16th July 2024

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• 🏁 Phased restart to Freeport LNG

• ❓ What energy transition?

• 🏃‍♂️ Trump’s O&G-friendly running mate

• ☀️ Solar panels as fences

• ➕ plus mega finds in Bolivia and China; Exxon’s drilling frenzy in Guyana; the UK’s emerging decom industry; Houthis are still at it; oil tanker capsizes off Oman.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Phased restart to damaged Freeport LNG - the 15 mpta facility was damaged in Hurricane Beryl but will restart some limited output this week. The outage has cut off a key export route for Texan gas, pushing Henry Hub prices down.

• White House considering more Alaska drilling restrictions - Alaska is already embroiled in a lawsuit with the federal government after the latter imposed new restrictions in April on O&G activity in Alaska’s National Petroleum Reserve.

• Former Chevron CEO Kenneth T. Derr dies - during his time at the helm between 1989 and 1999, he expanded Chevron’s global footprint including in Kazakhstan, Africa, Kuwait, Saudi Arabia and Venezuela. He was 87.

🏰 Europe 

• The UK North Sea’s emerging decom industry - $50bn is due to be spent on decom in the mature basin in the coming decade or so, spawning an entire industry focused on this task. The regulator is cracking down on operators who are delaying abandonment work and not supporting the UK’s supply chain.

• High gas storage weighing on prices - a rush of US LNG and strong pipeline imports from Algeria mean that EU gas storage is 98% full. After a few years of sky high gas prices, this will be very welcome news for European consumers and their sore wallets.

🕌 The Middle East

• Oil tanker capsizes off Oman - details are scarce but a search-and-rescue operation is underway at the Comoronian flagged vessel.

⛩️ Asia & Oceania

• CNOOC in Bohai Bay breakthrough - the company announced the exploration success at the offshore Longkou 7-1 oilfield. Bohai Bay, situated near Beijing, is China’s main oil producing region.

🗿 Central & South America

• Exxon plans 30 wells at Guyana field - according to its proposed development plan. The Hammerhead field is Exxon’s seventh oil project in the country and is set to produce 120-180 kb/d when it comes onstream in 2029.

• Bolivia announces discovery of “mega field” - the country’s economy is in tatters, it survived a coup, and its O&G production is in steady decline, so it’s about time the Bolivians had something to cheer about. The 1.7 tcf discovery is the country’s largest in ~20 years.

🌍 GEOPOLITICS & MACRO

• Trump’s running mate is O&G ally, renewable skeptic - JD Vance has in the past criticized the Biden administration for “doing everything it can to subsidize alternative energy sources and demonize our nation’s most reliable sources of power” and accused the gov’t of “wanton harassment of fossil fuel companies, to the detriment of the American people.” My guy.

• The Houthis are still at it - the militants continue to menace shipping in the Red Sea and have targeted three more vessels, including an oil tanker, with ballistic missiles, drones and booby-trapped boats. The group said it has also attacked a ship in the Mediterranean. Look out summer holiday goers!

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Solar panels so cheap they’re being used as fencing - China has flooded the global market with panels, pushing down costs by 50% in 2023 alone. But now many manufactures are bleeding cash at these prices and their share prices are getting hammered.

• $1.7bn in grants for the US EV industry - the government handouts are aimed at supporting EV manufacturing and assembly sites in eight states across the US. “These grants ensure that our automotive industry stays competitive and does it in the communities and with the workforce that have supported the auto industry for generations”, said Energy Sec. Granholm.

• Germany awards $5bn in hydrogen funding - the recipients include electrolysis and hydrogen storage facilities. Hydrogen has a lot of potential as a clean high-energy density fuel but until you can produce it with abundant, affordable power (which the world is severely lacking right now) it will remain out of the money and out of favour.

• Total & SSE launch UK EV charging company - the JV will be called Source and aims to install 3,000 fast-charge points in the UK and Ireland over the next five years.

🛢️ BOTTOM OF THE BARREL

The next time someone tells you about the “energy transition”, ask “what transition”?

Despite trillions of $ and relentless political support for alternative energy sources, hydrocarbons still make up ~80% of global primary energy demand, about the same share as 20 years ago.

Why? Because hydrocarbons as an energy source are a fundamentally better product and the market will always tend towards efficiency and affordability.

New energy sources are simply adding to the existing hydrocarbon base and helping meet growing energy demand.

There have never been energy transitions, only additions.

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