Editors: Tom Whipple, Steve Andrews
Quotes of the Week
“Before the [Colonial pipeline cyber] attack, the energy sector had some of the lowest interest in purchasing cyber insurance of all industries, but in the past two weeks, now they’re very interested.”
Anthony D’Agostino, cyber insurance broker w/ Lockton Companies
“It’s a big deal for Exxon, but it’s a watershed moment for the oil and gas industry. It’s no longer tenable for companies like Exxon Mobil to defy calls to align their business strategies with decarbonizing the economy.”
Fred Krupp, president of the Environmental Defense Fund
Graphic of the Week
| Contents 1. Energy prices and production 2. Geopolitical instability 3. Climate change 4. The global economy and the coronavirus 5. Briefs |
1. Energy prices and production
Oil: It was a historic week for the oil industry, potentially marking a turning point, at least for the corporate strategies of the oil majors. More curbs on the supply side added some bullish sentiment to the market, although the impacts on the fundamentals are not necessarily going to unfold in the near term. But in the wake of the enormous legal and corporate governance blows to the oil majors, more than a few analysts spoke about growing odds of a supply crunch in the years ahead. Royal Dutch Shell lost a landmark legal case in a Dutch court, which, if it stands, will require 45% cuts in GHG emissions by 2030. The case is seen as a warning sign for the rest of the oil industry, signaling legal exposure to emissions.
Oil posted its biggest weekly gain since the middle of April ahead of the US Memorial Day weekend that kicks off the country’s summer driving season. West Texas Intermediate rose 4.3% last week. A spate of positive US economic data continued to highlight the recovery taking shape in the US. At the same time, Americans are expected to unleash demand built up during the pandemic in the weeks ahead. With more drivers taking to the road and with some of the lowest gasoline stockpiles in almost 30 years, some see the US facing a supply squeeze on par with those seen when a hurricane knocks out oil refineries in Texas and Louisiana.
US crude oil output jumped 14.3% to 11.2 million b/d in March from 9.8 million in February, the EIA said in its monthly production report. Output sank 1.3 million b/d in February when extreme weather froze natural gas and oil wells and cut power supplies to millions of customers in Texas and other South Central US states. The 1.4 million b/d increase in March was the biggest monthly gain on record, according to EIA data going back to 2005. Most of the increases were in the most significant producing states, with Texas up 26.4% to an 11-month high of 4.7 million b/d and New Mexico up 17.6% to a record 1.2 million.
Despite President Biden’s pledge to aggressively cut the pollution from fossil fuels that are driving climate change, his administration has quietly taken actions this month to guarantee the drilling and burning of oil and gas for decades to come. The clash between Biden’s pledges and some of his recent decisions illustrates the political, technical, and legal difficulties of disentangling the country from the oil, gas, and coal that have underpinned its economy for more than a century.
IEA’s Net-Zero Report: A stark appeal by the world’s top energy body to stop investment in new fossil fuel projects by next year has met a mixed reception from the world’s leading producers – from guarded praise and pledges to cut back on coal to outright defiance. The International Energy Agency said in its “Net Zero by 2050” report that investors should not fund new oil, gas, and coal supply projects beyond this year. These cuts will be necessary if the world wants to reach net-zero emissions by mid-century and meet the goals of the 2015 Paris Agreement on climate change. Its findings aim to encourage ambitious climate targets from countries attending the United Nations Climate Change Conference (COP26) in November in Glasgow. Still, they have yet to garner a total commitment from any country.
The world’s seven largest advanced economies agreed on Friday to stop international financing of coal projects that emit carbon by the end of this year and phase out such support for all fossil fuels. The United States, Britain, Canada, France, Germany, Italy, and Japan, plus the European Union, said in a joint statement: “international investments in unabated coal must stop now.”
