The Right Strategy For Oil Companies In 2023 (31 December 2022): By Leonard Hyman & William Tilles - Oil and gas producers seemingly have settled on a strategy. OPEC and Russia will limit production and let prices rise during a global war-famine-pandemic. OPEC sets the price umbrella while the Russians discount the price for obvious geopolitical reasons. All other big oil producers adhere to pricing and supply discipline knowing that OPEC’s costs of production are so low that OPEC can undercut any oil producer that ignores pricing discipline. The big US producers say they will not expend capital to increase supply when they lack assurance of continued demand. As for high prices, they result from competition in the market, the oil CEOs say. We all know how this will end, as it always does: demand will weaken and producers who would rather get a lower price than let some other producer get the business will cheat. But not for a while. ... (Source: Oil Price)
Winter Storm Elliott Highlights Vulnerability Of U.S. Energy Systems (28 December 2022): By Tsvetana Paraskova - Winter Storm Elliott, which swept through most of the United States during the Christmas holidays, exposed the vulnerability of the energy system as natural gas and power supplies were strained, wells froze off, and utilities vastly underestimated the power demand during the huge storm. Despite the fact that it wasn’t as prolonged as the Winter Storm Uri of February 2021, when millions in Texas lost power for days, the latest storm showed—once again—that energy providers couldn’t accurately predict the power demand surge, and some had to resort to rotating outages to maintain grid stability. Moreover, well freeze-offs led to a plunge in natural gas production in the key gas-producing basin, the Appalachia, sending lower volumes via pipelines to gas-fired power generation units and sending regional natural gas prices soaring along with it. (Source: Oil Price)
America’s Biggest Gas Producer Sees 30% Output Cut Over Storm (28 December 2022): By Charles Kennedy - America’s largest natural gas producer, EQT Corp, has experienced a plunge in production up to 30% due to severe cold weather that led to Appalachian Basin well disruption, Bloomberg reports. Speaking to Bloomberg Television on Wednesday, EQT Chief Executive Officer Toby Rice said output fell by between 1 billion and 1.5 billion cubic feet per day amid the extreme cold snap that started last week with a blast of Arctic air and strong winds leading to subzero temperatures affecting an estimated 150 million people. In Q3 2022, EQT was producing around 5 billion cubic feet per day. Rice said output should be restored to normal in the “next couple of days”. (Source: Oil Price)
Christmas Grid Chaos Paves The Way For Transportable Nuclear Plants (27 December 2022): By ZeroHedge - The cold blast this holiday weekend across the eastern half of the US exposed the fragility of power grids as soaring heating demand spiked peak total loads to record high in many areas while supplies were tight. Grid operators and utilities told tens of millions of Americans to conserve power -- some conservation efforts are still ongoing Christmas morning. Christmas Eve was a mess for many customers in the Southeast states, including North Carolina and Tennessee, as utilities implemented rolling blackouts. Fossil fuels and nuclear power generation mix across the eastern US saved grids from collapse. Unreliable renewables, such as solar and wind, were just a tiny fraction of the power mix. (Source: Oil Price)
Where To Look For Unrealized Value In Oil Markets (25 December 2022): By David Messler - Today we’re offering a free glimpse into our monthly Global Energy Alert stock analysis. This report is written by David Messler, one of the top traders in the biz. He’s got a knack for picking winners and a keen eye for spotting ‘em before anyone else. Below, he breaks down two key oilfield service opportunities you’ll want to keep an eye on. With the weakness in oil prices in Q-4, producing companies have struggled, in many cases giving up 20-30% of their early November peak share prices. The $109 average realizations of Q-2, and $94 realizations of Q-3 are behind us, and these companies will report even lower realizations for Q-4. That’s baked in at this point. Wall Street has accordingly taken down valuations for these companies, and when they report in early Feb, 23, may still be further compressed. Longer term, we remain bullish on the producers as we think higher oil prices are in the offing. Pain will turn into gain for patient investors. But, that’s down the road a little bit, leaving the question as to where to look now for unrealized value in the oilfield sector. (Source: Oil Price)
