Adnoc inks Ruwais LNG supply deal with China’s ENN

Energy News Beat

UAE’s Adnoc has signed a heads of agreement with a unit of Chinese independent gas distributor ENN to supply the latter with liquefied natural gas from its planned LNG terminal in Al Ruwais.

Under the deal, ENN LNG (Singapore), a unit of ENN Natural Gas, will buy 1 million metric tons per annum of LNG for a period of 15 years.

Adnoc said in a statement that the LNG supplies would primarily be sourced from its planned LNG terminal in Al Ruwais Industrial City, Abu Dhabi.

The deliveries are expected to start in 2028, upon commencement of the facility’s commercial operations.

This is the first Ruwais LNG supply agreement.

Adnoc said the deal is contingent upon a final investment decision (FID) on the project, including regulatory approvals, and the negotiation of a definitive sale and purchase agreement between the two companies.

Rashid Khalfan Al Mazrouei, Adnoc’s senior VP, marketing, said this this is a “landmark” LNG agreement from the company’s ongoing Ruwais LNG project.

“We are making excellent progress in delivering this strategic project as we grow our portfolio of lower-carbon energy solutions,” he said.

Earlier this year, Adnoc announced it will build its second LNG terminal in Al Ruwais.

The firm previously planned to construct the facility in Fujairah.

Adnoc Gas, the gas and LNG unit of Adnoc, also awarded US energy services firm Baker Hughes a contract for the planned LNG export terminal.

Adnoc recently also said it is “advancing towards” a final investment decision to build the LNG terminal.

When completed, the project, which consists of two 4.8 mtpa LNG liquefaction trains with a total capacity of 9.6 mtpa, will more than double Adnoc’s LNG production capacity.

Adnoc owns a 70 percent stake in Adnoc LNG, that currently produces about 6 mtpa of LNG from its facilities on Das Island.

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Are Foreign Holders Finally Bailing Out of the Incredibly Ballooning US National Debt?

Energy News Beat

China and Brazil shed large portions of their holdings, but the top financial centers loaded up.

By Wolf Richter for WOLF STREET.

The total amount of Treasury securities outstanding has reached $33.89 trillion and is going to hit $34 trillion shortly. Everyone of these securities must be sold to someone, and foreign holders play a huge but declining role:

Foreign holders in aggregate have kept their holdings of US Treasury securities roughly stable for the past two years. In October, their holdings dipped to $7.56 trillion, up about 6% from a year ago, but the same as in June 2021, according to TIC data from the Treasury Department released Tuesday afternoon (red line in the chart below)

The top six financial centers (London, Belgium, Luxembourg, Switzerland, Cayman Islands, Ireland) decreased their holdings to $2.22 trillion, down from the record in August (blue line):
Japan, #1 single US creditor, increased its holdings in October to $1.10 trillion (green), but that’s down from the $1.3 trillion range in 2021.
China and Hong Kong combined further reduced their holdings to $969 billion (purple).

Foreign holders have not kept up buying the the incredibly ballooning US government debt, and as a result, the share of their holdings has plunged to a share of 22.4%, from the range of around 33% in 2015. In other words, the US debt financing has become less dependent on foreign holders:

The six largest financial centers – the UK (actually the City of London), Belgium, Luxembourg, Switzerland, Cayman Islands, and Ireland – reduced their holdings a little in October, after the record in August, to $2.22 trillion

These countries specialize in handling and often obscuring the financial holdings of global companies, individuals, and governments. Ireland is a favorite for US companies to store their profits:

UK: $693 billion
Luxembourg: $345 billion
Cayman Islands: $324 billion
Ireland: $299 billion
Belgium (home of Euroclear): $285 billion
Switzerland: $276 billion.

Japan’s holdings, after dropping sharply last year, have zigzagged up again this year, and in October ticked up to $1.1 trillion, up by 3.2% from a year ago.

Late last year, the Ministry of Finance sold some US-dollar assets, presumably Treasury securities, or let T-bills mature without replacement, to get the dollar-cash, and then blew $68 billion in dollar-cash to buy yen in the foreign exchange market to prop up the yen after it had plunged to ¥150 to the dollar by October 2022.

China and Hong Kong combined have been unloading Treasuries for years. In October, their combined holdings of Treasuries fell to $969 billion, the lowest in the data going back to 2011 (red in the chart below), down by 8.9% from a year ago.

During the capital-flight panic in 2016, China sold Treasury securities to prop up the RMB. It then increased its holdings again. But since Covid, the combined holdings have plunged by 29%.

Other top foreign holders:

Canada’s holdings ticked up to $281 billion, up by 29% year-over-year, after having hit a record in August:

Taiwan’s holdings fell to $231 billion, but were up 7.8% year-over-year. They’d hit a record in December 2021, and holdings have gyrated up and down since then:

India’s holdings fell to $222 billion, first reached in October 2020, having declined every month since the peak in April, but where still up 4.2% year-over-year:

Brazil’s holdings fell to $219 billion, and were roughly flat year-over-year, after having spiraled down by about one-third since the peak in 2018.

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Daily Energy Standup Episode #274 – Navigating Challenges and Strategies in Global Energy Dynamics

Energy News Beat

Daily Standup Top Stories

Energy Workforce: Biden’s Gulf of Mexico leasing auction “detrimental” to U.S. energy supply

(WO) – Energy Workforce & Technology Council released the following statement rebuffing the newly finalized Department of Interior 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program. The program holds the fewest oil and gas […]

Arctic LNG 2 T1 First LNG Drop

A step forward, not the finish line The first train for the ALNG2 project started producing LNG today at 10:30 local time. While producing the first LNG drop is a significant achievement for any liquefaction […]

Pragmatic Environmentalist of New York

Note: For quite a while now I have put my Citizens Guide to the Climate Act article as the top post on the website because it summarizes the Climate Leadership & Community Protection Act (Climate Act). This post updates my […]

Europe Almost Replaces Russian Gas

The European Union has been working to cut down its reliance on Russian energy, especially natural gas. While it sounds simple to just find new energy suppliers, it’s actually a tough task. It involves setting […]

