Q2 Technologies Expands Capabilities with New Field Operations Manager

Ever, Field Operations Manager

Q2 Technologies in the News

Q2 Technologies’ recent announcement is making the rounds as seen on Cison PR Newswire, Market Watch, Seeking Alpha, Yahoo! Finance,  and many local news outlets.

HOUSTON and MIDLAND, TexasNov. 16, 2021

Q2 Technologies, a specialized chemical company, adds Ever Chavez as Manager of Field Operations to their growing team. Hugo Lozano Jr, VP and General Manager of Q2 Technologies said, “Ever brings tremendous experience and leadership in technical and operational chemical blending from his background at Tech Management and Baker Hughes. We are excited to have Ever on board to develop our growing chemical treatment business in the Permian and beyond.”

Ever Chavez, Field Operations Manager

Ever’s Background

Chavez brings over ten years of chemical process and control engineering experience in the Upstream and Midstream business. His responsibilities will be to grow the established chemical treatment and blending operation Q2 Technologies has established in the Permian Basin, service Q2’s growing customer base, and continue to build the specialized product offerings Q2 provides to other multiple locations.Prior to joining Q2 Technologies, Chavez was with Tech Management. His increasing responsibilities allowed him to focus on overseeing QA/QC testing of product blends. This way, he ensured each product met appropriate standards and measures. Additionally, he has valuable experience in water analysis, chemical compatibility testing, friction flow loop analysis, emulsion testing, and other hydrocarbons specific testing methods. Further, Chavez spent over four years with Baker Hughes in Midland, Texas in account management where he focused on the technical aspects of growing, evaluating, and processing large-scale customer orders. “This is such an exciting time at Q2 Technologies, I’m excited to take on the responsibility to build the established footprint the company has built and take it to the next level. The proprietary and triazine/amine-based suite of products Q2 provides is a significant advantage and I look forward to ensuring that these products are manufactured, delivered, and administered to the highest qualities for our customers,” said Chavez, who holds a B.A. in Industrial Engineering and MBA from the University of Texas at El Paso.Q2 Technologies

Continuously working to create value for customers

Chavez’s business development acumen and insight will be an additional resource for Q2 Technologies. “Ever has a great blend of technical, commercial, and economic experience in the Oil & Gas industry specially as it pertains to the chemical and treatment aspects,” added Philip Weigand, Vice President of Business Development for Q2 Technologies, “and I am thrilled to have him on the team to continue what we have started: creating value for our customers by treating H2S and mercaptans.”

About Q2 Technologies, LLC

Q2 Technologies specializes in increasing the value of crude oil barrels by offering several solutions: Pro3® line of non-triazine H2S scavengers and ProM® line of non-triazine mercaptan scavengers for crude oil applications. The Pro3® /ProM® technologies currently treat over 6 million barrels of crude oil and condensate each month at major pipelines and terminals in the US. For more information, contact Philip Weigand at 323753@email4pr.com or +1 (832) 328-2200.Q2 Technologies has been in business for over 20 years. The company is a spin-off of Quaker Chemical (NYSE: KWR) and developed the MEA-Triazine scavengers used world-wide today in the late 1980’s. Q2 Technologies is an expert in H2S and mercaptan removal solutions. Q2 Technologies has H2S and mercaptan removal experience in the oil & gas, pulp & paper, wastewater, and landfill gas industries. By combining its experience and research and development within these industries, Q2 Technologies offers superior engineering, application, and chemical solutions.

From the Texas Freeze to Hurricane Season

The Triazine Market Explainer

The Insight You Need to Know

Deep Freeze February 2021:

Texas and much of Louisiana experienced an unprecedented extended freeze that shocked nearly every facet of modern living in the region from busted water lines and electrical outages to major industrial systems going offline.

Texas Freeze, February 14th. 2021
Historical Texas Freeze, February 2021

The chemical industry that supports the Oil & Gas industry, especially for Producers that use triazine or other amine-base chemistries to treat hydrocarbons, also felt the effects of this storm. Triazine based chemistries have been traditionally used to scavenge hydrogen sulfide (H2S) from natural gas and certain liquid hydrocarbon streams. The storm and summer have passed, but the long-term ramifications are still playing out, and for some the supply crunch is very much ongoing. Relief is on the horizon but not fast enough for some. Here’s a bit of history as to why we are seeing this near-commodity market acting the way it is and some forecasts for the supply/demand in 2022.

