Editors: Tom Whipple, Steve Andrews
Quote of the Week
“It is no surprise that a [German] coalition involving the Greens would want a swift coal exit, but the timing of the decision to push forward the coal phase-out by eight years [to 2030] coincides with the major power and energy crisis in Europe, including in Germany.”
Tsvetana Paraskova, Oilprice.com
Graphic of the Week
| Contents 1. Energy prices and production 2. Climate change 3. The global economy and the coronavirus 4. Renewables and new technologies 5. Briefs |
1. Energy prices and production
Oil: US crude futures posted an eighth straight weekly gain, the longest stretch of advances since 2015. Brent crude topped $85 a barrel in London for the first time since 2018, the latest milestone in a global energy crisis that has seen prices soar. The global benchmark rose above that level in intraday trading but did not settle above it on Friday. West Texas Intermediate for November settlement rose 97 cents to settle at $82.28 a barrel. Brent for December delivery added 86 cents to settle at $84.86 a barrel. The shortage of gas and coal is triggering extra demand for oil products from the power market. It’s also depleting stockpiles: the biggest US storage hub at Cushing recorded a considerable supply decline for this time of year.
The structure of Brent crude oil futures shows a “scarcity premium” that has widened to the most since 2013 this week, a sign of the tight market underpinning oil’s rally. The premium of the immediate Brent crude contract to the December 2022 price stood at $8.13 a barrel on Friday after reaching $8.30 on Monday. The value on Monday was the highest since 2013.
Global petroleum inventories have fallen to their lowest seasonal level for seven years as producers have failed to raise output to match the rapid rebound in consumption. In contrast to coal, gas, and electricity shortages, the oil shortage is mainly discretionary, as producers in the OPEC+ group of exporting countries and US shale firms have opted to limit increases in their production. But low inventories have eroded the market’s capacity to absorb faster-than-expected consumption growth or a sudden output disruption without prices spiking higher.
Total US crude oil production averaged 11.3 million b/d in July–the most recent monthly historical data point. However, the EIA estimates that domestic production fell to 10.6 million b/d in September because of disruptions from Hurricane Ida. The administration forecasts US production will be 11.0 million b/d in October, rising to 11.3 million b/d in December, and 11.7 million in 2022 as shale oil production increases. Growth will come because of increasing rig counts, which are eventually expected to offset natural production decline rates.
After years of pumping more oil and gas, Western energy giants like BP, Royal Dutch Shell, Exxon Mobil, and Chevron are slowing down production as they switch to renewable energy or cut costs after being bruised by the pandemic. But that doesn’t mean the world will have less oil. Instead, state-owned oil companies in the Middle East, North Africa, and Latin America are taking advantage of the cutbacks by investor-owned companies by cranking up their production. This massive shift could reverse a decade-long rising domestic oil and gas production trend that turned the US into a net exporter of oil, gasoline, natural gas, and other petroleum products.
International Energy Agency: The IEA said on Thursday that the global energy crunch is expected to boost oil demand by half a million b/d and could stoke inflation and slow the world’s recovery from the COVID-19 pandemic. An acute shortage in natural gas and coal supplies is triggering a massive switch to oil products and along with increasing travel has boosted the global oil demand outlook. Still, supply could catch up in early 2022 should OPEC+ stick to its plan to bring crude back online.
OPEC: The oil cartel+ was supposed to pump a combined 37.141 million barrels in September per its quotas. Yet, according to the Platts survey, the actual total was 570,000 b/d below this number—even if it was higher than the previous month by more than the 400,000 b/d OPEC+ agreed to add to the market every month. In other words, while OPEC+ was overperforming on its monthly production boost, it was underperforming on its quotas. As a result, the September total was some 6 million barrels lower than the baseline production level agreed to by OPEC+. The cartel has made no secret of its intention to go cautiously about production recovery.
In this month’s report, OPEC revised downward its 2021 estimate due to lower-than-expected data for the first three quarters of the year. In its closely watched Monthly Oil Market Report, the cartel kept its 2022 oil demand growth forecast unchanged at 4.2 million b/d. OPEC expects this year’s global oil demand to grow by 5.8 million b/d from the low 2020 levels, down from last month’s estimate of 5.96-million-b/d annual growth.
