23rd October 2024

Hello crew. We’re back with your daily dose of all things oil, gas, and energy. Here’s what hit the wires today:

• 🔄 Permian’s changing crude

• 🏠 Living in a wind turbine

• 🇨🇳 China’s booming gas demand

• 🇪🇬 Egypt getting real

• ➕ plus smoke shuts Sleipner; GoM shutdown averted; Germany’s major hydrogen push; Corpus Christi record exports; Elliott ups Suncor stake; offshore costs creeping up; Exxon gets Nigeria approval, and barrels more.

Let’s take a look…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Permian crude getting lighter - as producers exhaust first tier acreage and move into gassier second tier territory, the density of the oil is getting lighter, potentially creating problems for refineries that aren’t set up to process it. Historically, Midland crude has had a gravity of 38-42 degrees but reports are suggesting it has increased to 41-44 degrees.

• GoM shutdown averted, for now - a court granted more time for an environmental survey related to endangered whales in the GoM, which had threatened to shut down O&G operations in the region.

• Corpus Christi hits record high crude exports - the US port is now the world’s third largest oil export terminal, shifting a whopping ~2.3 mmb/d of crude. Wild to think that US crude exports were banned until as recently as 2015. In top spot is the Ras Tanura Port in Saudi Arabia (6.5 mmb/d) and in second is the Basrah port in Iraq (3.2 mmb/d).

• Elliott doubles Suncor stake - the PE firm has revealed that it’s built up a stake of nearly $3 billion in the oil sands company, calling the management team "rockstars".

• EnCap raises $5.25bn for E&P fund - no shortage of appetite for US upstream PE investments.

🏰 Europe

• Smoke shuts down Sleipner B platform - gas production from the platform at Equnior’s Sleipner West field in the Norwegian North Sea has been shut down after smoke was found coming from a switchgear room. Output from the field is down by 7.1 mcm/d, and it’s not clear when it will be restored.

• Russia grows its LNG market share in...Europe- sanctions are going well then? Russian LNG accounted for 20% of Europe’s LNG imports in H1 2024, up from 14% from a year earlier, despite Europe’s efforts to exorcise all things Russia. Ultimately the need for energy trumps all else.

• Balder partners FID $690m tie in project - Var and Kistos have given the green light for Phase 5 development of the offshore Norwegian field that will develop 33 mmboe through the Jotun FPSO.

• GIC buys BlackRock stake in GasLog - the value of the 45% shareholding in Gaslog, a Greece-based LNG shipper, was kept under wraps.

🕌 The Middle East

• Not much going down here

⛩️ Asia & Oceania

• Cheniere sees booming China gas demand - the LNG giant forecasts that China’s gas demand shows no sign of slowing, growing by 50% by 2040 to over 600 bcmpa. The continued surge is being driven by a “coal-to-gas-switch as well as a huge infrastructure build-up”, the company said. We’re entering the golden era for gas.

🦁 Africa

• Nigeria approves Exxon onshore sale - having just rejected Shell’s sale, the Nigerian regulator has been kinder to Exxon, approving its $1.3bn onshore exit to Seplat. It’s been a long time coming: the deal was announced way back in Feb 2022.

• Egypt getting real - the host of the 2022 COP27 has cut its 2040 renewable target by 30%, and is focusing on gas instead. Looks like the Egyptians have realized that “renewables” aren’t as cheap as they were promised and that reliable energy is actually quite important. Expect more to follow.

• BW and Panoro making progress in Gabon - the companies are nearing a target of 40 kb/d of oil at their offshore Dussafu licence following a successful horizontal sidetrack.

🗿 Central & South America

• Brazil beefs up next pre-salt auction - the country is adding 3 additional areas (Calcedonia, Opala, and Quartzo) to the list of blocks up for grabs next year as it woos more E&P investment.

🌍 GEOPOLITICS & MACRO

• No peak oil demand in sight, says JP Morgan - the bank expects global oil demand to keep growing over the next decade, climbing by 7.1 mmb/d to 108.5 mmb/d by 2035. A very different story to the IEA which sees oil demand peaking within the next 5 years. I’m with the bankers on this one.

• Russia and China cosying up at BRICS - their “profound” relationship will not change, Xi told Putin at the opening of the latest BRICS get-together in Russia, where reps from 36 non-Western countries have gathered.

• IMF’s views on global economy - the IMF sees global GDP growing by 3.2% this year and next. It highlighted strong performance in the US, Brazil, and India, but downgraded its expectations for growth in China and Germany.

• Total warns of LNG delays - a shortage of labour and equipment across the sector, as well as Biden’s LNG moratorium have delayed the next wave of LNG start-ups, due onstream next year, by as much as two years.

• Offshore costs creeping up - Rystad estimates that development costs of offshore O&G projects will keep rising due to tightening availability of rigs, vessels, components and subsea services. Costs have already risen by 12% across 2022-2024 (which isn’t that bad given where general inflation has been).

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Germany approves $21bn hydrogen plan - the government is moving forward with plans to develop a hydrogen network, including building new pipelines, converting existing gas pipelines, and connecting them to industrial consumers. Where’s that hydrogen going to come from…?

• Equinor fancies Japanese offshore wind - the company has participated in an auction to develop a project in the emerging offshore wind country. Japan is a bit of a latecomer to offshore wind and wants to build up to 45GW of capacity by 2040 from less than 1 GW today.

• Living in a wind turbine - wind developer Vattenfall is trialing converting old wind turbines into tiny houses, complete with a kitchen, bathroom and, of course, solar panels. Thousands of aging wind turbines will need to be replaced or demolished in the coming years when they reach the end of their ~20 year life.

• UK developing plan to speed up net-zero goals - yikes…

🛢️ BOTTOM OF THE BARREL

This business ain’t for the faint hearted…

👋 BEFORE YOU GO

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

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