NrgEdge Editor

Sharing content and articles for users
Last Updated: October 8, 2019
13 views
Business Trends
image

Market Watch  

Headline crude prices for the week beginning 30 September 2019 – Brent: US$59/b; WTI: US$54/b

  • News that Saudi production was ‘fully back online’ dropped global benchmarks back to their pre-attack range, moving the oil markets back to the question of how to ‘manage supply’ in the face of the inexorable rises in US output
  • Saudi Aramco stated that its production capacity has risen back to 11.3 mmb/d and will hit 12 mmb/d by November; output for October was expected to rise back to 9.89 mmb/d after falling to 5 mmb/d in the aftermath of the attacks
  • However, there have been some signs of the outage causes some kinks in the Saudi system – JXTG Nippon Oil reports that its scheduled cargos were switched from light crude to heavy and medium for October
  • A week after the UK-flagged ship was released by Iran, there are more shipping woes surrounding Iran as the US imposed penalties on four Chinese shipping companies for carrying Iranian crude post-waiver
  • There was also a new (unwelcome) development in the US trade war with China, as the US mulls capping the amount of American money that can flow into China; coupled with a sputtering Indian economy, the health of the global economy and global oil demand is in peril
  • Despite the unstoppable rise of US crude production, it appears that this has been mainly on the back of improved productivity, as the active US rig count fell once again by 8 sites (6 oil and 2 gas), bringing the total count down to 860, down 194 sites y-o-y
  • With no upside in sight, there is little room for oil prices to go but sideways or down; we expect that crude prices should be able to at least stay in their current range with Brent at US$58-60/b and WTI and US$53-55/b

Headlines of the week

Upstream

  • As rumoured, ExxonMobil is looking to exit Norwegian upstream, selling its non-operating assets to Var Energi AS for some US$4.5 billion, covering over 20 fields with a combined production of 150,000 boe/d
  • Reports suggest that ExxonMobil may be selling its 64% stake in the Ca Voi Xanh (Blue Whale) offshore project in Vietnam on fears that it taps into the same basin claimed by China as part of its Southeast Asia nine-dashed line
  • Sudan has urged international firms operating there to speed up exploration and production operations, despite ongoing grouses over unpaid liftings
  • Equinor’s plans for the Great Australian Bight – with some 1.9 billion potential barrels of oil – will be decided by the offshore regulator by mid-November
  • Kazakhstan is seeking an additional US$1 billion from the partners of the 425,000 b/d Karachaganak oil and gas project – including Shell, Eni and Chevron – the latest in a long line of spats over taxes and costs beginning 2012
  • A Canadian federal court has halted plans by the Alberta province to cut off crude oil pipeline flows to British Columbia, which came about due to disagreements over the planned expansion of the Trans Mountain Pipeline
  • The first ever onshore drilling campaign in Timor-Leste in nearly 50 years will begin as Timor Resources starts a campaign in the Viqueque formation
  • Indonesia’s PT Medco Energi has announced plans to almost triple its output from 120,000 b/d to 300,000 b/d over the next 5-10 years, betting on higher prices and supporting that goal by acquiring existing onshore wells
  • An underwater leak at the YYA-1 well in the Offshore North West Java block operated by Pertamina has finally been fixed after two months

Midstream/Downstream

  • While many major refineries are already producing low sulfur fuel oil to comply with the new IMO standards, some light crude from the UK and West Africa is being marketed as a straight replacement, requiring only minor blending
  • Sinopec continues to make strides in meeting the IMO requirements, with its Qilu refinery in Shandong expected to begin producing LSFO this month
  • A key shareholder of Marathon Petroleum – hedge fund Elliot Management Corp – has called for the company to be spun off into three businesses, covering its current retail, refining and midstream operations
  • Efforts to improve the chronic underperformance of Mexican refineries appear to be paying off, with utilisation rising to 50% from 38% in August
  • A shortfall of LPG from Saudi Arabia – where refining runs were lowered after recent attacks – has led India to turn to UAE to make up the shortfall

Natural Gas/LNG

  • Kinder Morgan’s Gulf Coast Express Pipeline has begun commercial service, delivering natural gas from Waha area in the Permian Basin to Agua Dulce near Corpus Christi on the Texas Gulf Coast, with a capacity for 2 bcf/d
  • Kosmos Energy hopes that its new Yakaar-2 well offshore Senegal is a ‘world-class’ discovery that will support the Yakaar-Teranga LNG project
  • Equinor has struck new gas in the Orn well near the Marulk field in the Norwegian Sea, with initial estimates suggesting 50-88 million boe in place

Corporate

  • Saudi Aramco will launch its IPO around October 20 – estimated at an initial US$2 trillion – a short timeline that has left investors scrambling

Oil oil and gas news oil and gas industry LNG oil and gas companies news weekly update market watch market trends latest oil and gas trends
3
3 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

EIA expects U.S. energy-related CO2 emissions to decrease annually through 2021

In its latest Short-Term Energy Outlook (STEO), released on January 14, the U.S. Energy Information Administration (EIA) forecasts year-over-year decreases in energy-related carbon dioxide (CO2) emissions through 2021. After decreasing by 2.1% in 2019, energy-related CO2 emissions will decrease by 2.0% in 2020 and again by 1.5% in 2021 for a third consecutive year of declines.

