Solar Stocks Are Leading The Energy Market Recovery (31 May 2020): By Tsvetana Paraskova - The COVID-19 pandemic has hit every part of the energy industry, but investments in renewables are set to drop the least, while renewable energy stocks have outperformed the broader market since U.S. stocks cratered in March. Within the renewable sector, solar stocks have been on an uptrend for two years, while renewable energy stocks have outperformed fossil fuel stocks over the past ten years, including during the pandemic when the oil price crash badly bruised oil stocks. Shares in solar power companies such as Enphase and SolarEdge, as well as the Invesco Solar ETF (TAN), have rallied and are further expected to rise in the long term, due to the bright long-term prospects for renewable energy –including solar power – in the United States and around the world, Olivier Garret, Founding Partner & CEO of RiskHedge, argues in an article in Forbes. Sure, the pandemic has created a lot of uncertainty in all industries and services because of the months-long lockdowns in every major economy. Investments and funding for renewables are expected to become harder to get in view of the economic recession caused by the coronavirus. But COVID-19 has created much more uncertainty around the oil and gas industry and stocks as it posed again the question of how long the world will take to reach peak oil demand. Or whether we have already hit peak oil, considering that the pandemic might result in lasting changes in consumer behavior and lifestyles—a notion that even the bosses of BP and Shell are not ruling out. (Source: Oil Price)
Old EV Batteries Could Hold The Key To Solving The Energy Industry's Biggest Pro (30 May 2020): By Irina Slav - Here’s a fact you don’t often hear: electric cars are a tiny portion of the global market. “Tiny” here means 0.5 percent of all cars on the world’s roads. In absolute numbers, however, this “tiny” portion translates into millions of EVs, and this number is growing. But what do we do with all those batteries when they’re done with them? The idea of giving EV batteries a second life rather than recycling them has been around for a while. The most obvious direction for this second life is energy storage. After all, this is what rechargeable batteries do: they store energy for when it is needed. And they need to be replaced in an EV long before they are completely exhausted. In fact, EV batteries are considered to be at the end of their productive life for a car when it falls to 80 percent of their original capacity, which is still plenty of capacity that could be repurposed. (Source: Oil Price)
How Long Until Hydrogen Is Competitive At The Pump? (28 May 2020): By Jon LeSage - Hydrogen might have a way to break through one of the barriers that keeps it from reaching mass-scale adoption for fuel cell electric cars and trucks. French fuel company Air Liquide just released a new product in the US that can make hydrogen competitive with the average gasoline and diesel fuel station. Its high capacity of 1,000 kg and dual filling positions are capable of fueling 250 vehicles per day. Compare that to a gas station fueling 800 to 1,000 vehicles a day on average, and it would make hydrogen viable for retail stations that can add up to six of these new dual hydrogen filling pumps. Hydrogen fueling stations that have been installed in the US, Europe, Japan, and South Korea, have been quite limited in available fuel pumps — and the supply of hydrogen. The French company which supplies industrial gases and services to various industries has already started installing these new stations in Japan, South Korea, and Europe. (Source: Oil Price)
The Trillion Dollar Space Race Crosses Another Milestone (27 May 2020): By Josh Owens - On October 3rd, 1942, Germany’s V-2 A4 rocket became the first-ever man-made object to reach space. 15 years and one day later, the Sovie Union launched Sputnik into space, the first satellite. Then, after more than a decade’s wait, the Cold War-fueled space race saw Apollo 11 successfully send humanity to the moon. Now, in 2020, space has once again captured our imagination and multiple entrepreneurs are attempting to launch space tourism as a legitimate industry. Today, SpaceX will take a large step towards that goal when it becomes the first private company to launch astronauts up to the International Space Station. But in a world that has become obsessed with controlling its carbon footprint, the jump from NASA-funded space missions to tourism is a significant one. (Source: Oil Price)
Tacking The U.S. Infrastructure Crisis Could Save The Economy (26 May 2015): By Michael Kern - Spending on public projects helped pull the United States out of the Great Depression and created a lasting network of employment that helps support America even today. Now, as the country grapples with a new economic crisis sparked by the COVID-19 pandemic, the timing has never been better to address the country’s $3.9 trillion infrastructure dilemma. Across the United States, neglected roads, airports, electrical grids, and water distribution facilities are taking a toll on the American economy. In fact, a report from ASCE suggests that failing to address the nation’s crumbling infrastructure could result in a $3.9 trillion hit to the country’s GDP by 2025. (Source: Oil Price)