Shale Oil: Overall, America’s oil production growth next year is expected to be modest. As oil prices rally, the rig count in the Permian is ticking up, and oil production in the basin is set to reach pre-pandemic levels soon. The Permian leads the US in rig additions and is the key driver of America’s oil production growth, while the other shale basins show either stagnant or slightly declining output. Most analysts expect the Permian oil production to reach pre-COVID levels of 4.9 million b/d by 2022.
Increased access to financing and the strong oil demand have created an opening for closely held producers. As a result, oil prices above $80 a barrel are again spurring a revival of shale drilling in the Permian Basin, where production is expected to return to pre-pandemic highs soon. But, this time, the surge is being driven by private operators rather than the publicly traded companies that fueled the previous booms.
Nabors Industries announced that the world’s first fully automated land drilling rig has drilled a well for ExxonMobil in the Permian basin to a depth of 19,917 feet. ExxonMobil contracted the rig to drill three horizontal wells on a test pad in Midland County, Texas.
Natural Gas: US natural gas futures gained almost 2% on Thursday on a smaller-than-expected storage build, lower output, rising LNG exports, and higher global gas prices that will keep demand for those LNG exports strong. In addition, the US Climate Prediction Center said La Nina conditions have developed, which could mean a cold and wet winter for parts of the US. The EIA noted utilities added 81 billion cubic feet of gas into storage during the week ended Oct. 8th, lower than the 94-bcf build analysts forecast in a Reuters poll.
On Friday, however, US futures fell almost 5% following a 9% drop in global gas prices, and on forecasts that the weather in the US will remain mostly mild through the end of October. But no matter how high global prices rise, the US is already close to producing LNG at total capacity.
Most American gas has been going to Asia, where buyers have been paying higher prices. US LNG has never been particularly competitive in most of Europe because of the availability of pipeline gas. However, Asia’s insatiable appetite for energy and its willingness to pay a premium for US LNG because of the lack of significant pipeline supplies is likely to remain the ultimate market for US LNG.
The focus for many US gas producers has shifted from increasing volumes to paying down debt and maximizing shareholder returns, driven in part by a more challenging financial landscape. Some investors have shied away from sinking money into oil & gas exploration and production, influenced by mounting pressure to divest from fossil fuels and uncertain returns on investment.
This capital discipline from US gas producers is expected to limit production despite higher prices. The situation could lead to dramatically higher US gas prices this winter. According to S&P Global Platts Analytics, “If this capital discipline remains, you are talking about $12-$14/million Btu, to curtail LNG exports or pipeline exports to Mexico.” Even as the NYMEX Henry Hub prompt-month contract climbed above $5/million Btu into heights last sustained in 2009, US gas supply has not been ramped up. Platts Analytics data shows that US dry gas production has averaged 90.3 billion cf/d over the last 30 days, more than 6 billion cf/d below record highs observed in late 2019.
Prognosis: The EIA forecasts that average US household expenditures for all primary home heating fuels will significantly increase this winter primarily because of higher expected fuel costs as well as more consumption of energy due to a colder winter. Average forecast increases vary by fuel, region, and weather assumptions. Compared with last winter, the administration forecasts propane expenditures will rise by 54%, heating oil by 43%, natural gas by 30%, and electricity by 6%. In addition, space heating demand will be generally higher this winter based on forecasts from the National Oceanic and Atmospheric Administration that US average heating degree days will be 3% higher than last winter. Finally, altering assumptions for a 10% colder-than-expected winter significantly increases forecast expenditures, while a 10% warmer-than-expected winter still results in increased costs because of price increases.
2. Climate change
The transition from coal, oil, and natural gas still isn’t happening fast enough to avoid dangerous levels of global warming, the IEA said last week. The Agency’s annual World Energy Outlook, which forecasts global energy trends to 2050, comes just weeks before world leaders gather for the climate summit to discuss how to accelerate the shift away from fossil fuels and prevent the planet from overheating.
