GAIN Clean Fuel Inks Partnership with CNG Provider
March 26, 2015

GAIN Clean Fuel, a brand of U.S. Gain, said on Thursday that it is partnering with compressed natural gas (CNG) provider American Fueling Systems (AFS).

Through the partnership, GAIN will add dispensing capabilities to AFS' existing CNG site in Atlanta, Ga., located at 4420 Buford Highway NE. The service will begin in early May, and will be incorporated into GAIN Clean Fuel's North American network of CNG stations.

This AFS CNG station has been operational since 2012, and it remains the largest public access CNG station in the state of Georgia.

The partnership also enables AFS to leverage GAIN Clean Fuel's CNG stations for use with its partner carriers. In return, GAIN will benefit from AFS's presence in the alternative fuel market.

Similar to GAIN Clean Fuel stations, all AFS stations are open for use by other fleets and the general public.

This partnership puts GAIN at 47 stations in operation or under construction and close to the halfway point of the goal of having more than 100 GAIN Clean Fuel stations in operation within the next two years.

GAIN said that in addition to saving on fuel costs and reducing emissions, fleet owners in Georgia will soon be able to take advantage of tax credits provided by House Bill 348, passed in 2014 by the Georgia state legislature.

The bill takes effect in July and provides $12,000-$20,000 per vehicle in tax credits for fleet owners converting medium- and heavy-duty vehicles to operate on natural gas.

In preparation for this bill going into effect, AFS is hosting six tax credit education seminars starting in April. The seminars are free and will provide fleet operators, owners and managers with a better understanding of how to take advantage of them.  

Local Opposition Blocking Pacific Northwest NGL Export Projects
March 23, 2015

Alberta's ability to relieve its surplus of NGLs hangs in the balance as Portland, Ore., officials mull the approval of a zoning variance to allow Pembina Pipeline to build a $500 million propane export terminal on the Columbia River. But, the news is grim for Alberta propane producers -- they will need to be creative to come up with export projects.

Pembina's project was supposed to be a layup. Portland had the land and wanted the terminal. The permitting process was calculated to be easy -- a building permit, an air quality permit and maybe a water quality permit. The terminal should have been up and running by early 2018.

The propane would be unloaded from rail cars, chilled and stored for up to 15 days in above-ground, refrigerated holding tanks, before being loaded to a propane ship for export to global markets, Pembina said on its website. The company expects there could be two to three vessel shipments of propane per month.

But, a crucial detail was missed: Portland's zoning code doesn't allow for the construction of a needed pipeline that will carry propane from a nearby tank farm to the wharf. In 1989, the city passed a zoning rule restricting the ability to build a pipeline along its waterfront.

This hiccup has provided an opening for environmental groups to protest the project in public hearings and possibly derail the project. More than 100 protesters showed up at a Jan. 13 Planning and Sustainability Commission meeting to voice their objection to Pembina's terminal.

Last week, the commission held a safety review meeting. There, Pembina and a third party suggested that a propane terminal would be "safe" for nearby north Portland residents. The commission is expected to hold its next meeting April 7. Opposition groups are targeting that meeting for rallies. Calls to Pembina for comment were not returned by presstime.

If Pembina is denied, this would be the second setback for midstream companies looking to ship their NGL production into the Pacific basin market. Last month, Longview, Wash., denied Sage Midstream a permit to build a rail-served export terminal.

A Sage spokesman said the firm was "disappointed" with Longview's decision. Meanwhile the firm is "exploring all options" and had "no further details at this time."

The Canadian companies have favored U.S. export projects because they appear to be easier to pull together. The NGL industry has watched LNG importers run into a buzz saw of opposition as they tried to build pipelines across British Columbia to Pacific ports. Native groups have been behind the opposition.

As a result, Canadian NGL firms have given up on the idea of pipelines and looked to the railroads to ship product. That's not an ideal conduit to move large-enough volumes to fill ocean-going ships at a fast capacity. But it's workable. The Pembina terminal was projected to have a volume of 37,000 b/d.

