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Headline crude prices for the week beginning 25 February 2019 – Brent: US$67/b; WTI: US$57/b

  • Crude oil prices maintained at elevated levels on optimism that the US and China were headed on a path of agreement on their trade spat
  • Initially teased by President Trump, the US has officially shelved its threat to increase tariffs on US$200 billion worth of Chinese imports ‘until further notice’, reducing the risk of a shock to the global economy
  • However, President Trump has gone on the attack again, calling on OPEC to ‘relax and take it easy’ instead of supporting oil prices at what the US believes to be ‘too high a level’
  • As Venezuela faces more US sanctions, India has been taking the advantage, becoming the largest buyer of Venezuelan crude in February, with volumes of some 620,000 b/d mainly driven by buying from Reliance
  • But while India feasts on Venezuelan oil, it has also hedged bets as Indian Oil Corp entered into the first annual deal to purchase US crude in India, taking in 60,000 b/d of oil through March 2020 to diversify sources
  • The US active rig count dropped by four last week, losing four oil sites, breaking a two-week streak of gains to close the week at 1,047 active rigs
  • Easing trade tensions between the US and China should keep oil prices afloat, with Brent expected to stay in the US$66-68/b range and WTI at US$55-57/b

Headlines of the week


  • US pipeline company Targa Resources is selling a 45% stake in Targa Badlands LLC, which holds shale plays in the Bakken and Three Forks areas of North Dakota, for some US$1.6 billion in cash
  • Kenya has accused Somalia of ‘misleading investors’ by offering up four offshore oil blocks in a maritime area disputed by both nations
  • To ease its oil sands industry that has been hampered by a pipeline crunch, the Canadian province of Alberta is investing US$2.8 billion in adding 120,000 b/d of crude-by-rail capacity through the addition of 4,400 rail cars over 3 years
  • PetroChina has made a shale oil discovery in a remote area of northwestern China, with test well results from the Jimsar field in Xinjiang suggesting strong potential for shale plays after years of disappointing results
  • Canada’s National Energy Board has recommended approval of the Trans-Mountain pipeline expansion, clearing the way for a project necessary to help clear heavy crude oil trapped in the Alberta province
  • As part of US$20 billion in investments, Saudi Arabia has signed an agreement to supply Pakistan with crude oil and fuel products to plug its national deficit

Midstream & Downstream

  • India’s giant US$44 billion refinery in Maharashtra is heading for delays, as farmer opposition has forced the joint venture between India’s state oil firms and Saudi Aramco to relocate from its initial site in Nanar near Mumbaiz
  • Saudi Aramco has made another major investment in China, joining Norinco and Panjin Sincen in a 300,000 b/d refinery in the Liaoning province, stepping up its efforts to secure crude oil market share in the Chinese market
  • Saudi Aramco and Total have announced plans to invest US$1 billion over the next six years in their 50:50 fuel retail joint venture, focusing on Saudi Arabia
  • Kenya has shot down suggestions of constructing a new refinery to capitalise on the expected 80,000 b/d of crude output flowing from the Lokichar basin; Kenya’s only refinery in Mombasa has been converted in a storage facility
  • Saudi Aramco’s trading arm has opened up offices in London and Fujairah, following an initial international setup in Singapore in June 2018
  • Pertamina has announced plans to spend US$4.2 billion in 2019 and US$7 billion per year from 2021 to double Indonesia’s domestic refining capacity to 2 mmb/d by 2026, focusing on planned new sites in Bontang and Tuban
  • Citgo has put on hold the US$685 million refurbishment of the 209,000 b/d refinery in Aruba due to ongoing sanctions imposed on Venezuela by the US

Natural Gas/LNG

  • Repsol has made the largest natural gas discovery in Indonesia in over 18 years, with the KBD-2X well in the Sakakemang block in South Sumatra estimated to provide at least 2 tcf of recoverable resources since the Cepu field in 2001
  • After receiving approval from the Federal Energy Regulatory Commission, Venture Global LNG has decided to start immediate construction on its US$5 billion Calcasieu Pass LNG terminal in Louisiana

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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
Global liquid fuels production outages have increased in 2020

Disruptions to crude oil and condensate production from members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries have risen considerably since last year. These outages have contributed to reduced liquid fuel supply and, along with crude oil production declines agreed to among OPEC and partner countries (OPEC+), have contributed to global liquid fuels inventory draws since June.

So far in 2020, monthly oil supply disruptions have averaged 4.6 million barrels per day (b/d) and reached 5.2 million b/d in June, the highest monthly levels since at least 2011, when the U.S. Energy Information Administration (EIA) began tracking monthly liquids production outages. Global oil supply disruptions averaged 3.1 million b/d in 2019, and rising outages in Iran have been the main drivers of the year-on-year increase. EIA does not include field closures for economic reasons or oil demand declines in its accounting of supply disruptions.

Libya, Venezuela, and Iran (the OPEC countries exempt from the latest OPEC+ agreement) were the main contributors to these outages. Domestic political instability in Libya has removed about 1.2 million b/d from oil production since February 2020. The Libyan National Army, the warring faction in eastern Libya, blockaded five of the country’s oil export terminals and shut in oil production from major fields in the southwestern region in January 2020, causing Libya’s production to fall to less than 100,000 b/d by April.

U.S. sanctions have led to production outages in Venezuela and Iran. U.S. sanctions placed on oil-trading companies and shipping companies that facilitated exports of Venezuela’s crude oil in the first half of 2020 removed 500,000 b/d of crude oil production from global markets by August. Ongoing U.S. sanctions on Iran’s crude oil and condensate exports have kept Iran’s disruption levels elevated through 2020, and disruptions there have increased by another 100,000 b/d since January.

Non-OPEC oil supply disruptions, mostly from the United States and Canada, rose to nearly 800,000 b/d in August. Disruptions in Canada occurred when operators ordered nonessential staff to stop work because of coronavirus outbreaks at production sites. In the United States, hurricane-related disruptions and unplanned maintenance affected oil production this summer. Other non-OPEC countries experienced temporary field closures for various reasons such as coronavirus outbreaks among workers, logistical issues moving workers or equipment during the pandemic, fires at field operations in Canada, or other natural disasters.

EIA publishes historical unplanned production outage estimates in its Short-Term Energy Outlook (STEO). In its estimates of outages, EIA differentiates among declines in production resulting from unplanned production outages, permanent losses of production capacity, and voluntary production cutbacks. EIA’s estimates of unplanned production outages are calculated as the difference between estimated effective production capacity (the level of supply that could be available within one year) and estimated production.

October, 14 2020