A New Type Of Oil And Gas Funding Is Booming (24 December 2022): By Tsvetana Paraskova - As banks have pulled back from funding oil and gas operations and other traditional sources of financing such as equity investment or reserve-based lending (RBL) facilities are drying up, private U.S. oil and gas producers are looking at a booming market for alternative fundin. That’s the proved developed producing (PDP) securitization, in which an oil or gas producer issues bonds in an asset-backed securitization (ABS) transaction. In other words, upstream producers use the cash from their oil and/or gas production as collateral for the notes placed with investors. (Source: Oil Price)
Global Energy Crisis Forces Japan To U-Turn On Its Nuclear Policy (22 December 2022): By Alex Kimani - Japan has announced a major U-turn in its energy policy after the Asian nation adopted a new policy promoting greater use of nuclear energy, effectively ending an 11-year prohibition and phase-out that was triggered by the Fukushima disaster. Under the new policy, Japan will maximize the use of existing nuclear reactors by restarting as many as possible, prolong the operating life of old reactors beyond their 60-year limit and also develop next-generation reactors to replace them. The proposed legislation marks a complete reversal of the nuclear safety measures the country adopted after a powerful tsunami hit caused three of its six reactors to suffer meltdowns. Fearing a public backlash, the Japanese government has desisted from building new reactors or replacing aging ones. (Source: Oil Price)
New Research Could Pave The Way For Mass Market Perovskite Solar Cells (21 December 2022): By Brian Westenhaus - Helmholtz-Zentrum Berlin für Materialien und Energie (HZB) researchers reported a new world record for tandem solar cells consisting of a silicon bottom cell and a perovskite top cell. The new tandem solar cell converts 32.5 percent of the incident solar radiation into electrical energy. The certifying institute European Solar Test Installation (ESTI) in Italy measured the tandem cell and officially confirmed this value which is also included in the National Renewable Energy Lab, USA chart of solar cell technologies. Scientists from HZB could significantly improve on the efficiency of perovskite/silicon tandem solar cells. Prof. Steve Albrecht said, “This is a really big leap forward that we didn’t foresee a few months ago. All the teams involved at HZB, especially the PV Competence Center (PVComB) and the HySPRINT Innovation lab teams have worked together successfully and with passion.” (Source: Oil Price)
The Global Economy Is Finally Realizing That Fossil Fuels Are Finite (20 December 2022): By Gail Tverberg - We know that historically, many economies around the world have collapsed. We also know that there is a physics reason why this happens. Growing economies require a growing supply of energy to keep up with a growing population. At some point, the energy supply and other resource needs cannot grow rapidly enough to keep up with population growth. When this happens, economies tend to collapse. In their book Secular Cycles, researchers Peter Turchin and Sergey Nefedov found that economies tend go through four distinct phases in each cycle, with each stage lasting for quite a few years: Growth; Stagflation; Crisis; Inter-cycle (Source: Oil Price)
The Era Of Cheap Oil Has Come To An End (18 December 2022): By Irina Slav - In its latest monthly report, OPEC revealed it had yet again failed to produce as much oil as it agreed to produce the last time it discussed output. And it wasn’t by a few thousand barrels per day, either. The shortfall was some 1.8 million barrels daily, but more importantly, that sort of undershooting of its own target has become a regular thing for the cartel. Meanwhile, the United States federal government needs to buy some oil for its strategic petroleum reserve after releasing close to 200 million barrels from it this year as a way of countering fuel price inflation. Yet U.S. drillers are not in a rush to boost production. On the contrary, it seems production growth has lost its place among these companies’ top priorities.