The new report finds that the world has made significant strides in the fight against climate change. Wind and solar power are now the cheapest source of new electricity in most markets and growing briskly. In addition, sales of electric vehicles worldwide hit records last year. Across the globe, approvals for new coal-fired power plants, a significant source of emissions, have slowed dramatically in recent years, as governments and banks have increasingly refused to finance them.
As a result, the IEA now projects that humanity’s carbon dioxide emissions will reach a peak by the mid-2020s and then drop slowly in the decades after that. Global coal use is expected to fall between now and 2050, despite an uptick this year driven by increased industrial activity in China. Global oil demand is expected to enter a permanent decline by the 2030s, as people ramp up their switch to electric vehicles.
However, US climate envoy John Kerry is tempering expectations for a UN climate summit, conceding next month’s talks likely will end with nations still short of the targets. But in an interview with the Associated Press, Kerry also credited efforts by the US, European Union, Japan, and other allies ahead of next month’s climate negotiations in Glasgow, Scotland, with getting the world much closer to the scale of significant, fast fossil fuel cuts needed.
A $100 billion dividing line between the world’s richest and poorest countries threatens to undermine any hope for a grand deal at the COP26 climate negotiations. That’s the amount in annual contributions promised more than a decade ago by developed nations to help less well-off nations cut planet-warming emissions and adapt to climate change. It’s one-half of a quid pro quo agreed in 2015 at United Nations-sponsored talks in Paris: Developed countries put up the cash, and in return, underdeveloped countries invest in clean-energy technologies and resiliency projects such as flood defenses. But, ahead of the global summit in Glasgow, Scotland, advanced economies have come up short.
China has taken a step back from emission reduction commitments amid the energy crunch that caused factory closures and power rationing. In a statement, Premier Li Keqiang said that the stable energy supply must be the foundation of any transition to a less emission-intensive future. “Energy security should be the premise on which a modern energy system is built, and the capacity for energy self-supply should be enhanced.” Based on this, Beijing now plans to ensure that its goal to reach peak emissions by 2030 and a net-zero emission status by 2060 will be pursued in a “sound and well-paced” manner
A global pledge to reduce methane emissions moved forward last week as 24 countries signaled they would join the effort, and donors committed $200 million to the cause. The pledge now includes nine of the world’s top 20 methane emitters, representing about 30 percent of global emissions. “If we act together, we can make a difference because rapidly reducing global methane emissions is the single fastest strategy we have to limit global warming,” Frans Timmermans, vice president of the European Commission, said at the opening of a ministerial meeting on the Global Methane Pledge.
A large cloud of planet-warming methane was detected in the natural gas-rich San Juan Basin in New Mexico by geoanalytics company Kayrros SAS. Many gas companies operate wells and pipelines in the area where a satellite saw the billowing greenhouse gas. Note that a cradle-to-grave analysis of coal vs. natural gas would narrow the advantage which natural gas has over coal when just measuring the emissions generated when each is burned in a power plant.
The number of abandoned oil and gas wells in the US is much higher than previously thought. The analysis done by the Environmental Defense Fund and McGill University found that 81,283 documented orphan wells across the US were drilled and then improperly abandoned by oil and gas companies. That’s nearly 1.5 times the previous estimate of roughly 56,000 wells from the Interstate Oil and Gas Compact Commission, a quasi-governmental organization.
3. The global economy and the coronavirus
Energy is so hard to come by right now that some provinces in China are rationing electricity, Europeans are paying sky-high prices for liquefied natural gas, power plants in India are on the verge of running out of coal, and the average cost of a gallon of regular gasoline in the US stood at $3.29 on Friday — up from $1.72 in April. As the global economy recovers and global leaders prepare to gather for a landmark conference on climate change, the sudden energy crunch hitting the world is threatening already stressed supply chains and raising questions about whether the world is ready for the green energy revolution.
The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil, and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines. In addition, supply-chain disruptions and global health concerns spurred the International Monetary Fund to lower its 2021 growth forecast for the world economy, while the group raised its inflation outlook and warned of the risks of higher prices.
