Quote of the Week
“Last week’s meeting reminded us that the Big Three of oil – Russia, Saudi Arabia, and the United States – whose total liquids production now comprises about 40 percent of the global total, are the dominant players.”
International Energy Agency (12/14)
Graphic of the Week
1. Oil and the Global Economy
2. The Middle East & North Africa
7. Climate Change Conference
8. The Briefs
1. Oil and the Global Economy
Oil prices were volatile last week trading inside a narrow range of about $1.50 a barrel and climbing or falling in response to the news of the day. Reports of the OPEC production freeze, the Iran sanctions, or production slowdowns in Libya and Venezuela push prices up while news of economic problems and falling equity markets tend to push prices down. At week’s end, New York futures settled at $51.20, about where they have been since the $7 a barrel price in mid-November. London futures closed $9 higher at $60.28 which is about they have been since November 22nd.
For the past three weeks, oil prices have been relatively steady. Fears of the reduction in oil supplies stemming from the Iranian sanctions have been abated for a while as the US has issued partial waivers. The OPEC+ production freeze will not take hold until next spring, and US shale oil output is still rising despite the $25 decline in prices during October and November. While there are signs that US shale oil production is starting to slow, this will not become apparent until later this winter. While oil prices are still $30 above the lows hit three years ago, a prolonged period of US prices hovering around $50 a barrel is likely to result in lower US oil production as it did 3-4 years ago.
The big unknown is the global economy. While the US has been doing well of late, likely due to the stimulus of tax cuts that took place earlier this year, the situation in Europe and China is not looking so good. There are numerous indications that China’s economy is slowing despite the glowing GNP numbers Beijing keeps publishing. This pullback is spooking the global equity markets as is the uncertainty about the effects of the already imposed and impending new US and Chinese tariffs. As we have seen so many times in the past, a significant economic recession is likely to reduce the demand for oil by so much that all the sanctions, production cuts, and local production outages the markets worry about today are likely to become minor issues in the determination of oil prices.
OPEC: Concerns are rising that the OPEC+ production freeze may not be as effective as thought. The announcement by Moscow that it would only cut production slowly starting with 50,000-60,000 b/d in January suggests that it may be many months before the effects are seen. The non-OPEC group is expected to reduce output by 400,000 b/d, but if Russia is only going to do its part gradually, the non-OPEC cuts might not reach the promised levels anytime soon. Because there are no country-specific allotments, it will be hard to hold any producer accountable. Even if OPEC+ were to adhere to its promised cuts, it still might not be enough. The fears that the global economy is faltering are growing, demand is showing signs of strain, and supply continues to rise. The EIA still expects significant production growth from US shale despite the downturn in prices.
The nature of the nearly 60-year-old cartel is changing as it becomes more involved in shifting world geopolitics. The recent meeting to initiate another production freeze to drive up prices shows that OPEC by itself can no longer be effective without help from Moscow and its associates in the former Soviet Union. Outside of the Saudis, Kuwait, the UAE, and the troubled Iran and Iraq, the rest of the coalition exports so little oil these days they are meaningless as world production hits 100 million b/d. Most of the world’s oil production now comes from Saudi Arabia, Russia, the US and the handful of countries associated with the big producers.
Given the nature of US and Canadian economic organization, they are unsuited to play the same role in regulating oil production as s do those countries with state-owned national oil companies. The developing Moscow-Riyadh duumvirate together control enough oil production to push up prices; however, it is doubtful that they can increase production enough to lower prices in a worldwide market that already consumes some 100 million barrels per day. The special relationship that the US has had with the Saudis since World War II is fracturing as the new crown prince is pursuing policies that are distasteful to the US and other Western nations. This situation, in turn, is driving the Saudis and the Russian closer as they have a common interest in oil prices and a similar approach to governing.
