Archive for the ‘Platts analysis’ Category

SoCal Gas’ Aliso Canyon gas storage leak raises questions about California markets

The Southern California Gas Company is one of the biggest local distribution companies in the United States, covering much of Southern California, and is a regulated utility within Sempra Energy.  One of the wells at its Aliso Canyon storage site has been leaking gas for over three months now, and it’s not expected to be stopped for another month.

We’re not here to comment on the politics or social impact of this event, but we are tracking how this is impacting the California natural gas market. This has really shaken up expectations for the California gas market, as the future of the facility after the leak is repaired is unknown. So why is Aliso Canyon such an important storage facility?

Read the rest of this entry »

The world is flat … at least for global ethylene producers while oil prices are low

On Jan. 20, WTI and Dated Brent closed at $26.54/b and 25.96/b, respectively, the lowest we have seen oil prices since 2003. Since then we have seen prices rise and hover around the $30/b level.

Unlike ethane, naphtha is highly correlated with the price of oil. Therefore, fluctuations in global oil prices will have a major impact on steam crackers, more so in Europe and Asia where most producers utilize naphtha as a feedstock for producing ethylene.

Read the rest of this entry »

Pemex reform efforts in Mexico hobbled by oil downturn: Fuel for Thought

Falling crude oil production, falling refined product output and falling income have led many to believe that the sky is falling on Mexico’s state-owned oil company Pemex.

The perilous situation for Mexico’s energy industry — and Pemex is Mexico’s energy industry — has not been lost on officials who are trying to reform the company and, by extension, the nation’s energy landscape.

Read the rest of this entry »

Grow a tree, burn a tree…a rethink of biomass philosophy

A re-evaluation of biomass for electricity generation appears a certainty, and the evolution of sustainability criteria is likely to retard market growth, just as it did for biofuels, although their implementation will run into industry and political resistance.

However, the experience of biofuels and doubts over biomass-fired power generation raise a broader question. The world has a functioning energy system in the production of food. Read the rest of this entry »

The impact of Saudi ethane price increases on competitiveness

At the end of December, Platts reported that Saudi Arabia increased the price of gasoline, domestic gas for power generation and ethane feedstock in its 2016 budget, part of a broader program to cut subsidies and reduce its budget deficit. As a part of this, the ethane price more than doubled from the long-standing fixed price of $0.75/MMBtu to $1.75/MMBtu, according to the official Saudi Press Agency.

So what does this mean for Saudi Arabia’s position as the world’s lowest-cost ethylene producer?

Read the rest of this entry »

Ethane cash cow a red herring for European petchems producers

In the next few weeks the first ship bringing US shale gas to Europe will arrive on the southern shores of Norway, marking an end to Ineos’ search for cheap feedstock to power its European petrochemical assets.

Plagued by $100/b oil, European petrochemical producers in 2012 were struggling with margins and started looking abroad for cheaper feedstock options. The contracting European margins coincided with plentiful and inexpensive supplies of ethane-rich natural gas in the United States.

Read the rest of this entry »

The cyclical nature of spreads and effects on PDH propylene

Propane prices are cyclical, peaking during the winter and bottoming out during the summer, and propane/propylene spreads hit their lowest during the winter and their highest during the summer. After all, feedstock prices are the biggest component of production costs in this industry.

While last winter was an anomaly, due to the drastic drop in global oil prices impacting many commodities, propane prices dropped alongside other prices. This year we are seeing the return to normalcy regarding propane pricing, but at a time when Asia is seeing low propylene prices, margins have deteriorated, and PDH units are feeling the impact the most.

Read the rest of this entry »

Petrochemical implications of easing sanctions on Iran

Earlier this month, the US and its negotiating partners announced steps to move ahead on what is known as “adoption day,” intended to show readiness for sanctions relief for Iran. However, relief will only begin on “implementation day,” the day when the International Atomic Energy Agency certifies that Iran lived up to its commitments according to the nuclear deal completed in July.

According to the US CIA’s The World Factbook, Iran has the world’s second largest supply of conventional natural gas reserves, much of which is rich in ethane. Given that the rest of the Middle Eastern countries are experiencing limited supplies in ethane, this presents a huge opportunity for the Iranian petrochemical sector as sanctions are eased.

Read the rest of this entry »

Infographic: Japan’s nuclear restart

Japan’s fleet of 43 nuclear reactors, with a total installed capacity of about 42,000 MW, has been largely idled since September 2013, when the country adopted stricter nuclear safety requirements in the wake of the Fukushima I accident.

Read the rest of this entry »

Metals prices unsteady in September, but August’s multi-year lows not tested

Concerns over the Chinese economy continued to trouble the metals market in September with expectations that the Federal Open Market Committee (FOMC) would raise US interest rates creating further headwinds. As a result, contracts traded on the London Metal Exchange continued to see volatility, although most metals (excluding zinc) did not trade below the multi-year lows established at the end of August.

Read the rest of this entry »