OPEC: The biggest question in the market is how fast OPEC and its allies will revive production later this year. This week they may get some clues. When it meets on Tuesday, delegates said the alliance led by Saudi Arabia and Russia looks set to rubber-stamp output increases scheduled for the next two months. But more importantly, Riyadh and Moscow may offer insights on the next stage of their strategy: bringing back the millions of barrels a day that remain offline after being shuttered when the coronavirus struck. In theory, there’s a yawning supply gap for OPEC and its partners to fill in the second half of the year as economies open up and fuel demand soars.
Yet, the group will need to weigh that against the risk from renewed virus outbreaks in India and elsewhere and the prospect of extra supply from fellow member Iran. The pace of revival they ultimately choose will be critical for crude markets and the fortunes of producers around the world. It was OPEC’s intervention that ended last year’s oil-price crash and fostered their recovery to nearly $70 a barrel today.
Shale Oil: Investors have been demanding more consolidation in the shale oil industry. The merger of Cabot Oil & Gas with Cimarex Energy announced Monday has confounded investors and analysts, leaving them to question the logic behind a tie-up that the companies say will increase diversification. Cimarex is mainly an oil explorer in Texas and Oklahoma, while Cabot focuses on natural gas drilling in the Marcellus shale basin in Appalachia.
Shares of both drillers plunged the most on an intraday basis in more than a year. Analysts at Citigroup said the deal — an all-stock transaction valued at about $7.4 billion — is an unexpected pairing as it creates geographic diversity, unlike other significant industry transactions recently. KeyBanc Capital Markets downgraded shares of Cimarex because of the lack of a premium and what it views as no clear strategic benefit to investors. Bloomberg Intelligence said a Permian-focused partner would have made far more sense for Cimarex.
The Dakota Access Pipeline ruling bodes well for other legal fights over existing pipelines. The future of the 570,000 b/d pipeline is still at risk. Still, the primary crude artery out of the Bakken Shale is in a much stronger position after a federal court ruling kept the oil flowing and the Biden administration opted against intervening on an existing pipeline system. The court ruling essentially decided there is a minimal threat of oil spills from the four-year-old pipeline. The risk fails to rise to the necessary “irreparable harm” level needed to shutter the 1,200-mile line.
Natural Gas: The global gas industry is in an existential race: either find a way to be part of the next generation of energy or risk getting supplanted by alternatives. BP, Sinopec, Equinor, and Royal Dutch Shell are among the producers looking to hydrogen to help secure demand that otherwise may falter as decarbonization speeds up. They want to utilize existing pipelines, storage tankers, and fuel supply to make blue hydrogen, which uses natural gas but captures the carbon emissions and stores them. The straightest route to net-zero emissions uses hydrogen produced by renewable electricity — known in the industry as green hydrogen — but the blue variety is expected to be cheaper until at least 2030 as wind and solar power ramp-up.
US natural gas storage fields injected 115 billion cf for the week ended May 21st — much more than expected — prompting Henry Hub futures to decline across the board on May 27th. Storage inventories increased to 2.215 trillion cf over the latest reporting week. The build proved greater than the 107 Bcf addition expected by analysts. Previously, strong export demand and tepid production levels have resulted in an underwhelming injection season in the early going.
Qatar’s recent announcement that it would build the world’s largest LNG production facility did not prompt any applause from other LNG producers. The tiny Gulf nation is also cutting its prices and expanding into the spot market to retain its number-one position in LNG exports. This could result in the death of some planned US LNG projects. While Qatar is still the cheapest LNG producer, the abundance of US shale gas made it affordable and competitive in some markets, which in turn led to a flurry of LNG projects as the US staked its claim on the international market.
Electricity: Communities from California to New England are at risk of power shortages this summer. The heat is expected to strain electric grids that serve more than 40% of the US population. The sweeping warning from the North American Electric Reliability Corporation comes after California and Texas both suffered weather-related blackouts affecting millions during the past nine months. While the agency has previously warned that the US West faces ongoing energy shortages, its report Wednesday highlighted for the first time that parts of New England and the Midwest are also at elevated risk if temperatures are above average.