Oil Firms Among Worst Hit As Wave Of Bankruptcies Hits Texas (25 May 2020): By Tsvetana Paraskova - Oil and gas companies, as well as the retail industry, are the worst hit sectors in the COVID-19 pandemic that swept through businesses in Texas, bankruptcy and restructuring lawyers say. According to data provided exclusively to The Texas Lawbook by Androvett Legal Media research, more than 545 companies of all sectors in Texas filed for Chapter 11 protection from creditors between January 1 and May 5, 2020. This is a surge of 133 percent compared to the same period of 2019, Mark Curriden at The Texas Lawbook writes in Houston Chronicle. Within Texas, Houston is the center of the wave of bankruptcies, which include many names in the retail and oil industries, according to the data and to bankruptcy partners at law firms. In April, companies such as Diamond Offshore Drilling and Whiting Petroleum filed for Chapter 11 bankruptcy protection. U.S. shale gas pioneer Chesapeake Energy said in May it was evaluating a Chapter 11 bankruptcy protection reorganization—along with other options—as the low oil and gas prices weigh heavily on its finances and substantial outstanding debt. (Source: Oil Price)
Natural Gas Prices In Europe Could Be Heading Into Negative Territory (24 May 2020): By Tsvetana Paraskova - The next negative prices in energy contracts could soon be seen in European natural gas prices as lockdowns batter demand while storage capacity for the commodity is running out, analysts and traders told Reuters on Friday. “If it will happen today or next week, it’s hard to say. This weekend we have very low demand and strong supply, so weekend prices might go close to negative,” a European gas trader told Reuters. Prices at the Dutch TTF hub and the prompt UK wholesale gas prices have recently slumped by 20-30 percent to low single-digits, and there is a risk that they may go negative because gas demand in Europe is still very weak while storage is close to capacity. (Source: Oil Price)
Oil & Gas Decommissioning To Total $42 Billion Through 2024 - Energy companies have been slashing exploration and production budgets since the Covid-19 pandemic took hold and sent oil prices tumbling, but, with few profitable investment alternatives, operators are now likely to increase spending in decommissioning work. Rystad Energy estimates the total value of the global pool of decommissioning projects that will accumulate through 2024 could reach $42 billion. With an average asset age of 25 years, the Northwest European decommissioning market could grow 20% in annual commitments through 2022 if the current low oil prices don’t show signs of substantial recovery soon. In addition to a rapidly maturing asset base and low oil prices that erode commercial viability and potential life extensions, the North Sea decommissioning market will also be helped by favorable service contract prices. (Source: Oil Price)
Goldman Sachs: OPEC To Dominate Oil Markets For The Foreseeable Future (22 May 2020): By Irina Slav - OPEC will regain its position as a dominant force on international oil markets after the world emerges from the current crisis, Goldman Sachs analysts have forecast in a report titled Top Projects 2020. Highlights from the report published by Forbes reveal the reasons for this forecast and these all have to do with the industry’s reaction to the events of the last few months: plummeting prices and skyrocketing supply. As in the 2014, Goldman said in its report, the industry is seeing shrinking investments in new exploration. This will eventually lead to tighter supply. But at the same time, the industry is under pressure from shareholders for higher returns and a cleaner carbon footprint. This could likely change their spending habits in the long run. “Under-investment in oil, and increasing focus on returns, deleveraging, free cash flow and ongoing capital discipline are taking a toll on oil resources life,” the bank’s analysts said as quoted by Forbes’ Tim Treadgold. This, according to them means more so-called stranded assets. In other words, assets that are uneconomical to exploit. (Source: Oil Price)
Why The Covid Crisis Is A Pivotal Moment For Renewables (21 May 2020): By Alex Kimani - The global energy and travel industries have been some of the hardest hit by the coronavirus crisis, with the energy market experiencing its biggest shock post-WWII. Widespread lockdowns have resulted in energy demand plummeting, dwarfing the decline recorded during the 2008 financial crisis. A new report by the International Energy Agency (IEA), based on analysis of 100 days of data, states that global energy demand in the current year is set to plunge 6% Y/Y, the equivalent of losing the entire energy demand of India. The silver lining, though, is this: A global economy on the skids is leading to the biggest drop in CO2 emissions on record with renewables playing an even more prominent role in the electricity generation mix. The bad news removes some of the shine: Oil demand is set to experience the biggest contraction of all major energy sources. (Source: Oil Price)