These declines come after an increase in 2018 when weather-related factors caused energy-related CO2 emissions to rise by 2.9%. If this forecast holds, energy-related CO2 emissions will have declined in 7 of the 10 years from 2012 to 2021. With the forecast declines, the 2021 level of fewer than 5 billion metric tons would be the first time emissions have been at that level since 1991.

After a slight decline in 2019, EIA expects petroleum-related CO2 emissions to be flat in 2020 and decline slightly in 2021. The transportation sector uses more than two-thirds of total U.S. petroleum consumption. Vehicle miles traveled (VMT) grow nearly 1% annually during the forecast period. In the short term, increases in VMT are largely offset by increases in vehicle efficiency.

Winter temperatures in New England, which were colder than normal in 2019, led to increased petroleum consumption for heating. New England uses more petroleum as a heating fuel than other parts of the United States. EIA expects winter temperatures will revert to normal, contributing to a flattening in overall petroleum demand.

Natural gas-related CO2 increased by 4.2% in 2019, and EIA expects that it will rise by 1.4% in 2020. However, EIA expects a 1.7% decline in natural gas-related CO2 in 2021 because of warmer winter weather and less demand for natural gas for heating.

Changes in the relative prices of coal and natural gas can cause fuel switching in the electric power sector. Small price changes can yield relatively large shifts in generation shares between coal and natural gas. EIA expects coal-related CO2 will decline by 10.8% in 2020 after declining by 12.7% in 2019 because of low natural gas prices. EIA expects the rate of coal-related CO2 to decline to be less in 2021 at 2.7%.

The declines in CO2 emissions are driven by two factors that continue from recent historical trends. EIA expects that less carbon-intensive and more efficient natural gas-fired generation will replace coal-fired generation and that generation from renewable energy—especially wind and solar—will increase.

As total generation declines during the forecast period, increases in renewable generation decrease the share of fossil-fueled generation. EIA estimates that coal and natural gas electric generation combined, which had a 63% share of generation in 2018, fell to 62% in 2019 and will drop to 59% in 2020 and 58% in 2021.

Coal-fired generation alone has fallen from 28% in 2018 to 24% in 2019 and will fall further to 21% in 2020 and 2021. The natural gas-fired generation share rises from 37% in 2019 to 38% in 2020, but it declines to 37% in 2021. In general, when the share of natural gas increases relative to coal, the carbon intensity of the electricity supply decreases. Increasing the share of renewable generation further decreases the carbon intensity.

U.S. annual carbon emissions by source

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2020
Note: CO2 is carbon dioxide.

January, 21 2020
Latest issue of GEO ExPro magazine covers Europe and Frontier Exploration, Modelling and Mapping, and Geochemistry.

GEO ExPro Vol. 16, No. 6 was published on 9th December 2019 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.

This issue focusses on oil and gas exploration in frontier regions within Europe, with stories and articles discussing new modelling and mapping technologies available to the industry. This issue also presents several articles discussing the discipline of geochemistry and how it can be used to further enhance hydrocarbon exploration.

You can download the PDF of GEO ExPro magazine for FREE and sign up to GEO ExPro’s weekly updates and online exclusives to receive the latest articles direct to your inbox.

Download GEO ExPro Vol. 16, No. 6

January, 20 2020
Your Weekly Update: 13 - 17 January 2020

Market Watch   

Headline crude prices for the week beginning 13 January 2020 – Brent: US$64/b; WTI: US$59/b