The Texas electric grid came within five minutes of a complete collapse in mid-February, which would have made a very bad problem much worse. A little-known network designed to jolt the grid back to life wasn’t working correctly. If grid operators had lost control of the situation—they didn’t, although they came close—the spotty performance of the restart units could have left Texans without power for much longer than a few days. By the grid operators’ estimate, a total collapse could have caused weeks or even months of outages.
Texas lawmakers are poised to pass several measures designed to help pay for the billions of dollars of energy costs stemming from catastrophic blackouts during the severe winter storm. The legislation would allow Ercot and gas utilities to securitize their costs from the storm. When the securitization measures gain final approval, customers’ energy bills will likely be saddled for years with charges to pay off the enormous debts accumulated by utilities and suppliers who paid exorbitant rates for electricity and gas during the crisis.
Prognosis: Global oil and gas companies could be facing a major legal threat if the Dutch court ruling on Royal Dutch Shell sets an international precedent. In a case by Dutch NGO Milieudefensie (Environmental Defense) against Shell, the court ordered that the oil giant reduce its CO2 emissions by 45% from 2019 levels. Shell has always claimed that it is doing its utmost to respond to the Paris Agreement and growing societal pressure. The court order, however, has made meeting these goals a legal prerequisite. According to the court, Shell is responsible for its emissions and needs to act prudently and do its utmost to have its suppliers and clients reduce emissions. This is significant as the ruling would mean Shell is now responsible for the whole value chain of operations.
To comply with a Dutch court order to cut carbon emissions, Shell may have to overhaul its business and cut its oil output faster than it had planned, analysts and investors said. Possible ways to curb emissions include selling assets, rethinking exploration spending, and halting the growth of its liquefied natural gas operations. “We are carefully reviewing the court’s written judgment and the questions it raises,” a Shell spokeswoman said.
If Shell pursues an appeal, the case would be referred to an appellate court where it can take around one to two years to be heard, after which it can be further appealed in the Dutch supreme court. The court on Wednesday said its order would stand provisionally, despite acknowledging potentially far-reaching consequences for Shell that may be difficult to undo.
Fresh from striking a hammer blow in the boardrooms of the world’s biggest oil companies, the climate movement has a clear message: the energy transition is happening, and there’s no turning back. Just five years ago, environmental activists were limited to waving placards outside of annual meetings and the odd shareholder proposal, inevitably rebuffed by the boards and management teams. On Wednesday, by contrast, stock investors ousted two Exxon directors seen as insufficiently attuned to the threat of climate change. At the same time, Chevron Corp. shareholders voted for a proposal to compel the company to reduce pollution by its customers.
Moody’s said it considered Exxon losing board members to an activist hedge fund over its energy transition strategy the most critical development because it “likely presages similar results in future board elections at other US oil companies.”
As economies recover from the pandemic, demand should surge, which will dent all the stored-up oil sloshing around. What if the next ‘peak oil’ is the last one? According to analysts, this could happen anytime between now and 2040. The International Monetary Fund estimates peak oil to be around 2040 itself. These estimates, nonetheless, were made before the ramifications of the pandemic were fully grasped. That said, peak oil may be sooner than initially anticipated and forecasted. The disruption caused by COVID-19 to supply chains – and the sudden halt in economic and business activity that came with it – adds to the uncertainty surrounding oil markets.
Thousands of new oil wells and hundreds of new oilfields will be needed to meet global demand even if it falls sharply towards the middle of the century, Oslo-based consultancy Rystad Energy said on Friday. Its analysis stands in sharp contrast to the IEA conclusions.
2. Geopolitical instability
(These are situations that reduce the world’s energy supplies or have the potential to do so.)
Iran: Tehran may have some 69 million barrels of oil in floating storage waiting on tankers to ship when US sanctions on its crude oil exports are removed, according to estimates from E.A. Gibson Shipbrokers. Citigroup also has a similar assessment of Iran’s floating storage. In a note last week, the bank said Iran could have around 65 million barrels of oil stored at sea, plus another 54 million barrels in storage onshore.