United States: Vaccination rates against COVID-19 in the US have risen by more than 20% after multiple institutions adopted vaccine requirements. The White House COVID-19 response coordinator told reporters that 77% of eligible Americans had received at least one shot of a vaccine. Vaccination rates went up thanks to mandates put into place by private businesses, healthcare systems, social institutions, and state and local governments.
US consumer prices increased in September as Americans paid more for food, rent, and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains which are hampering economic growth. Moreover, with prices likely to rise further in the months following a recent surge in the costs of energy products, the situation could test Federal Reserve Chair Jerome Powell’s repeated assertion that high inflation is transitory.
The Port of Los Angeles, one of the country’s busiest ports, will switch to operating around the clock to ease cargo bottlenecks that have led to shortages and higher consumer costs. By going to 24/7, Los Angeles will join the neighboring Port of Long Beach, which started doing a similar thing last month. Major ports in Asia and Europe have operated around the clock for years.
Europe: Industrial output in the eurozone fell below pre-pandemic levels in August as supply chain bottlenecks restricted production of many products, raising concerns that the bloc’s economic rebound may run out of steam. Several companies in Germany’s giant car-making industry have been forced to idle production and put thousands of workers back on leave due to shortages of materials, particularly semiconductors. This led to a 1.6% drop in manufacturing output in August from the previous month across the 19 countries that share the euro. A senior economist at HSBC estimated that the rise in regulated energy prices and oil prices would knock 0.6% off eurozone household income and reduce gross domestic product growth by 0.2%.
Soaring European wholesale gas prices encourage more utilities to switch to carbon-heavy coal for generating electricity, just as the region tries to wean nations off the polluting fuel. Although European coal and carbon prices have also jumped in recent months, they have lagged the spike in gas prices, causing short-term marginal costs to shift in favor of using coal to generate electricity. Benchmark carbon permit prices under the European Union’s Emissions Trading System have almost doubled since the start of the year, while European coal futures are more than twice as high and gas is nearly 400% higher than at the beginning of 2021.
Germany will cut a power surcharge levied on consumers to support renewable energy by 42.7% to help households cope with soaring energy prices. The reduction in the German levy to 3.7-euro cents per kWh will not take effect until Jan. 1st. The government will help fund the cut with $3.77 billion in revenue collected from carbon taxes.
China: President Xi Jinping appears to be sailing into an economic storm of his own making, as one of China’s most prominent developers teeters on the edge of bankruptcy and manufacturers grapple with power shortages across the country. But aside from minor course corrections, analysts and government advisers expect Xi to take advantage of what he has termed a “window of opportunity” to press ahead with difficult structural reforms. If successful, it will be the latest in a long series of bold political gambles — from the elimination of term limits on the presidency to his pursuit of “common prosperity” — that has made him China’s most feared leader since Mao Zedong. It has also put him on the cusp of an unprecedented third term in power at the Chinese Communist party’s 20th congress late next year.
A widening power crisis in China – caused by shortages of coal, record-high fuel prices, and booming post-pandemic industrial demand as it shifts to greener fuels – has halted production at numerous factories, including many supplying big global brands such as Apple. In addition, factory gate prices in China rose at their fastest pace in more than a quarter of a century as record coal prices intensified inflationary pressures on businesses and manufacturers.
China’s largest coal-producing region was hit by severe flooding, threatening the country’s already strained power supply and displacing more than 120,000 people. Officials in the northern Chinese province of Shanxi said that more than 1.75 million people in 11 cities across the province had been affected, with at least 17,000 homes collapsing and almost 494,000 acres of land flooded.
China’s state planner, the National Development and Reform Commission, said it would fully liberalize pricing for electricity generated from coal and that industrial and commercial users will all have to buy from the market. However, the NDRC gave no specific time frame for when 100% of electricity generated from coal-fired power will be priced via market trading, up from 70% in the country now.
China’s energy crisis deepened on Friday as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending fuel prices to record highs. In addition, electricity demand to heat homes and offices is expected to soar this week as cold winds move down from northern China.
