Page 8 - NorthAmOil Week 08

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Energy Transfer makes midstream progress
US
MIDSTREAM operator Energy Transfer has signed a set of agreements with an unnamed company covering the gathering, processing, transportation and fractionation of natural gas liquids (NGLs) in Texas.
The agreements increase and extend the scope of Energy Transfer’s partnership with the unnamed firm, which it describes as a “large, investment-grade integrated energy company”. Under the deals, Energy Transfer will serve the company up to 2034 in the Eagle Ford shale and up to 2040 in the Delaware – a sub-basin of the Permian.
The unnamed company has dedicated roughly 255,000 net acres (1,032 square km) to Energy Transfer. The midstream company said in a February 19 statement that the agreements align with its focus on achieving “long-term sustainable cash flow, via fixed-fee contracts, by increasing the utilisation of existing assets and minimising new capital expenditures”.
On the same day, Energy Transfer provided updates on other operations in its fourth-quarter earnings call. The company reported net income attributable to partners of $1.01bn for the fourth
quarter of 2019, marking an increase of $395mn year on year (y/y). Energy Transfer’s adjusted earnings for the fourth quarter reached $2.81bn, up by $138mn y/y.
The company said discussions with poten- tial shippers to build an offshore crude export terminal in Texas capable of handling very large crude carriers (VLCCs) were progressing, but a final investment decision (FID) had not yet been made. The comments come as a number of firms are vying to build new export terminals on the US Gulf Coast, boosting VLCC access to the region to take advantage of booming crude exports.
Meanwhile, Energy Transfer has received a boost after regulators in North Dakota approved the company’s plans to expand the Dakota Access oil pipeline, saying they believed the pro- ject has met state and federal requirements.
Under the expansion plan, Energy Transfer will build a $40mn pump station near Linton, North Dakota, to increase flows on the pipe- line. Dakota Access currently has a capacity of 570,000 barrels per day (bpd), but Energy Trans- fer is aiming to raise this to 1.1mn bpd in the coming years.™
INVESTMENT
Pioneer’s CEO urges investors to shun high-flaring firms
PERMIAN BASIN
PIONEER Natural Resources’ CEO, Scott Shef- field, has called on energy investors to punish shale producers with high rates of natural gas flaring by selling shares or pulling funding from them. Sheffield’s comments came after Texas regulators reported that flaring in the state had reached levels not seen since the 1950s.
The report, released last week by Texas Rail- road Commissioner Ryan Sitton, noted that pipeline capacity was struggling to keep up with natural gas output in the state – largely a by-product of drilling for oil. As a result, Texas’ flaring volumes had risen to an estimated 650mn cubic feet (18mn cubic metres) per day in 2018 – more than twice the 268 mmcf (7.6mcm) per day that were being flared in 2017. Flared volumes for 2019 will likely be found to be lower, given that new gas pipeline capacity came online, alleviating some of the pressure on producers.
Using publicly available data on the Railroad Commission’s website, Sitton compared the amount of gas a company flared to the amount of crude the same firm produced from November 2018 to October 2019 to create a flaring intensity
score. This index can be used to compare flaring among companies, states and countries, he said. The most flaring-intense company operating in Texas was Continental Resources, according to the index. Pioneer, thought to be Texas’ largest oil producer with output of over 360,000 barrels per day (bpd), was found to have a flaring index score of 0.02. Pioneer does not typically bring oil wells into production until gas-gathering pipe-
lines are in place.
Sheffield first called for companies in the Per-
mian Basin, spanning Texas and New Mexico, to limit flaring in November 2019. Speaking on the company’s earnings call last week, he said that if producers in the basin cannot drop flaring rates below 2% of gas produced by the first half of next year, when new pipelines would have come online, investors in public shares, bonds or pri- vate equity firms should “end up either not doing business or sell whatever you have in regard to that company”.
The idea emerged at a workshop held in Janu- ary co-ordinated between Columbia University and the University of Texas at Austin. Details of the workshop are due to be published.™
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w w w. N E W S B A S E . c o m Week 08 27•February•2020