More immediately, news is not optimistic for Alberta propane producers this summer. Inventories are flush. Production is high. There are no pipelines available to take away product, so it needs to move out by rail. And that's not looking good. Early talk in the markets is that all in-bound rail unloading spots in the Conway hub are booked for the summer. Conway is a "logical" storage hub, given it's proximity to Alberta. The Belvieu hub is not seen as being similarly oversubscribed. Additionally, there's the possibility of directing a railcar to pipeline terminals that allow for injection of product that can be shipped to Belvieu.

Alberta "is in bad shape," noted one market analyst. "The only thing for them to do is build a market up there -- build PDH plants." A PDH plant is a propane dehydrogenation plant that converts propane into the olefin propylene -- a feedstock for petrochemical plants. The analyst further noted that then a takeaway system would need to be developed to handle the propylene production.

All of these developments put the third interested party in the U.S. Pacific Northwest -- Petrogas -- in an enviable spot. The midstream firm has an operating terminal in the Puget Sound. Petrogas bought the Ferndale, Wash., export terminal from Chevron in March 2014 for an undisclosed amount. The terminal has the capability to handle exports and imports of up to 30,000 b/d of LPG and has facilities to handle and supply propane to the regional market for U.S. domestic consumption. The terminal has rail, truck and pipeline capability and is connected to two local refineries offering LPG balancing services.

Prior to the purchase, the terminal exported about four cargoes of butane per year. However, Petrogas wants to boost the export rate to 10 to 12 cargoes/year, sources tell OPIS. And some of those cargoes could be a butane/propane mix. In fact, the last cargo to depart was a butane/propane mix.

But the Ferndale terminal doesn't have the single-handed capacity to relieve Alberta's propane glut, notes another source.

Currently propane inventories in Alberta stand at 4 million bbl over the five-year average. Propane has been backing up in Edmonton since Cochin reversed its pipeline to bring diluent into the market. The U.S. has always been the primary customer for Edmonton propane and when the pipeline was reversed, a key outlet was taken away. Product still moves out by rail, but expansion of rail loading facilities has lagged the growth in production.

Navigator Posts Record Revenues, Profits on Buoyant U.S. LPG Exports
March 18, 2015

Leading Handysize LPG and ethane shipper Navigator Gas has posted record revenues and profits in the fourth quarter of 2014 as growing U.S. exports helped sustain shipping demand, and remained upbeat for the rest of 2015 with new export terminal capacity due to start up this year.  

Operating revenue amounted to $78.4 million in 4Q 2014, up 16.5% from the same time in 2013, while at the same time net income more than doubled to $24.3 million from $10.9 million. Over 2014, Navigator's earnings (EBITDA) was $161.3 million compared with $106.8 million in 2013.

Navigator's average time charter equivalent rate during the fourth quarter rose to $30,646 per day, up from $27,300 per day from 2013.    

Over the year, the shipowner added three semi-refrigerated newbuilding vessels to its fleet -- Navigator Atlas, Navigator Europa and Navigator Oberon -- and also chartered in the vessel Maple 3.

Navigator's fleet utilization was 94.8% at the end of the year, with 20 of its 26 vessels employed under time charters and the remaining six in the spot market.

The shipowner has defied the gloom setting in the U.S. oil industry amid collapsing prices over the fourth quarter as LPG exports have stayed at close to full capacity out of the Enterprise and Targa terminals in the Gulf Coast and for cargoes of all sizes.

Additionally, the group has a more diverse portfolio compared to pure-play VLGC shipowners in that its fleet has the capacity to carry ethane, ethylene and ammonia.

One of Navigator's new 22,000-cbm vessels was said to have been fixed last week to transport a full cargo of ethylene loading from Targa to be delivered in the Far East, a journey expected to take two and a half months.  