Winter Storm of February 2021

In mid-February 2021, Texas suffered major power outages throughout the state spurred on by a series of winter and ice storms from Feb. 13-17. The storms caused a massive electricity generation failure across Texas which led to shortages of food, water, and heat – all told more than 4.5 million homes and businesses were left without power for days and over $20 billion in damages have been reported.

Winter weather alerts in Texas on February 14th. 2021
February 14th, 2021: Every county in Texas and much of Lousiana were under a Winter Storm Warning.

The Components of Triazine

The formaldehyde-MEA triazine, which is a common H2S scavenger in natural gas, is synthesized by the reaction of formaldehyde and monoethanolamine (MEA). Triazine, water, and free formaldehyde or free MEA are the components of triazine and each play a critical role in the effectiveness of triazine as a stable product. It is a near commodity because of the overall general availability and mass manufacturing in the Gulf.

Why the Supply Upset in late 2021?

The chemical plants that are devoted to making the raw material for triazine, namely formaldehyde and MEA for the U.S., are located predominately along the Gulf Coast and most were severely impacted by the 2021 Winter Storm. When those plants went down for maintenance under force majeure in late February, some experienced extended delays taking months to get back online. This maintenance period was by far longer than most expected. During this downtime, Producers and other end users partly relied on existing inventory of triazine and began to see tighter allocation of both raw materials. As Q1 and Q2 progressed, MEA prices continued to steadily climb due to tight supply and higher demand in oil & gas as WTI continued to climb. H2S scavenging or H2S removal is needed for safety standards but also due to flaring restrictions in natural gas. It is necessary for Producers to remove H2S before flaring to limit SO2 emissions. If a Producer reaches its flaring limit, the highly valued crude oil value cannot be extracted, and the well must be shut in. Both Texas and New Mexico, where most of U.S. production is found have strict flaring limits.
As plants came back online in the late spring/early summer, the supply of MEA was still tight as manufacturers had drained coastal storage tank inventories. The storage tanks had run so low, there was concern that the tanks needed to be refilled to a certain level to ensure that when Hurricane Season was upon the Gulf Coast, there would be enough volume to physically weigh down the tanks incase high winds took direct aim.
Therefore, even though MEA was being made, the throttle was not fully opened to triazine manufacturers and a supply squeeze, albeit slightly lessened from earlier in the year, was still driving prices higher as demand increased in parallel. As WTI and Brent continue to climb, natural gas has also seen as surge in pricing. Natural gas prices that had been hovering around $2.50/MMBtu has spiked to $5.95/MMBtu on 9/28/21. Associated gas from crude oil production typically seen with little no value now warrants higher H2S treatment costs which drive triazine demand higher.
Near-term Henry Hub gas prices still support elevated levels of $/MMBtu which provides a bit of netback cushion to absorb the cost of treating with triazine. However, as triazine prices will fall when supply is rebalanced, the cost to treat the gas could improve the Producers’ netback price for gas.

Natural Gas Prices, Futures and Forecast
Henry Hub natural gas price and NYMEX confidence intervals dollars per million Btu
Current Triazine Market
Triazine Supply and Demand for Fall 2021

Outlook for Triazine

Hurricane Ida played an important role in the current amine shortage. The two largest producers lost about two weeks of production and declared force majeure limiting their supply to about 50% of normal output. A Mexican manufacturer is also down for maintenance leaving only one supplier running at capacity. Ethanolamine manufacturers are seeing 2-3x demand higher than production and see the shortage lasting well into 2022.
With the uncertainty of the supply of triazine in the market, as a manufacturer and supplier of triazine, we understand the market’s frustration! However, if your production has been severely impacted by triazine and if you are using that to treat crude oil or liquids, our Pro Series (Pro3® and ProM®) line of non-triazine/non-amine scavengers could be a cost and operational savings an alternative. Contact us at Sales@Q2Technologies.com or 832-328-2200 to learn more about how we are treating millions of barrels each month with these products.