The International Atomic Energy Agency could get a one-month extension of its monitoring and verification deal in Iran as talks to end US sanctions are making progress, state news agency IRNA reported. The head of the UN’s nuclear watchdog has warned that Iran is enriching uranium at purity levels that “only countries making bombs are reaching.” The IAEA director said, “A country enriching at 60 percent is a severe thing — only countries making bombs are reaching this level.” “Sixty percent is almost weapons-grade, commercial enrichment is 2, 3 percent.”
The candidates in Iran’s presidential election, scheduled for June 18th, either espouse deeply conservative positions aligned with those of the Supreme Leader, Ayatollah Ali Khamenei or are little known, with no voter base and no chance to win. One candidate, in particular, is leading: Ebrahim Raisi, the current judiciary chief, appointed by Mr. Khamenei, who has a long history of involvement in human rights abuses, and who lost in 2013 in a surprise victory by the outgoing president, Hassan Rouhani.
Iran is banning electricity-sapping cryptocurrency mining until the end of September as it grapples with power blackouts amid electricity scarcity. Even before the peak summer electricity demand season, Iran has been suffering from power outages as consumption soars, while power generation has declined. A few weeks ago, Iran banned air conditioning at Tehran’s state agencies as the country looks to save electricity.
Iraq: According to the State Oil Marketing Organization, Baghdad revised its April oil production figure upward by 1.7% to 3.93 million b/d, reflecting higher domestic crude use during the month. That was above Iraq’s OPEC+ quota of 3.857 million b/d for the third month in a row.
The government has introduced a new law aimed at fighting corruption. “Of the close to a trillion dollars made from oil since 2003, an estimated $150 billion of stolen money has been smuggled out of Iraq,” President Barham Saleh said, as quoted by The New Arab. The draft law presented to parliament envisages scrutiny of transactions of sums over $500,000 as well as bank accounts, with a particular focus on accounts with $1 million or more in them. Unfortunately, the law may never pass parliament, The New Arab reports, citing a local security and politics expert.
Iraq plans to complete this year’s construction of a new oil pier in its key fuel export and import facility to raise trade in refined oil products and boost government revenues. The work at the port is over 70% completed.
A decision by the Kurdistan Regional Government to change the schedule and terms for payments to international oil companies, without prior warning or consultation, has stunned the foreign operators and might deal a blow to oil production growth and investment. “Nobody looks at the news from last week and decides they want to invest more into Kurdistan,” said one executive with an IOC operating in the KRG.
Venezuela: China has announced that it will impose taxes on heavy sour crude, a move that could hit Venezuela hard as it continues to struggle with US sanctions and its dilapidated oil industry. Media reports suggest as many as 400,000 b/d of Venezuelan oil could be orphaned as new Chinese tax laws make it impossible for the country to export its crude to Asia. New regulations are expected to come into place on June 12th. The profit margins on Venezuelan oil are too low to warrant its current export route via Malaysian refineries, where it is mixed with fuel oil or bitumen before continuing on to China. China’s new rules could add around $30 per barrel to this scheme to avoiding US sanctions.
Venezuela welcomed its first diesel cargo since November 2020, a fuel that the country sitting atop the world’s largest oil reserves is forced to ration, similar to gasoline. The oil products arrived last week on a tanker from the United Arab Emirates that was supposed to unload in Togo but turned off its transponder and headed to Venezuela. It wasn’t immediately clear who provided the diesel cargo.
In the latest desperate attempt to deal with fuel shortages, government leaders are trying to repurpose two massive oil upgraders to make the main ingredient for gasoline instead. With US sanctions preventing the country from importing naphtha, a petroleum product its refineries use as feedstock, state-owned PDVSA will seek to make its own at upgraders designed to process heavy crude into lighter oil for the international market. The plants are the Petropiar partnership with Chevron and the Petrocedeno venture with Total and Equinor.
3. Climate change
A new study says by 2025, there’s a 40% chance of at least one year being 1.5C hotter than the pre-industrial level. That’s the lower of two temperature limits set by the Paris Agreement on climate change. The conclusion comes in a report published by the World Meteorological Organization. The analysis is based on modeling by the UK Met Office and climate researchers in 10 countries, including the US and China. In the last decade, it was estimated that the chance of any one year reaching the 1.5C threshold was only 20%.
