NrgEdge Editor

Sharing content and articles for users
Last Updated: January 3, 2020
1 view
Business Trends
image

Market Watch   

Headline crude prices for the week beginning 30 December 2019 – Brent: US$68/b; WTI: US$61/b

  • Global oil prices finished the year on a relative high, with indications that the presumed upcoming supply glut might be less severe than expected, pushing Brent and WTI prices to 3-month highs.
  • Dragged up by the renewed OPEC+ supply deal and an imminent Phase 1 US-China trade deal, data released by US EIA showing that US crude inventories had fallen for a second consecutive level to its lowest point in two points (along with a fall in US crude exports) also supported prices
  • Rising supply from non-OPEC+ sources – including the US, Norway and Brazil – is still a concern, especially with a significant amount of crude from Guyana also entering the market; while OPEC+ is stressing adherence, calculations suggest that there may still be an immediate excess of 500,000 b/d of crude in 1H 2020
  • Members of the OPEC+ club have also signalled that they expect an end to the organisation’s attempts to prop of crude prices, with Russian Energy Minister Alexander Novak stating that the cuts ‘can’t last forever’, stressing a need to defend market share
  • After two weeks of gains, the US active rig count fell to the pre-New Year lull, dropping 8 oil rigs overall, while the number of gas rigs stayed flat for a total count of 805, or 278 fewer rigs y-o-y; major losses were seen in the Permian, where 9 rigs were lost
  • At the start of a new year, it looks like crude prices will hold their recent gains, but not much higher, as the market frets about impending oversupply; Brent and WTI should remain rangebound at US$65-67/b and US$60-62/b, respectively


Headlines of the week

Upstream

  • First oil from Guyana is now on the market, as ExxonMobil’s Liza field starts commercial production, ramping up to some 120,000 b/d over Q1 2020
  • Even more oil is coming from Guyana, as ExxonMobil and its partners Hess  and CNOOC struck oil again at the Mako-1 well, southeast of the Liza field, making it the 15th discovery in the Stabroek Block and increasing estimated recoverable resources in the block to some 6 billion barrels of oil equivalent
  • Hoping to follow in the footsteps of Guyana’s success, Apache and Total have formed a joint venture to explore Block 58 offshore Suriname, each holding a 50% working interest in the asset, which includes the Maka Central-1 well
  • South Africa has published its first draft of new oil and gas legislation that would give the state a 20% carried interest in all exploration and production rights, including a 10% participating interest for black partners and calling for the establishing of a national Petroleum Agency
  • Equinor and Rosneft have taken FID on the first stage of their North Komsomolskoye field development project, with the onshore field in Western Siberia estimated to hold some 250 million barrels of oil and 23 bcm of gas
  • After several years of dispute that halted production, Saudi Arabia and Kuwait have agreed to resume oil production in their shared neutral zone, which could return as much as 500,000 b/d of crude to the market
  • China’s CNOOC is to ramping up drilling in the South China Sea, with up to 30 wells planned in the Pearl River Mouth and Qiongdongnan basins over 2020

Midstream/Downstream

  • Nigeria’s NNPC will be increasing its stake in the Chevron-operated 33,000 b/d EGTL gas-to-liquids refinery near Lagos from 20% to 60%, which is part of a cost dispute resolution agreed between both parties

Natural Gas/LNG

  • Shell announced that it had made a ‘significant’ gas and condensate discovery in Western Australia’s Browse Basin, with the Bratwurst-1 well lying close enough to the Prelude FLNG facility to enable a future tie-back
  • Thailand’s PTTEP has sanctioned the start of its Lang Lebah gas project in Block Sk 410B in Sarawak, Malaysia, with production aimed to act as feedstock for the Petronas LNG export project in Bintulu
  • Delek Drilling has officially delayed the launch of production at the Leviathan gas field in Israel, following a court injunction halting operations and a delay in permits required from the Ministry of Environmental Protection
  • Eni has taken FID on the planned expansion of its LNG export facility in Nigeria, which would increase production capacity from a currently 22.5 million tpa to over 30 mtpa, involving a new liquefaction train and debottlenecking of the existing six trains
  • Private equity group KKR & Co and the Alberta Investment Management Corporation have taken a 65% stake in the 21 bcf/d Coastal GasLink Pipeline project in Canada, which will connect natural gas supply from Dawson Creek to the upcoming LNG export facility in Kitimat, British Columbia
  • The second liquefaction train at the Cameron LNG project in Louisiana has started up initial production, bringing total production capacity to 8 mtpa
  • Australia’s Woodside has signed a long-term 13-year LNG sales and purchase agreement with Germany’s Uniper Commodities, involving an initial 500,000 tpa of LNG in 2021 then rising to 1 million tpa from 2025 onwards