Strategy to End Iran’s Aggression

History continues to offer lessons and strategy to Washington if only the Biden Administration had the wisdom to hear it. Eighty years ago, the allies quickly realized that both Nazi Germany and Imperial Japan fed […]

Pipelines and Global Political Center of Gravity Alternatives – George McMillan Energy and Geopolitical series

ENB Pub Note: This is the 4th article in a series with George McMillian, CEO of McMillian and Associates. The other articles and the first podcast are listed below. Buckle up, get your popcorn, and […]

Highlights of the Podcast

00:00 – Intro
02:51 – Energy Workforce: Biden’s Gulf of Mexico leasing auction “detrimental” to U.S. energy supply
04:38 – Arctic LNG 2 T1 First LNG Drop
05:30 – Pragmatic Environmentalist of New York
06:53 – Europe Almost Replaces Russian Gas
08:29 – Strategy to End Iran’s Aggression
10:09 – Pipelines and Global Political Center of Gravity Alternatives – George McMillan Energy and Geopolitical series
10:53 – Markets Update
12:27 – Outro

Follow Stuart On LinkedIn and Twitter

Follow Michael On LinkedIn and Twitter

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– Get in Contact With The Show –

Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Stuart Turley: [00:00:15] Hello, everybody. Welcome to the Energy News Me podcast. My name’s Stu Turley. CEO and president of the Sandstone Group. I’ll tell you what. Get an action packed show for you. The story thread is amazing. You understand? What we’re trying to talk about here is we’ve got the Biden administration in this first story coming around the corner, and it is Biden’s Gulf of Mexico. Leasing action is detrimental to the energy supply. So we have the Biden administration being detrimental to our supply. They have a documented war on energy, just not oil and gas. They’re costing regulation everywhere. Arctic LNG 2t1 first LNG drop. This is critical because this is actually the A-l in G two, which is the Russian Train one project and it’s pretty crazy what’s going on with Russia and LNG and how much everybody is still buying of it. Here’s one for us that follows along with the Biden administration, pragmatic environmentalist of New York. This one is an opinion piece, and I liked it from the standpoint that this guy has really broken out the climate scientist or the Climate Act where all of this is coming in. This is actually a very good storyline from the standpoint of legislation through regulatory issues. So we’ll go from there and we will go to Europe has almost replaced the Russian gas. This is just crazy that goes along with the Arctic to train coming online. And then there’s a strategy building to end Iran’s dominance in terrorism, strategy to end Iran’s aggression. This one is a little bit of an opinion piece as well, too, but that goes along with the story series from George McMillan that I’ve been doing. And his number, his article will be in the show. Note Pipelines and Global Politics Center of Gravity Alternatives from George McMillan. This is part of our geopolitical series, so I’m not going to go into that too much. But you can find everything on Energy News Beat that co forward slash George hyphen McMillan and his it’s his landing page. [00:02:48][152.6]

[00:02:48] So with that let’s get started in the energy workforce Biden’s Gulf of Mexico leasing action is detrimental to the U.S. energy supply. Only three oil and gas sales are scheduled for the Gulf of Mexico in 2025 and 2027 and 2029, a departure from the previous plans 11 lease sales. This is critical. When we talk about natural gas, we talk about oil and gas investment in low cost energy. The Gulf of Mexico, great offshore producers do a great job. We have to remind everybody ourselves the only reason the United States has reduced their carbon footprint is because of lowering natural gas or, excuse me, lowering the coal usage and increasing natural gas. Natural gas off the Gulf of Mexico is pretty important. You got to have that for LNG. You got to have that for exporting. That goes into the other article with Europe as well. It is all related. The Outer Continental Shelf produces 90 be estimated to hold 90 Bowie and 300 DFC. Gee, if developed, these could be more than 800,000 American jobs. You know, we always hear about President Biden being a for the American workers. Let’s pony up, let’s reduce and let’s get to carbon net zero, but let’s do it using great American energy. So anyway, that was pretty cool article there. [00:04:34][105.8]

[00:04:34] Let’s head over to Russia in the Arctic LNG 2t1 first drop. This is the first train in the al energy to project. Here’s where it is pretty important. Train one operates with only one of the four required lm 9000 gas turbines. That is huge to be able to get those on line as soon as possible. For Russia reason I’m almost happy about that is because it still goes to Europe and helps them out. They’re kind of tough. U.S. has got new sanctions coming around the corner. However, we have failed to enforce the sanctions over in Iran. So I don’t know that that’s really going to mean anything. [00:05:27][53.2]

[00:05:28] So let’s go to the next one, pragmatic environmentalist of New York. This goes along with the energy workforce and the climate. And this is very important. The Climate Act established in New York and net zero to target 85% reduction and 15% offset of emissions. It’s carbon tax coming. The carbon tax is just absolutely a sad way to monkey up the waters. I’ll cover that on another show. The Climate Action Council is responsible for preparing the scoping plan that details how to achieve the state’s bold, clean energy and climate agenda. All that’s going to do is not going to hit carbon net zero. It’s going to make it worse. And it’s going to drive the high price in New York to a higher price. Governor Hochul already said 20% increase in energy this year, 20% next year, and in a few years, a 100% increase. I went to Oklahoma State, but that’s 140%. So. And this guy has got the entire list out there in the show notes in the environmental impacts. Everything about this is a excellent story. [00:06:53][84.4]

[00:06:53] Europe has come along and this article from Geopolitical Futures is an excellent article. I had the good fortune of interviewing George Friedman twice, and George is a class act. I absolutely love his works. He is the founder of Political Futures dot com and he’s also the founder of Strat for reports outstanding geopolitical resource for the United States and the world. Want to give them a shout out. Go to geopolitical futures.com sign up and it’s worth your money to support them. Here’s where we’ve got a chart and producer Andy if you could fly this chart in. It’s pretty amazing to see how much of the natural gas and excuse me LNG and oil is coming around into and where it’s being sold around the world. The new suppliers. The EU has been doing well and filling up its gas and storage facilities before winter. More than 90% of its gas storage. But if it is a cold winter, it is going to be pretty tough. So the U.S. does fill in a bunch of it. And this is an excellent article. So even though they’ve filled it, it is at a higher rate. The U.S. is a benefactor. [00:08:21][87.4]

[00:08:23] And so that goes into some of the other conversations with George Macmillan on that, a strategy to end Iran’s aggression. I just want to go on record and say that I do not think the United States needs to go to war anywhere. I am not an fan of war. Lindsey Graham, if you’re listening and you’d like to come on this podcast, I would love to talk to you. Threatening to bomb Iran’s oil is not a way enforcing sanctions. The way Trump had is the way to do it. Iran under Trump 350,000 barrels per day production under Biden. With all of the sanctions they are going to be at about, I believe it’s 3.4 million barrels per day. Sanctions don’t work. And bombing them gets our kids killed. I just want to be clear. I am a humanitarian and we need to not bomb people. Missiles fired by Yemen’s Houthi rebels is really causing a stink around the oil there around the Red Sea. And it is going to cost the world billions. The supply chain is going to increase. Those stories are on there as well, too. But we do not need to have the U.S. bombing this in order to stop it. So I thought this article was a good one. But Hamas is definitely the enemy and we need to let Israel do their due diligence and take care what they need to do. So with that, I did have the force article. [00:10:05][102.3]

[00:10:06] We’ve had the fifth one go out as well, but I want to highlight pipelines and geopolitical center of gravity alternatives with George. This is in the show notes. I’m really not going to go into it right now, but it is crucial for you if you’re wanting to know about geopolitical strategies, what appears to be coming to light on war hawks and neocons coming around the corner. I really am enjoying talking to George. He is a geopolitical academic and I think that George would be absolutely wonderful with George Friedman as an author and an expert in geopolitical. So we’ve got some fabulous, fabulous interviews coming out. [00:10:53][47.6]

[00:10:53] We have in podcasts ready to go that the production team has put out oil is at right now because it is going up a little bit due to the. Again, I don’t understand this right now. At the time I’m recording this, it is 7394, the U.S. dollars at 102 it is come down a little bit. Natural gas is at 257 and Brant is at 7735. So I’m not sure again how the pricing is going to work out. You’ve got years ago, if the hoodies were blowing up ships and all of this was going on, you would have pricing going right on through the route. As Michael and I have talked about, you have 190, $100 oil is what Saudi Arabia really is targeting. They’re threatening to cut back supply. But as I have been talking about the dirt fleet and you have everybody in BRICS, you have Brazil ahead of Petrobras in Brazil saying they’re going to pump everything they can. I think the oil and gas pricing matrices are broken. The U.S. in the oil and gas in the U.S. are great. Producers are producing more now than they ever have before, even with the handicap of regulations and legislation through regulations. [00:12:27][93.6]

[00:12:27] So with that, I have an absolutely fantastic day. If you are an energy thought leader, I want to talk to you on our podcast. We are doing fabulous. We’re getting great traction and I love all the feedback, all the questions, and again, just really love talking about energy, elevating humanity out of poverty. And I am not really liking energy hypocrisy. So with that, have a great day. Reach out to us at any time and thank you for listening in the Energy Newsbeat podcast. My name’s Stu Turley. Michael will be back tomorrow. Have a great day. [00:12:27][0.0][726.9]

The post Daily Energy Standup Episode #274 – Navigating Challenges and Strategies in Global Energy Dynamics appeared first on Energy News Beat.

 

Residential Construction Gains Steam, Single-Family Starts Jump, Highest since Spring 2022, Multi-Family Rises from Ashes

Energy News Beat

Homebuilders and developers have adjusted to new reality of higher rates, growth back on track, for single-family since February, for multifamily since August.

By Wolf Richter for WOLF STREET.

Confronted with mortgage rates that make it tough to sell houses at May-2022 prices, homebuilders have adjusted, and in their quarterly reports, have spelled out how: Building smaller houses, “de-amenitizing” the houses (cheaper appliances, countertops, etc.), buying down mortgage rates, and piling on other incentives. Prices of many construction materials have also dropped. As a result, contract sales prices of new houses have dropped by 18% from a year ago, and sales volume has held up, while sales volume of existing homes have collapsed.

So construction starts of single-family houses in November rose by 6.6% from the prior month, to 86,100 starts not seasonally adjusted, when normally in November, construction starts drop.

This big unusual rise for November shows up in the seasonally adjusted annual rate – which adjusts for the typical drop in November: It jumped by 18% month to month, and by 42% from the collapsed levels last November, to an annual rate of 1.143 million starts, the highest since April 2022, according to data from the Census Bureau today.

Note how construction starts plunged starting in the spring half of 2022 as surging mortgage rates began to bite, unsold inventory began to pile up, and homebuilders were pulling back on new projects; and how construction starts bottomed out early this year and then recovered as homebuilders shifted to smaller houses, fewer amenities, and big mortgage-rate buydowns.

Homebuilders sell houses in various stages of construction, from not-started to completed. By completing a house without having sold it – a “spec house” – a homebuilder “speculates” what buyers might want, down to the finishes. Here we’re talking about construction starts of single-family houses, whether or not they have already been sold.

Construction starts of multifamily housing units in buildings with five or more units (such as in condo and apartment buildings) had entered a boom during the pandemic, setting multi-decade highs.

But then the interest-rate shock in late 2022 and in 2023 clobbered Commercial Real Estate – particularly the office and retail sectors which got waylaid by structural shifts, and also the multifamily sector – when soaring mortgage rates could no longer be covered by rents, causing all kinds of fallout, with landlords walking away from properties and lenders – many of them investors, not banks – taking huge losses.

And developers of multifamily properties pulled back, in part due to the difficulty of finding financing for projects whose numbers no longer work out with these higher mortgage rates.

But, but, but… not seasonally adjusted, multifamily construction starts rose to 33,300 housing units (condos and apartments) in November, the highest since July.

Seasonally adjusted, construction starts rose for the third month in a row, after the plunge through August, to an annual rate of 404,000 units, also the highest since July.