Crude oil imports into China fell by 6.8% to 387 tons over the first nine months of 2021. On the other hand, natural gas imports jumped by more than 22% over that period, to 89.85 million tons. In September alone, crude oil imports fell by more than 15% from a year ago. On the other hand, gas imports went up to the highest since the start of the year at 10.62 million tons. “China’s ambitions to cool commodity prices by drawing on commercial and strategic reserves, combined with power curbs in the industrial sector that cut into fuel demand, took a toll on crude oil imports,” said a senior director at SIA Energy, an oil and gas consultancy.
Major Chinese energy companies are in advanced talks with US exporters to secure long-term LNG supplies, as soaring gas prices and domestic power shortages heighten concerns about the country’s fuel security. At least five Chinese firms, including state majors Sinopec and China National Offshore Oil Company (CNOOC) and local government-backed energy distributors like Zhejiang Energy, are in discussions with US exporters, mainly Cheniere Energy and Venture Global. The talks could lead to deals worth tens of billions of dollars, marking a surge in China’s LNG imports from the US. At the height of the Sino-US trade war in 2019, gas trade briefly came to a standstill.
China’s Evergrande Group, the embattled property developer, is the first high-profile real-estate company to run into serious trouble in Beijing’s campaign to tame a soaring property market. Unfortunately, it might not be the last. As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good, according to economists at Nomura Holdings.
That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan, the world’s third-largest economy, last year. As a result, global markets are braced for a possible wave of defaults, with warning signs flashing over the debt of about two-fifths of development companies that have borrowed from international bond investors.
Russia: On Saturday the country recorded 1,000 Covid-related deaths in a single day for the first time since the pandemic began. The figure had been rising all week, with the Kremlin blaming the Russian people for not taking up vaccination. Only about a third of the population has been vaccinated, amid broad distrust of the vaccines. Russia’s official statistics showed 221,313 pandemic-related deaths by mid-October, but the independent demographer Alexey Raksha calculated that excess mortality — seen by analysts as the most reliable indicator of coronavirus deaths — has reached around 750,000. Raksha’s calculation used figures maintained by Rosstat, Russia’s statistical agency. Meanwhile, a report in the Moscow Times estimated the figure at about 660,000.
Millions from Latin America to the Middle East are waiting for promised doses of the Russian-made Sputnik V coronavirus vaccine due to manufacturing problems and other issues. In addition, the recent surge of virus cases inside Russia does not bode well for vaccine exports.
Moscow has taken the position that the demand for oil and gas will remain solid despite efforts to mitigate climate change and are optimistic about the prospects for Russia’s immediate future. Deputy Prime Minister Alexander Novak said last week that oil and gas will remain essential decades from now. The share of oil and gas in the world’s energy mix is set to drop from 85% to around 65-70%, not to 20-30% as some experts have forecast. The Russian government says that decades from now, oil and gas will continue to account for most global energy consumption.
Gazprom could increase production capacity if it sees higher demand for volumes under long-term supply contracts from Europe, Deputy Prime Minister Novak said on Friday. Russia has long sought to move a larger share of its natural gas sales to long-term contracts, which reduces the risk of short-term price variations and guarantees there will be markets for new investments in gas production.
Novak also said that Russia can increase oil production to 11.4 million b/d, from 9.9 million today. As a result, Russia expects its crude oil plus condensate production to return to pre-pandemic levels by May 2022. Some analysts and Russian officials are saying that Russian production is peaking and may never exceed some 11-12 million b/d.
President Vladimir Putin said last week that the success of OPEC+ in stabilizing the oil market after last year’s price crash shows that the group has a chance to expand cooperation. The Russian president said that Russia is a responsible member of the OPEC+ alliance, adding that Moscow assumes that the current deal would be in effect until the end of 2022. “At the same time, the results show that the OPEC+ cooperation has all the chances for further development. It could include more areas of cooperation, including the development of new, environmentally friendly technologies for oil and gas production and processing and exchange of best practices.
