Energy News Beat

The FSRU-based LNG import facility in the Dutch port of Eemshaven, owned by Gasunie and Vopak, has received 82 shipments since its launch in September 2022, mostly from the United States.

Operated by EemsEnergyTerminal, the LNG hub consists of two chartered floating storage and regasification units – the 170,000-cbm FSRU Energos Igloo, owned by Energos Infrastucture, and the 26,000-cbm barge-based FSRU Eemshaven LNG, owned by Exmar.

The terminal has a capacity of 8 billion cubic meters and supplies natural gas to capacity holders UK-based Shell, Czech utility CEZ, and France’s Engie.

Shell booked 4 bcm per year of the capacity, CEZ reserved 3 bcm per year, and Engie booked the rest.

In September 2022, the Eemshaven terminal received its first LNG cargo from the US onboard the Shell-chartered 173,000-cbm Murex LNG carrier.

The terminal started delivering regasified LNG to the Dutch grid in a record time during the same month, but the facility did not deliver gas to the grid during two periods since the launch due to maintenance and the unavailability of the heat connection.

Dutch gas grid operator Gasunie said in March last year it completed all the planned work at the terminal and signed a deal in April with compatriot storage firm Vopak to sell 50 percent of the LNG hub. The partners completed the deal in December.

A Gasunie spokeswoman told LNG Prime on Tuesday that the Eemshaven LNG terminal has received 12 cargoes in 2022, 68 LNG cargoes in 2023, and 2 cargoes this year up to date.

Each LNG carrier delivers an average quantity of around 160,000 cbm of LNG, but this does not mean that this quantity is actually brought in every time, she said.

The Eemshaven facility is the first FSRU-based terminal in the Netherlands and the second LNG import terminal in the country after Gate.

The Gate LNG import terminal in the port of Rotterdam, also operated by Gasunie and Vopak, handled record 328 vessels last year. Gate unloaded 169 LNG cargoes last year, and most of this shipments came from the US as well.

Gasunie previously said that EemsEnergyTerminal’s ambition is to be able to handle 9 Bcm of natural gas before the end of 2023, and then to grow to 10 Bcm.

The terminal operator said it aims to achieve this by ‘technical optimization’ of the existing installations, including debottlenecking.

“The process has now been optimized to the extent that we can technically achieve the 9 Bcm. It is up to the market to realize these quantities,” the spokeswoman said.

“We are currently still investigating the technical possibilities for 10 Bcm,” she said.

In addition, EemsEnergyTerminal plans to start maintenance activities at the LNG hub, starting this Sunday.

The spokeswoman said that “major maintenance” is expected to begin on January 27 and last until until February 7.

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Energy News Beat

Crude oil production in the United States reached a record high in August 2023, led primarily by more production in Texas. In 2023, most of the crude oil produced in Texas was relatively dense for the state.

API gravity measures the density of crude oil and other petroleum products relative to water. Crude oil with a higher API gravity is lighter, or less dense. Crude oil production in the Lower 48 states—a region that does not include Alaska—is primarily light crude oil, and heavy crude oil is primarily imported to meet U.S. refining demand. Alaska production, which is about 3% of U.S. production, tends to be medium density.

API gravity can differ significantly by production area. Oil produced in Texas—the top crude oil-producing state for more than a decade—has a relatively broad distribution of API gravities. In June 2023, production of crude oil with an API gravity between 30.1–40.0 degrees reached 2.58 million barrels per day (b/d), surpassing the production of crude oil with a gravity between 40.1–50 degrees for the first time. Texas accounted for 57% of the total production of crude oil with an API gravity between 30.1 and 40.0 degrees in the Lower 48 states.

New Mexico and North Dakota—the second- and third-highest crude oil-producing states—also recorded large increases in crude oil production with an API gravity between 30.1 and 40.0 degrees in the first 10 months of 2023, albeit from a smaller base than Texas. Still, the crude oil produced in North Dakota’s Bakken formation tends to be relatively light; about 82% of North Dakota oil production has an API gravity between 40.1 and 50.0 degrees. The crude oil produced in California and in the Federal Offshore Gulf of Mexico tends to be heavier, with a lower API gravity.