Multifamily projects tend to be big with long lead times. High-rise projects where construction started in November were in the planning stages years earlier. So these are long-term trends. But before construction starts, developers can slow down the process, and then they can start construction when they have their ducks all lined up in a row.

In many densely populated urban cores, multifamily is just about the only type of housing that is getting built, and much of it is higher end, because that’s where the money is in expensive cities. Single-family construction takes place further away from urban cores.

Total housing starts, single family and all multifamily, jumped by 14.8% month-to-month, and by 9.3% year-over-year, to a seasonally adjusted annual rate of 1.56 million, the highest since May:

So there “was” a big slowdown in housing starts, for single-family through last year, and for multifamily through the summer, but since then, homebuilders and developers have started to adjust to the new reality of higher rates, and growth is back on track.

And this is what we have seen in other parts of the economy, where consumers and businesses have adjusted to the higher interest rates. And the economy – despite big issues in certain corners, such as CRE debts and CRE property values – has managed to grow at unexpectedly high growth rates, and the most anticipated recession ever, which was supposed to come in 2023, never came. Instead, the economy grew at a red hot pace in Q3; and in Q4, it appears to be tracking at a solid growth rate that is more typical for the US.

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OPEC+ Enters 2024 With `Wait and Hope’ as Its Strategy

Energy News Beat

Any weakness in oil demand or increase in supply — or both — could push the market into a surplus next year.

Saudi Energy Minister Prince Abdulaziz bin Salman is apparently keen on Alexandre Dumas, often calling foes – Wall Street oil analysts and journalists alike – “musketeers.” I’m also a fan of the French novelist; but rather than D’Artagnan, I prefer The Count of Monte Cristo. Which brings me to my favorite Dumas’ quote, apposite for describing the Saudi oil strategy going into 2024:

“All human wisdom is contained in these two words — wait and hope.”

Last month, the Saudis rolled over their unilateral oil production cuts into the New Year, and convinced a few others inside the OPEC+ cartel to cut output further. Now, they wait and hope.

First, let’s recap 2023. Despite constant bearish talk about energy demand, global oil consumption grew by 2.3 million barrels a day. The final leg of the Covid-19 recovery lifted annual consumption this year to an all-time high, surpassing the previous peak set in 2019. So far, it was good for the Saudis.

The problem was on the other side of the balance: supply. First, the US shale industry defied predictions of a slowdown, posting strong annual growth. Next, Iranian oil production surged as Washington turned a blind eye to enforcing its sanctions, with Iran becoming this year’s second-largest source of additional oil. Meanwhile, Western sanctions on Moscow also proved porous, making more Russian oil available than expected. On top, Brazil, Guyana and a few other non-OPEC producers also boosted supply.

OPEC+, led by the Saudis and the Russians, responded mid-year with output cuts, which put a floor under the market. Middle East tension helped to push prices even higher in October, flirting with $100 a barrel. With a few days left to the end of the year, Brent has averaged about $82 a barrel in 2023 – not bad in nominal terms, but much lower than OPEC+ enjoyed in the past when adjusted for the surge in inflation since 2020.

Source: Energy Institute, S&P Global Platts and Bloomberg

So what awaits in 2024? For Saudi Arabia, it’s a wait-and-hope situation. But, in the background lurks make-or-break. If Riyadh is misreading the market — and the jury is out — it may need to make a U-turn by the end of next year.

Clearly, oil demand growth will slow as the torrid post-pandemic increases end. But, please, let’s not over emphasize the deceleration. The bears misjudged crude appetite in 2023, and I believe they’re wrong again for 2024. The International Energy Agency forecasts that oil demand would increase next year by 1.1 million barrels a day – somewhat more than expected a few months ago. The increase is in line with the 2000 to 2019 annual average of 1.2 million barrels a day, and stronger than the 1 million daily barrels between 1990 and 1999. So no, oil demand growth isn’t slowing down sharply – it is just returning to its historical norm.

Supply, however, looks less certain. In a benign scenario, with non-OPEC+ output growth roughly matching the increase in global oil demand, Saudi Arabia has probably done enough to keep prices above $70 a barrel next year. With some luck, over time it would be able to release some of the production it’s currently keeping out of the market — but no earlier than the second half of next year, meaning the cartel will likely need to prolong the cuts currently in place until the end of March through the end of the second quarter.

The above scenario underpins the wait-and-hope framework. But the margin of error for the Saudis and their allies is very small, and any weakness in demand or increase in supply — or, worse, both — could push the oil market into a surplus. For the second consecutive year, the consensus view is that US shale growth will slow. Having been wrong in 2023, I believe it’s prudent to prepare to be wrong again in 2024. Geopolitics can play both hands, providing bearish and bullish surprises on supply; as 2023 ends, conflict in the Middle East is affecting energy flows throughout the Red Sea.

On balance, I think that OPEC+ faces a greater danger from the supply side than the demand one. If a surplus emerges, particularly because the US shale industry can make money and grow production even with prices below $75 a barrel, Riyadh faces a difficult choice. Either it convinces OPEC+ to cut output even more (something I struggle to see), or accepts much lower prices. That’s why I reckon wait-and-hope could deteriorate into make-or-break.

For now, the Saudis are confident in their reading of the industry and the market. They don’t expect to face multiple years of non-OPEC+ extra supply overwhelming demand growth, as happened from 2010 to 2015 when they lost market share. The kingdom resolved that situation in 2016 with a price war against shale, flooding the market and sending oil below $30 a barrel.

In Wall Street, a growing minority see that happening again in 2024, and toward 2025 and 2026. That’s why the oil market is speculating about a “flush the market” scenario, with calls for the Saudis to launch another offensive, inundating the market and sending oil prices crashing once again. If that were to happen, it would reverberate beyond commodities, provoking turbulence in equities, bonds and currencies.

While I don’t currently buy the “flush the market” synopsis, I admit there’s a growing risk of that outcome. By the middle of 2024, the oil market could be very, very tired — of both waiting and hoping.

Source: Javier Blas, Bloomberg

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Today In Energy Announcement

Energy News Beat

 December 19, 2023

We are excited to announce changes to Today in Energy (TIE).

