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Last Updated: September 6, 2018
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Market Watch

Headline crude prices for the week beginning 3 September 2018 – Brent: US$78/b; WTI: US$71/b

  • Worries over Tropical Storm Gordon landing over the Mississippi Gulf Coast combined with renewed unrest in Libya and perennial concerns over Venezuela and Iran pushed oil prices higher at the start of this week.
  • Failing to become a hurricane, Gordon brought lashings of rain but largely spared offshore and onshore upstream infrastructure, which could allow a quicker ramp up of facilities that had been shut down for precaution.
  • A tanker collision had partially shut down Venezuela’s main oil-shipping port Jose last week, affecting shipments and adding to the country’s struggles.
  • In Iran, oil exports for August fell to a 30-month low of 2.1 mmb/d as key Asian buyers avoided cargoes in the lead-up to new American sanctions; there is room for more declines but perhaps not too much, as PetroChina commented that its refining network would be adversely affected by more cuts.
  • Faced with the renewed sanctions, Iran is once again threatening to blockade the Strait of Hormuz, effectively halting a large portion of Middle Eastern crude exports if it is not allowed to use the Strait
  • Despite the dwindling of Iranian exports, improved Libyan production and better exports from Iraq’s southern fields lifted OPEC oil production up by 220,000 b/d to 32.79 mmb/d in August, the highest level this year.
  • American trade belligerence has now led CNPC – China’s largest natural gas supplier – to halt all purchases of spot LNG cargoes from the USA until the trade dispute is settled; LNG has not yet been corralled into tit-for-tat trade war but will inevitably be drawn in, if President Trump expands import duties to an additional US$200 billion of Chinese imports.
  • The US EIA confirms that American crude oil production rose to a new record of 10.674 mmb/d in June 2018, up 231,000 b/d or 2%, with the largest gains seen in Texas, where onshore output grew to 4.4 mmb/d.
  • With crude prices in ascendance again, the active rig count in the US gained for the first time in three weeks as drillers added 4 new rigs – 2 oil and 2 gas – bringing the total count to 1,048.
  • Crude price outlook: As Tropical Storm Gordon eases, crude prices should settle into their range. Unrest in Libya is a worry, but unless the situation escalates further, Brent should trade in US$76-78/b range and WTI easing back down to US$68/70/b.

Headlines of the week


  • South Sudan has restarted production at the key Toma South field, idled since 2013 due to conflict; part of the Unity fields, an initial 20,000 b/d is being produced at Toma South and with the El Mar, El Toor, Manga and Unity fields expected to resume later this month, output could reach some 80,000 b/d.
  • Another hit for Eni in Egypt, as the Italian firm reports a new onshore gas discovery in Faramid South, East Obayed concession with some 25 mmscf/d.
  • In Alaska, Eni has acquired 124 exploration leases in the Eastern North Slope, a prime area with high potential just southeast of the giant Prudhoe Bay field.
  • Lundin Petroleum has raised its estimates for the Rolvsnes field in Norway’s North Sea from 3-16 mmboe to 14-78 mmboe, with FID targeted at 2020/21.
  • ExxonMobil has commenced drilling off Australia’s southeast gas in search of natural gas, which could help ease the growing gas supply gap in the east.
  • In search of the next Permian Basin, oil firms are now looking at Wyoming’s Powder River Basin, with some US$260 million in land deals already exchanging hands in an area where pipeline infrastructure is not congested.


  • Chevron’s subsidiary Caltex Australia is looking to sell some of its fuel retail convenience assets for some A$2 billion, covering some 12-25% of existing freehold sites as its 1H18 profits came in at the low end of projections.
  • Even as the private Dangote refinery moves ahead, Nigeria’s NNPC is conducting a feasibility study for two 200,000 b/d condensate refineries in the states of Delta and Imo as part of a wider plan to slash fuel imports.
  • The first fuel stations in the city of Tianjin have replaced gasoline with ethanol, as China fires its first salvo in unfolding an ambitious biofuels plan.
  • Plans to shut down the only oil refinery in Trinidad and Tobago has prompted threats of a general strike by the country’s oilfield workers trade union.
  • Gunvor has halted plans to upgrade its Rotterdam refinery for cleaner marine fuels, citing adverse market conditions affecting financial viability.

Natural Gas/LNG

  • Despite the threats of sanctions from the US, Nord Stream 2 AG claims the natural gas pipeline connecting Russia to Germany is progressing on schedule.
  • Indian Railways is attempting to shift some of its rail fuel demand away from (dirtier) gasoil to natural gas, with GAIL appointed as the sole supplier.
  • Freeport LNG in the USA has signed Japan’s Sumitomo as its first client for its Train 4, shipping 2.2 mtpa over 20 years beginning in 2023 when Train 4 of the complex in Texas is expected to start up.
  • Bangladesh is updating and improving its PSC terms ahead of a planned offshore licensing round next year, hoping that the new contracts will be able to attract international firms to reverse dwindling natural gas output that has already forced the country to turn heavily towards LNG imports.


  • Nicke Widyawati has been confirmed as the new CEO of Pertamina by the Indonesia government and Dharmawan Samsu as Pertamina’s new Upstream Director, with the aim of growing crude/gas output, boosting refining capacity and shedding fuel imports in favour of biodiesel usage.
  • Amid disappointing results in the oil sector, Russian state firms are proving to be a bright spark, with Gazprom beat expectations by reporting a 539% jump in 2Q18 net profits to RUB259 billion (~US$3.8 billion).

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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