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
2 0

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

Latest NrgBuzz

EIA expects U.S. crude oil production to remain relatively flat through 2021

In the U.S. Energy Information Administration’s (EIA) November Short-Term Energy Outlook (STEO), EIA forecasts that U.S. crude oil production will remain near its current level through the end of 2021.

A record 12.9 million barrels per day (b/d) of crude oil was produced in the United States in November 2019 and was at 12.7 million b/d in March 2020, when the President declared a national emergency concerning the COVID-19 outbreak. Crude oil production then fell to 10.0 million b/d in May 2020, the lowest level since January 2018.

By August, the latest monthly data available in EIA’s series, production of crude oil had risen to 10.6 million b/d in the United States, and the U.S. benchmark price of West Texas Intermediate (WTI) crude oil had increased from a monthly average of $17 per barrel (b) in April to $42/b in August. EIA forecasts that the WTI price will average $43/b in the first half of 2021, up from our forecast of $40/b during the second half of 2020.

The U.S. crude oil production forecast reflects EIA’s expectations that annual global petroleum demand will not recover to pre-pandemic levels (101.5 million b/d in 2019) through at least 2021. EIA forecasts that global consumption of petroleum will average 92.9 million b/d in 2020 and 98.8 million b/d in 2021.

The gradual recovery in global demand for petroleum contributes to EIA’s forecast of higher crude oil prices in 2021. EIA expects that the Brent crude oil price will increase from its 2020 average of $41/b to $47/b in 2021.

EIA’s crude oil price forecast depends on many factors, especially changes in global production of crude oil. As of early November, members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) were considering plans to keep production at current levels, which could result in higher crude oil prices. OPEC+ had previously planned to ease production cuts in January 2021.

Other factors could result in lower-than-forecast prices, especially a slower recovery in global petroleum demand. As COVID-19 cases continue to increase, some parts of the United States are adding restrictions such as curfews and limitations on gatherings and some European countries are re-instituting lockdown measures.

EIA recently published a more detailed discussion of U.S. crude oil production in This Week in Petroleum.

November, 19 2020
OPEC members' net oil export revenue in 2020 expected to drop to lowest level since 2002

The U.S. Energy Information Administration (EIA) forecasts that members of the Organization of the Petroleum Exporting Countries (OPEC) will earn about $323 billion in net oil export revenues in 2020. If realized, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues.

Crude oil prices have fallen as a result of lower global demand for petroleum products because of responses to COVID-19. Export volumes have also decreased under OPEC agreements limiting crude oil output that were made in response to low crude oil prices and record-high production disruptions in Libya, Iran, and to a lesser extent, Venezuela.

OPEC earned an estimated $595 billion in net oil export revenues in 2019, less than half of the estimated record high of $1.2 trillion, which was earned in 2012. Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programs, and support public services. EIA expects a decline in net oil export revenue for OPEC in 2020 because of continued voluntary curtailments and low crude oil prices.

The benchmark Brent crude oil spot price fell from an annual average of $71 per barrel (b) in 2018 to $64/b in 2019. EIA expects Brent to average $41/b in 2020, based on forecasts in EIA’s October 2020 Short-Term Energy Outlook (STEO). OPEC petroleum production averaged 36.6 million barrels per day (b/d) in 2018 and fell to 34.5 million b/d in 2019; EIA expects OPEC production to decline a further 3.9 million b/d to average 30.7 million b/d in 2020.

EIA based its OPEC revenues estimate on forecast petroleum liquids production—including crude oil, condensate, and natural gas plant liquids—and forecast values of OPEC petroleum consumption and crude oil prices.

EIA recently published a more detailed discussion of OPEC revenue in This Week in Petroleum.

November, 16 2020
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