  • Tensions in the Persian Gulf have abated, but not disappeared, as both the US and Iran stepped back from going to war; the buck, so far, has stopped with Tehran’s retaliation to the US assassination of its top general with a barrage of missile strikes at US bases in Iraq
  • The underlying situation is still fragile, with the Iranian population swinging from supporting the government to protesting its accidental downing of a commercial Ukraine Airlines plane; with the risk of war easing, crude prices have fallen back to their pre-crisis levels
  • However, American and foreign oil companies have pulled their staff from crude fields in northern Iraq and Kurdistan, including Chevron, as the oil industry in Iraq monitors the risk – and consequences – of military action
  • In precaution, oil tankers have begun boosting their rates once again to haul crude through the Persian Gulf, with quoted rates now at their highest level since the 2019 attacks on ships passing through the narrow straight
  • Although political tensions remain fresh, Saudi Arabia said that OPEC and the OPEC+ club were instead focused on using their window of production cuts to reduce excess oil stockpiles to levels ‘within the contours of 2010-2014’
  • In the US, not only is shale output staying strong, but production in the US Gulf of Mexico also made history, exceeding 2 mmb/d for the first time ever in 2019, beating the previous high recorded in 2018
  • Worries about the health of global oil demand persist… although the US and China signed a Phase 1 trade deal, the agreement is more about halting escalation of the trade war than repairing inflicted damage; a slowdown in Chinese economic growth could lead to oil demand growth halving in 2020 in China according to CNPC
  • The US active rig count fell for a second consecutive week, losing 15 rigs – 11 oil and 4 gas – for the 17th weekly decline of the past 20 weeks; losses in the Permian were once again high, shedding a total of 6 rigs
  • Crude oil prices should remain rangebound with Brent at US$63-65/b and WTI at US$57-59/b, as the market retreats back to its ever-present worries about demand while geopolitical risk premiums scale back


Headlines of the week

Upstream

  • Guyana’s success is now extending to its neighbours, with Total and Apache announcing a ‘significant’ oil discovery at their Maka Central-1 well in Suriname’s Block 58, which lies adjacent to the prolific Stabroek Block
  • BP has agreed to sell its operating interest in the UK North Sea’s Andrew assets – including the Andrew platform as well as the Andrew, Arundel, Cyrus, Farragon, and Kinnoull fields – along with its 27.5% non-operating interest in the Shearwater field to Premier Oil for some US$625 million
  • Liberia will kick start its next offshore licensing round in April 2020, offering nine blocks in the Harper basin, one of the few offshore regions in West Africa that remains unexplored and undrilled
  • Equinor has extended the life of its Statfjord assets beyond 2030, with plans to commission up to 100 new wells over the next decade, deferring decommissioning with a goal of maintaining current output levels beyond 2025
  • After Murphy Oil, Petrofac and ExxonMobil, Repsol is the latest major considering an upstream exit from Malaysia, covering assets that include six development blocks and the major Kinabalu oilfield in Sabah
  • Senegal’s government has approved Woodside’s offshore Sangomar Field Development, which will involve the drilling of 23 subsea wells and a FPSO with the capacity to process up to 100,000 b/d of crude
  • Equinor has announced plans to reduce greenhouse gas emissions from its offshore fields and onshore plants in Norway by 40% by 2030, 70% by 2040 and to near zero by 2050 from 2019 levels

Midstream/Downstream

  • Shell is reportedly seeking buyers for its 144 kb/d Anacortes refinery in Washington state, which would be its third North American sale in two years after divesting its Martinez refinery in California and Sarnia refinery in Ontario
  • Shell has announced plans to increase its share of the Mexican fuel market to 15%, which would require considerable growth in its network of 200 fuel stations in 12 states that currently represent 1% of the market
  • Occidental Petroleum plans to reduce its holdings in Western Midstream Partners – acquired as part of its controversial takeover of Anadarko – to less than 50%, potentially removing up to US$7.8 billion of debt

Natural Gas/LNG

  • Sempra Energy and Saudi Aramco have signed an agreement that will see the Saudi giant play a bigger part in the planned 22 million tpa Port Arthurt LNG project, following an existing agreement to purchase 5 mtpa signed in May 2019
  • Kuwait Petroleum Corp has agreed to purchase 3 million tpa of LNG from Qatar Petroleum for 15 years beginning 2022, with Kuwait remaining one of the few countries in the Middle East that remain neutral to the Saudi-Qatar standoff
  • ExxonMobil has signed an agreement with midstream company Outrigger Energy II to build a 250 mmscf/d cryogenic gas processing, gathering and pipeline system in the Bakken’s Williston Basin in North Dakota
  • The Larak gas field in Sarawak has achieved first gas, operated by SapuraOMV Upstream as part of the SK408 PSC that includes the Gorek and Bakong fields, with output planned to be processed into LNG at Petronas’ Bintulu complex
  • Russia’s TurkStream natural gas pipeline – connecting Russia, Turkey, Bulgaria and eventually Serbia and Hungary - has officially begun operations, delivering up to 13 bcm of Russian gas that can be rerouted from the Ukraine route
January, 17 2020