Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
‘Fault Lines Emerging in EU Plan to Label Natural Gas, Nuclear as Green Investments’, Therese Robinson, Released January 10, 2022
https://www.naturalgasintel.com/fault-lines-emerging-in-eu-plan-to-label-natural-gas-nuclear-as-green-investments/
New natural gas and nuclear energy projects could be classified as “green” investments to help the European Union (EU) reach its net-zero emissions target by 2050, according to a draft proposal by the European Commission (EC) published this month.
Regulations proposed under the EC’s taxonomy draft, part of a set of policy initiatives called the European Green Deal, could attract billions of euros in state and private investments for natural gas and nuclear projects classified as environmentally sustainable.
However, the draft was met with threats of legal actions against the commission. Since the regulations were first proposed in 2020, the final draft has been delayed several times because of disputes between EU member countries. Despite the lack of agreement, the commission plans to move forward.
“We need to act now if we are to meet our 2030 and 2050 climate targets,” EC spokesperson Daniel Ferre told NGI. This is what the European Green Deal is all about…The existing energy mix in Europe today varies from one member state to another.
“Some parts of Europe are still heavily based on high carbon-emitting coal,” Ferre said. “But even if some solutions might look ‘less green’ they are intended to accelerate the switch from higher- to lower-emitting energy sources.”
Each EU member determines its energy mix. As the continent’s energy market becomes more integrated and interdependent, it may be needed to achieve net-zero emissions by 2050. Both natural gas and nuclear are needed for the EU to reach net zero ambitions, EU climate policy chief Frans Timmerman said last month.
Gas and power prices have soared on the continent in part as domestic fossil fuel production has declined. There also have been more baseload power facilities shuttered in favor of renewable energy. As energy demand has rebounded from the pandemic, there has also been fierce competition for energy supplies.
EU member countries remain divided in their support for nuclear and natural gas assets. Austria, Denmark, Germany, Luxembourg, Portugal and Spain oppose nuclear power. The group said nuclear is expensive, has too many issues around radioactive waste and takes too long to build.
Germany plans to close its remaining three nuclear plants by the end of 2022 and phase out coal by 2030. While Germany depends on gas as it replaces nuclear and coal, it expects to reach its 2045 climate neutrality target.
For natural gas projects to qualify as a green investment under the EU proposal, new gas-fired power plants cannot emit more than 270 grams of carbon dioxide (CO2) equivalent/kWh. Construction of facilities would have to be granted by the end of 2030 and include plans to switch to renewables or low-carbon gases by the end of 2035.
The Nuclear Divide
The University of Edinburgh’s Stuart Hazeldine, professor of carbon capture and storage, told NGI that nuclear should be considered as part of the low carbon mix. “There is no doubt that nuclear energy is very low carbon, although the plant building and the fuel purification are sources of CO2 emissions.”
Nuclear waste still remains an unsolved problem, Hazeldine said. “Radioactive waste disposal can and should be technically solvable. It’s more a science and engineering perception and communication problem, as long as regulations remain stringent.”
All new nuclear power plants to be built under the EU’s proposed regulations must be classified as green or sustainable to receive construction permits by 2045. Financing, water resources and a safe site to dispose of radioactive waste would have to meet new criteria.
The commission expects to publish a final text by the end of January for review over the next six months.
GOM Offshore Rig Count increased by 1 rig from the previous week and is currently showing 16 rigs. The 1/7/2022 Total US Oil and Gas Rig Count reflects 588 rigs an increase of 2 rigs, 1 of which was for GOM Federal waters. Gulfslope’s Tau prospect is located in GOM Louisiana offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $78.90/bbl - February Contract, 08:14 am CDT 01/08/2022
https://oilprice.com/oil-price-charts/45
Wholesale Spot Petroleum Prices, 1/6/2022 Close
Crude Oil ($/barrel) Percent Change
WTI 79.47 +2.1
Brent 81.99 +1.7
Louisiana Light 81.72 +2.
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
A Gulfslope New Release is one thing. Communication between Gulfslope and BSEE is another.
Straight from the horse’s mouth (BSEE):
“The permit review process has always involved a back and forth exchange of documents and information between the applicant and the Bureau of Safety and Environmental Enforcement (BSEE). “
“There are no statutory or regulatory deadlines on this process; the operator may take as long as needed to correct the information, or gather missing information and resubmit the application.”
Mrs. Smith
Thank you.
Excerpt from a previous post of mine:
Note 1: Gulfslope Press Release 8/1/20019
“GulfSlope contracted the Valaris (Ensco) 102 jackup rig to drill a subsalt test well at Vermilion 375 (Corvette Prospect). That rig was also suitable for drilling a second well at Tau.”
Specificatons on Valaris 144 JU Standard Duty Modern “Undisclosed Operator 1Q22”:
https://s23.q4cdn.com/956522167/files/doc_rigspecs/jackup/valaris-ju-144.pdf
Specifications on Valaris (Ensco) 102 JU Heavy Duty Harsh Environment - Stacked in the GOM:
https://s23.q4cdn.com/956522167/files/doc_rigspecs/jackup2021/VALARIS_102.pdf
Note 2: Hurricane season ended November 30, 2021 and will not resume until June 1, 2022.
You tell me.
Mrs. Smith
Is there any chance “undisclosed operator” could be Gulfslope? “Minimum duration of 68 days.”
https://s23.q4cdn.com/956522167/files/doc_news/2022/01/1.4.2022-Valaris-Announces-Contract-Awards.pdf
Valaris Announces Contract Awards - New Release
Hamilton, Bermuda, January 4, 2022 ... Valaris Limited (NYSE: VAL) announced today that it has been awarded the following new contracts:
• One-well contract with Kosmos Energy in the U.S. Gulf of Mexico for semisubmersible VALARIS DPS-5. The contract is expected to commence in February 2022 with an estimated duration of 105 days.
• One-well contract with Western Gas offshore Australia for semisubmersible VALARIS MS-1. The contract is expected to commence in the first quarter 2022 with an estimated duration of 25 days.
• Six-well plug and abandonment contract with Centrica Storage in the UK North Sea for VALARIS Norway, a heavy duty ultra-harsh environment jackup. The contract is expected to commence in the third quarter 2022 with an estimated duration of 100 days.
•One-well contract with an undisclosed operator in the U.S. Gulf of Mexico for VALARIS 144, a standard-duty modern jackup. The contract is expected to commence in the first quarter 2022 with a “minimum duration” of 68 days.
Got a new spyglass from Santa. I will be looking for more “clues”, lol.
Mrs. Smith
Oil inventories declined by 2.1 million barrels - EIA Weekly Petroleum Status Report, Release Date: 1/5/2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $77.62/bbl up 0.82% January Contract, 15:08 pm CDT 1/5/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending December 31,2021
HIGHLIGHTS:
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.1 million barrels from the previous week. At 417.9 million barrels, U.S. crude oil inventories are about 8% below the five year average for this time of year. Total motor gasoline inventories increased by 10.1 million barrels last week and are about 4% below the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week.
Distillate fuel inventories increased by 4.4 million barrels last week and are about 16% below the five year average for this time of year. Propane/propylene inventories decreased by 0.7 million barrels last week and are about 7%
below the five year average for this time of year. Total commercial petroleum inventories increased by 10.2 million barrels last week.
U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending December 31, 2021 which was 163,000 barrels per day more than the previous week’s average. Refineries operated at 89.8% of their operable capacity last week. Gasoline production decreased last week, averaging 8.5 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day.
U.S. crude oil imports averaged 5.9 million barrels per day last week, decreased by 0.9 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels per day, 16.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 596,000 barrels per day, and distillate fuel imports averaged 217,000 barrels per day.
Total products supplied over the last four-week period averaged 21.4 million barrels a day, up by 14.4% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 15.2% from the same period last year. Distillate fuel product supplied averaged 4.1 million barrels a day over the past four weeks, up by 12.2% from the same period last year. Jet fuel product supplied was up 36.8% compared with the same four-week period last year.
The West Texas Intermediate price was $75.33 per barrel on December 31, 2021. The spot price for conventional gasoline in the New York Harbor was $2.274 per gallon. The spot price for No. 2 heating oil in the New York Harbor was $2.211 per gallon.
The national average retail regular gasoline price increased to $3.281 per gallon on January 3, 2022, $0.006 above last week’s price and $1.032 over a year ago. The national average retail diesel fuel price decreased to $3.613 per gallon, $0.002 per gallon less than last week’s price but $0.973 higher than a year ago.
Mrs. Smith
Additional information regarding my attached post:
1. The Tau BOEM lease G35244 “Rental” payment would have been made by July 1, 2021 “the first day of the lease year”.
2. The Tau BOEM lease G36121 “Rental” payment should have been made by November 1, 2021 “the first day of the lease year”.
3. Excerpt from Gulfslope and Delek January 1, 2018 “Participation Agreement”: “From and after the Effective Date of this Agreement the Parties shall pay, or cause to be paid, any delay rentals that become due under a Lease, as to periods from and after the Effective Date, in order to continue the Leases in full force and effect, and the Parties shall, within thirty (30) days after receipt of an invoice from the Operator, reimburse the Operator for its working interest share (for example, 75% as to Delek as opposed to the 90% carry) of any such delay rental payment covering the period from and after the Effective Date of this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement or in any Joint Operating Agreement, from and after the time that a Party (i) elects not to participate in the drilling of an Exploratory Well on a Phase II Prospect, Phase III Prospect or a Subsequent Phase Prospect or (ii) elects to withdraw from a Prospect, thereafter such Party shall have no liability or responsibility for any portion of lease maintenance payments, including, without limitation, delay rentals, with respect to the Leases associated with any such Prospects.”
4. Note: As of January 3, 2022 BSEE still reflected the Tau leases as “active”, and Delek Group (Delek GOM Investments, LLC) as a BOEM Lessee.
