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Last Updated: March 8, 2018
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Headline crude prices for the week beginning 5 March 2017 – Brent: US$65/b; WTI: US$62/b

  • Crude oil prices began the week on a stronger note, bouncing back from market jitters of American plans to impose steep tariffs on steel and aluminium imports to trade on indications that US crude inventories continue to fall.
  • Tanks at the important storage hub in Cushing, Oklahoma are at their lowest levels since 2014, as a booming American economy and backwardisation structure in futures trading encouraging drawdowns.
  • However, despite the fall in Cushing, overall US crude stockpiles rose more than expected – up by a preliminary estimate of 5.66 million barrels - providing some drag to the market.
  • The US is expected to become the world’s largest oil producer in 2019, overtaking Russia, with Saudi Arabia remaining the world’s largest exporter for the foreseeable future.
  • The upward march of American output remains the single largest drag on crude prices, and a key variable in determining direction, as the EIA confirmed that American production shattered a 47-year old output record last November, hitting 10.044 mmb/d.
  • OPEC commented that while it was committed to ensuring the market was rebalance by mid-2018, it warned that there was a risk of an ‘upcoming energy crisis’, sown by the current seeds of under-investment.
  • The US active oil rig count hit 800 for the first time in almost three years, gaining a single site. Along with 2 new gas rigs, the US rig count stands at 981 as of last Friday.
  • Crude price outlook: Crude prices should stay steady this week, with prices in the US$65-66/b range for Brent and US$62-63/b for WTI.

Headlines of the week

Upstream

  • The hits keep coming for ExxonMobil in Guyana, as it and partner Hess made a seventh major offshore discovery in two years in the Pacora-1 well. Development will be folded into the plans for the Payara field, which should bring Guyanese output up to a potential 500,000 bpd.
  • While Turkey squabbles with Cyprus over gas fields, Greece is hoping to make its own discoveries, sanctioning development of four blocks in the west of the country by Total, Italy’s Edison and Hellenic Petroleum.
  • Mexico will be hoping that the shale revolution can begin within its borders, as it offers up nine onshore areas in Tamaulipas state that will be awarded to private firms for the first time in September.
  • Thawing relations with China, The Philippines has identified two offshore sites – SC-57 and SC-72 at Reed Bank – which could be prototypes for proposed joint upstream activities with China.
  • Bolivia’s YPFB has reportedly signed an MoU with Dubai’s Kampac Oil and London’s Milner Capital to jointly invest US$2.5 billion to developing the Madre de Dios oil and gas basin in northern Bolivia.
  • Japan’s Inpex has been awarded a 10% interest in Abu Dhabi’s Lower Zakum concession for 40 years; separately, Inpex’s stake in the Satah and Umm al Dalkh concession has also been extended for 25 years.

Downstream

  • After years of delays, Vietnam’s second oil refinery in Nghi Son is ready for commercial startup in April, processing Kuwaiti crude. The country’s third refinery, in Long Son, also broke ground last week.
  • Total is aiming to build and operate a 150 kb/d greenfield refinery in Iraq, which would be linked to the Nassirya oilfield. Originally planned for 300 kb/d, PetroChina and Lukoil are also reportedly interested.
  • Poland’s plan to push for a merger of its two state oil refiners – PKN Orlen and Lotos – has met with intense political opposition once again.
  • Tullow Oil and its partners expects to finalise the construction of an export pipeline – linking the inland Amosing and Ngamia fields to the port of Lamu – by mid-2018, clearing the way for output to begin in 2022.

Natural Gas/LNG

  • While there has been no damage to ExxonMobil’s gas pipeline in Papua New Guinea after a 7.5 magnitude quake, it will take 8 weeks to repair and restore production at the PNG LNG plant, with ExxonMobil declaring force majeure on all exports as it continues to assess damage to gas fields.
  • Dominion Energy’s Cove Point export terminal in Maryland, USA has been cleared for commercial startup, shipping its first LNG cargo to Europe, becoming the second American LNG export facility to operate.
  • Timor Leste and Australia are on the verge of agreeing on a permanent maritime border at the Permanent Court of Arbitration, paving the way to develop the Greater Sunrise offshore gas field that had been shelved previously due to disputed oceanic borders. 
  • There may finally be some movement in the Philippines’ planned LNG import facility, as four potential investors – including Tokyo Gas and domestic power player First Gen – have reportedly expressed interest.
  • Japan’s Jera and Marubeni are reportedly teaming up with Australia’s Fortescue Metals to build a 2 mtpa LNG import terminal in New South Wales, which would help ease the east coast natural gas crunch.
  • India has begun to receive its first US LNG as Cheniere begins its 20-year contract with GAIL, supplying 3.5 mtpa of LNG per year.