Sources:

https://www.click2houston.com/news/local/2021/08/07/whats-in-store-for-texas-this-winter-will-the-state-experience-another-ice-storm-heres-what-the-farmers-almanac-says/.
https://www.wfaa.com/article/weather/winter-weather-extreme-cold-this-week-in-north-texas/287-a4622452-11c7-4674-aa13-6707782fd226.
https://www.noaa.gov/news-release/noaa-predicts-another-active-atlantic-hurricane-season.
https://www.eia.gov/naturalgas/weekly/#tabs-prices-2.
Q2 Technologies company data, 2001-2021, https://q2technologies.com/.

What is the Outlook for US Shale?

US shale outlook is cautiously optimistic for 2021

Reflections on global oil demand/supply for 2021

While 2020 brought a huge shock to the entire world, the oil industry was hit particularly hard. US shale requires continued investment to respond to the future global oil needs. However, as we look back on the past year and move forward with the new year, there are three important factors to consider as we reflect on the outlook for US shale. We expect a general improvement for oil, and for US shale in particular while capital discipline will make it hard to find resources for investment.

Demand Side

Demand destruction during the past year was less than most expected.

Global oil demand only decreased in the mid-teens during the COVID 19 crisis though it was thought that demand would decrease in the high 20’s. Even with reduced economic activity and widespread lock-downs during the current pandemic, global oil demand did not fall as much as it was feared. A part of this is due to the people’s avoidance of public transportation to avoid exposure. This is a particularly interesting phenomenon because it seems to point to a permanent behavioral change resulting from the pandemic. The importance of preserving energy independence if also a key geopolitical point for the US moving forward.

Global oil demand recovery has been very robust.

The lowest global oil demand in April 2020 was close to 80MMbpd and it is currently back at over 100+ MMbpd. This is a very significant increase since mid-April 2020. The demand outlook for 2021 is really strong considering a successful global vaccine rollout.  That will bring along strong economic recovery and a comeback of traveling and jet fuel demand.

Supply Side

Global Oil inventories are getting lower and lower.

Global oil and liquids inventories signal the direction of prices. Currently, they are falling and are expected to continue to do so. The initial shut-ins and production curtailments resulting from pandemic reduced global oil supply. While we foresee increased demand, the natural decline in productivity rate will drive supply declines in late 2020 and through 2021. Oil supply coming from OPEC+ is expected to hold flat through 2021 at 3 MMbpd if price remains at $45/bbl.

At strip pricing, the global oil inventory drawdowns will accelerate sharply in the coming months leading to unrealistic inventories. If price remains at $45, crude oil inventories expressed as OECD days of consumption would reach only 22, which signals that prices could not be that low. Inventories are normalized around 30.

Production and price levels are likely to rise.

It is expected to see prices gradually rising during the first half of 2021 while they will rise sharply during the second half considering the inventories falling way beyond normal. OPEC will likely increase production to max capacity by the end of 2021. Additionally, it is expected that Iran will also be able to participate on the market with an additional supply of around 1Mbpd.

US Shale Outlook

The outlook for US shale is cautiously optimistic with expected improvement on the second half of 2021. Current damage to US industry will result in substantially low supply during the current year. US supply response will lag rig count changes. For the US to increase production, it is expected that oilfield activity will ramp sharply higher towards the end of 2021 and into 2022 when oil prices reach higher levels.

If existing laws and regulations remain through 2050, projects domestic crude oil production to return to 2019 levels by 2023 and then remain near 13 million to 14 million barrels per day (b/d) through 2050. The United States continues to be an integral part of global oil markets and a significant source of supply, despite uncertainty surrounding post-pandemic expectations for oil and natural gas demand.

US will be one of the key crude suppliers into 2050
The US, a key crude supplier into 2050

High H2S and mercaptans levels are expected to continue appearing in the many Permian Basin wells, hence timely monitoring and treatment are paramount even during these next few months when prices are expected to remain around $45. As production levels rise, so will the need for treatment. As always, we at Q2 Technologies are here to serve you with all your treatment needs.