Mrs. Smith
Good morning Trip,
Since Delek Group and Delek GOM Investments, LLC are foreign entities, they could not bid during the 2014 BOEM oil and gas 231 lease auction for the Tau prospect, hence the partnership with Gulfslope Energy.
Effective January 1, 2018 the BOEM “accepted and approved” the “Assignment” of Delek Group (Delek GOM Investments, LLC) as a “Lessee” with a 75% record title interest in the Tau prospect’s two leases G35244 and G36121.
The BOEM has already received a “Rental” payment of $175,000 for the Tau leases through 2022.
Will have to wait for Gulfslope’s financials for verification on who is making these payments, but I doubt that GSPE is paying 100% of these expenses by themselves…
The “Rental” is being paid by someone, so if this is a defunct operation, why would they bother to keep paying it?
Mrs. Smith
Interesting article: ‘US Gulf of Mexico deepwater activity may increase in 2022’, 27 Dec 2021 | 20:48 UTC, Starr Spencer: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/122721-feature-us-gulf-of-mexico-deepwater-activity-may-increase-in-2022
US GULF FIELDS EXPECTED ONLINE IN 2022:
Field name - Owner - US Gulf Area Location
Taggart, LLOG, Mississippi Canyon
Spruance, LLOG, Ewing Bank
Samurai, Murphy, Green Canyon
Khaleesi, Murphy, Green Canyon
Mormont, Murphy, Green Canyon
Mad Dog 2, BP, Green Canyon
Vito, Shell, Mississippi Canyon
Power Nap, Shell, Mississippi Canyon
HIGHLIGHTS
*Mad Dog, Vito are two of biggest 2022 startups
*3 Murphy fields expected online next year
*US Gulf oil output to rise to 2 million b/d
More deepwater exploration and project sanctions in the US Gulf of Mexico could be in store for the E&P sector during 2022 assuming robust oil prices hold up, according to analysts.
The roughly 12 deepwater US Gulf discoveries scored in 2021 could expand by a couple more next year, and several fields that have patiently waited out several years of price volatility may finally be greenlighted, said Sami Yahya, senior energy analyst-supply and production for S&P Global Platts Analytics.
“We could potentially see more finds and final investment decisions next year," Yahya said. "US Gulf operators still have a healthy appetite for exploration, particularly as crude prices remain robust."
"Near-field exploration [around deepwater production hubs with declining output] will likely continue to be the leading strategy," he said. "[This] not only improves the economic case of new discoveries but can also help accelerate development, given existing infrastructure and the expected short-cycle time for tiebacks."
Current US Gulf oil output is 1.769 million b/d, according to the latest Platts Analytics estimates. Output will likely to rise by as much as 125,000 b/d early in 2022 and end the year at 2 million b/d.
The three largest projects in the Gulf which are set to come online in 2022 are Shell's Vito field, BP's Mad Dog Phase 2 and three fields operated by Murphy Oil: Khaleesi, Mormont and Samurai.
“This is the first time in a while we've seen three new facilities come on in one year," said Mfon Usoro, US Gulf of Mexico upstream analyst for Wood Mackenzie.
Mad Dog Phase 2 will also feature a new production hub named Argos with 140,000 b/d of gross oil capacity, and Vito also will sport new output infrastructure that can produce 100,000 boe/d at peak.
Debut of King's Quay
The three Murphy fields will produce into a new 80,000 b/d production hub known as King's Quay. Khaleesi and Mormont will deliver first oil in H1 2022 and Samurai in H2 2022.
The hubs can be later used to accommodate future production from yet undiscovered fields located within a roughly 30-mile radius.
Vito was pegged to come online in 2021, but concerns over the pandemic led to Shell postponing its debut.
Mad Dog Phase 2's original cost was more than $20 billion, but by simplifying and standardizing its platform design the overall cost was lowered to $9 billion. At its December 2016 sanctioning it was projected to be profitable at around $50/b.
Besides the larger projects, a few smaller fields are expected to debut in 2022, all tiebacks or hook-ups to existing infrastructure. Two from privately held Gulf player LLOG Exploration are Taggart, which will tie into the Devil's Tower, and Spruance, which will hook up to the Lobster facility, said Mark Adeosun, senior analyst-offshore for Westwood Global Energy Group.
In addition, Shell's Power Nap field, producing 35,000 boe/d of oil at peak, will tie into the major's Olympus platform.
"Basically, this is the use of existing facilities ... [and] optimizing facilities, which always drives down development costs as well as breakeven prices," Adeosun said.
Besides new field production, several discoveries are expected to be sanctioned in 2022, including Chevron's Ballymore, a field in the emerging Norphlet geologic play off East Louisiana/Mississippi that was pioneered by Shell. Shell's Rydberg field, also in the Norphlet, is also being watched for potential 2022 final investment decision.
Sub-$40/b breakevens
"I think the reason we're bullish on those projects moving forward, is the economic criteria; they're all sub-$40/b breakeven," Usoro said. "They look healthy enough in today's market to get sanctioned."
Two other projects that could get the thumbs-up in 2022 include TotalEnergies' North Platte field, an ultradeep play first discovered in 2012, and LLOG's Leon/Castile fields, although some expect the FID could slip into 2023.
In addition, Shell's Blacktip field and a related discovery earlier this month, Blacktip North, could be moved up the development queue, Usoro said.
"Shell has made some really material discoveries in the Perdido area," a remote area of the southwest US Gulf, she said. "I wouldn't be surprised to see them moving up the ranking ... post-2022" to be considered for FID.
2021 was also productive for the US Gulf, as several projects operated by majors came online, including the September extension to a major BP field, Thunder Horse South Expansion Phase 2. The project added 25,000 boe/d at peak to the giant Thunder Horse field, one of the largest in the US Gulf, with production capacity of 250,000 b/d of oil and 200,000 Mcf/d of natural gas.
A year of tiebacks
But mostly it was a year of tiebacks, smaller fields hooked into existing production hubs with dwindling production from the original large field. For instance, Murphy's Calliope tied into BP's Na Kika production facility, and LLOG's Praline tied into Talos Energy's Pompano output hub.
Looking ahead, the US Gulf lease sale in November captured more bids as well as more money paid for leases, which could mean more drilling in the next few years, Yahya said.
"The operating environment in the US Gulf is arguably the best it has been in a few years," he said. "That is supported by [not only] significantly improved crude prices, but relatively low breakevens at or less than $45-$50/b and the fact that the US Gulf offers some of the lowest carbon emissions out there – which has become an important factor for many global operators."
"It's worth noting that the latest offshore lease auction yielded the highest number of total bids since 2019, which is reflective of the still competitive edge the US Gulf provides," Yahya said.
Correction on the Business Indicators link under the Energy Survey Special Questions
“Business Indicators”: https://www.dallasfed.org/research/surveys/des/2021/2104.aspx#tab-results
Mrs. Smith
EDITED - For consumers, one of the biggest is the cost to drive electric vehicles (EV) compared to their familiar internal combustion engine (ICE) counterparts. If customers find the true cost of EVs to be lower than for ICE vehicles, we can expect rapid adoption. On the other hand, if EVs cost more to drive and to own, that transition is likely to be much slower.
Direct Monetary Costs of Fueling EVs and ICE Cars
Mid-Priced ICE Commercial fueling
Per Year for 12,000 miles: $1,030
Per 100 Miles: $8.58
Mid-Priced EV Commercial fueling
Per Year for 12,000 miles: $1,554
Per 100 Miles: $12.95
Luxury ICE Commercial fueling
Per Year for 12,000 miles: $1,512
Per 100 Miles: $12.60
Luxury EV Commercial fueling
Per Year for 12,000 miles: $1,862
Per 100 Miles: $15.52
Key Findings:
Our analysis of the refueling costs of vehicles indicate the following:
1. Fueling comparisons between EVs and ICE vehicles must account for all costs. The cost of fueling EVs and ICE vehicles include the cost of fuel (or electricity), as well as the cost of pump or charger, and road taxes levied on drivers. Most of these are bundled into the retail price of gasoline for ICE vehicles. The comparable cost of fueling an EV include the following five categories:
a) Commercial and residential electric power costs: Commercial chargers often impose per kWh fees that are double or triple
that of residential electric power costs.1
b) EV registration taxes: In many states, EV drivers need to pay additional auto registration taxes for the construction and maintenance of roads.
c) Cost of chargers and their installation: EV buyers typically receive a Level 1 (L1) charger along with their auto purchase. These typically use a standard home electrical outlet and pro- vide only a trickle charge for an EV. Sellers of EVs typically encourage the purchase of an optional Level 2 (L2) charger. Many owners that rely primarily on home-charging, purchase
and install an L2 charger that uses a special electrical circuit.2
d) Deadhead miles: EV drivers incur costs of driving miles to a commercial charger for the sole purpose of charging. By com- parison, there are over 100,000 gas stations in the US.
e) Time costs of charging: EV drivers also spend significant time finding and driving to a commercial charger, setting up the charger, and waiting for the charging process to complete. By comparison, finding a gas station and refueling the vehicle is relatively quick.
Patrick L. Anderson, Principal and CEO Alston D’Souza, Senior Analyst
October 21, 2021, Anderson Economic Group EV Transition Series: Report No. 1
See link below for additional findings:
https://www.andersoneconomicgroup.com/wp-content/uploads/2021/10/EVtransition_FuelingCostStudy_10-21-21.pdf
Dallas Fed Energy Survey, Fourth Quarter - December 29, 2021
https://www.dallasfed.org/research/surveys/des/2021/2104.aspx
Oil and Gas Activity Continues Expanding; Cost Pressures Intensify
What’s New This Quarter
Special questions this quarter focus on capital spending in 2022; the oil price that firms are using for budgeting; whether countries will meet their commitments for reducing greenhouse gas emissions; upstream firms’ primary goals for the coming year; plans for reducing greenhouse emissions; and oil and gas support services firms’ expectations for how much selling prices and input prices will change next year.