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The United States consumed a record amount of renewable energy in 2019

In 2019, consumption of renewable energy in the United States grew for the fourth year in a row, reaching a record 11.5 quadrillion British thermal units (Btu), or 11% of total U.S. energy consumption. The U.S. Energy Information Administration’s (EIA) new U.S. renewable energy consumption by source and sector chart published in the Monthly Energy Review shows how much renewable energy by source is consumed in each sector.

In its Monthly Energy Review, EIA converts sources of energy to common units of heat, called British thermal units (Btu), to compare different types of energy that are more commonly measured in units that are not directly comparable, such as gallons of biofuels compared with kilowatthours of wind energy. EIA uses a fossil fuel equivalence to calculate primary energy consumption of noncombustible renewables such as wind, hydro, solar, and geothermal.

U.S. renewable energy consumption by sector

Source: U.S. Energy Information Administration, Monthly Energy Review

Wind energy in the United States is almost exclusively used by wind-powered turbines to generate electricity in the electric power sector, and it accounted for about 24% of U.S. renewable energy consumption in 2019. Wind surpassed hydroelectricity to become the most-consumed source of renewable energy on an annual basis in 2019.

Wood and waste energy, including wood, wood pellets, and biomass waste from landfills, accounted for about 24% of U.S. renewable energy use in 2019. Industrial, commercial, and electric power facilities use wood and waste as fuel to generate electricity, to produce heat, and to manufacture goods. About 2% of U.S. households used wood as their primary source of heat in 2019.

Hydroelectric power is almost exclusively used by water-powered turbines to generate electricity in the electric power sector and accounted for about 22% of U.S. renewable energy consumption in 2019. U.S. hydropower consumption has remained relatively consistent since the 1960s, but it fluctuates with seasonal rainfall and drought conditions.

Biofuels, including fuel ethanol, biodiesel, and other renewable fuels, accounted for about 20% of U.S. renewable energy consumption in 2019. Biofuels usually are blended with petroleum-based motor gasoline and diesel and are consumed as liquid fuels in automobiles. Industrial consumption of biofuels accounts for about 36% of U.S. biofuel energy consumption.

Solar energy, consumed to generate electricity or directly as heat, accounted for about 9% of U.S. renewable energy consumption in 2019 and had the largest percentage growth among renewable sources in 2019. Solar photovoltaic (PV) cells, including rooftop panels, and solar thermal power plants use sunlight to generate electricity. Some residential and commercial buildings heat with solar heating systems.

October, 20 2020
Natural gas generators make up largest share of U.S. electricity generation capacity

operating natural-gas fired electric generating capacity by online year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Based on the U.S. Energy Information Administration's (EIA) annual survey of electric generators, natural gas-fired generators accounted for 43% of operating U.S. electricity generating capacity in 2019. These natural gas-fired generators provided 39% of electricity generation in 2019, more than any other source. Most of the natural gas-fired capacity added in recent decades uses combined-cycle technology, which surpassed coal-fired generators in 2018 to become the technology with the most electricity generating capacity in the United States.

Technological improvements have led to improved efficiency of natural gas generators since the mid-1980s, when combined-cycle plants began replacing older, less efficient steam turbines. For steam turbines, boilers combust fuel to generate steam that drives a turbine to generate electricity. Combustion turbines use a fuel-air mixture to spin a gas turbine. Combined-cycle units, as their name implies, combine these technologies: a fuel-air mixture spins gas turbines to generate electricity, and the excess heat from the gas turbine is used to generate steam for a steam turbine that generates additional electricity.

