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MIDLAND, Texas—SemGroup Corp. (NYSE: SEMG) is seeing significant growth and success from its transformation to serve the export market as U.S. oil exports hit a new high on June 6, the company’s executive Blake Trahan told attendees of Midstream Texas.
U.S. oil exports have surged since a decades-long ban on them was lifted late in 2015 and is most recently benefiting from the U.S. crude benchmark’s discount to Brent, which has widened to the most in over three years.
The latest data from the U.S. Census Bureau showed on June 6 a surge in U.S. crude exports to a record 1.76 million barrels per day (bbl/d) in April from 1.67 million bbl/d in March. The total export figure was the highest on record since at least 1920, according to a report by Reuters.
Trahan, who is vice president of SemGroup’s Houston Fuel Oil Terminal Co. (HFOTCO), described the transformation of HFOTCO from a focus on fuel oil to crude oil.
Occupying over 330 acres the Houston Ship Channel, HFOTCO provides crude oil, residual fuel oil, feedstocks and refined products terminal storage services. Despite its roots in fuel oil, the terminal’s current crude oil expansion will increase its overall tank storage capacity to 18.25 million barrels.
Later in the day, panelists on water management roundtable discussed where the opportunities are as the midstream water sector matures.
John Durand, president and CEO WaterBridge Resources LL, said as the segment evolves, the industry will see a difference between an oilfield services model and the midstream water model.
Additionally, funding for water infrastructure will need to be underpinned by long-term contracts, said roundtable panelists Porter Bennett, co-founder and CEO of B3.
Meanwhile on a midstream finance panel, Jim Benson, founding partner of Energy Spectrum Partners, said he sees lot of support for MLPs but 70% of activity is greenfield development.
Earlier in the day, Bill Ordemann, executive vice president of Enterprise Products Partners LP (NYSE: EPD), with a call-to-action during the conference's opening keynote address for gas pipelines as the lack of Permian remains a major dilemma facing the industry.
“The ball’s got to get rolling on gas pipelines,” Ordemann told conference attendees.
U.S. shale producer Apache Corp. (NYSE: APA) is also feeling the stress of insufficient infrastructure as it develops its Alpine High Field in the Permian's Delaware Basin, said Robert Bourne, vice president of business development for the company's midstream and marketing group.
Apache had the good fortune of discovering Alpine High—one of the biggest new Texas plays to come along in years—in September 2016. The find includes a dry gas play more than 1,000 highly economic locations and an even larger wet gas play with more than 3,500 highly economic locations.
However, Apache is now facing the herculean task of also developing a greenfield midstream system to move the play’s abundant wet-gas production to market. The company's gathering pipe at Alpine High has now reached 20 inches to 30 inches, Bourne said.
Overall, Bourne sees a takeaway “train wreck” coming for the basin's production.
Further, Ordemann said he doesn't see a lot of room for growth in the U.S. for natural gas. He believes a vast majority of the country's gas needs to be exported.
During his presentation, Bourne said exports to Mexico will help but it will take a while.
Still, Ordemann said he believes the Eagle Ford Shale holds a lot of promise and will rejuvenate a la Haynesville.
During a technology spotlight in the afternoon on new refinements in gas processing, Carlos Conerly, president of Linde Engineering North America's natural gas and refining division, described pre-shale and post-shale natural gas production.