The ‘Energy Survey’ current index for Capital Expenditures on all firms is 36.9%, previous quarter index was 37.1.
The oil and gas sector continued growing in fourth quarter 2021, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—remained elevated at 42.6, essentially unchanged from its third-quarter reading.
Oil production increased at a faster pace, according to executives at exploration and production (E&P) firms. The oil production index moved up from 10.7 in the third quarter to 19.1 in the fourth quarter. Similarly, the natural gas production index advanced seven points to 26.1.
Costs rose sharply for a third straight quarter. Among oilfield services firms, the index for input costs increased from 60.8 to 69.8—a record high and suggestive of significant cost pressures. Only one of the 44 responding oilfield services firms reported lower input costs this quarter. Among E&P firms, the index for finding and development costs advanced from 33.0 in the third quarter to 44.9 in the fourth. Additionally, the index for lease operating expenses also increased, from 29.4 to 42.0. Both of these indexes reached their highest readings in the survey’s five-year history.
Oilfield services firms reported improvement across all indicators, although the pace of growth for some indicators has slowed. The equipment utilization index edged up from 47.8 in the third quarter to 51.1 in the fourth. The operating margin index remained positive but declined from 21.8 to 11.6. The index of prices received for services also remained positive but fell from 42.2 to 30.3.
Labor market indicators showed further growth in the fourth quarter. The aggregate employment index posted a fourth consecutive positive reading, though it edged down from 14.0 to 11.9. Employment growth continued to be driven primarily by oilfield services firms; the employment index was 22.7 for services firms versus 6.7 for E&P firms. The aggregate employee hours index was largely unchanged at 18.0. The aggregate wages and benefits index moved higher, from 30.3 to 36.6—a record high.
Six-month outlooks improved, with the index remaining positive but declining from 58.9 last quarter to 53.2 in the fourth quarter. The outlook uncertainty index fell to -1.5, with the near-zero reading indicating that uncertainty is relatively unchanged compared with the prior quarter.
On average, respondents expect a West Texas Intermediate (WTI) oil price of $75 per barrel by year-end 2022; responses ranged from $50 to $125 per barrel. Survey participants expect Henry Hub natural gas prices of $4.06 per million British thermal units (MMBtu) at year-end 2022. For reference, WTI spot prices averaged $71 per barrel during the survey collection period, and Henry Hub spot prices averaged $3.76 per MMBtu.
Next release: March 23, 2022
“Special Questions” Dallas Federal Energy Survey - Fourth Quarter | December 29, 2021
Data were collected Dec. 8–16; 131 oil and gas “firms” responded to the special questions survey. (The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District.)
”Special Questions” Charts: https://www.dallasfed.org/research/surveys/des/2021/2104.aspx#tab-questions
”Price Forecasts”: https://www.dallasfed.org/research/surveys/des/2021/2104.aspx#tab-forecastcharts
”Business Indicators”: https://www.dallasfed.org/research/surveys/des/2021/2104.aspx#tab-forecastcharts
ALL FIRMS:
What are your expectations for your firm’s capital spending in 2022 versus 2021?
Most executives expect their firm’s capital spending to rise in 2022 compared with 2021. Forty-four percent of executives said they expect capital spending to increase slightly, while an additional 31 percent anticipate a significant increase. Sixteen percent expect spending in 2022 to remain close to 2021 levels. Only 8 percent expect reductions in spending in 2022.
What West Texas Intermediate crude oil price is your firm using for capital planning in 2022?
For this special question, executives were asked to provide the WTI price they used for planning their capital expenditures in 2022. The average response was $64 per barrel, with the median and the mode at $65 per barrel. The average price used is higher relative to what was used for prior budgets (2019: $54; 2020: $54; 2021: $44).
Do you believe countries will be able to meet their commitments for 2030 for reducing greenhouse gas emissions?
Ninety-five percent of executives said they believe countries will be unable to meet their 2030 commitments for reducing greenhouse gas emissions. The remaining 5 percent believe they will.
EXPLORATION AND PRODUCTION (E&P) FIRMS:
Which of the following is your firm’s primary goal in 2022?
Executives from E&P firms were presented with eight potential goals for 2022 and asked to select their firm’s primary one from the list. Forty-nine percent of executives selected “grow production” as the primary goal in 2022. A total of 15 percent said “maintain production,” 13 percent indicated “reduce debt,” and 12 percent said “acquire assets”.
Which of the following plans does your firm have?
E&P firms were first asked to classify themselves based on fourth quarter 2021 crude oil production and then asked if they had any of the following plans: to reduce carbon emissions; reduce methane emissions; reduce flaring; recycle/reuse water. Respondents could choose more than one answer for this special question.
Firms were classified as “small” if they produced less than 10,000 barrels per day (b/d) or “large” if they produced 10,000 b/d or more. In the U.S., small E&P firms are greater in number, but large E&P firms make up the majority of production (greater than 80 percent).
For the larger firms, 68 percent of executives said their firm plans to reduce methane emissions, 63 percent noted that their firm plans to reduce CO2 emissions, 58 percent plan to reduce flaring, and 42 percent plan to recycle/reuse water.
For the smaller firms, 26 percent of executives said their firm plans to reduce flaring, 24 percent plan to reduce methane emissions, 21 percent plan to reduce CO2 emissions, and 18 percent plan to recycle/reuse water. Among the smaller E&P firms, 53 percent said they don’t have any mitigation plans, compared with 11 percent of large E&P firms.
Relative to when this same question was asked in fourth quarter 2020, a similar share of firms said they had at least one of these mitigation plans.
By how much do you expect your firm to reduce greenhouse gas emissions from 2020 to 2025 in terms of barrel-of-oil equivalent produced?
Of the large firms, 38 percent said their firm plans to reduce greenhouse gas emissions by 10 percent or more by 2025. Of the remaining firms, 10 percent of respondents reported planned reductions of more than 5 percent but not more than 7.5 percent; 5 percent of respondents put the range at more than 2.5 percent but not more than 5 percent; 5 percent of respondents put the range at more than zero but not more than 2.5 percent; 5 percent reported no planned decreases.
The majority of the largest firms producing 100,000 b/d or more (not shown in the table) plan to reduce greenhouse gas emissions by more than 10 percent.
Among the executives of small firms, 8 percent said their firm plans to reduce greenhouse gas emissions by more than 10 percent by 2025. An additional 2 percent put the range at more than 7.5 percent but not more than 10 percent, 8 percent cited a range of more than 5 percent but not more than 7.5 percent, 9 percent said more than 2.5 percent but not more than 5 percent, 11 percent gave a range of more than zero but not more than 2.5 percent and 25 percent said they didn’t plan to decrease emissions.
Among both small and large E&P firms, 38 percent reported they were unsure of their plans. Relative to when this same question was asked in fourth quarter 2020, more firms are targeting reductions in greenhouse gas emissions of more than 10 percent, and fewer firms said they were unsure of their plans.
OIL AND GAS SUPPORT SERVICES FIRMS:
For your firm’s primary service or product, by what percent do you expect its selling price to change from December 2021 to December 2022?
For this special question, executives were asked to provide the percentage change for the selling price of their firm’s primary service or product. The average response was an increase of 8.5 percent, and the median was an increase of 10 percent.
The Total US Oil and Gas Rig Count reflects 586 no change from the previous week. The 12/31/2021 GOM Offshore Rig Count remained unchanged too and is currently showing 15 rigs. Gulfslope’s Tau prospect is located in Louisiana GOM waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $75.62/bbl - January Contract, 1/2/2022 21:02 pm CDT
https://oilprice.com/oil-price-charts/45
Wholesale Spot Petroleum Prices, 12/29/2021 Close
Crude Oil ($/barrel) Percent Change
WTI 76.58 +0.7
Brent 78.63 0.0
Louisiana Light 78.13 +0.
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
A look at what’s to come for Texas in the 2022 energy market
https://www.texasstandard.org/stories/a-look-at-whats-to-come-for-texas-in-the-2022-energy-market/
Listen to the interview with Smith in the audio player above or read the transcript below to learn more about how oil is bouncing back as investments in renewable energy sources continue to grow.
An energy industry analyst takes us through what to keep an eye on, especially when it comes to gas prices and renewables.
The pandemic has been a major driver in fluctuations in the energy market this past year. So what can Texans expect in 2022?
Matt Smith, lead oil analyst at Kpler, joined Texas Standard to talk about key developments, including with renewable energy, that could have big consequences for the Texas economy and the global energy market as a whole.
Texas Standard: What do you see as the highlights and lowlights of 2021, and what are some of the factors we should be thinking of as we ponder 2022?
Matt Smith: We’ve been seeing this demand recovery coming through, and that’s going to be a theme for for next year. But in terms of the immediate factors, you’ve got a really wild situation at the moment in terms of Europe and Asia where you’ve got a cold winter there. And that’s been wreaking absolute havoc on electricity prices there and is actually driving demand for U.S. LNG [liquefied natural gas] as well because they’re pulling that from the U.S. It’s at a record pace there.
But what is interesting is that it’s even driving oil demand this winter in these regions because electricity prices are spiking so high that these utility companies are switching from burning coal and natural gas to fuel oil and gas oil and whatever they can get their hands on just to keep the lights on.
But that’s all actually just juxtaposed with a warm start to winter here in the U.S. And so U.S. natural gas prices are easing lower, which is really important because natural gas prices are the key driver of electricity prices across the U.S. And so lower prices there is good for our utility bills.
And just, finally, we are seeing gasoline prices edging lower here towards the end of the year, but we did actually just see them at the highest price for Christmas on record. So that just shows that they are putting it in context how elevated they are.
What should we be fastening our seat belts for in 2022?
Any time we talk about energy, I think a lot of people’s thoughts turn to renewables and whether any of the developments we’ve seen over the past several months might tilt us past that tipping point where the demand reaches that critical mass.