US Shale Oil Production: The industry press is still discussing the implications of the United States Geological Survey’s announcement that the Permian Basin contains 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids. An important caveat in the announcement is that these figures represent technically recoverable resources. “Whether or not it is profitable to produce these resources has not been evaluated.” This is the issue of “sweet spots” and whether or not it costs more to drill, frack, and operate a well than the value of the oil or gas that is ultimately produced. In North Dakota and south Texas, drillers are already being forced to drill in less profitable locations. Given that all the “new technology” that is being touted by industry does not come for free and adds to the cost of each barrel produced, it may be sometime before the announcement of more oil being assessed as existing in the Permian is significant. Given that the world is currently consuming some 36 billion barrels of oil per year, the newly “found” oil would only cover a year’s consumption even if it can all be produced.
With oil prices back down to circa $50 a barrel in the US, several major oil companies have announced that they plan to increase their investment in shale oil. They do not have much choice if they plan to stay in the oil business. Offshore oil production is very expensive and takes many years of work before the oil begins to flow, while shale oil wells can be drilled quickly and can produce oil in a matter of months. Unlike the smaller producers, larger oil companies have incomes from conventional wells drilled years ago and do not risk bankruptcy if some newly drilled shale oil wells are not particularly profitable at first. These companies are banking on the efficiencies a larger company can bring to the shale oil business and on oil prices spiking to profitable levels in the next five years.
In the meantime, there are indications that US shale oil production is slowing and may even contract as it did three years ago. The US rig count continued to drop last week, and layoffs are in the offing for hundreds of oil and gas workers in Texas. While North Dakota’s oil output averaged over 1.39 million b/d in October, up nearly 32,600 b/d from September, the state government warned that a combination of low oil prices, limited gas capture infrastructure, and cold weather could slow future production. The state’s oil regulator said, “The signals I’m hearing from industry … they’re going to slow investment through the first quarter of next year.”
2. The Middle East & North Africa
Iran: The China National Petroleum Corp (CNCP) suspended investment in Iran’s South Pars natural gas project in response to US pressure last week. South Pars is the world’s largest gas field, and CNPC’s investment freeze is a blow to Tehran’s efforts to maintain financing for energy projects amid the re-imposition US sanctions. In August, CNPC company replaced France’s Total in the project for development of Phase 11 of South Pars Gas Field, increasing its stake in the deal to as much as 80 percent, with Iran holding the rest. Iranian officials said they would determine whether China’s CNPC has broken accords related to the development of South Pars.
The loss of Chinese involvement in the development of South Pars could be a major blow to Tehran’s plans to develop the world’s largest natural gas field and become a major exporter of natural gas to Europe and India.
Iran has set the official selling price of its light crude for its Asian buyers at 30 cents above the Oman/Dubai average for January, $1 lower than the previous month. Tehran has also cut prices for the other three crude grades it sells to Asia, keeping Iranian oil prices at the largest discounts in more than a decade against Saudi crude.
According to data released Wednesday by OPEC, citing secondary sources, Iranian crude oil production showed the biggest decline among members in November, as it fell by 380,000 b/d from October to 2.95 million b/d. India’s monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the US sanctions.
Japanese refiners plan to resume loadings of Iranian oil next month but won’t take the risk of loading cargoes beyond March amid doubts over whether Washington would extend the 180-day sanctions waiver.
Iraq: Iraqi oil exports in November fell by 80,000 b/d to 3.80 million. Increased exports through the Kurdistan region was offset by a fall in loadings from the Persian Gulf terminals due to bad weather. November crude production was only marginally lower, averaging 4.455 million b/d from 4.46 million b/d the previous month. With crude oil exports in November from Iraq’s Gulf terminals and Ceyhan falling to a seven-month low of 3.3372 million b/d, the latest data implies that exports by the Kurdistan Regional Government totaled 437,000 b/d in November up from 420,000 b/d the previous month.
Baghdad says total domestic consumption for power generation and refining was 646,000 b/d, compared with 571,000 b/d and 507,000 b/d in October and September respectively. With US pressure to stop importing Iranian natural gas to produce electric power, Baghdad is going to have to consume more crude domestically to keep the lights on.
Iraq has increased production at its southern Halfaya oilfield operated by PetroChina by 100,000 b/d to a total of 370,000 b/d. Production rose after the completion of a new oil processing facility. The new facility can process 200,000 b/d of crude oil and will help further boost output from Halfaya to reach 470,000 b/d. Iraq is one of the last places on earth with shallow, easy-to-produce conventional oil. This is the reason why major foreign oil companies have been able to increase Iraq’s oil production so rapidly in the last decade.
