23rd September 2024

Hello ladies and gents. Here’s what went down over the weekend in the global oil, gas, and energy patch. A fairly quiet one, actually:

• 📅 Petrofac survives another day

• ❌ Forties could close a decade early

• ⚛️ Three Mile Island reborn

• 💥 A bad day for hydrogen

• ➕ plus world’s biggest banks backing nuclear; SLB and NVIDIA teaming up on AI; Israel goes hard in Lebanon; Oman’s OQEP heading for IPO; GoM in the cross hairs again; rig count stays flat.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• GoM in the cross hairs again - days after resuming operations in the wake of Hurricane Francine, Shell is preparing to shut in production at its Stones and Appomattox facilities as Disturbance 35, which has a 50% chance of becoming a tropical storm, bears in.

• Hydrogen explosion at Chevron plant - two workers were airlifted to hospital after an explosion at a renewable diesel plant in Geismar, Louisiana. Hydrogen is essential in the production of renewable diesel but is a highly explosive element, making its handling a complicated matter.

• Oil rigs stay flat - the US rig count remains flat as a pancake, staying at 488 last week, marking another week of little movement. The gas rig count fell by 1 to 96.

🏰 Europe

• Petrofac survives another day - the beleaguered OFS company has received another extension from bond holders for missed interest payments, buying it a few more weeks to complete a restructuring. Lenders agreed that they would not take action against the heavily indebted company until at least 18th October.

• Forties pipeline could close 10 years early - Ineos, the operator of one of the UK North Sea’s major oil and gas pipelines which connects over 80 offshore fields, has warned that it could close a decade sooner than planned due to the government’s new taxes on the O&G sector which are starving investment. Bleak.

🕌 The Middle East

• Oman’s OQEP heading for IPO - the government owned E&P is selling 25% of its share capital in the listing which it hopes will value the company at ~$8.1bn. The move is part of the Omani government’s plan to increase privatization, diversify its economy, and reduce debt levels.

⛩️ Asia & Oceania

• China retreating from Russian LNG - Chinese contractor Winson has repatriated two modules destined for Novatek's sanctioned Arctic LNG 2 in Russia, ending its involvement in the flagship project. Interesting that even China, which has a close relationship with Russia, is feeling the pressure from the long arm of the US sanctions system.

🦁 Africa

• Nigeria looks to revive LNG plants - two mothballed LNG export projects, Brass LNG and Olokola LNG, that have been dormant for over a decade, are hoping to be restarted by the Nigerian government keen to capitalize on the country’s vast gas resources and growing global demand.

🗿 Central & South America

• PTTEP in Mexico sale - the Thai company is selling its entire 16.7% stake in Mexico’s offshore Block 29 to the asset’s operator, Repsol. Block 29 is in the exploration phase but holds two oil discoveries that Repsol is hoping to develop via and FPSO. PTTEP is undergoing a broader strategy to clean up its portfolio.

🌍 GEOPOLITICS & MACRO

• Israel upping the ante in Lebanon - Israel has carried out a series of massive strikes in Lebanon against Hezbollah, killing multiple senior commanders, and says it will continue to do so until its “goals are reached” and “they understand”. Hezbollah and Iran are close allies so the fears are that escalation between Israel and Hezbollah could pull Iran further into the fold.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Three Mile Island reborn - Microsoft has signed a deal to resurrect a unit of the ill fated Three Mile Island nuclear power station in the US to provide power to its data centers. Three Mile Island suffered a partial meltdown in 1979 although continued to operate until 2019 when it was fully closed for financial reasons. Tech companies have realized that if they want reliable, zero-carbon electricity to power their AI futures, then nuclear is their only option.

• World’s biggest banks backing nuclear - fourteen of them, including Bank of America, Morgan Stanley, and Goldman Sachs have joined the COP28 goal to triple the world's nuclear energy capacity by 2025. Financing capex-heavy nuclear power has proven to be a big blocker to its progress so support from major banks like this is potentially a big deal.

• SLB and Nvidia linking up on AI and energy - the two companies are working together to develop AI solutions for the energy industry including subsurface exploration, production operations and data management. The O&G sector has long been at the cutting edge of information technology and with its huge data and analytics requirements, it’s no surprise that it’s going all out to make the most of AI.

• Equinor ditches Germany blue hydrogen plans - the company said the project to export blue hydrogen (made from methane) to Germany would be too expensive and that there wasn’t sufficient demand. Had it gone ahead, the project would have included the world’s first offshore hydrogen pipeline. I have high long term hopes for hydrogen as an abundant, dense source of energy but the sector is struggle to gain momentum.

🛢️ BOTTOM OF THE BARREL

Speaking of Three Mile Island…

Yes, both Chernobyl and Three Mile Island kept producing electricity for many years after the accidents that anti-nuclear activist point to as proof of how dangerous an energy source it is.

I feel sorry for her at this point.

👋 BEFORE YOU GO 

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

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