Overall in the Lower 48 states, 19% more crude oil with an API gravity between 30.1 and 40.0 degrees was produced in the first 10 months of 2023 than during the same period in 2022. In September 2023, Lower 48 crude oil production in this API gravity range established a new record of 4.75 million b/d.

Lower 48 crude oil production with an API gravity from 40.1 to 50.0 degrees grew 6.3% in the first 10 months of 2023 compared with the same period in 2022, rising to 5.9 million b/d. Crude oil in this API gravity range accounted for the largest share of Lower 48 production.

The increase in crude oil production with an API gravity between 30.1 and 50.0 degrees in these parts of the United States is the result of several factors, including higher crude oil sale prices, improved drilling technology, and increased access to refineries and consumer markets because of increased availability of transportation via pipelines.

Principal contributor: Merek Roman

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Energy News Beat

Russia’s reliance on four, mainly Asian, countries to import its coal has increased since some countries implemented sanctions against Russia after it invaded Ukraine, according to Global Trade Tracker data. This trade shift corresponds with increased coal exports from the United States to Europe and EU sanctions that went into full effect in August 2022. The United States, Japan, Australia, and other countries issued sanctions during this same time period after Russia’s full-scale invasion.

China, South Korea, Turkiye, and India are currently the top importers of coal from Russia. These countries received over 80% of Russia’s coal exports from August 2022 to July 2023, compared with 47% from August 2021 to July 2022. Coal imported by European countries from Russia decreased 57% between these two periods. Imports into Eurasia, which includes Ukraine, stopped almost entirely. Imports received by all regions other than Asia declined, while global coal imports from Russia remained relatively flat, at nearly 233 million short tons (MMst).

China and South Korea are historically the top two importers of coal from Russia. China imported 104 MMst from August 2022 to July 2023, a 73% increase from the preceding 12 months, and South Korea imported 34 MMst, a 44% increase. Prior to sanctions, Germany, an EU member, and Japan were the third- and fourth-largest importers of coal from Russia. Both countries banned imports from Russia in 2022. In their place, Turkiye increased its imports of Russia’s coal by 120% to 30 MMst, and India increased imports by 159% to 29 MMst over the same period.

All four of these primary importers—China, South Korea, Turkiye, and India—continued to collectively receive over 80% of Russia’s coal exports each month after August 2023. Limited eastbound rail infrastructure from the Kuzbass region in Western Siberia, where coal production is centered, leads to congestion, delays, and longer turnaround times. Russia’s largest coal transshipment port, Vostochny, is located on the Pacific coast and maintains a competitive advantage for exporting to North Asia and China, but increased exports have caused railway and seaport bottlenecks. As a result, India has sought out northern shipping routes from Russia, and more broadly, total seaborne shipments of coal increased nearly 18% year over year in the first part of 2023.

Principal contributor: Gavin Clark

Russia’s reliance on four, mainly Asian, countries to import its coal has increased since some countries implemented sanctions against Russia after it invaded Ukraine, according to Global Trade Tracker data. This trade shift corresponds with increased coal exports from the United States to Europe and EU sanctions that went into full effect in August 2022. The United States, Japan, Australia, and other countries issued sanctions during this same time period after Russia’s full-scale invasion.

China, South Korea, Turkiye, and India are currently the top importers of coal from Russia. These countries received over 80% of Russia’s coal exports from August 2022 to July 2023, compared with 47% from August 2021 to July 2022. Coal imported by European countries from Russia decreased 57% between these two periods. Imports into Eurasia, which includes Ukraine, stopped almost entirely. Imports received by all regions other than Asia declined, while global coal imports from Russia remained relatively flat, at nearly 233 million short tons (MMst).

China and South Korea are historically the top two importers of coal from Russia. China imported 104 MMst from August 2022 to July 2023, a 73% increase from the preceding 12 months, and South Korea imported 34 MMst, a 44% increase. Prior to sanctions, Germany, an EU member, and Japan were the third- and fourth-largest importers of coal from Russia. Both countries banned imports from Russia in 2022. In their place, Turkiye increased its imports of Russia’s coal by 120% to 30 MMst, and India increased imports by 159% to 29 MMst over the same period.

All four of these primary importers—China, South Korea, Turkiye, and India—continued to collectively receive over 80% of Russia’s coal exports each month after August 2023. