Brent had vaulted over the key psychological level of $70/barrel as we wrapped up this edition Friday night in Singapore, while WTI had climbed above $65. “Geopolitical storms poised to shake crude out of its languor” was the headline of our Viewsletter last Friday, and it proved to be prescient.
Worries over the fate of the Iran nuclear deal had already started gathering steam last week after US President Donald Trump fired Secretary of State Rex Tillerson, a moderate, and named Iran hardliner Mike Pompeo as his replacement.
The anxiety got worse this week. First, it was comments by Saudi Crown Prince Mohammed Bin Salman and Foreign Minister Adel Al-Jubeir during their visit to the US. Al-Jubeir denounced the 2015 multilateral Iran nuclear agreement as “flawed,” echoing Trump’s sentiment, while MBS reiterated his threat that Saudi Arabia would develop a nuclear bomb if Iran did so.
Exacerbating the picture was Trump’s appointment Thursday of John Bolton, a hawk on North Korea and Iran, as his national security advisor effective April 9, replacing H R McMaster. In an August 2017 piece Bolton wrote in the National Review magazine, he laid out a game plan for the US to abrogate the nuclear deal on the basis of “significant Iran violations,” which he said should be documented in detail in a white paper, alongside early consultations with “key players such as the UK, France, Germany, Israel and Saudi Arabia”, to get them on board.
Yemen’s Houthi rebels fired a ballistic missile across the border into Saudi Arabia’s Najran province Thursday. Though no damage or disruption to the oil and gas processing and loading operations was reported, the incident served as a reminder of the tensions bubbling just below the surface in the Middle East. Yemen has been racked by a proxy war between regional archrivals Iran and Saudi Arabia.
Canadian oil sands producer Cenovus Thursday said it had been forced to reduce output in the face of pipeline and rail capacity constraints in shipping crude. The country’s growing oil transportation bottlenecks over the past few months were well-known, but the Cenovus news lent more gravity to the situation and added to the market’s supply concerns.
NYMEX WTI futures comfortably returned to backwardation at the front end of the forward curve Wednesday, ending six days of contango. The backwardation along the rest of the curve also strengthened, suggesting tightening supply-demand balances.
The US Federal Reserve announced a quarter-point hike in interest rates Wednesday, as was widely expected, and more importantly, signalled it remained on course for two more increases this year. That gave the financial markets, rattled by fears of accelerating inflation leading to a more hawkish Fed since February, some breathing room. But not for long. The US announced plans to slap tariffs on $60 billion worth of annual imports of Chinese goods, and China retaliated with its own list of tariffs against the US. The trade wars have only just begun, it seems. The stock markets took a beating, but not crude — it was back in the grip of fundamentals and fears.
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Pioneering technology expert tells ADIPEC Energy Dialogue up to 80 per cent of plant shutdowns could be mitigated through combination of advanced electrification, automation and digitalisation technologies
Greater use of renewables in power management processes offers oil and gas companies opportunities to create efficiencies, sustainability and affordability when modernising equipment, or planning new CAPEX projects
Abu Dhabi, UAE – XX August 2020 – Leveraging the synergies created by the convergence of electrification, automation and digitalisation, can create significant cost savings for oil and gas companies when making both operational and capital investment decisions, according to Dr Peter Terwiesch, President of Industrial Automation at ABB, a Swiss-Swedish multinational company, operating mainly in robotics, power, heavy electrical equipment, and automation technology areas.
Participating in the latest ADIPEC Energy Dialogue, Dr Terwiesch said up to 80 per cent of energy industry plant shutdowns, caused by human error, or rotating machinery or power outages, could be mitigated through a combination of electrification, automation and digitalisation.
“Savings are clearly possible not only on the operation side but also, using the same synergies between dimensions, you can bring down the cost schedule and risk of capital investment, especially in a time when making projects work economically is harder,” explained Dr Terwiesch.
A pioneering technology leader, who works closely with utility, industry, transportation and infrastructure customers, Dr Terwiesch said despite the increasing investment by oil and gas companies in renewables and the growing use of renewables to generate electricity, both for individual and industrial uses, hydrocarbons will continue to have an important role in creating energy, in the short to medium term.
“If you look at the energy density constraints, clearly electricity is gaining share but electricity is not the source of energy; it is a conduit of energy. The energy has to come from somewhere and that can be hydrocarbons, or nuclear, or renewables.” he said.
Nevertheless, he added, the greater use of renewables to generate electricity offers oil and gas companies the option of integrating a higher share of renewables into power management processes to create efficiencies, sustainability and affordability when modernising equipment, or planning new CAPEX projects.
The ADIPEC Energy Dialogue is a series of online thought leadership events created by dmg events, organisers of the annual Abu Dhabi International Exhibition and Conference. Featuring key stakeholders and decision-makers in the oil and gas industry, the dialogues focus on how the industry is evolving and transforming in response to the rapidly changing energy market.
With this year’s in person ADIPEC exhibition and conference postponed to November 2021, the ADIPEC Energy Dialogue, along with insightful webinars, podcasts and on line panels continue to connect the oil and gas industry, with the challenges and opportunities shaping energy markets in the run up to, and following, a planned three-day live stream virtual ADIPEC conference taking place from November 9-11.
An industry first of its kind, the online conference will bring together energy leaders, ministers and global oil and gas CEOs to assess the collective measures the industry needs to put in place to fast-track recovery, post COVID-19.
To watch the full ADIPEC Energy Dialogue series go to: https://www.youtube.com/watch?v=QZzUd32n3_s&t=6s
Utility-scale battery storage systems are increasingly being installed in the United States. In 2010, the United States had seven operational battery storage systems, which accounted for 59 megawatts (MW) of power capacity (the maximum amount of power output a battery can provide in any instant) and 21 megawatthours (MWh) of energy capacity (the total amount of energy that can be stored or discharged by a battery). By the end of 2018, the United States had 125 operational battery storage systems, providing a total of 869 MW of installed power capacity and 1,236 MWh of energy capacity.
Battery storage systems store electricity produced by generators or pulled directly from the electrical grid, and they redistribute the power later as needed. These systems have a wide variety of applications, including integrating renewables into the grid, peak shaving, frequency regulation, and providing backup power.
Most utility-scale battery storage capacity is installed in regions covered by independent system operators (ISOs) or regional transmission organizations (RTOs). Historically, most battery systems are in the PJM Interconnection (PJM), which manages the power grid in 13 eastern and Midwestern states as well as the District of Columbia, and in the California Independent System Operator (CAISO). Together, PJM and CAISO accounted for 55% of the total battery storage power capacity built between 2010 and 2018. However, in 2018, more than 58% (130 MW) of new storage power capacity additions, representing 69% (337 MWh) of energy capacity additions, were installed in states outside of those areas.
In 2018, many regions outside of CAISO and PJM began adding greater amounts of battery storage capacity to their power grids, including Alaska and Hawaii, the Electric Reliability Council of Texas (ERCOT), and the Midcontinent Independent System Operator (MISO). Many of the additions were the result of procurement requirements, financial incentives, and long-term planning mechanisms that promote the use of energy storage in the respective states. Alaska and Hawaii, which have isolated power grids, are expanding battery storage capacity to increase grid reliability and reduce dependence on expensive fossil fuel imports.
Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
Note: The cost range represents cost data elements from the 25th to 75th percentiles for each year of reported cost data.
Average costs per unit of energy capacity decreased 61% between 2015 and 2017, dropping from $2,153 per kilowatthour (kWh) to $834 per kWh. The large decrease in cost makes battery storage more economical, helping accelerate capacity growth. Affordable battery storage also plays an important role in the continued integration of storage with intermittent renewable electricity sources such as wind and solar.
Additional information on these topics is available in the U.S. Energy Information Administration’s (EIA) recently updated Battery Storage in the United States: An Update on Market Trends. This report explores trends in battery storage capacity additions and describes the current state of the market, including information on applications, cost, market and policy drivers, and future project developments.