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On Wednesday, oil jumped above $50/bbl for the first time this year. According to the Energy Information Administration (EIA), U.S. crude oil stockpiles shrank by 4.23 million barrels last week to total 537.1 million barrels. That was the biggest drop in seven weeks, exceeding an expected decrease of 2 million. Crude stocks at the Cushing, Oklahoma, and the delivery hub for futures fell 649,000 barrels.  Supply to US shrank due to lower imports from Canada.

Asia

In South East Asia, the volumes of oil stored offshore have increased. In Singapore, a fleet of 40 supertankers is currently anchored in the region's coastal waters for use as floating storage facilities. The tankers are filled with 47.7 million barrels of oil, mostly crude, according to Thomson Reuters Eikon. That means, that output disruptions across the globe did not have significant impact on South East Asia. Crude oil, mainly from the Middle East, continues to flood Asian market.

Global volumes of oil held on tankers grew by 10.3 million barrels to 88.9 million in April, the most since June 2015, the International Energy Agency said. Furthermore, demand for oil storage soars amid supply glut.

Rosneft

Russian state-owned company Rosneft seeks to enter South Asian oil markets, mostly supplied by Middle Eastern producers. In the near term, the company plans to acquire two refineries - in India and Indonesia - and to start crude oil supplies to the new markets. Rosneft have already announced a deal with India's Essar Oil, which owns the refinery and a network of around 2,000 gas stations across the country. This year Russian company plans to purchase 49% stake in Essar Oil and to start sending its first regular deliveries of crude to India.

Rosneft intends to enter Indonesian market in a similar way, investing in the refinery construction. On Thursday, state-owned Indonesian oil company PT Pertamina said it hopes to take a majority share (at least 51% stake) in a near-$14 billion Indonesia-refinery venture with Russian Rosneft. The venture plans to build a refinery in eastern Java, capable of processing 320,000 barrels of oil a day. Russian company would supply crude oil to the refinery, and the deal could also include Pertamina's taking minority stakes in Russian oil fields. Later on Thursday two companies signed the agreement. 

$50/bbl Is Pain At The Pump

As oil prices rise some South Asian countries may have to increase their spendings on fuel subsidies. We are talking here about multibillion-dollar burden. India, Malaysia, Indonesia and Thailand are among big fuel consumers in the region that took advantage of the slump in oil prices to scale back long-standing government assistance for gasoline, diesel and other fuels. According to BMI Research, diesel prices in Delhi have climbed more than 7% this year, while diesel in Thailand is up 17%, hurting motorists and other energy consumers across Asia.  

Canada

The country is on the way to resume crude production in oil-sands. Last Friday, municipal authorities in Alberta lifted mandatory evacuation orders for seven oil-sands worker camps and production facilities. The threat posed by the wildfire that shut down 1.2 million barrels of daily oil production has not completely passed, but oil-sands companies have begun sending crews back up to northern Alberta to prepare to restart their facilities.

Iran

Iran has boosted exports by around 1 million b/d by now after the sanctions were lifted in January. According to Reuters, Iranian crude oil exports in April reached 2.3 million b/d, exceeding forecasts. In May last year Iran was exporting about 1.3 million b/d. Tehran is regaining market share at a faster pace than analysts had projected as it battles with Saudi Arabia for customers by cutting its prices. In the near term, competition may lead to increases of as much as 1 million b/d in Saudi Arabia's output as it struggles for regional supremacy with Iran.

Libya

Crude exports resumed from the Libyan port of Hariga after the National Oil Corp. and officials based in the east reached an agreement last week. Since the deal was announced, the tanker Seachance loaded 660,000 barrels of crude and sailed from Hariga on Friday, Tripoli-based National Oil Corp. said in a statement. The cargo was the first international shipment from the port since the regime in the east refused to let the tanker leave port in early May. 

Nigeria

Eni reported another attack in the Niger Delta. On Sunday, militants blew up the Tebidaba-Brass pipeline with dynamite. Attacks in the Niger Delta region in the last few weeks have driven the country's oil output to a more than 20-year low. 