OPEC+ Deal Could Collapse As Oil Prices Shoot Up (20 May 2020): By Tsvetana Paraskova - The OPEC+ coalition appears determined to ease the global oil glut and lift the oil prices that had cratered in April because of OPEC+ wrangling and crashing global demand in the pandemic. Oil prices have rallied since the start of the new OPEC+ cuts. These cuts, along with curtailments in North America, have combined with improved global oil demand and the new notion that the worst of the demand collapse is likely behind us, to instill confidence in the market that it is now heading for a deficit. The more bullish sentiment, however, raises another question—will producers be tempted by rising crude oil prices to disregard quotas within OPEC+? Will U.S. shale resume drilling activity sooner than the market needs it? (Source: Oil Price)
Shale Restart Threatens WTI Rally (19 May 2020): By Irina Slav – West Texas Intermediate has been on a roll, rising above $30 a barrel last week for the first time in two months. This, however, may be about to end. The number of active drilling rigs in the United States has been falling for nine weeks straight and is now 60 percent lower than it was in late March, Reuters’ John Kemp said in his weekly column on prices. That’s when hedge funds began scooping up WTI contracts, Kemp noted, accurately predicting that the price level at the time was unsustainable. Indeed, despite posting its first negative price ever last month, the U.S. benchmark has been doing better now, thanks almost exclusively to the deep production cuts that shale drillers have been forced to implement. And yet the situation remains extremely volatile with the downward potential for prices still too abundant for comfort. (Source: Oil Price)
How To Play The Next Big Rally In Gold (13 May 2020): By Charles Kennedy - The pandemic lockdown is killing the global economy, and while stocks are rebounding on the slim hope that everything will eventually go back to normal, Wall Street knows a fear bargain when it sees one, and this could be gold’s time to shine, while some other commodities get crushed. Gold is trading at over $1,688 an ounce right now. And it’s going to hit $3,000 an ounce in about 18 months, according to the Bank of America. So imagine buying it in the ground for $3-$4 an ounce instead. When Wall Street goes bargain hunting, it’s looking for discount gold. One way it does so is by targeting junior miners with in the ground gold assets, setting short-term price targets that make these global gold assets a cheap base price for investors who are fleeing the next potential economic meltdown. (Source: Oil Price)
Tesla Could Launch A Million-Mile Battery This Year (14 May 2020): By Tsvetana Paraskova - Tesla is set to launch a million-mile battery as soon as this year or early in 2021 for its Model 3 in China, as part of a wider plan to introduce longer-lasting, low-cost batteries that would bring electric vehicle (EV) prices to parity with conventional gas-powered cars, Reuters reported on Thursday, citing sources familiar with the EV maker’s plans. A million-mile battery would be just one pillar of Elon Musk’s strategy to make Tesla an energy company, according to the sources. Last year, a team from the Dalhousie University in Halifax, Canada, who do research for Tesla, said in a paper that they had tested lithium-ion battery cell chemistry expected to be able to power electric vehicles (EVs) for more than 1 million miles and last at least two decades in grid energy storage. (Source: Oil Price)
Tesla Energy: Elon Musk's Next Big Plan (13 May 2020): By Haley Zaremba - The way that you trade energy could soon have a whole lot more star power. Elon Musk is entering the energy trading scene with a new Tesla Energy software asset called Autobidder, which would allow both providers and consumers to exchange their energy capacity. The software is currently being used to run the company’s new battery farm in South Australia. Electrek reports that Autobidder is just one of the early steps in Tesla’s ultimate goal of becoming an electric utility company. Last year the EV news site reported that, according to Elon Musk, “the company’s energy division, Tesla Energy, is becoming a distributed global utility and it could eventually outgrow Tesla’s automotive business.” (Source: Oil Price)
Russia’s Top Oil Company Cuts Investment Due To OPEC+ Deal (12 May 2020): By Tsvetana Paraskova - Russia’s largest oil producer, Rosneft, will slash its investments for 2020 by 21 percent from earlier plans, due to the dramatic situation on the oil market and the new OPEC+ deal in force since May 1, Rosneft’s chief executive Igor Sechin told Russian President Vladimir Putin on Tuesday. Considering the dramatic state of the global oil market and the decision to cut oil production, Rosneft will have to optimize its capital expenditures, Sechin told Putin, the Kremlin said today. Rosneft will try to keep its investment program for this year at around US$10.2 billion (750 billion Russian rubles), down from US$12.9 billion (950 billion rubles) in capex planned earlier, Sechin said. (Source: Oil Price)
