Investors began to pull away from energy stocks as commodity prices sagged toward the end of the third quarter. Drooping prices are not a surprise given abundant output, lingering soft domestic demand and a strengthening dollar. It will be interesting to see if Wall Street can differentiate “energy” firms that are commodity-based upstream producers from feebased midstream operators.

Barclays is among the industry observers to take a look into the near future and project how current trends will impact things. In a recent analysis, it estimated the Brent-West Texas Intermediate spread will widen to around $8 per barrel in this quarter “as rising production and planned refinery turnarounds require further import displacement.” It expects improvements to marginal transportation costs will begin “diverting Bakken and Permian barrels to the Gulf Coast.”

A cure for low prices, of course, will be successfully turning the nation’s energy focus outward—a major change following 40 years of instinctive energy hoarding triggered by the 1973 to 1974 crisis. Associate Editor Deon Daugherty discusses an important export trend in this issue: moving gas under U.S. borders to our neighbors in Canada and Mexico. These are not small markets. Gas export volumes could double in the immediate future, so it’s good to remember not all exported gas will need to be liquefied.

Whether ethane?

No hydrocarbon has suffered price pressure more than ethane but the problem may be solving itself—thanks again to exports. The Interview in this issue features my conversation with Randy Fowler, executive vice president and CFO of Enterprise Products Partners LP, which has its Morgan’s Point ethane terminal on the Houston Ship Channel under construction. When finished in 2016, it will be able to ship 200,000 barrels per day (bbl/d).

Speaking of gas liquids, Senior Editor Frank Nieto contributes his annual NGL producer and processor rankings in this issue time—with some jockeying among the players for top honors. It always makes for good reading and has proved to be one of our most popular features.

DUG topics

I’ve recently returned from two Hart Energy conferences—DUG Australia in Brisbane and DUG Eagle Ford in San Antonio. I thoroughly enjoyed hearing experts discuss what’s ahead for these diverse, but promising, areas in the worldwide energy business.

Midstream infrastructure remains a major issue as Australia rapidly develops its big, prospective LNG export business. For its part, DUG Eagle Ford focused on a play that has developed faster than almost anyone could imagine. The Eagle Ford has gone from essentially zero liquids production six years ago to a projected 1.58 million bbl/d this month, according to Global Hunter Securities estimates. From its perspective, RBN Energy estimated that Eagle Ford output number will be north of 2 million bbl/d by 2020.

Infrastructure has been surprisingly good despite that skyrocketing growth, according to RBN. “Even with booming Eagle Ford production, there have been few constraints getting crude to market as midstream operators moved rapidly to build adequate pipelines—some of them repurposed natural gas pipelines,” it added.

Will that Eagle Ford projection be correct? Will Australia place its potentially large LNG business onstream? Assuring the midstream assets are in place to assure future growth requires continuing strong capital inflows.

John B. Walker, CEO and chairman of Envervest Ltd., advised the recent Hart Energy A&D Strategies and Opportunities conference attendees to focus “three, four, five, six, 10 years out” when trying to make money. “Now is too fast for us to react to make money,” he added. Let’s hope investors heed his advice.

Paul Hart can be reached at pdhart@hartenergy.com or 713-260-6427.

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