The Nord Stream 2 pipeline is completed and ready to pump Russian gas to Europe, but nothing is flowing yet because Germany’s energy regulator is still awaiting clearance. The project has faced resistance from the US and Ukraine, among others. A move by the German regulator last week to ask the pipeline operator, Swiss-based Nord Stream 2 AG, for assurances it will not break competition rules suggests it could take several more months before the 1,200 km pipeline gets the green light.
Saudi Arabia: Last week, Saudi Aramco’s chief executive officer, Amin Nasser, said that it expects to boost its oil production capacity to 13 million b/d by 2027. However, skeptics say that this claim is just another in a decades-long string of Saudi officials exaggerating the size of the kingdom’s oil reserves and its ability to pump oil.
At the beginning of 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels. A year later, and without discovering any significant new oil fields, the official reserves estimate had somehow increased by 51.2% to 257 billion barrels. Shortly after that, it rose again to 266 billion barrels, a level that persisted until a slight increase in 2017 to 268.5 billion barrels.
On the other side of the supply-demand equation, from 1973 to the end of last week, Saudi Arabia pumped an average of 8.162 million b/d of crude oil. Thus, in the past 32 years, the Saudis have pumped out some 95 billion barrels of petroleum which, if the 1973 figure is closer to the truth, the Saudis are over halfway through their reserves.
Given that the demonstrated sustained level of Saudi production is on the order of 8 to 10 million b/d, increasing this to 13 million b/d in the next few years seems like another exaggeration of their capabilities.
India: The world’s largest coal miner, Coal India, has suspended supply to several industrial consumers as it prioritizes shipments to the coal power plants that provide most of the country’s electricity. Like other countries in Asia, India faces a severe coal supply shortage, threatening power outages and industry slowdown amid rallying global prices of coal and natural gas. “This is only a temporary prioritization,” according to Coal India’s text message to Bloomberg. “Once the situation stabilizes, expected within a short time, and stocks at coal-fired plants attain a comfort level, other sectors will be brought back to their regular supply.” The current coal shortage in India, which has an average of just three days’ worth of coal in stockpiles, could last for up to six months, according to Power Minister R.K. Singh.
4. Renewables and new technologies
While winds can slow or even stop blowing and solar power is unavailable at night or can stay behind clouds for long periods, tides have no such problems. As long as there are oceans and the moon goes around the earth, there will be tidal energy — 24/7. Tidal power could deliver 100 GW of capacity by 2050 – equivalent to 10% of Europe’s electricity consumption today. European grants – including Horizon 2020 grants – have been instrumental in moving the needle forward in tidal energy research, and now the technology has reached fruition.
The next step is scaling up the prototype platforms so that tidal energy can become commercially viable and enter the energy grid in a meaningful way. There’s just one hitch in this plan – cost. All types of energy production require significant financial backing, but tidal energy companies are running into problems when they ask for support to scale up. Traditional funders, like banks, are either unwilling to invest at all or offer sky-high interest rates on their loans, making it commercial nonsense for tidal energy companies to accept.
To get off the ground, tidal companies need national governments to introduce revenue support schemes, guaranteed prices, and decent bank loan rates. According to Rémi Gruet of Ocean Energy Europe, “At the national level, we need guaranteed prices to be put on the table. This is how we developed wind and solar, and there is no other way to do tidal. You can’t just ask a new technology to go and compete against an old technology. Especially when all the other energy sectors are subsidized.”
The significant advantage that tidal energy has over other renewable energy sources is that it is entirely predictable. Wind and solar energy rely heavily on the weather – when the wind stops blowing or the sun goes behind a cloud, little or no power is produced. But tidal energy depends on the moon’s gravitational pull on the earth, something that’s not likely to change anytime soon.
That’s part of the reason why it’s so attractive to innovators like Orbital Marine power. They’ve designed a unique floating platform consisting of a cylindrical tube with the turbines on two retractable legs underneath the water. The advantage of the retractable legs is that they can be lifted onto the surface, which facilitates repairs much more quickly, thereby cutting costs.
“The issue is not the size of the project. It’s that the technology attached is a technology that the banks don’t know.”
Plug Power announced a strategic partnership with Airbus to study the feasibility of bringing green hydrogen to future aircraft and airports worldwide. As part of its goal of bringing zero-emission aircraft to market by 2035, Airbus has identified green hydrogen as one of the most promising options to decarbonize air travel. The firm will be working closely with Plug Power on a joint study and roadmap to deliver green hydrogen to aircraft and the airport ecosystem in the coming years. Plug Power will build deployment scenarios for green hydrogen infrastructure at airports, while Airbus will provide insight on hydrogen aircraft characteristics.
The idea of artificial energy islands, where renewable energy and energy storage technology would combine to provide electricity for nearby nations, appears to be taking off. There are now plans for a new island in the North Sea as early as 2030 which would send power not just to the UK but to other countries as well. More countries in northern Europe are looking into feasibility studies for these islands as they aim to reduce emissions.
5. The Briefs (date of the articles in the Daily Energy Bulletin is in parentheses)
Norway, Western Europe’s largest oil and gas producer, will continue to develop its oil and gas industry, the incoming minority coalition government said in its platform on Wednesday. Technologies to reduce emissions and fight climate change will take center stage in the new government’s policies. Still, the development of Norwegian energy resources will also be pursued to ensure a fair and gradual energy transition. (10/14)
Pakistan is looking to buy liquefied natural gas for the winter. Still, it couldn’t find any sellers in a recent tender, highlighting that the natural gas market in Asia is tight. (10/13)
In Singapore, marine fuel sales fell to a 15-month low of 3.94 million tons in September as the number of ships calling at the world’s largest bunkering hub for bunkers sank to a near four-year low. (10/13)
In Nigeria, pipeline vandalism continued nationwide, with over 151 pipeline attacks in the first quarter of 2021. This upward trend reflects a surge of 26.5% compared to 111 pipeline hits recorded in the corresponding period of 2020. (10/13)
In Nigeria, the transition to an economy not based on oil won’t be easy. The oil sector influences Nigeria’s economy despite representing a relatively small proportion of the gross domestic product: about 9% in 2020. But, in the same period, crude oil sales made up one-third of the government’s budget revenue and about 90% of the West African nation’s export earnings. (10/14)
Mexico’s second-largest refinery has remained halted since late September due to protests by teachers that are blocking roads used by state-run Pemex to transport the facility’s output for domestic consumption and exports. The refinery supplies fuel to Mexico City. As the strikes stopped the facility from delivering products, its inventories built up in recent weeks, reaching total capacity and forcing Pemex to cut back production. (10/13)
The US oil rig count grew by 12 to 445 last week while gas rigs slipped by 1 to 98, according to Baker Hughes Co. The oil rig count is the highest since April 2020, while the gas rig count is the lowest since August. (10/16)
Electric fracturing: Halliburton Company has announced that it and VoltaGrid LLC have entered into a multi-year contract with Aethon Energy to deploy an advanced, all-electric fracturing solution in the Haynesville shale. (10/15)
Oil spill bruhaha: A hearing by a sub-panel of the House Natural Resources Committee comes as anger over oil fouling Huntington Beach has renewed demands for offshore oil drilling bans. House Democrats began Thursday making a case for stricter regulation of thousands of abandoned wells, platforms, and pipelines off the US coasts following one of the most significant offshore spills in California in nearly 30 years. (10/15)
In California, the recently passed ban on sales of gas-powered lawnmowers, leaf blowers, and other small off-road equipment engines could start as early as 2024 as part of the state’s effort to reduce carbon emissions that contribute to climate change. (10/13)
Turning bales of straw into ethanol is about to become a profitable venture in Europe, according to a firm that just opened a production site in the continent. Clariant AG, a Swiss chemicals maker, just opened a facility in Romania to make so-called advanced biofuels, which use agricultural waste or non-edible crops to produce fuels that can be blended into gasoline and diesel. (10/16)
Big wind moves: The Biden administration announced a plan to develop large-scale wind farms along nearly the entire coastline of the United States, the first long-term strategy from the government to produce electricity from offshore turbines. (10/14)
