2nd December 2024

Morning ladies and gents. Here’s what’s been happening in all things oil, gas, and energy:

• 👀 All eyes on OPEC

• 💸 America’s richest oil towns

• 🇳🇴 Norway’s not so “dry belt”

• 🚢 Qatar and Shell’s mega LNG deal 

• ➕ plus Syria returning to chaos; Gazprom’s cost cutting; curtailment costs; tough times for Tullow; Repsol exits Colombia; chasing fortunes in Bulgaria; and barrels more.

Let’s take a look.

📈 THE NUMBERS

European gas prices keep rising as chilly weather bites and gas storage continue to falls alarmingly fast.

🗞️ WELL-HEADLINES

 🗽 North America

• America’s richest oil towns - Midland, the beating heart of the Permian oil patch, has the third highest wages of all metropolitan areas in the US (behind tech centers San Jose and San Francisco). Odessa, another Texas oil town, also made the top 10 list. Drinks on you guys.

• Rig count inches down - the number of operational US oil rigs fell by 2 last week to 477, ~28 lower than this time last year. Gas rigs rose by 1 to 100. Oil rigs have remained stubbornly around ~480 for months now as WTI seems range bound at ~$65-75/bbl.

• Canada activity ramping up - The Canadian Association of Energy Contractors sees drilling activity at its highest level in a decade in 2025, and expects over 6,600 wells to be drilled, a 7.3% increase from this year.

🏰 Europe

• Chasing fortunes in Bulgaria - OMV Petrom and Israel's NewMed Energy have partnered to drill a deepwater exploration well targeting a 3.5 tcf gas prospect on promising acreage in the Bulgarian Black Sea.

• DNO strikes lucky in Norway’s “dry belt” - an exploration well at the Othello prospect in the southern North Sea, an area considered to be lacking in resources, discovered ~41 mmboe of recoverable resources.

• Gazprom tightening its belt - the Russian gas giant is cutting investment by 7% next year to $14 billion compared to 2024, with more of this cash being spent on projects to help pivot sales to China and away from Europe. Having lost its major gas customer in Europe, Russia is desperately cosying up to China to help make up for it.

• Harbour fires up Talbot and quits CCS - the new oil & gas field in the UK North Sea will be tied back to the Judy platform. Meanwhile Harbour has announced plans to quit the Medway Hub Camelot CCS project in the UK which it inherited when it acquired Wintershall DEA earlier this year.

🕌 The Middle East

• Qatar and Shell sign mega Chinese LNG supply deal - QatarEnergy will supply 3 mpta to Shell, for delivery to China, starting next year. The length of the supply agreement wasn’t disclosed. 3 mtpa is ~4% of China’s total LNG imports.

⛩️ Asia & Oceania

• A relaxed weekend over in Asia by the looks of things.

🦁 Africa

• Tough times for Tullow - the Africa-focused E&P saw its share price sink by 10% last week to near four year lows after it revealed cash flows for 2024 will be significantly below expectations, mainly due to production issues at its key Jubilee field in Ghana.

• Success at Mopane - a closely watched appraisal well at the 10 bnboe Mopane discovery offshore Namibia has hit pay, confirming the “extension and quality of' main reservoir”.

• Eni bulking up in Ivory Coast - the Italian major has acquired 4 new offshore exploration blocks in the country where it already produces ~22 kboe/d.

🗿 Central & South America

• Repsol sells Colombia assets for $530m - the Latam-focused indy, Geopark, acquired the assets, which are mostly situated in the prolific Llanos Basin and produce ~16 kboe/d. The deal was funded using a combo of cash and debt.

• Vaca Muerta ramping up - oil output from Argentina’s giant shale patch grew by 40% year on year in Q3 to ~400 kb/d thanks to expanded takeaway capacity. It’s expected to hit 1 mmb/d by 2030. It seems this promising patch might soon live up to its potential.

🌍 GEOPOLITICS & MACRO

• All eyes on OPEC+ - the group had planned to hold its next meeting yesterday, but delayed it until the 5th due to a “scheduling conflict”. At this latest get-together delegates are set to discuss what to do about their production cuts which are currently set to start unwinding in January. With a fragile oil market, and Brent hovering around $75/bbl, further delays to the unwinds are the most likely outcome. Then again, OPEC has caught us all by surprise plenty of times before.

• Syria descending back into chaos - after a few years of relative calm in Syria, a surprise insurgency by Islamist rebels has taken control of large parts of the country’s second biggest city, Aleppo. Russian war planes, in support of the Syrian government, have been called into action to try and halt the advance.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Folding floating wind - a company backed by Bill Gates and Jeff Bezos has completed a prototype of a floating offshore wind turbine which is based on a foldable platform that can be towed horizontally to an offshore wind site, to lower costs and construction timelines.

🛢️ BOTTOM OF THE BARREL

I thought this was fake news. It’s not.

Sorry asthmatic children, you can’t have that inhaler to help you breathe because it’s changing the weather…

One of the many hidden costs of wind and solar: curtailment costs.

Curtailment costs is money paid to wind and solar farms to shut down when they are producing too much power and overburdening the grid.

The unavoidable problem of “renewable” power is that it does not produce when you want it to.

And power is a service that is required with a 100% reliability.

Ensuring this reliability with unreliable, weather-dependent technology is damn expensive and is paid for by you and I.

👋 BEFORE YOU GO

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

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