Saudi Arabia: Saudi Arabia’s oil minister Khalid Al-Falih said last week the kingdom produced 11.1 million b/d in November but should reduce production by 400,000 b/d in December amid lower demand and the production agreement. In December, the kingdom is expected to produce 10.7 million b/d, and then reduce its production by 500,000 b/d in January, to average 10.2 million, he said. The commitment is for Saudi Arabia to cut its production by 2.5 percent from its October levels, which would mean roughly 267,000 b/d. Demand in Saudi Arabia is dropping due to cooler weather, but Al-Falih also said international demand for its crude has been falling. The peak seen in mid-2018 was driven up by anticipation of the effect of sanctions on Iraqi production on the market, he said. Buyers ordered more Saudi crude to fill their inventories, and now are asking for fewer shipments as the US sanctions on Iran have been “relaxed.
A combination of the Khashoggi affair and the war in Yemen are starting to weigh on the Saudis’ position in the world. The Trump administration still is standing behind King Salman and his son; however, in a historic rebuke of the Trump administration’s Saudi policy, senators voted to end US support for the Yemen war, then unanimously held Saudi Arabia’s crown prince responsible for the murder of Jamal Khashoggi. While the Senate vote will change little, it is a harbinger of growing congressional unease with aspects of the U.S.-Saudi partnership, which Trump has made the pillar of his entire Middle East strategy, particularly with regard to confronting Iran. The discomfort will grow only more urgent next month when a new, Democratic-led House convenes.
For now, little seems likely to happen to the US-Saudi relationship or the power structure in Riyadh; however, as Western interest decreases in investing in the Saudis new economic initiatives, this could change. The recent drop in oil prices has put that Saudi government back into the red. Given that the Saudis and their Gulf Arab associates control a major part of world oil exports, any political disorders in the area are always a matter of concern.
Libya: Last Monday the National Oil Company (NOC) declared force majeure on exports from the 315,000 b/d El Sharara oilfield after it was seized ten days ago by a local militia group. The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for the company said, without giving an output figure. The field usually pumps around 70,000 b/d. On Friday, the NOC announced that it is against paying a ransom to an armed group that has halted crude production at the oilfield. “Any attempt to pay a ransom to the armed militia which shut down El Sharara would set a dangerous precedent that would threaten the recovery of the Libyan economy.”
China’s crude imports averaged more than 10 million b/d for the first time in November, as they beat the previous record for highest crude imports set in October. Imports were up by 8.5 percent compared to November 2017 and surpassing the previous record of 9.61 million b/d, which was established in October 2018. Demand was driven by independent refiners who were rushing to fulfill their 2018 oil import quotas before they expire. In November, the independent refiners—the so-called teapots—continued to buy high volumes and some of them increased intake as they start trial runs at newly-built oil refineries. An independent refiner Hengli is planning trials at its new 400,000 b/d refinery at Dalian, in northeastern China.
Despite the increase in oil imports, a sharp slowdown in Chinese spending growth and manufacturing is adding to the gathering gloom for the international economy, sending financial markets lower around the world at the prospect of global loss of momentum. Retail sales grew at the slowest pace in 15 years in November, while factory output was the weakest in nearly three years, suggesting economic stimulus measures enacted by Beijing earlier this year have failed to reverse dwindling growth. Car sales have plunged 10 percent from last year and are down 14 percent in November from October. The housing market is stumbling. Some factories are letting workers off for the big Lunar New Year holiday two months early. Many economists say the slowdown is the worst since the global financial crisis a decade ago when Beijing was forced to plow trillions of dollars into its economy to keep growth from derailing.
The big question is what will happen next year, particularly in coastal areas dependent on exports to the United States. Many supply chains have been stockpiling with extra inventory so that American importers may need fewer goods in the months ahead. If any of this economic decline is due to the US administration’s trade war is unknown. Most believe the impact of the reciprocal tariffs has not yet been felt. One well-known factor is that the oil markets have become very sensitive to the ups and downs in the news about the Sino/US trade negotiations.