Navigator's outlook for 2015 remained positive with Occidental's Ingleside LPG terminal reportedly starting up in June, Chief Commercial Officer Oeyvind Lindeman said during their earnings call. The Texan terminal is gearing to export propane and butane at ambient temperatures in which semi-refrigerated ships will be the largest ships which can load.  

Out of the U.S. East Coast terminal Marcus Hook, Sunoco's Mariner East 1 project is expected to ramp up volumes in the second quarter, and producers such as MarkWest anticipate a rise in export volumes coming out of the winter.

Marcus Hook is a key export hub for Navigator, supplying semi-refrigerated parcels to the Europe, the Mediterranean and East Africa.

Navigator has 11 remaining semi-refrigerated gas carrier newbuildings on order for delivery between April 2015 and March 2017 after the 21,000-cbm Navigator Triton was delivered in January.

The group has not yet secured further charters for three of their 35,000-cbm ethane capable vessels, although interest was said to remain "strong."

Ex-Oiltanking's Sr. Execs Form New Terminaling Firm, Secure $750MM Funding
March 17, 2015

Moda Midstream, a liquids terminaling and logistics provider, said on Tuesday that it has secured an initial equity commitment of $750 million from EnCap Flatrock Midstream and the Moda management team.

Moda was formed earlier this year to provide independent terminaling, storage and distribution solutions to refiners, petrochemical manufacturers, marketers and producers of crude oil, condensate, NGLs, refined products and other bulk liquids.

Moda's expertise includes deep-water vessel loading and unloading, storage, blending, processing and pipeline operations.  

Moda Midstream is led by the team that includes Moda President and CEO Ken Owen, Senior Vice President of Commercial and Business Development Bo McCall, Senior Vice President and CFO Jon Ackerman and Senior Vice President and COO Javier del Olmo.

Moda's founding partners have more than 70 years of combined energy industry experience and worked together as members of the executive team at Oiltanking North America LLC and its publicly traded affiliate, Oiltanking Partners LP.

OPIS notes that Oiltanking Partners, which has oil terminal assets on the Gulf Coast, was acquired by Enterprise Products Partners for $6 billion last year.

"There continues to be strong demand for North American bulk liquids storage infrastructure, particularly for facilities that have excellent import-export deepwater capabilities and pipeline, truck and rail connectivity," said Owen.

"EnCap Flatrock's long-term commitment gives us the financial flexibility we need to build an integrated logistics platform through greenfield projects and asset acquisitions," Owen said.

EnCap Flatrock Midstream provides private equity capital to proven management teams focused on midstream infrastructure opportunities across North America. The firm was formed in 2008 by a partnership between EnCap Investments and Flatrock Energy Advisors. Based in San Antonio with offices in Oklahoma City and Houston, EnCap Flatrock is led by Managing Partners William D. Waldrip, Dennis F. Jaggi and William R. Lemmons Jr.

The firm manages investment commitments of nearly $6 billion from a broad group of institutional investors. EnCap Flatrock is making commitments to new management teams from EFM Fund III, a $3 billion fund.

Norwegian Oil and Gas Production Down Mildly in February 2015
March 12, 2015

Production of oil, NGL and condensate was an average 1,925,000 b/d in February, according to Norwegian Petroleum Directorate figures released today.

The output was 6,000 b/d less than the average for January, with gas sales of 10.1 billion cubic meters -- 0.2 less than the previous month.

Average daily liquids production for February was 1,548,000 bbl of oil, 332,000 bbl of NGL and 45,000 bbl of condensate. The oil production was up 0.3% on the same period in 2014.

Technical problems during the month saw reduced production at the fields -- Brynhild, Draugen, Ekofisk and Eldfisk. The Gudrun field has been shut down since the Feb. 18 due to a gas leak. Oil production was about 2% above the NPD's prognosis for the month.

Final production figures from January 2014 show an average daily production of about 1,544,000 bbl of oil, 388,000 bbl of NGL and condensate and a total of 10.3 billion cubic meters of salable gas production.