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The “New Energy Economy”: An Exercise in Magical Thinking

The Manhattan Institute – March 2019

Rethinking the New Energy Economy and the use of Hydrocarbons in our society

A movement has been growing for decades to replace hydrocarbons, which collectively supply 84% of the world’s energy. It began with the fear that we were running out of oil. That fear has since migrated to the belief that, because of climate change and other environmental concerns, society can no longer tolerate burning oil, natural gas, and coal—all of which have turned out to be abundant

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Mexico’s Refining Market and Forecast

Source: RBN Energy – December 20th, 2018

US Gulf Coast Refiners fill the market demand void left behind by Pemex.

As Mexico’s refined fuel oil production has plummeted, U.S. refineries have filled the void in supply to meet Mexico’s demand.   Enjoying a rich supply of feedstock and proximity to the market, has provided US Gulf Coast refiners with a unique opportunity to fill Mexico’s production shortfalls. More…

Snapshot of U.S. Refining Markets and Ambitions

Source: RBN Energy – September 30th, 2018

An Analysis of Mexico’s effect on U.S. refining industry.

Mexico’s refinery utilization rates have remained below 50% throughout 2018, forcing the country to import more refined products. As the supply has struggled to meet demand, it’s become a major factor slowing down the growth in demand. The storage infrastructure is very minimal, requiring a constant flow of imported fuel products, also known as a “just in time” market. More…

Unit Trains Now Delivering U.S. Propane To Mexico

Source: RBN Energy, August 18, 2019

As domestic supply fails to meet demand, Propane imports arrive by train.

In May 2019, Twin Eagle Liquids Marketing shipped a 100-car train filled with propane from North Dakota to Mexico, marking the first-ever unit train shipment between the Bakken and Mexico.   Pemex has struggled to meet Mexico’s big appetite for propane, whose supply void is increasingly relying on imports from U.S. suppliers. More…

Lack of Permian Midstream Capacity Stirs Headwind to Reach Market

Source: RBN Energy – August 1st, 2018

Bottlenecks and lack of optionality drive midstream capacity investments.

Amidst the Shale revolution, operators are drilling faster than ever before, increasing the Permian Basin’s production faster than midstream capacity can be built. This is leaving operators with tight crude takeaway constraints, without enough pipeline capacity, forcing offtakers to take crude by rail and truck – the two most inefficient and expensive modes of transport, to reach Houston refiners. More…

Inadequate infrastructure makes it difficult to meet demand for refined product imports in Mexico

Source: RBN Energy – July 7, 2018

Mexico needs more U.S. refined products… and more infrastructure to move and store it.

In Mexico, refined product imports struggle to efficiently meet demand which continues to grow while domestic refining capacity dwindles, and Pemex struggles with maintenance problems, high debt and budgetary challenges. As Mexico commits to improving the country’s logistics infrastructure and domestic refining capacity, the challenges in getting refined products to markets in and around Mexico continue to mount generating high prices and structural inefficiencies which are getting accentuated. More…

Mexico Fuel Supply Void Opens Door to Private Investment

Source – RBN Energy – December 17, 2017.

Mexico’s Energy Reform and the supply void created by domestic inefficiencies creates opportunities for private sector participation.

As discussed in our previous post from 2015, here, the inefficient refining configurations and declining capacities opened doors to private investment into Mexico to meet growing fuel oil demands. Over the last several years, the government has been gradually dismantling Pemex’s monopoly to help boost private enterprise in the country, and More…

Mexico’s Oil Demand Strengthening U.S. Relations

Source – RBN Energy – November 16, 2015.

Mexico’s oil industry is in a state of flux as its refineries produce too much high-sulfur fuel products with too little gasoline and diesel to supply domestic demand, so imports of U.S. natural gas and fuels rise. The oil produced domestically, majority of which is 22º to 23º API gravity, is too heavy to refine with Mexico’s current refining configurations, but is perfect More…

A Quick Glimpse of Refining Economics

Source: RBN Energy – June 4th, 2015

One of the most important financial metrics for refiners is the crack spread, a basic measure of profitability using benchmark crude & product prices. A frequent ratio is dubbed the “3-2-1 Crack Spread”, where a refinery produces twice as much gasoline than diesel, two of the most profitable products. More…

Connecting the Permian to Mexico and the Pacific.

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