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Panama Canal expansion could be watershed for LPG; Appalachian drillers balancing costs, production growth


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Panama Canal expansion could be watershed for LPG; Appalachian drillers balancing costs, production growth

Panama Canal expansion could be watershed for LPG, but future not assured

The openingof the widened Panama Canal has finally arrived and U.S. energy producers are breathinga sigh of relief as consumers of natural gas liquids in Asia can more easily bereached. The future is not certain, however, as a leveling of global prices andcompetition from producers in the region will reduce the U.S. price advantage.

"Theimproved economics of moving petroleum products to Asia/Pacific markets will likelyimprove margins for Gulf Coast refineries, and as a consequence support U.S. crudeoil prices," Rusty Braziel, president and CEO of RBN Energy, said in a noteApril 12. "Bottom line — the Panama Canal expansion should provide a boostto natural gas, [natural gas liquid] and crude prices."

As longas prices overseas are high enough to cover the freight and terminaling fees, LPGshould continue to migrate from the U.S. to overseas consumers. The problem, though,is that supplies exported overseas after new U.S. export terminals have been deployedhave already started to level the playing field.

Preview of Appalachian drillers' Q2 shows firms balancing costs, productiongrowth

The firstpreviews of Appalachia's spring show drillers trying to balance production growthwith disciplined spending and balance sheet preservation.

and both releasedsecond-quarter operations updates results July 14, marking the outlines of how operationsin the Appalachian shales progressed during the second quarter. Antero kept drillinglike it was hurricane season 2008, while Gulfport hibernated until summer weatherarrived in June.

Marcellusand Utica shale driller Antero continued to be the most active driller in Appalachiawith seven rigs running in the plays, increasing production year over year 19% inthe second quarter to 1,762 MMcfe/d. Utica driller Gulfport Energy conserved itscash and didn't restart its frack crews until near the end of the second quarter.In spite of a late-inning restart of production, Gulfport still posted productiongrowth of 40% year over year to 664.7 MMcfe/d, the bottom of its guidance.

Colo. drillers, officials ask Congress for help with 'inconsistent' BLMin Mancos Shale

The potentiallyprolific Mancos Shale play in Colorado could be an economic boon for the regionif development is supported by federal agencies, a number of speakers told membersof the House Natural Resources Committee.

WalterGuidroz, a program coordinator with the U.S. Geological Survey, said the MancosShale holds an estimated 66 Tcf of natural gas, 74 million barrels of oil and 45MMbbl of natural gas liquids. That total, he said, would make the Mancos one ofthe most prolific unconventional plays in the U.S.

"Wehave an 84 Tcf mean for the Marcellus Shale. The Mancos ranks second, and thereare a number of plays that fall below that," he told the Subcommittee on Energyand Mineral Resources.

Propane market finishes week on mixed note in spite of inventory pressure

Pricesof propane were able to avoid steep losses in the week ended July 15 in spite ofweakening fundamentals that included continued gains in inventories and more cancellationsof export cargoes.

LoneStar pipeline grade propane at Mont Belvieu increased 0.70 cent to trade at 49.50cents per gallon in the week ended July 15, while non-LST propane rose 0.55 centto trade at 49.10 cents per gallon. Prices at the hub in Conway, Kan., dropped 0.85cent, and traded at 44.60 cents per gallon.

The fracspread increased 1.08 cents to 18.63 cents per gallon July 14 and compared to 17.55cents per gallon July 7, according to data from S&P Global Market Intelligence.The average NGL barrel gained 1.6% between the two dates while natural gas pricesdeclined 1.8%.

Enterprise to begin propylene exports at Houston Ship Channel

Respondingto increasing global demand, EnterpriseProducts Partners LP has added propylene exports to the service offeringsat its Houston Ship Channel terminal.

Enterprisehas loaded its first two vessels with polymer grade propylene, or PGP, for export,according to a July 19 news release. The facilities at the Enterprise HydrocarbonsTerminal can load 5,000 metric tons per day of refrigerated PGP, supplied by fractionatorsand storage wells at the partnership's Mont Belvieu, Texas, complex.

The partnershipanticipates a rise in PGP export cargoes due to growing demand. Previously, itspipeline and rail infrastructure were upgraded for easier delivery of refinery gradepropylene to its fractionation facilities, where the mixture of propane and propylenewill be separated into PGP.