There is definitely that momentum behind renewables at the moment, and we’re set to see them increase by 60% or something like that over the next decade, in terms of that capacity coming online. So that’s going to be a consistent theme through next year, especially with some iteration of the Build Back Better act being passed, which will really kind of propel the investment side of renewables in the U.S.
But in terms of other energy sources and joining the dots back to Texas, you’re going to be seeing the oil market starting in 2022 in much better shape than it was last year – over $70 a barrel. We’re likely to see global demand growth continuing to rebound after the impact of the pandemic, while a big chunk of the supply-growth side of the picture is expected to come from the U.S. and the Permian [Basin] as well. So, higher oil prices is going to be ultimately supporting the Texan economy into next year.
Would higher oil prices mitigate against investment in renewables?
In Texas, you know, more than 20% of electricity generated comes from wind power. And actually, an amazing stat to me is still that if Texas were a country, it would be the world’s fifth largest wind-power producer, which is crazy. But going forward, investment and focus is actually pivoting towards solar power capacity instead. And so growth next year is set to double in terms of capacity to 20 gigawatts and then up to 31 gigawatts in 2023. So the future is is definitely looking bright for Texas solar going forward.
Real World Cost of Fueling EVs and ICE Vehicles, Comparison
Electric vehicles can be more expensive to fuel than their internal combustion engine counterparts
Anderson Economic Group EV Transition Series: Report No. 1
Patrick L. Anderson, Principal and CEO Alston D’Souza, Senior Analyst
October 21, 2021
https://www.andersoneconomicgroup.com/wp-content/uploads/2021/10/EVtransition_FuelingCostStudy_10-21-21.pdf
24th OPEC and non-OPEC Ministerial Meeting, January 4, 2022, via videoconference
Mrs. Smith
Gulfslope’s annual 10-K report should be filed by December 30, 2021. Gulfslope’s next SEC report will be their Quarterly 10-Q which should be filed by February 14, 2022, six weeks after the release of their annual report.
Hope this helps,
Mrs. Smith
The Total US Oil and Gas Rig Count reflects 586 rigs an increase of 7 rigs. The 12/24/2021 GOM Offshore Rig Count remained unchanged from the previous week and is currently showing 15 rigs.
https://rigcount.bakerhughes.com/
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $76.11/bbl up 0.71% - January Contract, 12/28/2021 10:21 am CDT
https://oilprice.com/oil-price-charts/#WTI-Crude
Wholesale Spot Petroleum Prices, 12/27/2021 Close
Crude Oil ($/barrel) Percent Change
WTI 75.49 +2.2
Brent NA NA
Louisiana Light 77.39 +2.
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
”U.S”. Economic Activity Charts, Issued December 20, 2021, Federal Reserve Bank of Dallas: https://www.dallasfed.org/-/media/Documents/research/econdata/uscharts.pdf
”U.S.” Weekly Economic Index (WEI) The WEI is an index of ten indicators of real economic activity, scaled to align with the four-quarter GDP growth rate. The WEI represents the common component of ten daily and weekly series covering consumer behavior, the labor market, and production, including:
* Initial unemployment insurance claims
* Continuing unemployment insurance claims
* Federal taxes withheld
* Redbook same-store sales
* Rasmussen Consumer Index
* The American Staffing Association Staffing Index
* Raw steel production
* U.S. railroad traffic
* U.S. fuel sales to end users
* U.S. electricity output
https://www.newyorkfed.org/research/policy/weekly-economic-index#/interactive
Commentary:
The WEI for the week of December 18 remains unchanged (relative to the second revision for the week of December 11) following decreases in consumer confidence and steel production, and an increase in retail sales. Because the WEI measures changes over a 52-week period, the large positive reading also reflects the sharp deterioration in economic conditions during the same time last year. December 21, 2021 Preliminary ‘WEI’ Estimate: 7.66
Mrs. Smith
Texas Upstream Employment Rises
by Andreas Exarheas, Rigzone Staff | Tuesday, December 21, 2021
https://www.rigzone.com/news/texas_upstream_employment_rises-21-dec-2021-167367-article/
Texas upstream employment increased by 2,400 jobs from October to November, the Texas Independent Producers and Royalty Owners Association (TIPRO) highlighted, citing the latest Current Employment Statistics (CES) report from the U.S. Bureau of Labor Statistics (BLS).
The latest employment figures marked the seventh consecutive month of job growth for the industry since April, as well as an increase of 24,800 positions compared to November 2020, TIPRO outlined in a statement sent to Rigzone on Monday. Total Texas upstream employment for November came in at 185,800, TIPRO reported.
According to the organization’s workforce analysis, there were 65,914 total job postings for the Texas oil and natural gas industry in November, of which 9,613 were unique. This was said to represent an increase of 100 posted unique positions compared to October. Among the 14 specific industry sectors TIPRO uses to define the Texas oil and natural gas industry, Support Activities for Oil and Gas Operations ranked the highest in November with 2,183 unique job postings, followed by Crude Petroleum Extraction (1,612) and Petroleum Refineries (1,246), TIPRO revealed.
The leading three cities by total unique oil and natural gas job postings were Houston (2,985), Odessa (709) and Midland (651) and the top three companies ranked by unique job postings in November were Halliburton Company (709), National Oilwell Varco, Inc. (620) and Delek US Holdings (481), according to TIPRO. Top posted occupations for November included heavy tractor-trailer truck drivers (680), maintenance and repair workers (572) and industrial engineers (323), the organization noted.
“The Texas oil and natural gas employment trends outlined in our latest analysis illustrate the industry's continued recovery and positive economic impact to the state,” Ed Longanecker, the president of TIPRO, said in an organization statement.
“Despite concerns over the latest Omicron variant and any related restrictions to economic activity, underinvestment in the oil and gas sector, along with growing demand for our product projected for next year, will likely lead to tighter supplies and higher prices,” he added in the statement.
“A more restrictive regulatory environment for the U.S. oil and natural gas industry would further exacerbate both and add to inflationary pressures,” Longanecker continued.
In a separate statement sent to Rigzone on Monday, the Texas Oil and Gas Association (TXOGA) noted that, since a low point in September 2020, growth months have outnumbered decline months 12-to-2, with the industry adding 28,300 Texas upstream jobs. TXOGA also noted that, for the past six months in a row, employment gains have exceeded 2,000 jobs every month with the average monthly gain being 2,633.
“The Texas economy continues to rebound and the upstream sector’s addition of 2,000-plus jobs every month for the past six months is a prime example of how critical this industry is to the state’s recovery,” Todd Staples, the president of TXOGA, said in an organization statement.
“These jobs pay among the highest wages in Texas and the activity of this industry supports communities across the state, whether you live in the oil patch or not. These positive job numbers are good news for all Texans and Americans,” Staples added in the statement.
Oil inventories declined by another 5 million barrels - EIA Weekly Petroleum Status Report, Release Date: 12/22/2021
https://ir.eia.gov/wpsr/wpsrsummary.pdf
https://ir.eia.gov/wpsr/overview.pdf
Full Report with Graphs available after 1 pm: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $72.26/bbl up 1.60% January Contract, 12:24 pm CDT 22/12/2021: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending December 17, 2021
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ending December 17, 2021 which was 148,000 barrels per day more than the previous week’s average. Refineries operated at 89.6% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.2 million barrels per day last week, down by 277,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 12.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 688,000 barrels per day, and distillate fuel imports averaged 203,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.7 million barrels from the previous week. At 423.6 million barrels, U.S. crude oil inventories are about 8% below the five year average for this time of year. Total motor gasoline inventories increased by 5.5 million barrels last week and are about 4% below the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 0.4 million barrels last week and are about 8% below the five year average for this time of year. Propane/propylene inventories decreased by 0.8 million barrels last week and are about 8% below the five year average for this time of year. Total commercial petroleum inventories decreased by 7.0 million barrels last week.
Total products supplied over the last four-week period averaged 20.9 million barrels a day, up by 11.0% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 14.7% from the same period last year. Distillate fuel product supplied averaged 4.1 million barrels a day over the past four weeks, up by 7.5% from the same period last year. Jet fuel product supplied was up 25.6% compared with the same four- week period last year.
12/17/2021 GOM Offshore Rig Count increased by 1 rig from the previous week and is currently showing 15 rigs. The Total US Oil and Gas Rig Count reflects 579 rigs an increase of 3 rigs, 1 of which were for GOM Federal waters. Gulfslope’s Tau prospect is in GOM Louisiana offshore waters.
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/ogj_rig_count.pdf
Mrs. Smith
Interesting article on self-locating ocean bottom seismic nodes for data acquisition.
‘Sourcing Seismic with Subsea Swarms’, by Elaine Maslin, December 15, 2021
https://www.oedigital.com/news/492859-sourcing-seismic-with-subsea-swarms
Excerpts:
Blue Ocean Seismic Services seems close to commercial reality, with pre-commercial trials planned for the North Sea and potentially the US Gulf of Mexico. Next year’s testing will be in the North Sea, probably also off northwest Australia at the end of Q2 and probably also in the US Gulf of Mexico. The next step is likely opening an operations office, to cover the North Sea, also an office in Houston, to support Gulf of Mexico.
“The Gulf of Mexico is a very important part of the future,” says Illingworth, especially as one of its key supporters, Woodside, is moving to merge with BHP, giving it more focus in that region. The key takeaway? Blue Ocean Seismic Services is one to watch in 2022.
Mrs. Smith
API Monthly Statistical Report ‘MSR’, Released 12/16/2021. API Statistics Department & Office of the Chief Economist
For Notable Chart Details and Data By Section see pdf link below: https://www.api.org/-/media/Files/News/2021/12/MSR_11_2021.pdf
EXECUTIVE SUMMARY
Heading towards the year’s end, U.S. demand for petroleum products has remained solid and steadfast along with the economy.
API’s primary data on U.S. petroleum markets for November indicated that demand increased in total and across most refined products. To meet demand growth, refining activity accelerated to its highest capacity utilization rate in three months and, in the process, drew down crude oil inventories to their lowest level for November since 2014. Crude oil inventories fell for the month despite domestic crude oil production that edged up by 0.1 million barrels per day (mb/d) to 11.6 mb/d, its highest since April 2020.