Russia will cut its liquids output by 50,000-60,000 b/d in January under the latest agreement with OPEC, Energy Minister Novak said Tuesday. Russia committed to reducing output step by step, as freezing winter temperatures in the country make a rapid reduction impractical. The minister did not elaborate on the plan for subsequent months, which is supposed to see Russia eventually reduce output by 228,000 b/d. Novak also said that the OPEC+ group of oil-producing countries maintains its target to keep global stocks at around the five-year average under the new deal, agreed last week in Vienna. Moscow’s immediate production cut is only a fraction of what the Saudis say they are cutting next month, but Russia’s demand for heating oil spikes in the winter, while the Saudis need for air conditioning plummets.
Talks about a possible asset swap deal between Royal Dutch Shell and Gazprom have been suspended, Kommersant business daily reported on Wednesday. The memorandum on the possible asset swap was signed in 2015 and was seen as a coup for Gazprom at a time when many Western companies were reducing their exposure to Russia because of Western sanctions over Moscow’s actions in Ukraine. Plans for the expansion of the Sakhalin-2 plant, which produces 11 million tons of liquefied natural gas per year, hinge on the outcome of the talks with the Sakhalin-1 consortium led by Exxon Mobil Corp and Rosneft about gas supplies.
Despite assurances that Nigeria is working to diversify its economy away from oil, the country continues to depend heavily on oil exports, and consequently, on oil prices, for revenues. The value of Nigeria’s crude oil exports in the third quarter accounted for 85.4 percent of the value of all exports. Other oil products accounted for 11.2 percent of Nigeria’s total exports, while non-oil products made up a mere 3.4 percent of the country’s exports in the third quarter.
Petroleum product Marketers and Depot Owners Associations gave the government yet another ultimatum the week before last, to redeem their long overdue balance for over N800bn for fuel, already sold at Government regulated retail price of N145/liter. The N800bn is the difference between government’s regulated price and the actual open market price that the retailers have to pay for their imported gasoline. The marketers are also demanding compensation for exchange rate differentials and relief from the extended burden of interest on their bank loans.
The open market price for gasoline in neighboring countries is presently between N305 – N360/liter while the government regulated retail price is N145/liter in Nigeria. This difference caused gasoline wholesalers and retailers to suffer an N800 billion loss in recent years. The much lower gasoline price in Nigeria has encouraged large-scale cross-border smuggling of Nigeria’s gasoline imports to neighboring nations such as the Republics of Benin, Togo, Cameroun, Niger, and Chad.
Minister of State for Petroleum Resource Kachikwu said that President Muhammadu Buhari-led government had not spent a dime on the country’s four refineries. More than N264 billion was spent on maintenance of the refineries by successive governments before the present administration but the refineries are in terrible condition, and the bulk of the country’s oil products must be imported. The minister said all the efforts made so far to fix the refineries have been to find private investors to collaborate with government to put these refineries in order and then save the government money. “What is important is that for the first time, the president had been able to say that he would repair the refineries without government money.”
For an oil exporting country of 191 million people, the lack of much refining capacity is ridiculous. The government is spending billions each year to import refined oil products and is leaving much of the costs of these imports on the back of the oil importing firms.
Following a three-day visit to Moscow two weeks ago and meetings with dozens of Russia’s top officials, President Maduro boasted of $6 billion worth of investment pledges and a string of other deals designed to help prop up its collapsing economy. Maduro said Moscow had pledged to invest $5 billion in joint ventures in the country’s oil sector, $1 billion in mining projects and to export 600,000 tons of wheat to Venezuela to cover its 2019 needs. He said that Russia had also agreed to modernize Venezuela’s armed forces and to look into potential projects in the country’s diamond industry.
However, following Maduro’s visit, Russian officials sought to damp expectations of any major financial support. “Quite obviously Rosneft would have made a statement and bragged about a deal of that size had it really happened,” a Rosneft official said. “Besides, the amount of investment in the joint oil projects Maduro named sounds suspiciously close to the amount in the existing deal.”
Several years ago, Rosneft lent $6 billion to PDVSA partly as pre-payment for crude. More than half of this debt remained outstanding as of the end of September. Last November Moscow agreed to restructure $3.15 billion worth of this debt after international rating agencies said the country had defaulted on $60 billion worth of obligations. In recent months there have been reports that Rosneft wants its money back as the amount of oil being shipped to Russia has dwindled.
A joint venture with a state-owned Chinese company, Sinovensa, accounting for around 10 percent of Venezuela’s oil output has nearly doubled production in the past seven months, PDVSA said last week. “They are managing to recover so-called ‘deferred output’ which they had lost due to issues like equipment theft,” said Antero Alvarado, Venezuela director at consultancy Gas Energy Latin America. “But this will have a short-term impact because output will fall again, and they will need to drill more wells.”
Venezuela told OEPC it produced 1.46 million b/d in November, up from 1.43 million in October. Data from secondary sources showed a decline to 1.1 million b/d in November, according to the OPEC report, published last Wednesday.
Canadian miner Crystallex has accused Venezuela of breaching a $1.4 billion settlement agreement as PDVSA continued to try and overturn a court order that allowed Crystallex to take control of the stock of Citgo’s parent company. Crystallex had already hired banks to organize a forced sale of Citgo stock in order to get its $1.4 billion, a lawyer for the Canadian mining company said, but the process has been suspended because Venezuela is appealing Crystallex’ accusation.
The issue is the ownership of Citgo. While Citgo is a unit of PDVSA, PDVSA is a state-owned company, according to a court ruling from earlier this year. The court’s decision was unique: government assets such as Citgo’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. The judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA.
ConocoPhillips also won a case against Venezuela and earlier this year stepped up its efforts to obtain the money awarded by the courts by seizing PDVSA assets in the Caribbean. The strategy worked, and PDVSA coughed up US$345 million as the first part of a US$2-billion settlement.
7. Climate Change Conference
The rules that will govern the climate pact were approved on Saturday by the nearly 200 countries that signed the Paris agreement. The agreement passed over the weekend includes a universal system for measuring and reporting emissions, whereby all countries will abide by the same rules that will take effect in 2024. The rules will eliminate an earlier distinction between developed and developing countries over their commitments, but the final agreement failed to include provisions on a global carbon market mechanism.
Earlier in the week, objections from the US, Saudi Arabia, Russia and Kuwait over a recent scientific report from the Intergovernmental Panel on Climate Change sparked a heated debate that resulted in watered down language used to describe the study. The policy director at the Union of Concerned Scientists said that the deal was “a bit of a mixed bag”. “When you turn to climate ambition it is a fairly weak response to the clarion call from scientists just over two months ago.”
The major disagreement in the final hours of the meeting was over carbon markets — a provision for a global scheme that would allow countries to trade emissions reductions. The article related to this issue was largely deleted from the final agreement due to opposition from Brazil, with the carbon market discussion delayed to next year.
Absent leadership from Washington, the meeting did little to speed up the reduction in carbon emissions in response to the IPCC report. While several European governments are planning serious and expensive efforts to reduce carbon emissions, the major emitters, China, the US, India, and Russia, are doing little or nothing. It seems like the world’s climate will have to get far worse before people and their governments are ready to make major sacrifices.
8. The Briefs (date of an article in Peak Oil News is in parentheses)
The cut agreement: Last week, major oil producers meeting in Austria agreed to cut oil production by 1.2 million b/d. OPEC producers and non-OPEC oil exporting countries including Russia agreed last Friday to make the cut, which will be done during the first six months of 2019. (12/14)
War on diesels: Jürgen Resch is upending the German car industry— one court case at a time. The white-haired veteran of the country’s environmental movement is behind a sweeping legal campaign to uphold air quality by imposing driving bans in German cities. His main target: diesel cars made by the likes of Volkswagen, Daimler, and BMW. There is no dispute over his record: an unbroken string of courtroom victories, millions of furious vehicle owners and an industry reeling from reputational and financial blows, with potential losses running to billions of euros. (12/14)
EU car sales drop: Volkswagen, Renault, and Fiat Chrysler led an 8.1 percent decline in European car sales in November as the introduction of tougher new emissions tests continued to weigh on demand. Registrations fell to 1.16 million cars in the European Union and European Free Trade Association countries last month from 1.26 million in the year-earlier month. (12/14)
In Singapore, around $150 millions’ worth of oil was stolen from Shell’s biggest global refinery over four years, far more than the $10 million reported when police first revealed the heist earlier this year. Raids last January led to over a dozen arrests, including of several former employees of the local unit of Royal Dutch Shell. (12/14)
Australia overtook Qatar as the world’s largest exporter of liquefied natural gas (LNG) for the first time in November. The surge in Australian exports follows the start-up of many export projects in the country over the past three years, most recently the Ichthys start-up offshore its northern coast. In November, Australia loaded 6.5 million tons of LNG for exports while Qatar exported over 6.2 million tons. (12/10)
Off French Guyana, Total S.A. said Monday it dispatched a ship to begin drilling off the coast and assured it won’t damage coral reefs in the area. The move comes just days after Brazil denied it a license for work on its offshore portion, and despite warnings from environment protection organizations. (12/12)
In Mexico, new President Andrés Manuel López Obrador’s ultimatum to his country’s oil industry: pump more oil in three years. He has announced an ambitious $3.7bn cash injection to reverse cratering production at debt-laden national oil champion Pemex, as well as a goal to halt oil exports, become self-sufficient in fuel and build a new $8bn refinery. (12/15)
Mexico’s energy regulator on Tuesday canceled two oil field auctions scheduled for February after the new leftist government said it would not hand over more resources to private companies until they proved themselves as producers. (12/12)
Since Alberta Premier Rachel Notley announced an oil production cut of 325,000 b/d beginning next month, the spot price for Western Canadian Select has gained over 70 percent. The deep discount, at certain times more than US$40 a barrel, had closed by more than half over the last eight days since the cut was announced. (12/12)
In Canada, Suncor Energy said it expects average upstream production to rise 10 percent in 2019, even after implementing Alberta’s mandated output cuts. Alberta has mandated temporary output cuts of 325,000 b/d until excess crude in storage is drawn down. Suncor forecast average upstream production of 780,000 to 820,000 barrels of oil equivalent per day (boe/d), an increase from about 730,000 boe/d in 2018. (12/15)
The US dropped oil rigs for the second week in a row, according to weekly data compiled by Baker Hughes, a GE Company. After declining by ten oil rigs the previous week, the US dropped another four rigs last week, bringing the total oil rig count to 873. Gas rigs remained flat this week, with no rigs added or cut. (12/15)
US crude oil output growth was expected to slow slightly for this year compared with previous forecasts, the US EIA said, but at a record 10.88 million b/d, the nation will end 2018 as the world’s top producer. Output this year was forecast to rise by 1.53 million b/d. (12/12)
US net imports have averaged 3.1 million b/d in 2018 to date. Ten years ago, just ahead of the shale revolution, the figure was 11.1 million b/d., the IEA said. (12/12)
LNG boom: The US is poised to become a much bigger player in the global supply of LNG. Cheniere and Dominion Energy are both exporting LNG produced from shale gas, and three more developers are expected to have export terminals up and running next year in Texas, Louisiana, and Georgia. (12/12)
Gas pipeline: Dominion Energy has suspended construction on the full 600-mile route of the Atlantic Coast Pipeline, except for some ‘stand-down’ activities, after an appeals court stay last week. Dominion said its action to halt work on the natural gas project was in response to the 4th US Circuit Court of Appeals’ stay of implementation of the US Fish and Wildlife Service’s biological opinion and incidental take statement. Both documents relate to the project’s impact on vulnerable species. (12/10)