When Will The Next Oil Price Cycle Begin? (11 May 2020): By Salman Ghouri - The world will soon bounce back from this pandemic, but the recovery will be rough and painful. The current low oil price environment will also come to an end, with prices possibly spiking as demand recovers. The extent of oil and gas exploration and production is largely driven by current oil prices, future expectations of oil prices, and availability of resources. Higher oil prices generally lead to large investments in upstream operations, while lower oil prices can lead to a drastic drop in investment. Persistently lower oil prices from 2014 to 2016 led to underinvestment in upstream and fewer Final Investment Decisions for oil projects. Investments in upstream, for example, plunged from $1079 billion in 2014 to $900 billion in 2015 and then further down to $583 billion in 2016. This is because lower oil prices severely affect the revenues, cashflows, and profitability of oil and gas companies. That leads to fewer resources being available for future investment in exploration and production activities. The question now, is what will happen to the oil and gas industry post-COVID-19? Should we expect the regime of lower oil prices to linger or will oil prices bounce back? (Source: Oil price)
The Major Problem With Shutting Down Oil Wells (10 May 2020): By Irina Slav - Oil well shut-ins are the new black. Everyone, especially in the U.S. shale patch, seems to be shutting in wells in response to what is shaping up to be the Great Glut of 2020. Now, many are asking how all these wells will be restarted once prices improve. The answer? Nobody knows. Shutting in oil wells is markedly different from flipping a switch. It is a job that has to be done with extreme care based on the characteristics of the formation into which the well is drilled, its rate of production, and the specificities of the oil that flows from it. But even with careful planning, there is a risk of permanent damage if the well remains shut-in for more than a couple of weeks. (Source: Oil Price)
Oil Producers May Ditch Old FPSO Offshore Projects In This Downturn: The swift oil price crash caused by the Covid-19 pandemic will reduce the combined free cash flow of FPSO fields, which have produced above three quarters of their original resources at just $2.20 per barrel this year. This is a jaw-dropping decline from 2019’s $11.10 per barrel, a Rystad Energy impact analysis reveals. We also estimate that 40% of the 96 assets which have produced more than 75% of their original resources will end 2020 with a negative cash flow. Given our base case oil price outlook, with prices recovering next year and into 2022, free cash flow will climb back to 2019 levels. However, as these mature fields see production stagnate, free cash flow will quickly return to a decline, ultimately threatening the profitability of many FPSO assets. (Source: Oil Price)
U.S. Oil Towns Could Take Years To Recover From Crude Price Shock (8 May 2020): By Tsvetana Paraskova - Oil towns and counties in America’s states most dependent on oil revenues are once again hit by the bust in the oil cycle, but this time the drilling activity slump and the job losses came faster than in previous downturns. And it may take years for communities and state economies to recover from the oil price crash and the lockdowns in COVID-19 pandemic, state and town officials told The Hill. Oil towns in Alaska, North Dakota, Wyoming, Texas, and Oklahoma are accustomed to the boom-and-bust nature of the oil industry, but this time around, the economic prospects and job losses are aggravated by the layoffs in the hospitality and entertainment industry amid the lockdowns to curb the spread of the coronavirus. (Source: Oil Price)
Why Is Russian Crude So Expensive? (7 May 2020): By Viktor Katona - One of the main reasons why the coronavirus-induced price slump feels so odd is that it is accompanied by a prolonged price war that has simultaneously dropped crude differentials, in many instances to levels unseen in the past 8-10 years. The price war was started by Saudi Arabia’s national oil company Saudi Aramco mid-March when it cut its April prices by $6-7 per barrel month-on-month, in a move that was at the time perceived as Riyadh’s claim to safeguard or even increase its market share come what may, a strategy that was continued with May-loading cargoes. Yet despite fears that Russia’s main export grade Urals will inevitably fall victim to such an aggressive Saudi marketing strategy, Urals’ allure has caught market watchers somewhat offguard. (Source: Oil Price)
Low Crude Prices Force Another Oil Major To Slash Dividends (6 May 2020): By Tsvetana Paraskova - Suncor Energy is axing its quarterly dividend by 55 percent to reduce its cash breakeven to a WTI Crude price of US$35 a barrel, one of Canada’s biggest oil firms said on Wednesday. Suncor made the statement when reporting a huge Q1 loss due to impairments stemming from the low oil prices. "After taking significant action in reducing capital and operating costs, the Board believes that reducing the current level of dividends is required to drive down the cash breakeven of the company to a WTI price of US$35 per barrel," Mark Little, president and chief executive officer at Suncor Energy, said in a statement. Suncor Energy’s Board has decided to cut the quarterly cash dividend by 55 percent to US$0.15 (C$0.21) per common share. As early as in March, Suncor announced cuts to its oil production and spending for this year, as did all Canadian, American, and international oil companies in response to the oil price collapse. (Source: Oil Price)