However, as demand still outpaced supply, the U.S. was a petroleum net importer in November of 0.4 mb/d. This marked a reversal of the United States’ position as a petroleum net exporter in November 2019 and November 2020. Notably, EIA projects U.S. crude oil net imports could grow by 26% y/y or 0.9 mb/d in 2022, leading the U.S. to be a petroleum net importer next year.
Leading economic indicators strengthened. API’s Distillate Economic IndicatorTM suggested continued growth of U.S. industrial production and broader economic activity.
Demand
• U.S. petroleum demand rose to 20.6 mb/d with increases across most refined products solid.
– Motor gasoline demand (9.1 mb/d) within 2.1% of its highest of the past 5 years.
– Trucking drove highest distillate demand (4.1 mb/d) for any month since Nov. 2019.
– Jet fuel demand (1.5 mb/d) continued to strengthen.
– Shipping helped to double residual fuel oil demand.
– Other oils’ demand of 5.5 mb/d a record for November.
Prices & Macroeconomy
• Highest gasoline prices for November since 2012.
• Leading indicators suggest continued economic growth.
Supply
• Highest U.S. crude oil production (11.6 mb/d) since Apr. 2020.
International trade
• U.S. petroleum net imports continued; projected by EIA to persist in 2022.
Industry Operations
• Refinery inputs and capacity utilization increased seasonally but lagged their 2019 levels.
Inventories
•Lowest total and crude oil inventories for November since 2014.
Oil inventories declined by almost 5 million barrels - EIA Weekly Petroleum Status Report, Release Date: 12/15/2021
Full ‘Status’ Report with Graph: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $72.38/bbl up 1.57% January Contract, 17:45 pm CDT 16/12/2021: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending December 10, 2021
HIGHLIGHTS:
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.6 million barrels from the previous week. At 428.3 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 6% below the five year average for this time of year. Finished gasoline inventories remained unchanged while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.9 million barrels last week and are about 9% below the five year average for this time of year. Propane/ propylene inventories decreased by 2.4 million barrels last week and are about 10% below the five year average for this time of year. Total commercial petroleum inventories decreased by 15.9 million barrels last week.
U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ending December 10, 2021 which was 115,000 barrels per day less than the previous week’s average. Refineries operated at 89.8% of their operable capacity last week.
Gasoline production increased last week, averaging 10.0 million barrels per day.
Distillate fuel production decreased last week, averaging 4.8 million barrels per day.
U.S. crude oil imports averaged 6.5 million barrels per day last week, down by 28,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.5 million barrels per day, 15.4% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 499,000 barrels per day, and distillate fuel imports averaged 450,000 barrels per day.
Total products supplied over the last four-week period averaged 21.3 million barrels a day, up by 12.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 15.4% from the same period last year. Distillate fuel product supplied averaged 4.3 million barrels a day over the past four weeks, up by 11.2% from the same period last year. Jet fuel product supplied was up 27.3% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $71.71 per barrel on December 10, 2021, $5.32 above last week’s price and $25.12 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $2.225 per gallon, $0.188 greater than last week’s price and $0.887 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $2.118 per gallon, $0.160 above last week’s price and $0.764 above a year ago.
The national average retail regular gasoline price decreased to $3.315 per gallon on December 13, 2021, $0.026 below last week’s price but $1.157 over a year ago. The national average retail diesel fuel price decreased to $3.649 per gallon, $0.025 per gallon less than last week but $1.090 higher than a year ago.
Federal Reserve Bank of Dallas ”Energy Slideshow”, Updated December 8, 2021
See link below for slideshow charts on Energy Prices, Global Petroleum Data, National Outlook Data, and Regional Activity:
https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en
Mrs. Smith
Aramco CEO: Rushed Energy Transition Could Spark Social Unrest, By Irina Slav - Dec 07, 2021, 9:00 AM CST
https://oilprice.com/Energy/Crude-Oil/Aramco-CEO-Rushed-Energy-Transition-Could-Spark-Social-Unrest.html
A rushed transition into renewable energy would cause spiraling inflation and social unrest, the chief executive of Aramco warned at the World Petroleum Congress in Texas this week, noting that investments in oil and gas needed to continue in order to avoid such a scenario.
“I understand that publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some,” Amin Nasser said as quoted by the Financial Times.
“But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation, and social unrest as the prices become intolerably high and seeing net-zero commitments by countries start to unravel,” the executive added.
The warning should ring true for many Europeans despite a great effort on the part of EU and other officials to deny that the EU’s quick buildup of wind and solar power capacity had any role to play in the ongoing energy crunch, at a time when the world’s top wind turbine makers both warned on lower profits because of lower wind speeds.
Nasser’s warning was echoed by U.S. oil majors, too. Per a Houston Chronicle report, the chief executives of Exxon and Chevron said that while they were all for a transition to a lower-carbon energy system, oil and gas would continue to be part of this system.
“The growth of emissions-free energy is good for society and an objective our company supports,” Exxon’s Darren Woods said. “The fact remains that under most critical scenarios, including net-zero pathways, oil and natural gas will continue to play a significant role in meeting society’s needs.”
“The world needs affordable, reliable and ever cleaner energy every day. It’s indispensable in today’s global economy,” Chevron’s Mike Wirth said. “Our products make the world run, and we can make it run even better.”
Big Oil cautions against disruptive energy transition, by Paul Takahashi, HoustonChronicle.com
https://www.houstonchronicle.com/business/energy/article/Exxon-Chevron-chiefs-say-world-will-need-oil-and-16680605.php?utm_campaign=sftwitter&utm_medium=referral&utm_source=twitter.com
The chief executives of the two largest U.S. oil companies on Monday reiterated their beliefs that the world will continue to rely on fossil fuels for years, if not decades, to come — even as society shifts toward cleaner forms of energy.
Exxon Mobil CEO Darren Woods and Chevron CEO Mike Wirth told thousands of attendees at the first full day of the World Petroleum Congress in downtown Houston that they shared the world’s concerns about climate change and touted their efforts to reduce their carbon emissions. While European oil majors have expanded into wind and solar power to prepare for a low-carbon future, Exxon and Chevron are investing heavily in carbon capture and storage, hydrogen and biofuels, reflecting their beliefs that fossil fuels will remain the world’s choice for affordable and reliable fuel — as long as they can mitigate harmful carbon emissions.
“The growth of emissions-free energy is good for society and an objective our company supports,” Woods said. “The fact remains that under most critical scenarios, including net-zero pathways, oil and natural gas will continue to play a significant role in meeting society’s needs.”
A debate over the future of fossil fuels is playing out at the World Petroleum Congress, the triennial energy conference that brings together the world’s energy ministers and professionals for a week of panel discussions and trade exhibits. The conference, held in Houston for the first time in three decades, was postponed last year because of the pandemic. About 5,000 attendees are expected this year, about half of the 10,000 attendees anticipated before the coronavirus spread in early 2020.
As economic activity and travel recovers from the pandemic, the sharp uptick in demand for gasoline and jet fuel hasn’t kept up with crude production, causing gasoline prices in the U.S. and natural gas prices in Europe and Asia to skyrocket in recent months. High fuel prices have forced the climate-minded Biden administration to urge OPEC to boost production, and European countries to appeal to Russia to supply more natural gas to ensure adequate winter supplies.
Chevron’s Wirth pointed to these energy price shocks as evidence of fossil fuels’ staying power.
“The world needs affordable, reliable and ever cleaner energy every day. It’s indispensable in today’s global economy,” Wirth said. “Our products make the world run, and we can make it run even better.”
Woods cautioned against a disruptive energy transition that would create shortages and boost prices, adding that many people take for granted the benefits of fossil fuels, which provided the low-cost energy that helped create modern society. They also forget the billions of people in developing countries who lack access to affordable energy that could help provide them with higher standards of living.
“As history has shown on many occasions, the best of intentions poorly executed can do more harm than good,” Woods said. “It’s important to keep this in mind as we deal with climate change. Calm heads and a thoughtful approach are needed. While the fight to mitigate the risk of climate change is vitally important, so is the work to meet the growing needs of people around the world.”
Mike Sommers, president of the American Petroleum Institute, said the world’s population will grow by 2 billion to around 10 billion people by 2050, which will require more energy, much of which will continue to be supplied by fossil fuels. The energy transition is more of an energy addition, with the world adding more wind and solar to the energy mix, he added.
“The energy transition doesn’t mean oil and gas is going away,” Sommer said. “They said we’re transitioning away from coal, but the world uses three times more coal as it did in the 1960s.”
Carbon capture capital
Exxon on Monday pledged to make its Permian Basin operations reach net-zero carbon emissions by 2030. The company is planning to invest $15 billion on low-carbon projects by 2027, including carbon capture projects in Europe and Asia and a biofuels refinery in Canada.
The Texas oil giant is also working with 10 energy companies to develop a $100 billion carbon capture hub in the Houston area that could capture 100 million metric tons of carbon emissions from the city’s refineries and chemical plants by 2040, equivalent to the greenhouse gas emissions from more than 20 million cars.
Chevron said its Southern California refinery has begun producing sustainable aviation fuel, a combination of traditional jet fuel and renewable biofuel made from used cooking oils, which Delta Airlines is using to power some of its flights. The California oil major also is capturing methane emitted by dairy farms and converting the greenhouse gas into renewable natural gas. It also has plans to expand its own carbon capture business.
“Reaching the ambitions of Paris would require a massive transformation in technology and innovation,” Wirth said. “It will also require more ambitious government policy designed to align goals, create viable markets and serve as a catalyst for action.
Perhaps most fundamentally, however, it will require new partnerships and collaboration. No one company, no one industry, no one country acting alone can meet the world’s energy and climate goals.”
Even European oil majors said they plan to keep investing in oil and gas projects in the near term to fund their energy transitions.
