Permalink Reply by Daryl Brown on November 18, 2015 at 10:38am

I'm not sure what theories you are looking for me to confirm or debunk specifically and would be happy to provide my thoughts as requested.  I know this strayed from the original thread somewhat but I feel pretty strongly that Keystone XL from Canada to Cushing has little positive impact on Appalachian producers maybe no negative impact either but just struggle to find anything positive.  I have a much better understanding of Nat Gas logistics than crude but do have a basic understanding of crude pipeline network and how flows work at present.  As stated earlier the Keystone is anticipated to be full or near full when it enters the US so there really isn't much opportunity for additional volumes from Rockies or Bakken to enter the pipeline and certainly no way for Appalachian production to access that system if there were space.  Here is one thing you might find of interest.  The southern leg of Keystone from Cushing to Houston Ship Channel was built and placed in service back in Jan 2014 I believe.  This helped unload stranded volumes at Cushing (pricing point for WTI Nymex contract) and had the effect of improving pricing for many US producers relative to Brent Pricing.  Cushing had become the Hotel California of the crude oil business and additional takeaway was desperately needed.  Although several things have changed since then there is at least some risk in my mind that if you build the link from Canada to Cushing/Steele City you might once again flood Cushing with oil that has nowhere to go.  I am not positive about this but there are some who believe this could once again happen.  This would certainly not be good for producers and could impact pricing across all the lower 48 since this is the location of the Nymex contract.  Not sure if this helps you or not.

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