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U.S. renewable electricity generation has doubled since 2008

U.S. annual renewable generation

Source: U.S. Energy Information Administration, Electric Power Monthly

Renewable generation provided a new record of 742 million megawatthours (MWh) of electricity in 2018, nearly double the 382 million MWh produced in 2008. Renewables provided 17.6% of electricity generation in the United States in 2018.

Nearly 90% of the increase in U.S. renewable electricity between 2008 and 2018 came from wind and solar generation. Wind generation rose from 55 million MWh in 2008 to 275 million MWh in 2018 (6.5% of total electricity generation), exceeded only by conventional hydroelectric at 292 million MWh (6.9% of total generation).

U.S. solar generation has increased from 2 million MWh in 2008 to 96 million MWh in 2018. Solar generation accounted for 2.3% of electricity generation in 2018. Solar generation is generally categorized as small-scale (customer-sited or rooftop) solar installations or utility-scale installations. In 2018, 69% of solar generation, or 67 million MWh, was utility-scale solar.

U.S. annual net generation, wind and solar

Source: U.S. Energy Information Administration, Electric Power Monthly

Increases in U.S. wind and solar generation are driven largely by capacity additions. In 2008, the United States had 25 gigawatts (GW) of wind generating capacity. By the end of 2018, 94 GW of wind generating capacity was operating on the electric grid. Almost all of this capacity is onshore; one offshore wind plant, located on Block Island, off the coast of Rhode Island, has a capacity of 30 megawatts. Similarly, installed solar capacity grew from an estimated less than 1 GW in 2008 to 51 GW in 2018. In 2018, 1.8 GW of this solar capacity was solar thermal, 30 GW was utility-scale solar photovoltaics (PV), and the remaining 20 GW was small-scale solar PV.

Growth in renewable technologies in the United States, particularly in wind and solar, has been driven by federal and state policies and declining costs. Federal policies such as the American Reinvestment and Recovery Act of 2009 and the Production Tax Credit and Investment Tax Credits for wind and solar have spurred project development.

In addition, state-level policies, such as renewable portfolio standards, which require a certain share of electricity to come from renewable sources, have increasing targets over time. As more wind and solar projects have come online, economies of scale have led to more efficient project development and financing mechanisms, which has led to continued cost declines.

Conventional hydroelectric capacity has remained relatively unchanged in the United States, increasing by 2% since 2008. Changes in hydroelectric generation year-over-year typically reflect changes in precipitation and drought conditions. Between 2008 and 2018, annual U.S. hydroelectric generation was as low as 249 million MWh and as high as 319 million MWh, with hydroelectric generation in 2018 totaling 292 million MWh. Generation from other renewable resources, including biomass and geothermal, increased from 70 million MWh to 79 million MWh in the United States between 2008 and 2018, and it collectively represented 1.9% of total generation in 2018.

March, 20 2019
Your Weekly Update: 11 - 15 March 2019

Market Watch

Headline crude prices for the week beginning 11 March 2019 – Brent: US$66/b; WTI: US$56/b

  • Global crude oil prices continue to remain rangebound despite bearish factors emerging
  • News that Libya was restarting its 300,000 b/d Sharara field could weaken the ability of OPEC to control supply, while a report from the US EIA hints that the market was moving into a glut
  • The EIA report showed that commercial crude inventories in the US rose by 7.1 million barrels, far higher than the 1.6 million barrel increase predicted, with a 873,000 barrel increase at Cushing and a 12% y-o-y drop in crude imports
  • By the end of 2019, with American output surging and Saudi Arabia curtailing production, the US could export more oil and liquids than the world’s largest exporter
  • Meanwhile in OPEC, PDVSA has received some aid from Russia with Rosneft agreeing to send heavy naphtha to Venezuela – a product necessary to thin heavy Venezuela crude to move by pipeline to the coast that have been affected by the American sanctions
  • On the demand side, Morgan Stanley has predicted that China’s oil consumption will peak in 2025, some 5-8 years earlier than most expectations, driven by a shift in cars towards electric vehicles and high-speed rail
  • The US active rig count fell for a third consecutive week, following a 9 rig fall with an 11 rig drop last week, with nine oil sites and two gas sites scrapped
  • Despite the bearish factors, it looks like crude has found a new comfortable range with Brent at US$65-67/b and WTI at US$56-58/b for the week


