13th November 2024

Good morning crew. Here’s all you need to know today in the world of oil, gas, and energy:

• 💪 The evolution of power

• 🎁 “A gift of God”

• ✂️ OPEC cuts demand forecast, again

• 🤑 Exxon’s $1bn Permian sale

• ➕ plus Saudi taking sides; CO2 hits new highs; US energy dominance; Shell’s crucial court win; Aethon looking for an exit; Norway state takes over Gassled; Rosebank back in court; new US methane fee; and barrels more.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Exxon in $1bn Permian sale to Hillcorp - the conventional, mature assets have production of ~26 kboe/d. Privately owned Hillcorp has been on a spending spree recently, also buying Eni’s offshore Alaska assets for $1bn and Permian assets from APA for $950m. Cash to splash.

• Aethon Energy looking for an exit - the company is weighing up options for its natural gas production and midstream assets that include a sale or an IPO at a valuation of ~$10bn. Aethon produces ~ 2.5 bcf/d of gas and owns more than 1,400 miles of pipelines.

• Canada not worried about US energy tariffs - given US refineries’ dependence on Canadian heavy oil, expectations are that Canadian energy will be spared from the sweeping tariffs that Trump is expected to slap on many imports.

• Trump names Lee Zeldin to head the EPA - “We will restore US energy dominance”, was Zeldin’s first line announcing his appointment to lead the agency. I’d say the US energy is already pretty dominant but OK.

• EOG ramping up in the Utica - the indy is increasing its activity in the Utica shale by 50% next year, operating two full rigs and one full hydraulic fracturing fleet. Elsewhere across the US, it expects to keep activity levels more or less constant.

• Talos starts drilling at Katmai West - the operator hopes that the well at the field in the GoM will produce by mid-2025.

• Japex looking for US tight oil investments - the Japanese company hopes to eventually become an operator.

🏰 Europe

• Norway government takes over critical gas infra - the state has paid $1.6bn for the extensive 5,600 miles Gassled pipeline network which comprises major gas export pipelines to Germany, Britain, France and Belgium

• Shell wins landmark emissions case - the IOC won an appeal against a 2021 ruling that required it to accelerate carbon reduction efforts, including emissions caused by the use of its products. Had the appeal failed it would have set a dangerous precedent for O&G companies whereby courts could legally oblige them to reduce Scope 1, 2, & 3 emissions.

• Rosebank and Jackdaw back in court - a legal hearing, brought by Greenpeace and other anti-humanists, has begun in Scotland to try and prevent the development of the two offshore UK fields. If the challenge is successful, operators would have to resubmit environmental impact assessments for approval before drilling can begin.

• Tyra II ready for winter - after technical issues with the start up of the $3bn gas development in the Danish North Sea, Total’s project is hitting full capacity and will be ready to send much needed gas to Europe in time for a chilly winter.

🕌 The Middle East

• The Middle East’s booming EPC market - NMDC Energy, one of the region’s largest EPC contractors, is targeting contracts worth up to a potential $18bn as core markets in the UAE and Saudi spend big on O&G development projects.

⛩️ Asia & Oceania

• Nothing much happening over here

🦁 Africa

• Angola courting investors for 10 offshore discoveries - Angola says the untapped finds, which have been relinquished in the past by IOCs and Angola’s NOC, hold over 500 mmbbls of resources.

🗿 Central & South America

• Gas explosions disrupt 60% of Venezuela supply - another day, another failure in Venezuela’s decrepit energy system. The explosion occurred at a key PDVSA gas supply facility.

• GeoPark making strides in Vaca Muerta - the indy has announced first oil from its Confluencia Norte Block in Argentina, claiming a “significant milestone…validating the immense potential that underpinned our entry into this world-class basin”.

🌍 GEOPOLITICS & MACRO

• Saudi taking sides - having remained largely neutral in the Israel / Hamas conflict until now, Saudi Arabia has decided to get off the fence. Crown Prince MBS, the de facto ruler, said that Israel was “committing genocide” in Gaza and warned Israel against attacking Iran. MBS and the Iranian President also spoke on the phone recently, and the Chief of Staff of Saudi military made a rare visit to Iran. That’s the end of “normalization of ties” with Israel then.

• OPEC cuts oil demand…again - for the fourth consecutive month, the group has cut its oil growth outlook for 2024 and 2025 citing lower demand in China. OPEC now sees 2024 growth at 1.8 mmb/d (down 110 kb/d from last month) and 2025 growth at 1.5 mmb/d (down 103 kb/d). Whoever made their initial forecast might be looking for a new job soon.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• “Oil and gas a gift of God” - this is what the president of COP29’s host country, Azerbaijan, told the UN climate conference. “Countries should not be blamed for having [oil & gas], and should not be blamed for bringing these resources to the market, because the market needs them. The people need them.". Brilliant trolling.

• CO2 emissions hit new record high - the Global Carbon Budget, released during the COP29 summit, forecasts that CO2 emissions will hit 41.6 billion metric tons in 2024, up from 40.6 last year. Time for a different approach? Cough coal-to-gas cough nuclear cough…

• Woods encourages Trump to stick with Paris agreement - “The way you influence things is to participate, not to exit”, said the Exxon CEO, arguing that if the US left the agreement it would forgo its ability to push for “common sense” carbon-cutting policy on the world stage.

• Saudi launches carbon credit exchange market - to kick start the voluntary market, 22 Saudi and international companies will take part in an auction for 2.5 million carbon credits.

• EPA finalizes US methane fee - large O&G companies will have to pay $900 per tonne of “waste emissions” this year, climbing to $1200 next year and $1500 per tonne for 2026 onwards.

🛢️ BOTTOM OF THE BARREL

Sometime around 12,000BC your nomadic many-great grandfather got tired of life on the move.

He settled down.

Agriculture was born.

But working the hard earth with sticks and stones was a toiling existence.

His body could only muster ~100 W of sustained power.

Thankfully, things got a little better a few thousand years later.

Oxen were domesticated and put to work.

A farmer could now use the strength of these bovines to do his job.

The power of a pair of oxen ploughing a field?

500 W. A 5x improvement on the man with basic tools.

Not bad.

But the animal kingdom had more to offer.

Our ancestors soon harnessed a better suited beast to do our bidding: horses.

And a farmer holding the reins of six large stallions wielded 5 KW of power.

A 50x increase compared with the original farmers.

Now we’re talking.

Fast forward to today.

Animals are out. Internal combustion engines are in.

Agriculture has been industrialized.

Giant machines, not men or mules, work the earth.

And today, you could take the keys of a tractor and control a rip roaring 520 KW of power.

This means that you alone could do the same job as 5,200 of your early settler ancestors…An army or tireless workers at your finger tips.

That is the miracle of hydrocarbons.

👋 BEFORE YOU GO

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Thanks for reading. Have a day out there. 🛢️🛢️

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