BP, which pledged to lower its oil and gas production by 40 percent to meet its net-zero ambitions by 2050, is building its fifth oil platform in the Gulf of Mexico, and TotalEnergies, which plans to become one of the world’s top renewable power producers, this year became the largest exporter of U.S. liquefied natural gas.
“We will be investing in hydrocarbons for many, many years to come,” said David Lawler, head of BP Americas. “But we will focus on those hydrocarbons that are lower emissions and add the most value to the company so we can fund this transition.”
TotalEnergies CEO Patrick Pouyanné added, “We want to become one of the world’s top-five renewable power producers. But don’t make a mistake. We will continue to invest in oil and gas projects.”
OPEC Review of 2021 and outlook for 2022
FEATURED ARTICLE - Released 12/13/2021
The global economy recovered strongly in 2021, supported by unprecedented fiscal and monetary stimulus in major economies, pent-up demand and increased investments. World GDP growth is estimated at 5.5% in 2021 and is forecast at 4.2% in 2022.
However, numerous challenges have emerged during the year, as the recovery was increasingly divergent among and within major economies. Moreover, ongoing supply-chain issues, in combination with continued tight labour markets have led to rising core-inflation in some major economies. While some inflationary factors may qualify as temporary, the rise in wages and salaries in affected economies may turn out to be of a more sustained nature. Given the solid economic growth levels in most western economies, the unprecedented monetary stimulus may gradually be reduced in the short-term. This could potentially lead to additional challenges for highly indebted emerging economies, with foreign currency debt.
Global oil demand growth is estimated to have rebounded by 5.7 mb/d y-o-y in 2021. The non-OECD region increased 3.2 mb/d, while the OECD is estimated to have added 2.5 mb/d. This increase is driven by a steady rebound in economic activities and improved transportation fuel consumption, despite a resurgence in COVID-19 cases and containment measures.
In 2022, world oil demand is forecast to increase by 4.2 mb/d, y-o-y, given improved COVID-19 management and rising vaccination rates, enabling economic activity and mobility to return to pre- pandemic levels, supporting transportation fuels in particular. OECD oil demand is forecast to grow by 1.8 mb/d in 2022, while the non-OECD region
is projected to increase by 2.3 mb/d, supported by steady momentum in economic activities, particularly China, India and Other Asia. Meanwhile, as vaccination rates increase, the impact of the Omicron variant is projected to be mild and short-lived.
On the supply side, non-OPEC growth in 2021 is estimated at 0.7 mb/d, impacted by major production outages in 2H21, due to weather and accidents, prolonged and unforeseen maintenance, as well as COVID-19-related safety measures in offshore platforms and drilling areas. On the other hand, non-OPEC participants in the Declaration of Cooperation (DoC) continue to return their planned volumes to the market. The main drivers of growth in 2021 for non-OPEC supply are estimated to have been Canada, Russia, and China.
In 2022, non-OPEC supply is projected to see robust growth of 3.0 mb/d, y-o-y, on the back of an expected gradual increase in drilling and completion activities in the US, leading to expected growth of 0.6 mb/d for US tight oil output. The US and Russia are forecast to contribute two thirds of total expected growth, followed by Brazil, Canada, Kazakhstan, Norway, and Guyana. However, investment in the non-OPEC upstream sector in 2021 and 2022 is estimated at around $350 billion each, showing a 50% drop compared to the 2014 level, and thereby limiting growth potential.
While the expected recovery in 2021 was surrounded with challenges, some of these are expected to continue into the next year. The expected market balance continues to be determined by the evolution of the COVID- 19 pandemic, as a key factor of uncertainty, but the successful joint efforts of the DoC continue to closely monitor all developments in a timely and vigilant manner, to be able to react to rapidly changing market circumstances.
December 2021 OPEC Monthly Oil Market Report “MOMR”, Released 12/13/2021
12/2021 MOMR PDF: https://momr.opec.org/pdf-download/res/pdf_delivery_momr.php?secToken2=accept
12/2021 MOMR VIDEO: https://www.opec.org/opec_web/en/publications/338.htm
WTI $70.89/bbl January Contract, 12/13/2021 22:48 pm CDT: https://oilprice.com/oil-price-charts/45
LLS $73.96/bbl Wholesale Spot Price, 12/10/2021 close: https://www.eia.gov/todayinenergy/prices.php
Oil Market Highlights
Crude Oil Price Movements
Crude oil spot prices declined in November, amid concerns regarding the emergence of the new Omicron COVID-19 variant, and easing of the energy crunch which had resulted in higher oil demand from the gas-to- oil switching. The OPEC Reference Basket (ORB) value dropped by $1.74, or 2.1%, in November to average $80.37/b, amid lower prices of almost all medium and heavy sour grades in Asia, Europe, and the Americas. The year-to-date (y-t-d) ORB value reached $69.45/b, which is $28.71, or 70.4%, higher compared with the same period last year of $40.75/b. Similarly, crude oil futures prices ended November sharply lower amid higher volatility after a broad selloff in futures and equity markets, amid the emergence of the new Omicron COVID- 19 variant and easing concerns about an energy crunch. The ICE Brent first-month fell by $2.90, or 3.5%, in November to average $80.85/b, and NYMEX WTI declined by $2.57, or 3.2%, to average $78.65/b. DME Oman crude oil futures prices fell by $2.11 m-om, or 2.6%, to settle at $79.70/b in November. The spread between the ICE Brent and NYMEX WTI benchmarks narrowed further in November by 33¢ to average $2.20/b. Hedge funds and other money managers accelerated selling in November, contributing to the decline in oil prices. Combined speculative net length positions linked to ICE Brent and NYMEX WTI dropped to the lowest level since November 2020. The backwardation structure in all three markets weakened considerably in the second half of November.
World Economy
The global GDP growth forecast in 2021 is revised slightly down to 5.5%, from 5.6% in the previous month’s assessment, while the 2022 growth forecast remains unchanged at 4.2%. The US is still expected to grow by 5.5% in 2021 and 4.1% in 2022, unchanged from last month’s assessment. Similarly, Euro-zone economic growth remains at 5.1% for 2021 and at 3.9% for 2022. Japan’s economic growth forecast for 2021 is revised down to 2% from 2.5%, after an unexpectedly strong decline in 3Q21, but forecast for 2022 is revised up to 2.2% from 2%, with ongoing 4Q21 momentum expected to be carried over into next year. Given the softening growth momentum in 2H21, China’s economic growth forecast for 2021 is revised down to 8% from 8.3% and to 5.6% from 5.8% for 2022. India’s forecast for 2021 is revised down to now stand at 8.8%, compared with 9% in the previous month, but anticipated momentum from 4Q21 has lifted the 2022 growth forecast to 7%. Russia GDP growth forecast remains unchanged at 4% for 2021 and 2.7% for 2022. Brazil’s economic growth forecasts for both 2021 and 2022 are also unchanged at 4.7% and 2%, respectively. The ongoing robust growth in the world economy continues to be challenged by uncertainties related to the spread of COVID-19 variants and the pace of vaccine rollouts worldwide, as well as ongoing global supply-chain bottlenecks. Additionally, sovereign debt levels in many regions, together with rising inflationary pressures and potential central bank responses, remain key factors that require close monitoring.
World Oil Demand
World oil demand is kept unchanged compared to last month’s assessment, showing a growth of 5.7 mb/d in 2021. However, oil demand was adjusted higher in 1H21, amid better-than-anticipated transportation fuel consumption in OECD, offset by a downwardly-revised estimate for 3Q21 due to increased COVID-19 cases and softer industrial production in China, as well as easing transportation fuel recovery in India. The 4Q21 oil demand was adjusted slightly lower, mainly to account for COVID-19 containment measures in Europe and the potential impact of the new Omicron COVID-19 variant. “The forecast for 2022 is also kept unchanged at 4.2 mb/d. Indeed, some of the recovery previously expected in 4Q21 is now shifted to 1Q22, followed by a more steady recovery throughout 2H22. The impact of the new Omicron variant is expected to be mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges. This is in addition to a steady economic outlook in both the advanced and emerging economies.”
World Oil Supply
Non-OPEC liquids supply growth in 2021 remained unchanged at around 0.7 mb/d y-o-y to average 63.7 mb/d. The upward revisions in the US, and Canada were offset by downward adjustments to Brazil, and Norway. The 2021 oil supply forecast primarily sees growth in Canada, Russia, China, US, Norway, Guyana, and Qatar, while output is projected to decline in the UK, Colombia, Indonesia and Brazil. Similarly, the non-OPEC supply growth forecast for 2022 is also kept unchanged at around 3.0 mb/d, to average 66.7 mb/d. “The main drivers of liquids supply growth are expected to be the US and Russia, followed by Brazil, Canada, Kazakhstan, Norway and Guyana”. OPEC NGLs are forecast to grow by 0.1 mb/d both in 2021 and 2022 to average 5.1 mb/d and 5.3 mb/d, respectively. In November, OPEC crude oil production increased by 0.29 mb/d m-o-m, to average 27.72 mb/d, according to available secondary sources.
Product Markets and Refining Operations
Refinery margins in all main trading hubs weakened in November, as the performance of all product across the barrel in all regions lost ground m-o-m with the exception of Naphtha in Asia. This downturn was attributed to a rise in product outputs as refineries ramped-up run rates, following major turnarounds to replenish product inventory levels. In addition, the seasonal demand-side weakness amid renewed lockdown measures as a result of a rise in COVID-19 infection rates further weighed on product markets. Going forward, a potential continuation of a rise in global refinery processing rates will most likely lead to a widening product balance and continued weakness in product markets in the coming month. Moreover, concerns over the spread of the Omicron variant is set to add to the downside and further suppress the robust recovery in jet fuel margins witnessed in the recent months, particularly during the end of the year holiday season.