Beginning on January 8, Today in Energy will encompass a broader range of analysis. Pieces previously published as This Week in Petroleum (TWIP), the Electricity Monthly Update (EMU), and the Natural Gas Weekly Update’s (NGWU) In the News will now fall under Today in Energy.

Consolidating these products will make it easier for you to access our energy analysis. We will continue covering emerging energy topics and remain flexible in analyzing changes to the energy landscape.

Key improvements to TIE articles:

One page for all analysis. Analysis articles for TWIP, NGWU, and EMU will be available on the TIE page. We will continue to publish the data and statistics associated with these products in their current formats and on their current pages, and their article archives will remain in place.
Timely analysis. With this new approach, we will continue to publish articles most weekday mornings, but we will now also publish additional content in the afternoon, as appropriate.
Article types. We will publish three article types that span topics across the energy sector.

Announcement: highlights from recently released statistics
In-brief analysis: a short analysis describing a trend in energy markets, similar to current TIE articles
In-depth analysis: a longer analysis addressing more complex topics in energy markets
Advanced filtering by article type and topic. In addition to searching articles by keywords, you will be able to filter articles by type.
Access to existing legacy content. All TIE articles will still be available in their archive, and legacy articles on TWIP, NGWU, and EMU will be archived and available on their current pages.
Larger images and charts. We are increasing the size of our charts for improved visibility.
Email updates. If you subscribed to receive email notifications about TWIP, NGWU, and EMU, you will continue to receive email updates about data releases and related TIE articles. Existing TIE subscribers will also continue to receive email updates.

Between December 18, 2023–January 1, 2024, we will publish several of our most popular articles from 2023 in Today in Energy and resume publishing our most up-to-date analysis January 2, 2024.

Subscribe to TIE email updates to receive articles on all topics.

Principal contributors: EIA staff

 

We are excited to announce changes to Today in Energy (TIE). 

The post Today In Energy Announcement appeared first on Energy News Beat.

 

Europe Almost Replaces Russian Gas

Energy News Beat

The European Union has been working to cut down its reliance on Russian energy, especially natural gas. While it sounds simple to just find new energy suppliers, it’s actually a tough task. It involves setting up the right logistics, technology and infrastructure. Still, the EU has made good progress, which aligns with its long-term goals.

Between the second quarter of 2022 and 2023, the EU significantly reduced its imports of Russian petroleum, to 2.7 percent from 15.9 percent. This reduction was mostly compensated by increased imports from Norway, Kazakhstan, the U.S. and Saudi Arabia. A similar shift is happening with natural gas. Norway and the U.S. have become the main new sources, providing natural gas and liquefied natural gas, respectively.

In addition to finding new suppliers, the EU has also done well in filling up its gas storage facilities. Before the winter, the bloc managed to fill more than 90 percent of its gas storage, which puts it in a decent spot for the coming months, even if Russia cuts back on supplies.

Source: Geopoliticalfutures.com

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Energy Workforce: Biden’s Gulf of Mexico leasing auction “detrimental” to U.S. energy supply

Energy News Beat

(WO) – Energy Workforce & Technology Council released the following statement rebuffing the newly finalized Department of Interior 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program. The program holds the fewest oil and gas leases in United States History.

Only three oil and gas lease sales are scheduled for the Gulf of Mexico Program Area in 2025, 2027 and 2029, a sharp departure from the previous plan’s 11 lease sales.

“There is no doubt that this action will have a detrimental impact on energy supply for the United States,” said Energy Workforce President Tim Tarpley. “Limiting Americans access to their offshore energy resources not only threatens our energy security but harms the American workforce and economy.”

The U.S. Outer Continental Shelf is estimated to hold 90 Bboe and 327 Tcfg. If developed, these resources could create more than 800,000 American jobs, spur nearly $450 billion in private-sector spending, and generate more than $200 billion in revenue for federal and state governments. In terms of the workforce, the decrease in lease sales jeopardizes the jobs of more than 370,000 American energy workers.

Previously, Energy Workforce has submitted formal comments to the Bureau of Ocean Energy Management (BOEM) on this program, testified on Capitol Hill in support of legislation that would increase the number of lease sales, and supported policy proposals that will ensure America is never in a position to be energy reliant on a foreign nation.

Source: Worldoil.com

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Pragmatic Environmentalist of New York

Energy News Beat

Note: For quite a while now I have put my Citizens Guide to the Climate Act article as the top post on the website because it summarizes the Climate Leadership & Community Protection Act (Climate Act). This post updates my current thoughts about the Climate Act and will replaces that post at the top of the list of articles on October 2, 2023

There is a new climate reality and it is passing New York by.  New York decision makers are going to have to address the new reality that proves that the Hochul Administration’s Scoping Plan to implement the Climate Act will adversely affect affordability, reliability, and the environment.  This post highlights articles by others that address my concerns.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 350 articles about New York’s net-zero transition.  I have devoted a lot of time to the Climate Act because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good by increasing costs unacceptably, threatening electric system reliability, and have major unintended environmental impacts.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council is responsible for preparing the Scoping Plan that outlines how to “achieve the State’s bold clean energy and climate agenda.”  In brief, that plan is to electrify everything possible using zero-emissions electricity. The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to develop the Draft Scoping Plan.  After a year-long review, the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.

Climate Science

In the past several weeks there have been multiple articles highlighting issues that call into question the rationale for the Climate Act and Climate Act net-zero transition.   The rationale for the Climate Act is that there is an existential threat due to climate change.  However, the Epoch Times reports that is not a universally held position:

There’s no climate emergency. And the alarmist messaging pushed by global elites is purely political. That’s what 1,609 scientists and informed professionals stated when they signed the Global Climate Intelligence Group’s “World Climate Declaration.”

The article gives a good overview of the World Climate Declaration.  The declaration’s signatories include Nobel laureates, theoretical physicists, meteorologists, professors, and environmental scientists worldwide. The article quotes a few signatories who when asked by The Epoch Times why they signed the declaration stating that the “climate emergency” is a farce, they all stated a variation of “because it’s true.”