Grid Bottlenecks Could Derail Europe’s Renewable Energy Boom (17 December 2022): By Rystad Energy - Europe’s energy transition ambitions face several challenges, but a major impediment to bringing new renewable power online is insufficient grid capacity. Rystad Energy’s current base case forecast has Europe adding as much as 530 gigawatts (GW) of solar PV and onshore and offshore wind between 2022 and 2030, more than 66 GW per year on average. Furthermore, the share of solar and wind combined as a share of total installed capacity surpassed 10% in 2010 and more than tripled in 2021, reaching 34%, according to Rystad Energy research. Growth is not expected to slow down anytime soon, as European countries are planning huge additions of renewables over the next few years. If Europe is to remain a leader in the energy transition, a huge amount of grid capacity will need to be developed, both to integrate new generation capacity into respective countries’ power mixes and to better connect European countries so that electricity can flow in the most optimal way. (Source: Oil Price)
Is Europe’s Energy Crisis Actually A Boon? (14 December 2022): By Irina Slav - The energy crisis that began last year in Europe and dramatically escalated following the EU response to Russia’s invasion of Ukraine has seen many in government worry about the survival of the continent during the winter. Yet not all see such a bleak picture. In fact, some believe that not only is the worst over for Europe but that the crisis actually did the EU a favor. That favor took the form of accelerating the buildout in renewables and the restart of hydrocarbon-fueled power plants. This take, which is certainly not very common right now, came from one investment manager, Per Lekander, who is managing partner at a firm called Clean Energy Transition LLP. Speaking to CNBC this week, Lekander said that Russia had, in fact, very little to do with Europe’s crisis, and it could even be said Vladimir Putin did Europe a favor. (Source: Oil Price)
Hydrogen Jets Could Help Decarbonize Air Travel (13 December 2022): By Felicity Bradstock - Plans for hydrogen jets are finally getting off the ground after years in the works. As one of the biggest carbon polluters, the aviation industry has been pumping huge quantities of funds into the research and development of low-carbon jet fuels and other potential emissions-reducing technologies. As international investment in green hydrogen increases, the aviation sector may finally be able to use the clean fuel to power flights in a momentous move towards the decarbonisation of air travel. In November, Rolls-Royce, in partnership with easyJet, moved to the testing phase of its low-carbon aviation development. The two companies conducted the ground test of a jet engine, using green hydrogen from tidal and wind energy to power it. Aerospace firm Roll-Royce said it was “the world’s first run of a modern aero engine on hydrogen,” marking a significant step towards the low-carbon future of aviation. (Source: Oil Price)
Scientists Make Breakthrough In $40 Trillion Nuclear Fusion Push (12 December 2022): By ZeroHedge - As the world moves towards net-zero emissions, sustainable and affordable power sources are urgently needed by humanity. As Visual Capitalist's Bruno Venditti details below, one of the most promising technologies, fusion, has attracted the attention of governments and private companies like Chevron and Google. In fact, Bloomberg Intelligence has estimated that the fusion market may eventually be valued at $40 trillion. Producing energy through nuclear fusion has been a long-held ambition for scientists and energy experts, and has prominently featured in science fiction novels and movies. The process involves fusing nuclei together, which throws off energy – which could then provide theoretically abundant energy on earth. Scientists have for decades tried to use nuclear fusion to produce electricity at a usable scale, however, replicating the reaction on Earth is highly challenging, requiring vast amounts of heat and pressure. (Source: Oil Price)
Saudi Aramco Seeks Investors For $110 Billion Unconventional Gas Project (12 December 2022): By Tsvetana Paraskova - Saudi Aramco is in early-stage talks with potential equity investors that would help fund a huge $110 billion unconventional gas field development in the Kingdom, sources with knowledge of the negotiations told Bloomberg on Monday. Aramco is seeking investors to back the field development of Jafurah, the largest non-associated gas field in Saudi Arabia, as the world’s top crude oil exporter looks to develop its gas assets to reduce dependence on oil for power generation and free up more crude for exports. Saudi oil giant Aramco has therefore contacted private equity firms and infrastructure funds that could invest in the midstream and downstream projects associated with the huge gas field, Bloomberg’s sources said. (Source: Oil Price)