Tanker Market
“Dirty tanker spot freight rates remained steady in November”, as the expected year-end upward momentum had yet to show. For VLCCs, the Middle East-to-East route averaged WS43, up 2% m-o-m. While this represented an improvement over November 2020, it is still well below pre-COVID levels for this time of year. For Suezmax, the West Africa-to-US Gulf Coast averaged WS61 for a decline of 6%. In contrast, clean tanker spot rates strengthened, with gains both east and west of Suez. Optimism for the end of the year has been shaken somewhat by the uncertainty around the impact of the Omicron variant on economic activities, as well as the persistent imbalance in the tanker market.
Crude and Refined Products Trade
“Preliminary data shows US crude imports in November partly recovered from a dip in the month before to average 6.4 mb/d. US crude exports also rose for the second month to average 2.9 mb/d.” China’s crude imports averaged 8.9 mb/d in October, the lowest since February 2018, although preliminary customs data shows a recovery in November with crude imports averaging 10.2 mb/d. India’s crude imports feel back, following 2 months of gains, averaging 4.0 mb/d in October. In contrast, India’s product imports increased, driven by higher inflows of gasoline and fuel oil. Japan’s crude imports fell for the second month in a row, averaging 2.4 mb/d in October. In OECD Europe, the latest data for August shows crude imports remaining strong at 8.7 mb/d, while crude exports continued to edge higher reaching 0.5 mb/d.
Commercial Stock Movements
Preliminary October data sees “total OECD commercial oil stocks up by 9.9 mb m-o-m. At 2,773 mb, they were 357 mb lower than the same time one year ago, 207 mb lower than the latest five-year average and 174 mb below the 2015-2019 average”. Within the components, crude and products stocks rose by 9.4 mb and 0.5 mb m-o-m respectively. At 1,307 mb, OECD crude stocks stood 154 mb below the latest five-year average and 149 mb below the 2015-2019 average. “At 1,465 mb, OECD product stocks exhibited a deficit of 52 mb below the latest five-year average, and were 25 mb lower than the 2015-2019 average”. In terms of days of forward cover, OECD commercial stocks rose m-o-m by 1.0 day in October to stand at 61.7 days. This is 12.1 days below October 2020 levels, 2.7 days below the latest five-year average, and 0.7 days less than the 2015-2019 average.
Balance of Supply and Demand
“Demand for OPEC crude in 2021 is revised up by 0.2 mb/d from the previous month’s assessment to stand at 27.8 mb/d, around 4.9 mb/d higher than in 2020. Demand for OPEC crude in 2022 was revised up by 0.2 b/d from the previous month’s assessment to stand at 28.8 mb/d, around 1.0 mb/d higher than in 2021.”
Shell makes another deep-water discovery in the GOM, Issued December 9, 2021
https://www.offshore-technology.com/news/shell-deep-water-discovery-us-gulf-of-mexico/
The Royal Dutch Shell subsidiary Shell Offshore has announced another deep-water discovery in the Gulf of Mexico.
The company has found oil at the Blacktip North prospect, located in the OCS block Alaminos Canyon (AC) 336.
The well encountered approximately 300ft of net oil pay at multiple levels. The well was drilled to a total depth of 27,770ft.
Further assessment is currently underway to devise development options.
Shell Deep Water executive vice-president Paul Goodfellow said: “The Blacktip North prospect is the latest example of discovering new resources in our advantaged corridors.
“Our strategic positions, like the Perdido Corridor, are at the heart of value creation in the Gulf of Mexico, and they represent an opportunity to use our existing infrastructure to unlock the full-value potential of our discoveries.”
Shell Offshore operates the Blacktip North prospect with a 89.49% interest. The other stakeholder is Repsol E&P USA with a stake of 10.51%.
According to the company, the Blacktip, Blacktip North and Leopard discoveries will help to increase production in the Perdido Corridor.
The Total US Oil and Gas Rig Count reflects 576 rigs an increase of 7 rigs. The 12/10/2021 GOM Offshore Rig Count increased by 1 rig from the previous week and is currently showing 14 rigs.
https://bakerhughesrigcount.gcs-web.com/static-files/b72b613e-a2a0-42ee-a67b-c5e4d6c8ca55
WTI $71.67/bbl up 1.03% - January Contract, 12/12/2021 01:55 am CDT
https://oilprice.com/oil-price-charts/45
Wholesale Spot Petroleum Prices, 12/9/2021 Close
Crude Oil ($/barrel) Percent Change
WTI 70.87 -2.2
Brent 74.10 -2.4
Louisiana Light 72.27 -2.
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
December 2021 (MER) Monthly Economic Review
Source: Jack Kleinhenz, Ph.D., CBE Chief Economist National Retail Federation
For a clearer narrative click link to view graphs and full report: https://cdn.nrf.com/sites/default/files/2021-12/2021%20Dec%20MER_0.pdf
S Y N O P S I S | Holiday Sales Could be Better Than Expected
Now that we’re in December, the holiday shopping season is nearing the finish line. The question is how have factors ranging from economic indicators to the twists of the COVID-19 pandemic affected the season so far, and what role will they play in the weeks that remain? There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights. In fact, the season could turn out even better than we expected.
Just before Thanksgiving, the Bureau of Economic Analysis released data showing that U.S. economic growth slowed to a modest 2.1 percent in the third quarter, down from 6.7 percent in the second quarter. But real gross domestic product was still 4.5 percent higher than it was in the third quarter of 2020, and third-quarter growth was led by personal consumption and increased inventories as retailers and other businesses worked to keep up with demand. Business investment in intellectual property was also up, along with state and local government purchases, although net exports, home building, business investment in equipment and commercial construction slowed.
BEA data on income and outlays for October provided an all-important update on the health of the consumer. Nominal disposable income rose 0.3 percent, reflecting increases in wage, salary and interest income, although the increases were partly offset by a decrease in government pandemic aid after extended unemployment benefits ended in September. While dwindling government stimulus has held back month-to-month income growth in recent months, consumers remain in solid financial shape and do not appear stretched. Consumer spending rose by 1.3 percent in October, the largest monthly increase since March. There was no evidence of a pullback in consumer spending despite price increases that have come with supply chain disruptions and increased demand. Disposable personal income is up 4.1 percent in the past year, while spending has increased 12 percent. The increase in income together with very strong spending lowered the saving rate from 8.2 percent to 7.3 percent, the third monthly decline in a row with the latest figures beginning to return to pre-pandemic levels.
Nonetheless, households have a savings cushion of around $2 trillion accumulated since the beginning of the pandemic to support spending and provide an important buffer against higher prices.
The Federal Reserve’s preferred measure of inflation – the Personal Consumer Expenditures Price Index from the BEA – increased 5 percent year-over-year in October, reflecting increases in prices of both goods and services. But that was driven largely by a 30.2 percent in energy prices while food prices increased 4.8 percent. Excluding food and energy, the index was up only 4.1 percent. Even at that level, it’s worth noting that this dynamic is not constant across all sectors of the economy and not all goods and services are moving in lockstep or even in the same direction from month to month. Looking at the core retail categories of general merchandise, apparel, accessories and furniture, prices grew at a more muted 3.3 percent.
Meanwhile, the job market appears to be regaining its vitality. Initial unemployment claims declined by 71,000 to 199,000 as of the weekend before Thanksgiving, plunging to the lowest level since 1969. Continuing claims declined by 60,000 to just over 2 million. Official labor market data for October showed payrolls were up by 546,000 jobs, topping 379,000 in September and 483,000 in August, both of which had initially been reported far lower before revisions. October's performance implied that the impact of the COVID-19 delta variant was fading and that it might not have been as pernicious to the labor market as previously thought. November’s job numbers were comparatively disappointing with only 210,000 jobs added, with the estimate pulled down by seasonal factors. But the unemployment rate fell to a new pandemic low of 4.2 percent. A few more months of strong job additions will reduce the 4.2 million jobs that still need to be recovered to reach the pre-pandemic peak.
The economy has a lot riding on consumers, and it needs the consumer to keep growing. Retail sales growth remained strong in October as many consumers began holiday shopping early. NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants – showed October spending increased 1.7 percent from September and was up 10.8 percent unadjusted year-over-year. For the first 10 months of 2021, sales were up 14.1 percent over the same period of 2020.
The holiday season clearly looks to be off to a good start. As seen with the October results, some sales were likely pulled forward from November and December as consumers began holiday shopping earlier than ever in the face of disrupted supply chains that threatened to limit inventory levels. As a result, the ever-important Thanksgiving holiday weekend now helps to mark the holiday season rather than serving as the kickoff it once was. Consumers and retailers have both revised their playbooks and broken with previous traditions. With the momentum we’ve seen so far likely to continue, it seems probable that we will exceed our initial projection, which was made when the late-summer growth in COVID-19 was still a key factor. Rather than the growth of 8.5 percent to 10.5 percent over 2020 we expected in October, we now believe holiday retail sales could grow as much as 11.5 percent.
In direct contrast to the positive outlook much of the data is showing, consumer confidence as measured by the University of Michigan shows confidence at pandemic-era lows. The UM Index of Consumer Sentiment declined to 67.4 in November, the lowest level since November 2011.The decline appears to have been instigated by the surge in prices, especially for gasoline, pushing up inflation fears, and the impact of rising COVID-19 infections as the delta variant spread. Wrangling in Washington over federal legislation, the federal budget and debt limit likely contributed as well. Nonetheless, when faced with a disparity between a consumer survey and hard data on spending, watch what consumers do, not what they say.
Amid all these considerations, the latest wild card raising uncertainty around the economic outlook – and creating a potential risk – is the new COVID-19 omicron variant. It’s too early to have a clear answer – or any answer at all – to how omicron will impact the economy and the retail industry. Compared with where we were a year ago, however, there is a much higher share of vaccinated population, which should help slow its spread. What we do know is that retailers have been on the front lines from the start of this pandemic in implementing procedures and protocols that protect their workers, their customers and the communities they serve. Those procedures and protocols remain in effect, and retailers will continue to follow guidelines established by health professionals and experts. This development shows we cannot take anything for granted, but we are hoping households can enjoy a safe and happy holiday season.
