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Headline crude prices for the week beginning 29 April 2019 – Brent: US$72/b; WTI: US$63/b

  • After touching fresh peaks the previous week, as the USA confirmed its intention to hold firm to its decision to end waivers on Iranian crude, global crude oil prices have taken a bit of a breather, easing back as the Americans vowed to make up for the loss of Iranian crude volumes
  • Iran itself has threatened to close the Strait of Hormuz – a threat it has used in the past – stating that ‘if we are prevented from using it, we will close it’, a direct threat to the US’ return to aggressive sanctions designed to reduce Iranian oil export ‘to zero’
  • With Saudi Arabia and Russia appearing poised to make up for the Iranian loss, the market also noted that President Donald Trump was once again calling on OPEC to reduce oil prices, despite being responsible for causing it in the first place
  • Meanwhile in strife-set Venezuela, crude oil production fell to 840,000 b/d in March, the lowest level for the country since January 2003; renewed tensions between pro-Maduro and pro-Guaido forces in the country could lead to a possible civil war, further hampering output
  • The active US rig count fell by a huge 21 sites last week – 20 oil and 1 gas – bringing the total rig count below the 1000 level for the first time in 15 months to 991 sites with most of the losses in onshore shale basins
  • Crude oil is like to fall back to the US$70-72/b range for Brent and US$61-63/b for WTI, with reports of ample supplies in the market washing over concerns of the end of Iranian crude waivers and the continued implosion in Iran

Headlines of the week


  • The Chevron-Anadarko deal is not yet set in stone, with rival Occidental Petroleum engaging in a bidding war with a new US$38 billion takeover proposal – or a 20% premium over Chevron’s offer
  • Shell claims that it has made a ‘blockbuster’ discovery at its Blacktip deepwater well in the Gulf of Mexico, with the Perdido Corridor asset shared with Chevron, Equinor and Respsol reporting ‘significant’ oil flows
  • Lukoil has achieved cumulative production of 100 million tons at Iraq’s West-Qurna-2 field over Phase 1 of the project, with current output of 400,000 b/d
  • CNOOC and PetroChina have signed a new Petroleum Contract, covering the Beibu Gulf 23/29 and Beibu Gulf 24/11 blocks in the South China Sea
  • ExxonMobil will be adding some 28,000 to its exploration acreage in Namibia through the addition of offshore Blocks 1710 and 1810 and farm-in agreements with state firm NAMCOR for Blocks 1711 and 1811A
  • The Trump administration will be delaying its plans to vastly open up federal coastal waters for oil and gas drilling until after 2020 Presidential election, following legal setbacks and opposition from coastal Republicans
  • ADNOC has launched a second licensing round in Abu Dhabi, covering the offshore Block 3, 4 and 5, and the onshore Blocks 2 and 5
  • Angola is reportedly planning to offer nine oil blocks in the prolific Namibe basin for auction this year to capitalise on a swell in crude prices

Midstream & Downstream

  • ExxonMobil will be expanding its 270 kb/d Fawley refinery in the UK to increase ultra-low sulfur diesel output by 38 kb/d, the latest in a string of clean fuel investments across the supermajor global refining network
  • Azerbaijan’s new STAR refinery in Turkey will be expanding its crude diet away from the current source of Russian Urals crude to include other Middle Eastern and African grades beginning this month
  • Indian Oil’s 160 kb/d Mathura refinery in northern state Uttar Pradesh will be shut down for over a month beginning November 2019 for full maintenance
  • Shell employees at the 400 kb/d Pernis refinery in the Netherlands have voted to end a union-backed strike after a new wage offer was made by Shell
  • As rumoured, Saudi Aramco has bought out Shell’s 50% stake in the Jubail Industrial City SASREF refining joint venture for US$631 million

Natural Gas/LNG

  • Saudi Aramco has sold its first shipment of LNG ever – despite not producing a single drop of the fuel – with the trade coming out of its Singapore trading arm to an unidentified Indian buyer
  • ExxonMobil and China’s Zhejiang Provincial Energy Group have signed a sales agreement for the 20-year supply of 1 mtpa of LNG beginning 2021
  • China’s CNOOC has reached an agreement with Russia’s Novatek to acquire a 10% interest in the Arctic LNG-2 project located on the Gydan Peninsula
  • President Donald Trump is reportedly considering waiving a requirement that only US-flagged ships can move natural gas between two US ports, to ease distribution and bottlenecks within the US natural gas system
  • Australia’s Santos has acquired all remaining equity in the Tern and Frigate gas discoveries in Australia, boosting its position in the growing LNG space there
  • China is reportedly looking into a plan to build a network of LNG plants along the Yangtze river to improve supplies to underdeveloped areas upstream

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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