A key selling point that made solar energy the fastest-growing power source in the world—rapidly decreasing costs—has hit a speed bump. Solar module prices have risen 18% since the start of the year after falling by 90% over the previous decade. The reversal, fueled by a quadrupling in the critical raw material polysilicon cost, threatens to delay projects and slow uptake of solar power just as several major governments are finally throwing their weight behind it to slow climate change.
The European Union is looking to extend energy taxation to the aviation industry as the bloc is ramping up efforts to raise its chances of reaching the targets in the European Green Deal for carbon neutrality by 2050. During a weekend meeting of the finance ministers of the EU in Lisbon, the ministers backed, in general, a proposal to have EU-wide taxation of aviation fuel.
The impacts of California’s deepening drought hit home for Central Valley farmers last week when federal officials announced they didn’t have enough water to supply many of their agricultural customers. Urban users south of San Francisco in Santa Clara County saw their regular water deliveries cut in half. California ships water to cities and farms through a combination of state and federal programs that oversee a complex network of hundreds of miles of dams, reservoirs, and aqueducts throughout the state.
4. The global economy and the coronavirus
According to two new studies, immunity to the coronavirus lasts at least a year, possibly a lifetime, improving over time, especially after vaccination. The findings may help put to rest lingering fears that protection against the virus will be short-lived. Together, the studies suggest that most people who have recovered from Covid-19 and who were later immunized will not need boosters.
The energy transition is colliding with another challenge facing the world as it struggles to emerge from the pandemic: food prices pushed to their highest in seven years. Many energy companies plan to increase their biofuel capacity by 2030, mainly using crops like corn and soybean oil as a primary feedstock. But such a move is driving price inflation for a host of commodities and vegetable oils, including palm oil, canola, and soybean oil. Meanwhile, corn, oil, copper, and gasoline futures prices have doubled from a year ago, while lumber has more than tripled. Accelerating demand for renewable biodiesel fuels is directly responsible for commodity price inflation.
United States: The US reported the lowest number of new COVID-19 cases in nearly a year, with new infections dropping 26% from the previous seven days to just under 180,000, according to a Reuters analysis. A recent poll suggests the United States could be on track to vaccinate at least 70 percent of the adult population against Covid-19 by this summer. In the latest survey by the Kaiser Family Foundation, 62% of respondents said they had received at least one dose of a vaccine, up from 56% in April.
Americans continue to venture back out into public to buy services they went without for more than a year—a shift that is adding fuel to the economic recovery and stirring higher inflation. The US economy grew at a robust annual rate of 6.4% in the first three months of this year, unchanged from the government’s initial estimate. The recovery from last year’s deep recession gained steam at the beginning of this year, helped by vaccines to combat the virus and trillions of dollars in government assistance.
European Union: Europe is returning to a semblance of normalcy that was unthinkable even a few weeks ago. Coronavirus infections, hospitalizations, and deaths are plummeting across the continent, after Europe led the world in new cases last fall and winter in waves that cost hundreds of thousands of lives, forced more rolling lockdowns, and overwhelmed intensive care units. Now, vaccination rates are accelerating across Europe, and with them, the promise of summer vacations. There are hopes for a rebirth of a tourism industry that in Spain and Italy alone accounts for 13% of gross domestic product.
According to some analysts and traders, European carbon prices are running at record highs these days, and they have more room to rise. On the face of it, this is excellent news: the costlier that carbon emissions get, the more that businesses should be motivated to invest in energy efficiency and cleaner sources of electricity generation. In practice, things are not as simple as this. Earlier this year, when carbon prices started rising fast, European industrial associations called on EU authorities to set a so-called border tax for the carbon emissions generated by competitors outside the 27-member bloc.
