8th November 2024

Happy Friday crew. Here’s all you need to know today in oil, gas, and energy, without the hot air:

• ❓ What do Iran and wind developers have in common?

• 📏 Exxon’s 20,000 ft wells

• 🛑 Dunkelflaute jolts Europe

• 😴 COP losing its allure

• ➕ plus Rafael spares GoM; German government on the brink; China’s $1.4 trillion stimmy; crude inventories climb; world’s largest seismic; more UK exits; Perenco doubling down in Africa; bees and nuclear; and barrels more.

Hello to the bunch of new readers that joined this week. I hope you like what you see and please don’t be shy in giving any feedback. The more critical the better.

Have a great weekend. Catch you Monday.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Hurricane Rafael spares GoM - up to 22% of GoM production had been shut in in preparation of the storm, but its path ended up avoiding most O&G installations and it’s now weakening. As you were.

• Exxon’s 20,000 ft wells - the major is planning some of the Midland’s longest ever horizontal wells on its new Pioneer acreage. For context, that is the length of ~55 full size American football fields.

• Crude stocks climb - oil inventories rose by 2.1 mmbbls last week, compared with expectations of a 1.1 mmbbls increase. Gasoline stocks were up by 0.4 mmbbls. Stocks remain right at the low end of the five-year average for this time of the year.

• Some Q3 earnings highlights - EOG beats estimates and boosts buybacks; Halliburton hit by cyber attack and hurricanes; TC Energy shares rise on cost cutting.

🏰 Europe

• Equinor bulks up at Halten East - it has acquired Sval’s 11.8% interest in the Norwegian Sea development, taking its total stake to 69.5%, for an undisclosed price. The project holds ~100 mmboe of resources and is set to start up next year.

• Success for Harbour at Gilderoy - the indy hit oil at the UK exploration well close to the Greater Britannia infrastructure. Resource estimates are unknown.

• More UK exits - APA, formerly known as Apache, has become the latest to abandon the UK because of “uneconomic” regulations and tax increases. The company said it will cease all production from its North Sea assets by year end 2029, “well ahead of what would have been an otherwise reasonable time frame”. Well played UK, well played.

🕌 The Middle East

• What next for Iranian oil in a Trump world? - Trump’s “maximum pressure” approach to Iran means he’s likely to come down hard on Iran with fresh sanctions targeting its oil sector. During his first term, tough US sanctions reduced Iranian output by over 1.5 mmb/d, but volumes have since recovered due to a more tolerant Biden administration and novel ways of secretly exporting barrels.

• World’s largest 3D seismic - ADNOC has awarded a $490m contract to expand the scope of the world’s largest seismic project covering 85,000 sq kms onshore and offshore Abu Dhabi.

⛩️ Asia & Oceania

• China crude demand supported by petchems - while EVs and LNG trucks have likely heralded the top for oil demand in China this year, Vitol thinks that growing petchem demand in the country will play a “crucial role” in the future global oil demand picture.

• Murphy kicks of Vietnam exploration campaign - the US indy has begun a two-well offshore exploration programme in Vietnam’s Cuu Long basin, targeting up to a combined ~550 mmboe of resources.

• Malaysia finally lifts force majeure at MLNG Dua - the unit at the LNG export facility, which is the largest in Asia Pacific, has been disrupted for over two years after a gas leak back in October 2022.

🦁 Africa

• Perenco doubling down in Africa - the family owned E&P reportedly plans to invest ¾ of its $2bn budget into Africa next year. The company produces ~500 kb/d from 14 countries, the lion’s share of which comes from central Africa nations including Gabon, Congo and others.

• Angola ramping up lease offerings - the west African producer, which quit OPEC last year, plans to launch additional multi-year oil and gas licensing rounds from 2026 to attract more investment from IOCs.

🗿 Central & South America

• Some earnings highlights - Petrobras announces dividends after profit jump; YPF smashes estimates on strong output.

🌍 GEOPOLITICS & MACRO

• Putin ready to talk with Trump on Ukraine - the Russian president congratulated Trump on his election victory, called him a “real man” for how he handled the assassination attempt, and said he was ready to talk about solutions to the war in Ukraine.

• Germany’s government on the brink - the country is set for snap elections as the ruling coalition has fallen apart. Chancellor Scholz fired the finance minister over opposing views on how to stop the country’s economic rot, causing his ruling coalition to lose its majority. The elections will give Germany, which has had two years now of declining GDP, a much needed chance for a hard reset. I suggest they start with throwing out their lunatic energy policy.

• China unleashes $1.4 trillion stimulus package - the money will be dispensed across three years and be used to help local governments address their “hidden” debt problems.

• Interest rates cut in US and UK - the Fed has cut US interest rates by 0.25% to a target range of 4.50%-4.75%. Meanwhile, the UK has done exactly the same. Countries around the world are beginning to adopt some fiscal loosening after finally getting rampant inflation under control. Good news.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Low carbon sector bracing for Trump axe - his administration is expected to cut EV mandates, roll back billions in support for wind given in the IRA, and may reduce the power of the Environmental Protection Agency. He’ll probably pull back on global climate initiatives and could exit the Paris Climate Agreement, for the second time. Grab the popcorn, this’ll be fun.

• “Dunkelflaute” keeps power prices sky high - a lack of wind across Europe has meant power prices remain at levels last seen in the depths of the energy crisis back in 2022. Wind farms have been producing at just 7% of their capacity this week. But politicians think the solution is to build even more of them…

• COP finally losing its allure? - after the annual climate shindig last year we wondered whether the back slapping talk fest had run its course and was fading into irrelevance. Well we might have been right as this year’s COP29, hosted in Azerbaijan next week, will be skipped by head honchos from the US (Biden), China (Xi), Brazil (Lula), EU (von der Leyen), and others.

• Rare bees scuppering Meta’s nuclear / AI link up - plans to build an AI data center powered by nuclear energy were scrapped after rare bees were discovered on the proposed site. CEO Zuckerberg apparently isn’t happy at the lack of nuclear options in the US compared with China that is embracing the technology.

🛢️ BOTTOM OF THE BARREL

Lots of funky infographics came out of the election but this one tells the story better than most. Emphatic.

Musk bet big. Really big. And won. Again. Hard not to admire that.

👋 BEFORE YOU GO

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

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