The US plans to hold up to seven offshore wind auctions in the next four years, including in areas that have yet to be developed, such as off the California coast and in the Gulf of Mexico. (10/14)
Jet fuel rocketing: Since August, spot prices for New York Harbor Jet Fuel have risen 37%. Delta Airlines expects fuel prices between $2.25 and $2.40/gal in the fourth quarter, up from $1.94 in the third. Fuel costs accounted for 20% of Delta’s adjusted operating expenses in Q3. (10/14)
EV competition: US towns, states, and regions are vying to lure new electric vehicle plants. The billions of dollars to be invested highlight the economic stakes for communities as the automotive industry commits to massive spending to switch away from assembling petrol-power vehicles. (10/15)
EV twist: In the UK, a new law has been proposed to switch off home EV chargers during peak hours. The law seeks to prevent excessive strain on the grid. Transport Secretary Grant Shapps announced the proposed law that stipulates that EV chargers may not function for “up to nine hours a day.” (10/13)
One for the ages! Prince Charles has spoken out about his efforts to combat the climate crisis, including pumping wine and cheese byproducts into his Aston Martin sports car and installing solar panels at his royal residence. (10/13)
Electricity prices in Japan have risen to nine-month highs this week as gains in global prices of oil, liquefied natural gas (LNG), and coal are starting to feed through to the country’s $150 billion power market. (10/13)
Squeezing out coal: Germany’s coalition that will form the government to succeed Angela Merkel has agreed to phase out coal by 2030, eight years earlier than currently planned. The alliance includes center-left Social Democrats, the Greens, and the liberal Free Democrats. (10/16)
A “juice” link: Greece and Egypt will this week ink a preliminary deal to build a large electricity cable connecting the two countries, the first such agreement to be signed between Europe and Africa in the southeastern Mediterranean. Egypt, which has a surplus of electricity, began talks a year ago to sell power to Europe, pressing its advantage as a producer of cheap renewable energy in a bid to become a regional export hub. (10/13)
In Lebanon, if the new government fails to solve the energy crisis, there are genuine fears that the country could fall into civil war. Lebanon’s fuel crisis has worsened as the country experienced a 24-hour blackout over the weekend. (10/13)
“Green” H2: France aims to become a leader in green hydrogen production and reinvent nuclear power by building a small modular reactor by 2030 as part of a more comprehensive $34.6 billion (30 billion euro) plan to decarbonize industry and slash emissions. (10/13)
More “green” H2: A consortium bidding in the Crown Estate Scotland’s ScotWind offshore wind leasing round is studying the potential to develop a renewable hydrogen production plant on Orkney, powered by 2 GW of wind power. (10/13)
H2 trains: Ballard Power Systems will supply eight of its 70 kW FCmove-HD fuel cell modules to Talgo SA for trials of its commuter and regional passenger train. Talgo plans to conduct its demonstration in early 2022 in Spain, with expected commercialization in 2023. (10/14)
CCS boom: Global plans to build carbon capture and storage (CCS) plants have mushroomed over the last nine months as governments and companies accelerate the hunt for ways to cut emissions and curb global warming. The capacity of planned projects soared to 111 million tons a year (mtpa) as of end-September, up 52% from 73 mtpa at the end of 2020. While there was more capacity on the drawing board a decade ago than today, high costs stopped most projects from going ahead. Last weekend, demolition began at a multi-billion-dollar power plant in Mississippi, where costs blew out so much that regulators stopped a CCS project. But CCS costs have since fallen while the impetus for emissions cuts has grown. (10/12)
Automated trains: Deutsche Bahn and Siemens Mobility have developed what they say is the world’s first train that operates by itself in rail traffic. The train is controlled by digital technology and is fully automated. The driver remains on the train to supervise the journey with passengers on board. (10/13)
The weather phenomenon La Niña, for the second year in a row, is expected to alter the US winter. La Niña winters are generally drier and warmer across the southern third of the US and cooler in the northern parts. This winter, a La Niña this winter could have a particularly devastating effect on the Southwest if dry weather prolongs severe drought conditions that have strained the region. (10/16)