U.S. Energy CO2 Emissions Drop In 2019, Offsetting 2018 Rise (5 May 2020) By Tsvetana Paraskova - Energy-related carbon dioxide (CO2) emissions in the United States declined by 2.8 percent last year, offsetting a 2.9-percent carbon emissions increase in 2018, the Energy Information Administration (EIA) said on Tuesday. CO2 emissions related to energy use in 2019 dropped more than energy consumption in the United States, which fell by 0.9 percent in 2019, the EIA has estimated. The 2019 drop in CO2 emissions in the energy sector offset the prior year’s increase in those emissions, which was the only annual rise in CO2 energy-related emissions in the past five years. In 2018, higher natural gas consumption due to extreme summer and winter weather and increased petroleum demand in transportation in a strong economy resulted in the United States reversing several years of CO2 emissions reductions in the energy sector. Back in 2018, U.S. energy-related CO2 emissions increased compared to 2017, primarily due to the higher emissions from natural gas and petroleum. The emissions increase in 2018 was the first such annual rise since 2014, the EIA said in November 2019. Even with the 2018 rise, the emissions in 2018 were still 12 percent lower than the energy-related emissions back in 2005, according to EIA’s data series. (Source: Oil Price)
Why The Next Oil Price Cycle Is So Important For Saudi Arabia (4 May 2020): By Vanand Meliksetian - Time is running out for oil-dependent nations. The world is transforming quickly and climate change is accelerating oil’s demise even faster. Despite fossil fuel’s so-called imminent fall of grace with buyers, most consumers will require oil and gas in the foreseeable future. Before the Coronavirus devasted the global economy, oil consumption was slated to grow slightly until 2030 and remain stable for the next couple of decades. Although it is unclear how demand will develop after the current crisis, certain energy-dependent nations are using the opportunity to create a modern economy and reduce dependence. Especially Saudi Arabia has been vocal on this point during the past couple of years. Ever since the reform-minded crown prince became the de facto leader of the oil-rich kingdom, Riyadh has laid out plans to transform the country's economy. This includes social transformation as well as physical investments in technology and infrastructure. In order to increase economic activity, Saudi women should participate more in the workforce which stands at 23 percent currently (the global average is 48 percent). (Source: Oil Price)
COVID-19 Could Accelerate The Arrival Of Peak Oil Demand (3 May 2020): By Tsvetana Paraskova - Until three months ago, the oil industry was pinning its hopes on aviation, alongside petrochemicals, for continued growth in oil demand for at least another decade. The aviation industry, however, was dealt a near-deadly blow by the coronavirus pandemic, which upended all plans for fleet utilization for years to come. Airlines and aircraft manufacturers do not expect global airline traffic to return to 2019 levels for several years, while air carriers are set to retire the older, larger, less fuel-efficient aircraft earlier than planned. This could speed up the arrival of peak oil demand, considering that jet fuel demand—albeit with a small overall share of oil demand—was expected to be the key driver of oil demand growth over the next two decades, alongside petrochemicals. (Source: Oil Price)
Does Nuclear Power Have A Future?: The discussion today about nuclear energy is nothing short of tribal, two warring camps shouting slogans at each other. This so-called debate reminds us of a popular beer commercial from years ago where two men couldn’t decide what their preferred characteristic of Millers Light was, whether it “tastes great!” or was instead “less filling”. Applying this beer ad approach to the construction of new nuclear power stations would involve two opposing teams. The pro-nuke squad, attempting to take the environmental high ground (a bold move), would shout out “zero-carbon”. In a previous iteration no longer appropriate, the rallying cry was - compelling from an economic perspective - “too cheap to meter”. The anti-nuclear forces have broken into two opposing squads. The European team, very effective in shutting down nuclear capacity, going with the ever-popular “No more Chernobyls,” while cheeky, cost-conscious Americans (present company included) have been shouting “too expensive to matter”. (Source: Oil Price)
The Next Perovskite Solar Breakthrough Could Give Us Endless Energy By 2025 (1 May 2020): By Alex Kimani - Harnessing the motherlode of the sun’s power is almost within our reach. The sun, our primary source of energy, bathes our Blue Planet in more solar energy than we can ever hope to reasonably use. Each hour, the sun sends 430 quintillion Joules of energy our way, more than the 410 quintillion Joules that humans consume in a whole year. With the sun likely to be around for another five billion years or so, we have a virtually unlimited source of energy--if only we could tap it efficiently. Unfortunately, we are currently only able to harness a minuscule amount of this energy due to technical limitations. But that could be about change, thanks to advances in one wonder-crystal--perovskite. (Source: Oil Price)