According to a draft document, European Union countries will seek to prolong EU support for cross-border natural gas projects, a stance at odds with the European Commission’s plan to end such funding. The EU’s “TEN-E” rules define which cross-border energy projects can be labeled Projects of Common Interest (PCI), giving them access to certain EU funds and fast-tracked permits. The EU is rewriting the rules in line with its climate change goals, as it seeks to reach zero net greenhouse gas emissions by 2050.
Germany will invest more than $9.74 billion to fund large-scale hydrogen projects, the Economy and Transport ministries said on Friday, in a step to scale up hydrogen as an alternative to fossil fuels to meet climate targets. The 62 German projects, supporting chemical, steel, and transport industries, are part of a joint European hydrogen project called Hydrogen-IPCEI. German industry leaders have called for a faster rollout of hydrogen projects after the government brought forward a net-zero target to 2045.
China: China’s strong economic momentum eased slightly in May, as surging raw material prices squeezed profits, businesses turned more cautious, and property and car sales underperformed. That’s the outlook of an aggregate index combining eight early indicators tracked by Bloomberg, which slipped from April but remained in expansionary territory, underpinned by solid export demand.
This year China’s government has been gradually ramping up scrutiny of its sprawling oil industry, reinforcing its authority with new taxes on refined products while investigating crude imports by state energy giants and independent refiners. Last Tuesday, the country’s top economic planning agency gave five state-owned companies just two days to report their historical use of imported oil. The move is part of a broader effort by the world’s largest oil importer to control inbound shipments as domestic supplies swell.
China is the world’s largest crude oil importer and the No. 2 consumer after the United States. China’s crude imports surged 7.3% in 2020 – the only market where oil demand grew during the COVID-19 pandemic. Strong economic growth, new refining capacity, and changes in fuel taxes could spur crude imports 7.2%, or 775,000 b/d, higher this year.
Russia: President Biden said he decided to waive sanctions against the company behind the Nord Stream 2 gas pipeline because the project was nearly complete. Doing so could have harmed ties with Europe. Biden, who is preparing for his first visit to Europe and his first meeting with Russian President Putin next month, told reporters he had opposed the new pipeline since its inception but held off on sanctions because it was “almost finished” by the time he took office in January.
US Senate Republicans opposed to the Nord Stream 2 gas pipeline will not likely gather enough support to reverse the Biden administration’s decision to waive some sanctions on the project developer.
India: New Delhi is considering relaxing its Covid-19 restrictions six weeks after a devastating coronavirus surge rocked the Indian capital, with a pledge to ramp up vaccinations to protect the city’s more than 20 million people from another wave. But the vow came after a weekend in which city officials were forced to close vaccination centers for lack of supply, a problem plaguing the entire country as the coronavirus continues to spread.
India does not have the vaccine manufacturing capacity to inoculate a significant portion of its population anytime soon. In contrast, the prospect of importing new supplies from abroad has bogged down amid squabbling between the central and local governments. As a result, any decision to lift coronavirus restrictions could be a mistake if the government allows large mask-less gatherings to occur as it did before. “The only answer is vaccination,” said Dr. Anand Krishnan.
India’s crude imports and refinery runs remained robust in April as refiners shipped in cargoes contracted earlier and refrained from backing out of deals despite a second wave of COVID-19 triggering demand destruction fears. Analysts, however, said the full impact of the crisis would get reflected only in May numbers. Although India started to witness record COVID-19 cases in the early part of April, the number of regional lockdowns began to increase only towards the latter part of the month and early May, while the country stayed away from a national lockdown. As a result, refiners met all their April import commitments, analysts said. “Just like last year, India’s refiners had been slow to respond as crudes were bought in advance.
Africa: The IEA’s call for no new oil and gas exploration could hit hardest in Africa, where five of OPEC’s 13 member states are from. They’re all massively dependent on oil. One of the worst-case scenarios is Angola. At the end of last year, Angola was set for a promotion from the least developed country list. Five years ago, Angola was the top producer in Africa. Now, its oil production has plunged to a 15-year low, under 1.2 million b/d. According to OPEC, oil contributes 50% of Angola’s GDP and accounts for nearly 90% of its exports. Now, Angola is hoping that new oil concessions will attract over $67 billion in investment.