OPEC Misses Production Quota By 310,000 Bpd (9 December 2022): By Julianne Geiger - A new survey from Argus showed on Friday that OPEC+ production fell to 38.29 million bpd last month—1.81 million barrels per day short of its reduced quota. The 19 OPEC+ members subject to the quota produced 310,000 bpd fewer barrels in November when compared to the month prior. But that’s still 1.81 million barrels per day short of its quota for November. November’s quota was a reduction of 2 million barrels per day off October levels, although it was understood at the time that the group might not be able to reach even that reduced target. Non-OPEC members of the OPEC+ group faired better than the traditional OPEC members, raising the combined output by 460,000 bpd—an eight-month high, according to Argus. Most of those increases came from Kazakstan, which saw a 330,000 bpd production increase, and Russia’s production, which saw an increase of 190,000 bpd after restarting Sakhalin 1. (Source: Oil Price)
Uzbekistan Rejects Putin’s Natural Gas Union Idea (8 December 2022): By RFE/RL staff - Uzbekistan has rejected the idea of creating a so-called "natural gas union" with Russia and Kazakhstan that was proposed by Russian President Vladimir Putin last month, a sign of the growing divide between Moscow and former Soviet republics over the war against Ukraine. Putin proposed creating a "gas union" with Kazakhstan and Uzbekistan on November 28 at talks with Kazakh President Qasym-Zhomart Toqaev in Moscow. Kremlin spokesman Dmitry Peskov said at the time that the idea was proposed to establish a mechanism to ship natural gas between the three countries and to other nations, including China. While such as deal would help the Central Asian countries ensure supplies during their peak needs, it has met resistance among populations wary of Moscow's intentions, especially at a time when it is waging war in another nearby part of the former Soviet Union. (Source: Oil Price)
Food Security Has Become A Central Priority For Many Emerging Markets (7 December 2022): By Oxford Business Group - Food security became a central priority for many emerging markets in 2022, against the post-Covid-19 pandemic backdrop of supply chain shocks, natural disasters and high commodity prices. While the second UN Sustainable Development Goal, promulgated in 2015, aims to end hunger by 2030, The Economist’s Global Food Security Index (GFSI) has fallen consistently over the last three years from a peak its 2019. As of 2020 some 2.4bn people – approximately 30% of the world’s population – did not have access to adequate food sources. Faced with these realities, several emerging markets have begun to take innovative steps to increase food security on a national, regional and global level. (Source: Oil Price)
Which Countries Are Paying The Most For Energy And Fuel? (6 December 2022): By ZeroHedge - For some countries, energy prices hit historic levels in 2022. Gasoline, electricity, and natural gas prices skyrocketed as Russia’s invasion of Ukraine ruptured global energy supply chains. Households and businesses are facing higher energy bills amid extreme price volatility. Uncertainty surrounding the war looms large, and winter heating costs are projected to soar. Given the global consequences of the energy crisis, Visual Capitalist's infographics below shows the price of energy for households by country, with data from GlobalPetrolPrices.com. At an average $11.10 per gallon, households in Hong Kong pay the highest for gasoline in the world—more than double the global average. Both high gas taxes and steep land costs are primary factors behind high gas prices. (Source: Oil Price)
Looming Recession May Be The Energy Transition’s Biggest Threat (4 December 2022): By Irina Slav - Raw material costs and looming shortages: these have been the dangers on the path of the world’s energy system transition from fossil fuels to low-carbon alternatives. Until inflation and recession reared their twin heads. Since the start of the year, economies in Europe and North America, previously stalwarts of economic growth, even with hiccups such as the 2008 financial crisis, have been slowing down, and fears of runaway inflation have been rising. While most of the media attention in this respect has been focused on consumer prices because this is ultimately what people worry about, inflation has contributed substantially to the rising costs of transition metals and minerals as it has added to continued supply chain snags from the pandemic period and to a longer-term problem in mining: absence of investment in new capacity. (Source: Oil Price)
Russia Boosts Production While OPEC+ Considers Deeper Oil Output Cuts (2 December 2022): By Tom Kool - With only 3 days to go until the EU ban on Russian seaborne crude imports gets implemented, Russian oil producers are going against all expectations and have actually ramped up production in recent weeks, according to some accounts. On October 5th, the group of oil producers known as OPEC+ agreed to cut production in November by 2 million bpd, ignoring calls from the U.S. to pump more crude to keep prices palatable for consumers. The proposed cut came at a moment when OPEC+ deemed it necessary to cut production to stabilize crude markets in the face of wavering global demand this autumn. One month later, the actual results of the proposed cuts are beginning to roll in. According to a Reuters survey, actual OPEC production in November amounted to 29.01 million bpd, some 710,000 bpd less than in October. The heavy lifting, according to the survey, was done by Saudi Arabia, which cut its November output by 500,000 bpd compared to October. (Source: Oil Price)