31st July 2024

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

• ❌ Crude jumps as Hamas leader killed

• 🖥️ Discovering barrels with microchips

• 🧠 “Rethinking the Eagle Ford”

• 🤝 Viaro bags North Sea assets

• ➕ plus Vitol cashing in; airlines facing reality; Freeport is back; Saudi drops more rigs; China continues to underwhelm.

Let’s dive in…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• “Rethinking the Eagle Ford” - BP’s CEO has said that latest fracking technology has helped generate 'unbelievable returns' by increasing production and recovery rates in the basin. BP has ~500 wells in the Eagle Ford that have been producing for over a decade and is re-fracking them using the latest technology with great success.

• Freeport LNG back to full throttle - all three trains at the facility have now restarted after the plant was damaged by Hurricane Beryl.

• Cenovus shuts Ohio refinery - no reason was given for the shutdown of the 183 kb/d refinery in Lima, Ohio.

🏰 Europe

• Vitol employees making bank - the commodity trader paid its ~450 employee shareholders $6.4bn via share buybacks last year (that averages to $14.2m each!), its largest buyback ever, after a bumper few years for the company during volatile energy markets. Vitol made $13bn in net profit in 2023 and $15bn in 2022. Make it rain.

• Viaro buys Shell and Exxon North Sea assets - the deal is rumored to be worth ~$500m and mostly includes gas assets in the Southern North Sea which produce ~5% of the UK’s gas production. The sale marks Exxon’s exit from the North Sea where it has been present since 1964 - a sign of the times.

• Sanctions continue to bite Russian LNG projects - Novatek is reducing the planned capacity of its Murmansk LNG facility from 20.4 mtpa to 13.6 mtpa. The plant is due onstream ~2030.

• Shell gets started with Selene drilling - the UK North Sea gas prospect contains gross P50 prospective resources of 318 bcf.

🕌 The Middle East

• UAE ramping up output with AI - ADNOC said it has raised the capacity of one of its major offshore oilfields by 25% by using AI and other advanced digital technology that have enabled “remote monitoring, smart well operations, and production management technologies”. Fascinating to see how resources keep growing through microchips rather than drill-bits.

• Saudi drops more rigs - after cancelling nearly 20 contracts for drilling rigs in April, Aramco is rumoured to be about to suspend up to 5 more, including 2 from Valaris. These contract cancellations fit with Saudi’s recent decision to reduce its 2027 oil capacity target by 1 mmb/d to 12 mmb/d.

• Sailaway for Al Shaheen platform - the platform had been under construction in South Korea for 3 years and is now on its way to play its part in the expansion of Qatar’s largest oilfield.

⛩️ Asia & Oceania

• Fluor considering China JV exit - the company is a 49% shareholder in a major offshore engineering joint venture in China but is considering selling due to poor returns.

• First gas at Jadestone’s Akatara project - the onshore gas field in Indonesia has been “fast tracked” and contains 2P gross resources of 81 bscf of sales gas.

🦁 Africa

• Exxon readies mega Mozambique LNG tender - the process will soon begin for bidders to pitch for the job of building Exxon’s 18 mtpa Rovuma liquefaction project.

🗿 Central & South America

• Colombia faces development delays - Ecopetrol said gas from its Caribbean offshore projects is unlikely to start flowing before 2029, two years later than planned, and raising concerns about an impending gas shortage in the country. Ecopetrol is investing $300m this year, a record high, in offshore drilling to try and address declining gas production.

🌍 GEOPOLITICS & MACRO

• Hamas leader killed in Iran by Israeli raid - the militant group’s political leader has met his end after his residence in Tehran was targeted. Israel has said it won’t stop until it has taken out all of Hamas’ leaders following the October 7th attack. Iran has vowed “severe punishment” for Israel as the escalation dial turns up further...Hold onto your hats.

• China’s manufacturing output underwhelms - in the latest evidence of Chinese economic slowdown, the country’s factory activity declined for a third consecutive month in July. Meanwhile, new home prices fell at their fastest pace in nine years in June, denting consumer confidence and spending (70% of Chinese household wealth is in real estate).

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• UK raises wind and solar budget by 50% - a few days after the government complained about a £20bn black hole in the country’s finances and then kneecapped its own oil and gas industry, it has ramped up the amount of subsidies it will pay to wind and solar developers. God help us.

• Air NZ faces up to reality - the New Zealand airline has become the first major carrier to abandon its 2030 emissions targets, citing a lack of efficient planes and sustainable fuel. As 2030 draws nearer, watch as all these arbitrary plans (e.g. phase outs of gasoline / diesel cars or renewable targets) across the western world are quietly ditched. Most are based on nothing but ideals and ignore the reality of technology, economics, and consumer behavior.

🛢️ BOTTOM OF THE BARREL

It would be funny if it wasn’t so terrifying.

The new UK government said it was going to reduce energy bills. How’s it doing that? By offering £1.5bn in subsidies to uneconomic wind and solar. Make it make sense.

Try this next time you’re offshore…

👋 BEFORE YOU GO 

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

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