Nigeria had just started recovering from a 2017 recession when the pandemic-driven oil crisis hit. Oil accounts for 90% of Nigeria’s foreign exchange earnings and 60% of its revenue. Less ominous than Angola, oil accounts for about 9% of Nigeria’s GDP. It’s now targeting a lot more deepwater drilling.
Across Africa, an end to oil exploration could lead to a heightened radical Islamic insurgency.
5. The Briefs (date of the articles in the Daily Energy Bulletin is in parentheses)
The five largest oil and gas companies in the world—Sinopec, PetroChina, Saudi Aramco, BP, and ExxonMobil—saw their combined revenues drop by 30% last year. However, they still generated more than $1 trillion in total revenues. (5/25)
Oil and gas giant Total will be rebranded as TotalEnergies as it shifts some of its focus towards renewable energy sources. Shareholders voted overwhelmingly in favor of the move. However, the firm faces a revolt later over whether it is doing enough to diversify away from its core fossil fuel businesses. (5/28)
The United Kingdom will not commit to halting new oil exploration in the North Sea. Despite a warning from the world’s top energy watchdog, a government energy body told Reuters to rein in fossil fuel spending to achieve climate goals. (5/26)
Nigeria’s National Petroleum Corp. this week renewed for another 20 years a deal with Shell, Exxon, Total, and Eni to develop an offshore oil block that includes the deepwater Bonga field. NNPC noted the agreement marks a historic moment as it settles long-running disputes between the government and international oil companies. The company says the deal could unlock up to $10 billion in new investments in Nigeria’s oil industry. It could also add 150,000 bpd to the country’s production. (5/27)
Nigeria’s state-owned NNPC is in advanced talks with Dangote Industries to acquire a 20% stake in the 650,000 b/d Dangote oil refinery. The government claims that the administration is ready to encourage private investors in building refineries. (5/28)
In Nigeria, between January 2019 and May 18, 2021, a total of 30 oil companies spilled 41,216 barrels of crude, a government-run satellite tracker showed. The spills occurred in 846 cases of oil spillages in less than three years. (5/26)
Pemex will buy controlling interest from Royal Dutch Shell in a Texas refinery for about $596 million, the latest move by the European oil major to cut its global refining footprint. The deal makes the Deer Park, Texas, facility the first foreign refinery that Mexico’s state-run oil company will own solely in its history. (5/25)
The US oil rig count increased by three to 359, up more than 100 since the start of the year, while the gas rig count dropped 1 to 98, according to Baker Hughes’ latest report. The total number of active oil and gas drilling rigs in the US is now 156 more than this time last year. (5/29)
Alaska project: US President Joe Biden’s administration defended Wednesday a proposed ConocoPhillips oil development in Alaska, backing the drilling project approved under former President Donald Trump. Wednesday’s action comes even as Interior Secretary Deb Haaland had opposed the project last year when she was a member of Congress. (5/27)
In North Dakota, the oil royalties which producers pay landowners should be calculated at the well, not at a higher price at some point downstream, the state’s Supreme Court said this week in a win for the oil industry.