Bureau of Labor Statistics - CONSUMER PRICE INDEX – NOVEMBER 2021, Released 12/10/2021
Charts and analysis:
https://www.bls.gov/news.release/pdf/cpi.pdf
Summary:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in November on a seasonally adjusted basis after rising 0.9 percent in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.8 percent before seasonal adjustment.
The monthly all items seasonally adjusted increase was the result of broad increases in most component indexes, similar to last month. The indexes for gasoline, shelter, food, used cars and trucks, and new vehicles were among the larger contributors. The energy index rose 3.5 percent in November as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.7 percent as the index for food at home rose 0.8 percent.
The index for all items less food and energy rose 0.5 percent in November following a 0.6-percent increase in October. Along with shelter, used cars and trucks, and new vehicles, the indexes for household furnishings and operations, apparel, and airline fares were among those that increased. The indexes for motor vehicle insurance, recreation, and communication all declined in November.
The all items index rose 6.8 percent for the 12 months ending November, the largest 12-month increase since the period ending June 1982. The index for all items less food and energy rose 4.9 percent over the last 12 months, while the energy index rose 33.3 percent over the last year, and the food index increased 6.1 percent. These changes are the largest 12-month increases in at least 13 years in the respective series.
OECD - December 2021 Economic Outlook - Organization for Economic Co-operation and Development
Graphs and Analysis:
https://www.oecd-ilibrary.org/sites/66c5ac2c-en/1/3/1/index.html?itemId=/content/publication/66c5ac2c-en&_csp_=9b4ecb1aafc11518f34da944ee244a5b&itemIGO=oecd&itemContentType=book
Mrs. Smith
Yes MKTMVN, I will be happy with a discovery that is 25% of Thunder Horse, especially if it comes after a Tau 2 discovery. That is exactly why we are all here. Hopefully we get word of something happening soon. And, as we have all stated in previous posts, Delek should not pass on an opportunity like Tau, so I believe that they will bite the bullet and procede. We will have to wait and see. The anticipation can be wearisome, so I guess I could never thrive as a ‘wildcatter’. All things considered, I have much respect for you and your profession. No wonder you miss it.
Mrs. Smith
EIA Weekly Petroleum Status Report, Release Date: 12/8/2021, Data for week-ending: 12/3/2021
Full ‘Status’ Report with Graph: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
Summary of Weekly Petroleum Data for the week ending December 3, 2021
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ending December 3, 2021 which was 153,000 barrels per day more than the previous week’s average. Refineries operated at 89.8% of their operable capacity last week. Gasoline production decreased last week, averaging 9.6 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.5 million barrels per day last week, down by 105,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 15.1% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 558,000 barrels per day, and distillate fuel imports averaged 269,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.2 million barrels from the previous week. At 432.9 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year. Total motor gasoline inventories increased by 3.9 million barrels last week and are about 5% below the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 2.7 million barrels last week and are about 7% below the five year average for this time of year. Propane/propylene inventories increased by 0.6 million barrels last week and are about 11% below the five year average for this time of year. Total commercial petroleum inventories increased by 4.2 million barrels last week.
Total products supplied over the last four-week period averaged 20.9 million barrels a day, up by 10.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 13.7% from the same period last year. Distillate fuel product supplied averaged 4.1 million barrels a day over the past four weeks, up by 6.1% from the same period last year. Jet fuel product supplied was up 27.0% compared with the same four-week period last year.
The West Texas Intermediate price was $66.39 per barrel on December 3, 2021, $20.16 above a year ago. The spot price for conventional gasoline in the New York Harbor was $2.037 per gallon, $0.750 higher than a year ago. The spot price for No. 2 heating oil in the New York Harbor was $1.958 per gallon, $0.639 over a year ago.
The national average retail regular gasoline price decreased to $3.341 per gallon on December 6, 2021, $0.039 below last week’s price but $1.185 over a year ago. The national average retail diesel fuel price decreased to $3.674 per gallon, $0.046 per gallon less than last week but $1.148 higher than a year ago.
MKTMVN Quote: “In terms of Corvette analogues, any of the deep water, middle and lower Miocene fields would be a good comparison.”
Excerpt from Gulfslope’s 2019 presentation in reference to the Corvette prospect:
* Large 4-way closure with multiple sand targets ranging from 15,000’ to 26,000’
* Estimated drill and evaluate cost for discovery fault block is approximately $30 million
* New proprietary RTM-VOT depth imaging identifies trap potential and amplitudes at adjacent fault blocks
* Additional $5 to $10 million to test M2 and M3 sands in Corvette prospect
* Inverted basin provides potential for very large accumulation - resource potential estimated at 200+ MMBOE
* Deeper potential is analogue to Thunder Horse field
Mrs. Smith
US set to lead world in LNG sales: Imports to Exports. By: Larry Persily, For the Journal, Post date: Wed, 12/01/2021 - 10:38am
https://www.alaskajournal.com/2021-12-01/imports-exports-us-set-lead-world-lng-sales
Sometime next year, when Venture Global’s Calcasieu Pass terminal in Louisiana ramps up toward full production and Cheniere Energy starts commercial operations through the latest addition to its nearby Sabine Pass terminal, the United States will become the world leader in liquefied natural gas production capacity.
More than Qatar, which held the title for more than a dozen years.
More than Australia, which dethroned Qatar a couple of years ago after a $200 billion investment bonanza that lasted about a decade.
And almost 20 years sooner than ExxonMobil had predicted in 2016, when it said that North America would become the world’s top LNG exporter, but not until 2040.
The LNG coronation is a long way from 15 years ago — before the start of the shale gas boom saved the U.S. from a natural gas deficit — when analysts, government officials and the oil and gas industry expected the country to become a world leader in LNG imports, not exports.
Marketed U.S. gas production shot up 80% from an average 53 billion cubic feet, or bcf, per day in 2006 to about 96 bcf per day in November and is headed to a record year in 2021, according to federal data. Of that, more than 11 bcf per day in November was piped to liquefaction terminals for export — enough to fill three standard-size LNG carriers for overseas customers.
The transformation from the impending title of Import Nation to Export Leader was a costly lesson in how quickly, and dramatically, commodity markets can shift — although it looks to eventually be a profitable lesson for many developers that poured billions of dollars into building new terminals to import LNG, or expanding and reopening mostly unused LNG import facilities from the 1970s.
The leader in reversing direction from imports to exports has been Houston-based Cheniere Energy, which now operates two liquefaction and export plants in Louisiana and Texas with a total annual output capacity expected next year of 45 million tonnes, which is almost 10% of worldwide capacity.
But it wasn’t until the company had sunk almost $2 billion into building its import facility in Sabine Pass, Louisiana, that it saw the market start to turn at about the same time the plant went online in 2008.
Though Cheniere could see that investing in exports was the only way to salvage a failed investment in imports, it was not an easy sell to lenders, or to analysts.
“It is more likely to see snow in New York in July than to see exports of gas from LNG terminals in the United States,” Fadel Gheit, senior energy analyst at New York-based Oppenheimer & Co., was quoted in The New York Times in January 2011.
A few months later, Cheniere received export approval from the U.S. Energy Department. It took a couple more months, but Charif Souki, then CEO at Cheniere, sent Gheit a pair of snow boots.
Lenders were just as skeptical of exports, at first. They told Cheniere, which was close to defaulting on its debt for the import terminal, “show us some money, and then we’ll consider making a loan.”
A key element of putting together financing for Cheniere’s export project at Sabine Pass was that the developer did not ask lenders to take any commodity price risk, Roberto Simon, head of project finance for the Americas at Societe Generale, retold at a natural gas conference in London in 2012.
The developer’s customers would take the risk of fluctuating gas prices. They would have to pay Cheniere for its services, regardless of the profit or loss on the gas at the other end of the market. That clinched the cash flow for Cheniere.
When Cheniere approached French bank Societe Generale for help with financing, the bank told the company to get its federal export authorization and construction approval, gather up a lot of equity, get 20-year contracts with investment-grade customers, and then come in to talk about a loan, Simon said.
Cheniere, which had no ready cash of its own, raised $2 billion for its equity contribution toward the almost $6 billion project; $1.5 billion from Blackstone Group-affiliated investment funds and a combined $500 million from a Singapore investment bank and U.S. private-equity firm.
Cheniere first spent the equity on construction, Simon said, only later gaining access to the debt. The company’s bonds for the project were rated below investment grade by Standard & Poor’s. That was more a reflection on the parent company than on the LNG export project itself.
“For us it was a matter of life and death,” Souki said in 2012. His company was close to bankruptcy and needed to find a way to salvage its investment. It still had half of its 1,000-acre riverfront site available for construction, which made it very economical to add liquefaction units and operate an export terminal.
Cheniere was one of several U.S. import terminal owners that saw the value of turning their unused or underused operations into profitable export facilities. The dock, storage tanks and other facilities already were in place. Owners of other terminals in Louisiana, Texas, Maryland and Georgia made the same business decision and are now sending out LNG, with two more North American export plants under construction at the facility-sharing site of an import terminal.
However, the growth of U.S. LNG exports to South America, Asia and Europe has not gone unnoticed by large industrial users in the domestic market. The businesses don’t like paying higher prices for natural gas, and figure keeping more of it at home would help reduce prices.
The Industrial Energy Consumers of America sent a letter on Nov. 22 to U.S. Energy Secretary Jennifer Granholm, offering a dozen reasons why the department should scale back export approvals. Two months earlier, the same group urged the department to require exporters to throttle back their cargoes.
Not our fault, an LNG trade group said of current high prices for U.S. buyers.
“This is a short-term sort of issue,” Charlie Riedl, executive director for the Center for Liquefied Natural Gas, told the Houston Chronicle the day after the industrial group issued its call to scale back exports.
“We’re not going to run out of natural gas because of LNG exports,” Riedl said