Oil rig batteries: Siemens last week announced the launch of the first hybrid power plant for offshore rigs combined with energy storage featuring lithium-ion batteries. The company first unveiled the Blue Vault power supply and storage system in May this year in yet another sign of its growing focus on energy storage at just the right time. In the case of Blue Vault, Siemens said the system could reduce a rig’s fuel consumption by 12 percent with carbon dioxide emissions down by 15 percent. (12/11)
Dealing re vehicle mpg: When the Trump administration laid out a plan this year that would eventually allow cars to be less efficient and emit more pollution, automakers, the obvious winners from the proposal, balked. The changes, they said, went too far even for them. But it turns out that there was a hidden beneficiary of the plan that was pushing for the changes all along: the nation’s oil industry. Marathon Petroleum, the country’s largest refiner, worked with powerful oil-industry groups and a conservative policy network financed by the billionaire industrialist Charles G. Koch to run a stealth campaign to roll back car emissions standards. (12/14)
CA pushes EV buses: California on Friday became the first state to mandate a full shift to electric buses on public transit routes, flexing its muscle as the nation’s leading environmental regulator and bringing battery-powered, heavy-duty vehicles a step closer to the mainstream. Starting in 2029, mass transit agencies in California will only be allowed to buy buses that are fully electric under a rule adopted by the state’s powerful clean air agency. (12/15)
German EV truck: A battery-powered eTruck from MAN will be used by Porsche for logistics in the Stuttgart area. The truck is an 18-ton semitrailer tractor that can haul 32 tons. Lithium-ion batteries with a storage capacity of 149 kWh allow the eTruck to cover a range of 130 kilometers (81 miles). The truck can be charged in 45 minutes to go an additional 100 km. (12/15)
Battery boom: Daimler will buy more than $23 billion of battery cells for electric drive vehicles by 2030. The suppliers are already producing battery cells in Asia and Europe and are continuing to expand in Europe and additionally in the US. Daimler currently has battery cell supply deals with SK Innovation, LG Chem and China’s Contemporary Amperex Technology.
China’s output of new energy vehicles rose to 173,000 units in November, up 18.5% year on year. Production of NEVs, which are purely electric and plug-in hybrid vehicles that use lithium-ion batteries, in November was up 36.9% month on month. Over January-November, NEV output totaled 1.05 million units, up 63.6% year on year. (12/12)
EV fast-charging: In Germany, the FastCharge research consortium has presented a prototype for a charging station with an output of up to 450 kW. The new charging station is suitable for electric models of all brands with the European standard Type 2 variant of the widely used Combined Charging System (CCS). A Porsche research vehicle with a net battery capacity of approximately 90 kWh achieved a charging capacity of more than 400 kW on the new charging station, allowing for charging times of less than 3 minutes for the first 100 km range. An innovative cooling system makes this possible by ensuring even gentle temperature control in the battery cells. (12/14)
TX wind record: The Electric Reliability Council of Texas set a new wind output record of 19.2 GW in late Thursday, as a storm system was moving into the area with high wind. High wind generation broke the previous all-time high of 17.9 GW set in mid-November and broke the record several hours in a row before topping out at 19.2 GW. At the time when the record was set, more than 51% of the total load was served by wind generation. (12/15)
Offshore wind bid: A US government auction for three wind leases off the coast of Massachusetts ended on Friday with record-setting bids totaling more than $400 million from European energy giants including Royal Dutch Shell Plc and Equinor ASA. The two-day sale attracted 11 bidders and lasted 32 rounds. (12/15)
China’s climate chief Xie Zhenhua has warned that the UN climate talks are “deadlocked” in certain areas, as ministers from around the world scramble to reach an agreement before the talks end this weekend. China has been thrust into the spotlight at this year’s UN climate talks in Katowice, Poland, amid a leadership vacuum created by the US, which has said it planned to withdraw from the Paris agreement. In unusually strong language, Mr. Xie said he was “disappointed” at the US withdrawal and urged the country to reclaim its place at the climate talks. (12/14)
Air pollution killer: A new animal study by a team at Ohio State University suggests that a parent’s exposure to dirty air before conception may result in cardiac dysfunction in adult male offspring. The open-access paper is published in the Journal of the American Heart Association. The study used an in vivo mouse model of preconception exposure to PM 2.5 to investigate the adverse cardiac effects on male offspring. (12/10)