In my case, I signed the Declaration because I do not think we understand natural climate variability well enough to be able to detect the effect of a relatively small change to the atmosphere’s radiative budget caused by mankind’s greenhouse gas (GHG) emissions.  There are so many poorly understood factors at play and the mathematical challenges of simulating the chaotic, non-linear processes are so immense that I think that claiming that Global Climate Models can simulate the atmosphere well enough to make major changes to the energy system of the world is absurd.

There is another important aspect.  One of the key points made in the Declaration is that climate science is overly politicized:

“Climate science should be less political, while climate policies should be more scientific,” the declaration begins. “Scientists should openly address uncertainties and exaggerations in their predictions of global warming, while politicians should dispassionately count the real costs as well as the imagined benefits of their policy measures.”

It seems to me that every day there is another mass media story attributing any extreme weather event to climate change and insinuating that the “science” has unequivocally shown that there is a link to mankind’s GHG emissions has made the weather more extreme.  The fact is that the latest research and the Intergovernmental Panel on Climate Change are finding that as Roger Pielke, Jr. explains the “projected climate futures have become radically less dire”.  He argues that the consensus has accepted a large change in expected warming due to a doubling of GHG emissions — from 4oC to 2.5oC or less.   Pielke notes that he has documented this trend  for years and has “been talking about the incredible shift in expectations for the future” recently.  Unfortunately he also notes: “Despite the growing recognition that our collective views of the future have changed quickly and dramatically, this change in perspective — a positive and encouraging one at that — has yet to feature in policy, media or scientific discussions of climate.”   He concludes “That silence can’t last, as reality is persistent.”

Affordability

I think this is the one issue that might force political change to the Climate Act net-zero transition.  A coalition of business organizations have called for a “reassessment” of how the Climate Act is being implemented highlighting current policies to determine “what is feasible, what is affordable and what is best for the future of the state.”  In response, Department of Environmental Conservation Commissioner Basil Seggos told Capital Tonight that “the costs of inaction are much higher.”  He goes on: “Listen, we know from two years of very intensive research that the cost of inaction on climate in New York far exceeds the cost of action by the tune of over $100 billion”I disagree.

The Scoping Plan that documents this claim by Seggos has been described as “a true masterpiece in how to hide what is important under an avalanche of words designed to make people never want to read it”.  No where is this more evident than in the tortuous documentation for this cost claim.  I documented the issues with costs and benefits in my  comments (social cost of carbon benefits, Scoping Plan benefits, and electric system costs).  In brief, the Hochul Administration has never provided concise documentation that includes the costs, expected emission reductions and assumptions used for the control strategies included in the Integration Analysis documentation making it impossible to verify their assumptions and cost estimates.

The claim that the costs of inaction are more than the costs of action compares real costs to New Yorkers relative to societal benefits that can be charitably described as “biased high” or more appropriately “cherry picked” to maximize alleged benefits and, more importantly, do not directly offset consumer costs.  The benefits claimed are also poorly documented, misleading and the largest benefit is dependent upon an incorrect application of the value of carbon.  The plan claims $235 billion societal benefits for avoided greenhouse gas emissions.  I estimate those benefits should only be $60 billion.  The Scoping Plan gets the higher benefit by counting benefits multiple times.  If I lost 10 pounds five years ago, I cannot say I lost 50 pounds but that is what the plan says.  The cost benefit methodology was duplicitous because the cost comparisons were relative only to Climate Act requirements that did not include “already implemented” programs.  For example, this approach excludes the costs to transition to electric vehicles because that was a requirement mandated before the Climate Act.  I maintain that the total costs to transition to net-zero should be provided because that ultimately represents total consumer costs.

It is also frustrating that the State ignores that other jurisdictions are finding costs are an issue.  In a recent article I noted that the Prime Minister of Great Britain, Rishi Sunak, said he would spare the public the “unacceptable costs” of net zero as he scaled back a string of flagship environmental policies. The fact is that every jurisdiction that has tried to transition away from fossil-fueled energy has seen a significant increase in consumer costs.  For example, Net Zero Watch recently published a report that describes six ways renewables increase electricity bills that makes that inevitable.   The article explains:

In order to reduce bills, a new generator generally has to force an old one to leave the electricity market — otherwise there are two sets of costs to cover. But with wind power, you can’t let anything leave the market, because one day there might be no wind.

The article goes on to explain that as well as adding excess capacity to the grid, renewables also have a series of other effects, each of which will push bills up further:

Renewables need subsidies, they cause inefficiency, they require new grid balancing services that need to be paid for; the list of all the different effects is surprisingly long. There is only one way a windfarm will push your power bills, and that’s upwards.

Reliability

Another flawed aspect of the Climate Act narrative is that a transition to a zero-emissions electric system is straight-forward and there are no significant technological challenges.  Terry Etam summed up the issues evident in the German transition that will also occur in New York.  In an article about the ramifications of the energy requirements for implementing artificial intelligence applications, he argued that the fossil-fired energy growth in the developing nations has been discouraged by the G7 nations.  However, those nations are pushing back on anything that is not in their best interests.  He writes:

The second big tectonic shift was on full display at the recent G20 summit. The African Union was admitted as a member, which was kind of a big deal, particularly for Africa, but also for the world in general. The addition acknowledges that other voices need to be on the world stage, a sense of humility the G7 has long lacked. The final communique issued at the end of the G20 summit included doses of common sense lacking from typical utterances of the G7: “We affirm that no country should have to choose between fighting poverty and fighting for the planet…It is also critical to account for the short-, medium-, and long-term impact of both the physical impact of climate change and transition policies, including on growth, inflation, and unemployment.”