Exxon Mobil’s US oil refineries pump out far more lung-damaging soot than similarly sized facilities operated by rivals, according to regulatory documents and a Reuters analysis of pollution test results. The Texas-based firm’s three largest refineries – two in Texas and one in Louisiana – are the nation’s top three emitters of small particulate matter. (5/29)
Refinery sale: Shell on May 27 said it reached an agreement to sell its 90,000 b/d Mobile, Alabama, refinery to Vertex Energy Operating LLC for $75 million, marking its third refinery sale in a month. (5/28)
Proposed fracking ban: California initiated on Friday the pre-rulemaking stage of proposed legislation that would end fracking in the state in 2024. (5/25)
Fighting cyber-crime: The Transportation Security Administration intends to release the first of at least two security directives that would require pipeline operators to notify it when they are targets or victims of cyberattacks, according to senior officials at the Department of Homeland Security. The action expected this week also would require each company to designate a point person for cybersecurity. (5/26)
A cost of cyber-crime: US energy companies are scrambling to buy more cyber insurance after this month’s attack on Colonial Pipeline disrupted the US fuel supply. Still, they can expect to pay more as cyber insurers plan to hike rates following a slew of ransomware attacks. Only about half of the nation’s pipeline companies currently buy cyber insurance even though ransomware attacks have become more frequent. (5/28)
Gasoline demand: As drivers ready to hit the road for their Memorial Day weekend road trips, they might want to bring along a fattened wallet—because gasoline prices at the pump are soaring, according to new information from AAA. The US will see 60% more travelers this year than last year. (5/25)
Ford outlined a tech-centric strategy to electrify much of its vehicle lineup and sharply grow its commercial truck and van business. Ford said it plans to boost spending on electric-vehicle development to $30 billion by 2025, roughly one-third more than it forecast earlier this year. The increase in spending is driven by Ford’s plans to begin manufacturing its batteries eventually. (5/27)
Seaborne coal prices have been bullish over the past year, mainly rising from pandemic lows last spring as global energy demand resumes and economies strengthen. The prices signal a lack of supply as producers scramble to rehire furloughed workers and reconnect supply chains. However, there is uncertainty about whether the sustained rally will lead to a crash or the prices will stabilize as supply chains catch up. (5/29)
CA offshore wind: The Biden administration and California Gov. Gavin Newsom (D) announced that they plan to push ahead with West Coast offshore wind by designating two areas off the California coast for future wind energy development. One area is an area north of Morro Bay, on California’s central coast. The second area is in Northern California, near the Oregon border. Unlike the East Coast turbines that will be affixed to the seafloor, the deeper Pacific waters would require floating turbines. (5/26)
Solar panel prices surge: Year-to-date, solar module prices have risen 18% after consecutive years of falling into the mainstream’s grasp. One element in the solar module equation is to blame: polysilicon. Polysilicon is witnessing a severe supply squeeze. In fewer than 12 months, polysilicon prices have jumped from only $6.19/kg up to as high as $25.88/kg. (5/27)
Cement-based batteries? Swedish researchers have developed a concept for a rechargeable battery based on cement—a world-first such concept that they suggest could one day turn buildings into giant energy storage facilities. The proof of concept at the lab scale is an idea in its early stages, and it has challenges to overcome. The concept includes a cement-based mixture with small amounts of short carbon fibers added to increase the conductivity and flexural toughness. The researchers then included metal-coated carbon fiber mesh in the cement-based combination. (5/25)
Mercedes-Benz AG is the first car manufacturer to take an equity stake in Swedish start-up H2 Green Steel to introduce CO 2 free steel into series production. With an equity stake in H2 Green Steel, Mercedes-Benz is sending an important signal to accelerate change in the steel industry and increase the availability of carbon-free steel. (5/26)
PEUGEOT has become one of the first manufacturers to offer in series production, from 2021 onwards in the compact utility van segment, an electric version powered by a hydrogen fuel cell in addition to its battery-electric version. (5/28)
Climate refugees: The number of new people forced to move within their own countries by climate disasters rose to the highest in at least a decade in 2020, more than three times those displaced due to conflict and violence. Due to extreme weather events, people who migrated domestically rose to 30.7 million, or 75% of those uprooted within their borders. (5/25)
FEMA $$ up: President Biden announced Monday that he was doubling the amount of money the US government will spend helping communities get set for extreme weather events, proclaiming the need for full readiness as he visited government workers and told them to prepare for another season of natural disasters. (5/25)
Extreme heat this summer could create energy shortfalls in California, Texas, New England, and the US West and Central regions. California is most at risk of power shortages this summer. The state increasingly relies on intermittent energy sources like wind and solar, and climate change causes more extreme heat events, drought, and wildfires across the US West. (5/27)
Brazil’s government agencies warned of droughts this week as the country faces its worst dry spell in 91 years, increasing fears of energy rationing, hitting hydroelectric power generation, and agriculture while raising the risk of Amazon fires. (5/29)