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Last Updated: November 29, 2018
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Headline crude prices for the week beginning 26 November 2018 – Brent: US$60/b; WTI: US$51/b

  • Crude oil prices remain weak as traders doubt OPEC’s ability to agree on crude output cuts to a level that could offset surging American shale oil production
  • OPEC meets on December 6 in Vienna; Saudi Arabia is expected to push for a coordinated production cut, but US President Trump is continuing to apply pressure for the cartel not to cut production, while the US Department of Justice is reportedly considering antitrust legislation designed to curb OPEC’s power
  • But even if Saudi Arabia choose not to capitulate to American pressure, there is dissent in the ranks of OPEC+; aside from Russia, there does not seem to be much appetite among the NOPEC members to sign up for new cuts
  • Libya, a member of OPEC, has also called to be exempted from any new production cut deal agreement; Libya (and Nigeria) were exempted from the previous supply freeze due to domestic conflict, and Libya is pointing to its continued fragile situation as reasons to continue to be exempted
  • Saudi Arabia is also seemingly not curbing its production yet, with Energy Minister Khalid al-Falih suggesting that the Kingdom’s October output exceeded the 10.72 mmb/d record set in November 2016
  • Saudi Arabia and Russia will also be meeting at the G20 summit in Argentina this weekend, providing an opportunity for Saudi Crown Prince Mohammad bin Salman and Russian Vladimir Putin to coordinate ahead of the OPEC Vienna meeting in December
  • Crude oil prices also remain weak as the impact of American sanctions on Iran were countered by waivers to key importers; after Japan and South Korea moved to resume imports last week, China is also reportedly taking Iranian crude again after halting purchases in October
  • After two weeks of gains, US drillers assessing weaker WTI prices (and also the long Thanksgiving weekend) cut down on active rigs, shedding a net 3 oil rigs to bring the total rig count to 1079
  • Crude price outlook: Without any concrete news from OPEC+ on a supply freeze, crude oil prices will stay within their current range of US$59-61/b for Brent and US$49-51/b for WTI


Headlines of the week

Upstream

  • BP has started up oil production at its Clair Ridge project in the UK’s West Shetlands region, with peak output expected at some 120,000 b/d
  • Chevron reports that production has begun at its Big Foot deepwater project in the US Gulf of Mexico, with output of 75,000 b/d and 25 mmscf/d of natural gas over a forecasted project life of 35 years
  • Western Canada oil producers have slammed the recent Canada federal budget update, criticising it for the lack of measures to tackle the supply glut and subsequent price crash of crude oil in Alberta
  • Brazilian President-elect Jair Bolsonaro is looking to put the country’s deepsea oil blocks on sale, aiming to raise some US$30 billion to help plug Brazil’s large fiscal deficits

Downstream

  • Equinor is making further inroads in the Southeast Asian LPG market, partnering with Global Petro Storage on an LPG terminal and storage in Port Klang, Malaysia, with volumes aimed at the region and South Asia
  • Following major strikes in France over proposed fuel taxes, workers at four of the country’s seven refineries have gone on strike, with unions encouraging blockades, over a salary increase dispute with UFIP
  • The St. Croix refinery in the US Virgin Islands may be restarted after six years of being idled, with BP agreeing to enter into a tolling agreement with Limetime Bay Refining, the new owner of the 200 kb/d Hovensa refinery
  • LyondellBasell is reported on the verge of acquiring a controlling stake in Brazilian petrochemical producer Braskem, while also pursuing a long-term naphtha supply contract with the firm
  • Faced with a crude oil glut, Canada’s Alberta province is doubling incentives for downstream projects, aiming to diversify its economy into refining and petrochemicals, offering royalty credits worth US$1.6 billion
  • BP’s Southern Africa arm will be investing some US$1 billion to upgrade the 180 kb/d SAPREF refinery in Durban, South Africa to produce lower-sulphur diesel to meet regional demand for low-sulphur fuels

Natural Gas/LNG

  • Novatek reports that initial production from the Yamal LNG Train 3 in West Siberia has begun production, a year ahead of schedule
  • Woodside has agreed to a long-term, 20-year deal to provide Australian conglomerate Perdaman Chemicals & Fertilisers with some 125 Tj of piped natural gas (around 1 million tons per annum) for use in a new urea plant
  • Petronas is aiming to ramp-up production at the Kebabangan gas field in Sabah to full capacity by August 2019 following a gas leak that will require repairs along a 500-km pipeline that is scheduled to be completed by July 2019
  • Shell has decided to exit the Greater Sunrise project in Timor-Leste, selling its 26.56% share back to the government for some US$300 million
  • Dana Gas and Crescent Petroleum, partners on the Khor Mor field in Iraq’s Kurdistan region, have reported a 30% increase in production, with output rising to 400 mmscf/d of natural gas and 15,000 b/d of condensate

Corporate

  • Oman is merging its state Oman Oil and Oman Oil Refineries & Petroleum Industries firm into a single integrated refining-to-trading business

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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