Headlines of the week

Upstream

  • Despite security concerns, Libya has restarted its largest oil field, with output at 300,000 b/d Sharara expected to reach 80,000 b/d initially, throwing a new spanner in the OPEC goal of controlling supply
  • A one-year delay to Enbridge’s Line 3 conduit in Canada due to regulatory issues has thrown new troubles onto Alberta’s beleaguered crude industry
  • ExxonMobil is planning a major acceleration of its Permian assets, aiming to produce more than 1 mmboe/d by 2024, an increase of nearly 80%
  • China has announced plans to form a national oil and pipeline company, part of a natural energy industry overhaul that will give the new firm control over at least 112,000 km of oil, gas and fuel pipelines currently held by other state firms
  • Equinor, with Petoro, ConocoPhillips and Repsol, have announced a new oil discovery in the North Sea, with the Telesto well on the Visund A platform potentially yielding 12-28 million barrels of recoverable oil
  • Aker Energy has reported a new oil discovery at the Pecan South-1A well offshore Ghana, with the Pecan field expected to hold 450-550 mboe of oil
  • Production declines at Kazakhstan’s three main oil fields will see the country slash crude exports by 2% to 71 million tons this year, with cuts mostly to China

Midstream & Downstream

  • Canadian Natural Resources is looking to ease pressure on the Alberta crude complex by bringing its 80 kb/d North West Redwater refinery online this year
  • Work has begun on the upgrade and expansion of Egypt’s Middle East Oil Refinery near Alexandria, with the project expected to boost capacity to 160 kb/d and quality to Euro V through the installation of a new CDU and VDU
  • Bahrain’s BAPCO has announced plans to expand its Sitra oil refinery by early 2023, growing capacity from 267 kb/d to 360 kb/d

Natural Gas/LNG

  • India has started up its first LNG regasification facility on the east coast, with the Ennore terminal expected to service the major cities of Chennai and Madurai
  • Total has signed an agreement with Russia’s Novatek for the formal acquisition of a 10% stake in the Arctic LNG 2 project, bringing its total economic interest in the 19.8 mtpa project in the Yamal and Gydan peninsuals to 21.6%
  • Thailand’s PTTEP has announced a new offshore gas find in Australia’s portion of the Timor Sea, with the Orchid-1 well striking gas and expected to be incorporated into the Cash-Maple field with 3.5 tcf of resources
  • Crescent Petroleum and Dana Gas’s joint venture Pearl Petroleum Company is aiming to boost gas production at Khor Mor block in Iraq’s Kurdistan region by 63% with an additional 250 mmscf/d of output
  • Petronas’ 1.2 mtpa PFLNG Satu – the world’s first floating LNG vessel – has completed its stint at the Kanowit field and will now head to its second destination, the Kebabangan gas field offshore Sabah
  • Chevron is looking to revisit its Ubon wet gas project in Thailand after a period of hiatus as the supermajor recalibrated its development costs
  • Nigeria’s NLNG Train 7 LNG project is expected to reach FID in the third quarter of the year after multiple delays
  • ExxonMobil and BP have agreed to collaborate with the Alaska Gasline Development Corporation to advance the Alaska LNG project
  • Energean Oil and Gas has started its 2019 drilling programme in Israel, focusing on four wells, including one in Karish North near the Karish discovery
March, 15 2019
Latest issue of GEO ExPro magazine covers New Technologies and Training Geoscientists, with a geographical focus on Australasia and South East Asia

GEO ExPro Vol. 16, No. 1 was published on 4th March 2019 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.

This issue focuses on new technologies available to the oil and gas industry and how they can be adapted to improve hydrocarbon exploration workflows and understanding around the world. The latest issue of GEO ExPro magazine also covers current training methods for educating geoscientists, with articles highlighting the essential pre-drill ‘toolbox’ and how we can harness virtual reality to bring world class geological locations to the classroom.

You can download the PDF of GEO ExPro magazine for FREE and sign up to GEO ExPro’s weekly updates and online exclusives to receive the latest articles direct to your inbox.

Download GEO ExPro Vol. 16, No. 1

March, 14 2019