Combined-cycle generators generally operate for extended periods; combustion turbines and steam turbines are typically only used at times of peak load. Relatively few steam turbines have been installed since the late 1970s, and many steam turbines have been retired in recent years.

natural gas-fired electric gnerating capacity by retirement year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Not only are combined-cycle systems more efficient than steam or combustion turbines alone, the combined-cycle systems installed more recently are more efficient than the combined-cycle units installed more than a decade ago. These changes in efficiency have reduced the amount of natural gas needed to produce the same amount of electricity. Combined-cycle generators consume 80% of the natural gas used to generate electric power but provide 85% of total natural gas-fired electricity.

operating natural gas-fired electric generating capacity in selected states

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Every U.S. state, except Vermont and Hawaii, has at least one utility-scale natural gas electric power plant. Texas, Florida, and California—the three states with the most electricity consumption in 2019—each have more than 35 gigawatts of natural gas-fired capacity. In many states, the majority of this capacity is combined-cycle technology, but 44% of New York’s natural gas capacity is steam turbines and 67% of Illinois’s natural gas capacity is combustion turbines.

October, 19 2020
EIA’s International Energy Outlook analyzes electricity markets in India, Africa, and Asia

Countries that are not members of the Organization for Economic Cooperation and Development (OECD) in Asia, including China and India, and in Africa are home to more than two-thirds of the world population. These regions accounted for 44% of primary energy consumed by the electric sector in 2019, and the U.S. Energy Information Administration (EIA) projected they will reach 56% by 2050 in the Reference case in the International Energy Outlook 2019 (IEO2019). Changes in these economies significantly affect global energy markets.

Today, EIA is releasing its International Energy Outlook 2020 (IEO2020), which analyzes generating technology, fuel price, and infrastructure uncertainty in the electricity markets of Africa, Asia, and India. A related webcast presentation will begin this morning at 9:00 a.m. Eastern Time from the Center for Strategic and International Studies.

global energy consumption for power generation

Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)

IEO2020 focuses on the electricity sector, which consumes a growing share of the world’s primary energy. The makeup of the electricity sector is changing rapidly. The use of cost-efficient wind and solar technologies is increasing, and, in many regions of the world, use of lower-cost liquefied natural gas is also increasing. In IEO2019, EIA projected renewables to rise from about 20% of total energy consumed for electricity generation in 2010 to the largest single energy source by 2050.

The following are some key findings of IEO2020:

  • As energy use grows in Asia, some cases indicate more than 50% of electricity could be generated from renewables by 2050.
    IEO2020 features cases that consider differing natural gas prices and renewable energy capital costs in Asia, showing how these costs could shift the fuel mix for generating electricity in the region either further toward fossil fuels or toward renewables.
  • Africa could meet its electricity growth needs in different ways depending on whether development comes as an expansion of the central grid or as off-grid systems.
    Falling costs for solar photovoltaic installations and increased use of off-grid distribution systems have opened up technology options for the development of electricity infrastructure in Africa. Africa’s power generation mix could shift away from current coal-fired and natural gas-fired technologies used in the existing central grid toward off-grid resources, including extensive use of non-hydroelectric renewable generation sources.
  • Transmission infrastructure affects options available to change the future fuel mix for electricity generation in India.
    IEO2020 cases demonstrate the ways that electricity grid interconnections influence fuel choices for electricity generation in India. In cases where India relies more on a unified grid that can transmit electricity across regions, the share of renewables significantly increases and the share of coal decreases between 2019 and 2050. More limited movement of electricity favors existing in-region generation, which is mostly fossil fuels.

IEO2020 builds on the Reference case presented in IEO2019. The models, economic assumptions, and input oil prices from the IEO2019 Reference case largely remained unchanged, but EIA adjusted specific elements or assumptions to explore areas of uncertainty such as the rapid growth of renewable energy.

Because IEO2020 is based on the IEO2019 modeling platform and because it focuses on long-term electricity market dynamics, it does not include the impacts of COVID-19 and related mitigation efforts. The Annual Energy Outlook 2021 (AEO2021) and IEO2021 will both feature analyses of the impact of COVID-19 mitigation efforts on energy markets.

Asia infographic, as described in the article text


Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)
Note: Click to enlarge.

With the IEO2020 release, EIA is publishing new Plain Language documentation of EIA’s World Energy Projection System (WEPS), the modeling system that EIA uses to produce IEO projections. EIA’s new Handbook of Energy Modeling Methods includes sections on most WEPS components, and EIA will release more sections in the coming months.

October, 16 2020