Contrast that with the west’s bizarre self-lobotomization when it comes to energy, as best personified by the entity furthest along the rapid-transition path, Germany: the dwindling economic powerhouse is chained to a green freight train it insists is under control, has shut down nuclear power plants with no low-emissions baseload to replace it, and in a final stunning swan dive to the pavement, is orchestrating the installation of 500,000 heat pumps per year to the grid, which will be in most demand in cold weather and will perform worst in cold weather, and will add a potential 10 gigawatts of cold-weather demand at the very instant the grid is least able to afford it, and for which there is no supply available anyway. A German energy economic university think tank says the additional cold-weather demand could only be met by new gas-fired power plants, which are not being built. In sum: Germany has shuttered its cleanest, most reliable energy; it has or is trying to banish hydrocarbons and replace them with intermittent power; and finally, is hastening adoption of devices that will function very well in 80 percent of conditions when it doesn’t matter much but will fail in a spectacularly deadly way at the point in time when they are needed the very most, because heat pumps will be turned up to 11 at the very time the grid will be the most taxed. German engineering isn’t what it used to be.

In the last several years I have concluded that intermittency of wind and solar is the fatal flaw for that technology.  The most important consideration is the need for energy storage.  Francis Menton writing at the Manhattan Contrarian summarizes energy storage problems in a recent post on a new British Royal Society report “Large-scale energy storage.”  This report suffers from the same problems afflicting the Climate Act Scoping Plan.  Menton explains (my emphasis added):

Having now put some time into studying this Report, I would characterize it as semi-competent. That is an enormous improvement over every other effort on this subject that I have seen from green energy advocates. But despite their promising start, the authors come nowhere near a sufficient showing that wind plus solar plus storage can make a viable and cost-effective electricity system. In the end, their quasi-religious commitment to a fossil-fuel-free future leads them to minimize and divert attention away from critical cost and feasibility issues. As a result, the Report, despite containing much valuable information, is actually useless for any public policy purpose.

I believe that the insurmountable problem with energy storage backup for wind and solar is worst-case extremes.  The Royal Society report notes that “it would be prudent to add contingency against prolonged periods of very low supply”.  This contingency is the theoretical dispatchable emissions-free resource that the Integration Analysis, New York State Independent System Operator, New York State Reliability Council, and Public Service Commission in the Order Initiating Process Regarding Zero Emissions Target in Case 15-E-0302 all acknowledge is necessary.  Incredibly, the loudest voices on the Climate Action Council clung to the dogmatic position that no new technology like this resource was necessary and excluded any consideration of a backup plan to address the contingency that a not yet commercialized technology might never become commercially viable and affordable.

If New York State were to embrace nuclear energy, then there might be a chance to significantly reduce GHG emissions without affecting reliability.  Instead, the Scoping Plan placeholder option for this resource is green hydrogen.  Menton describes the hydrogen option proposal in the Royal Society report:

Since hydrogen is the one and only possible solution to the storage problem, the authors proceed to a lengthy consideration of what the future wind/solar/hydrogen electricity system will look like. There will be massive electrolyzers to get hydrogen from the sea. Salt deposits will be chemically dissolved to create vast underground caverns to store the hydrogen. Hydrogen will be transported to these vast caverns and stored there for years and decades, then transported to power plants to burn when needed. A fleet of power plants will burn the hydrogen when called upon to do so, although admittedly they may be idle most of the time, maybe even 90% of the time; but for a pinch, there must be sufficient thermal hydrogen-burning plants to supply the whole of peak demand when needed.

The Scoping Plan proposal is slightly different.  It envisions that the electrolyzers will be powered by wind and solar to create so-called “green” hydrogen.  Menton and I agree that the biggest unknown is the cost.  He raises the following cost issues:

How about the new network of pipelines to transport the hydrogen all over the place?
How about the entire new fleet of thermal power plants, capable of burning 100% hydrogen, and sufficient to meet 100% of peak demand when it’s night and the wind isn’t blowing.
They use a 5% interest rate for capital costs. That’s too low by at least half — should be 10% or more.
And can they really build all the wind turbines and solar panels and electrolyzers they are talking about at the prices they are projecting?

It gets worse in New York.  Ideologues on the Climate Action Council have taken the position that “zero-emissions” means no emissions of any kind.  They propose to use the hydrogen in fuel cells rather than combustion turbines because combustion turbines would emit nitrogen oxides emissions.  This adds another unproven “at the scale necessary” technology making it even less likely to succeed as well as adding another unknown cost.  In addition, it ignores that there are emissions associated with the so-called zero-emissions technologies that they espouse.  All they are advocating is moving the emissions elsewhere.

Environmental Impacts

I addressed the implications that the Scoping Plan only considers environmental impacts of fossil fueled energy in my Draft Scoping Plan Comments.  The life-cycle and upstream emissions and impacts are addressed but no impacts of the proposed “zero-emissions” resources or other energy storage technology are considered.  The fact is that there are significant environmental, economic, and social justice impacts associated with the production of those technologies. Furthermore, the most recent cumulative environmental impact analysis only considered a fraction of the total number of wind turbines and area covered by solar PV installations proposed in the Scoping Plan.  As a result, the ecological impacts on the immense area of impacted land and water have not been adequately addressed.

One of the more frustrating aspects of the Hochul Administration’s Climate Act implementation is the lack of a plan.  For example, consider utility-scale solar development.  There are no responsible solar siting requirements in place so solar developers routinely exceed the Department of Agriculture and Markets guidelines for protection of prime farmlands.  My solar development scorecard found that prime farmland comprises 21% of the project area of 18 approved utility-scale solar project permit applications which is double the Ag and Markets guideline.

I am particularly concerned about environmental impacts associated with Off Shore Wind (OSW).  This will be a major renewable resource in the proposed Climate Act net-zero electric energy system.  The Climate Act mandates 9,000 MW of Off Shore Wind (OSW) generating capacity by 2035.  The Integration Analysis modeling used to develop the Scoping Plan projects OSW capacity at 6,200 MW by 2030, 9,096 MW by 2035 and reaches 14,364 MW in 2040.  I summarized several OSW issues in a recent article that highlighted an article by Craig Rucker titled Offshore Wind Power Isn’t ‘Clean and Green,’ and It Doesn’t Cut CO2 Emissions.  He explains:

A single 12 MW (megawatts) offshore wind turbine is taller than the Washington Monument, weighs around 4,000 tons, and requires mining and processing millions of tons of iron, copper, aluminum, rare earths and other ores, with much of the work done in Africa and China using fossil fuels and near slave labor.

Relying on wind just to provide electricity to power New York state on a hot summer day would require 30,000 megawatts. That means 2,500 Haliade-X 12 MW offshore turbines and all the materials that go into them. Powering the entire U.S. would require a 100 times more than that.

These numbers are huge, but the situation is actually much worse.

This is because offshore turbines generate less than 40% of their “rated capacity.” Why? Because often there’s no wind at all for hours or days at a time. This requires a lot of extra capacity, which means a lot more windmills will have to be erected to charge millions of huge batteries, to ensure stable, reliable electricity supplies.

Once constructed, those turbines would hardly be earth or human friendly, either. They would severely impact aviation, shipping, fishing, submarines, and whales. They are hardly benign power sources.

The environmental impacts on whales of the OSW resources necessary to meet the net-zero transition are especially alarming.  Earlier this year I described the Citizens Campaign for the Environment virtual forum entitled Whale Tales and Whale Facts.  The sponsors wanted the public to hear the story that there was no evidence that site survey work was the cause of recent whale deaths.  I concluded that the ultimate problem with the forum was that they ignored the fact that construction noises will be substantially different than the ongoing site surveys and will probably be much more extensive when the massive planned construction starts.  The virtual forum noted a lack of funding for continued monitoring necessary to address the many concerns with massive offshore wind development to allay the concerns of the public.   Since then, the Save Right Whales Coalition (SRWC) has found issues with the incidental harassment of whales associated with the noise levels associated sonar surveys done in conjunction with OSW development.  I am very disappointed that the Hochul Administration is not investing in an adequate monitoring program that confirms that whales are not being harmed.

Conclusion

This article was intended to summarize my current concerns about the impacts of the Climate Act transition on affordability, reliability, and the environment.  There is a growing realization that the alleged problem of global warming is not as big a threat as commonly assumed. Combined with the fact that New York GHG emissions are less than one half of one percent of global emissions and global emissions have been increasing on average by more than one half of one percent per year since 1990 the rationale for doing anything is weak.  It may not mean that we should not do something, but clearly we have time to address the affordability, reliability and environmental impact issues.

The Scoping Plan has not provided comprehensive and transparent cost estimates so New Yorkers have no idea what this will cost.  I explained why the Hochul Administration claim that the costs of inaction are more than the costs of action is misleading and inaccurate.  I believe that all New Yorkers should let it be known that they need to know the expected costs so they can determine if they support the transition.

When the energy system becomes all-electric the reliability of the electric system will be even more critical than today.  The State plan is to proceed as if there are no implementation issues.  The rational thing to do would be to develop demonstration projects to prove feasibility and cost of the new technology needed before dismantling the current system.  Francis Menton explains why this is necessary and how it could work.  There is no sign that is being considered.

It is particularly galling that organizations who claim to be in favor of a better environment have failed to support comprehensive cumulative environmental impact assessment and on-going impact monitoring assessment to potential impacts from wind, solar, and energy storage development on the scale necessary for the net-zero transition.  Maybe they don’t want to know that the concerns are real.

Mark Twain said: “It is easier to fool someone than it is to tell them they have been fooled.”    The politicians who support the Climate Act net-zero transition have been fooled into thinking it is affordable, will not affect reliability, and benefits the environment.  Unfortunately, it is very difficult to slow down, much less stop the unfolding train wreck of these policies.  I encourage readers to keep asking for a full cost accounting of all the proposed programs as the most obvious concern.

Source: Pragmaticenvironmentalistofnewyork.blog

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Arctic LNG 2 T1 First LNG Drop

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A step forward, not the finish line

The first train for the ALNG2 project started producing LNG today at 10:30 local time.

While producing the first LNG drop is a significant achievement for any liquefaction project, it is important to note that this is not the same as loading the first cargo. Several additional steps, including further testing, ramp-up, and ensuring consistent output, must be completed before reaching this crucial project milestone. Technical hiccups are not uncommon at the final stage: one of the LM9000 gas turbines experienced a technical issue during the critical final cooldown phase, causing a slight delay in achieving the first drop.

Limited output and equipment uncertainties

Train 1 currently operates with only four of the required seven LM9000 gas turbines, significantly restricting its production capacity. Additionally, the planned Chinese gas turbines intended for onshore power generation have not been installed yet, casting doubt on the project’s timeline and ultimate output potential.

The concrete gravity-based structure (GBS), with the train installed on top, was pulled out of the Belokamenka yard by 14 tugs under the watchful eye of President Vladimir Putin in July, who attended personally, underscoring the importance of the project and wide-scale support the government extended to Novatek in its maiden project, Yamal LNG, and now Arctic LNG 2.

Once Train 1 is operational, the focus will shift towards resolving the equipment shortfall, potentially installing the planned Chinese gas turbines, and optimizing production for consistent output. Only then can the project progress towards its next major milestone: reaching T1 projected capacity and completing the construction of the second train.

New sanctions

The US has targeted the facility with the explicit goal of shutting down the project. As part of congressional testimony, US officials said their aim is to “systematically reduce Russia’s future energy revenue.” It is unclear if or to what degree existing European and Japanese partners in the project will comply with the new sanctions. Novatek has a 60% stake in Arctic LNG 2, with the remaining shareholders comprising France’s TotalEnergies (10%), China’s CNPC (10%), China’s CNOOC (10%) and a consortium of Japan’s Mitsui and Jogmec – called Japan Arctic LNG – with the final 10% stake.

In September, the US had already imposed sanctions on two vessels intended for use as transshipment terminals for LNG shipments from the project. Industry experts anticipated that this move would lead to shipping congestion for many market participants, particularly Asian companies.

ALNG 2 has yet to sell a large portion of its capacity

Industry insiders, including traders and legal experts, foresaw a scenario in which Arctic LNG 2 might be compelled to place more shipments on the spot market, potentially involving trading intermediaries. This could result in cargoes reaching markets that have been evading oil sanctions. Despite a significant decline in Russian pipeline gas deliveries, shipments of Russian LNG to the European Union have remained strong since the invasion of Ukraine in February 2022.

Source: Linkedin.com

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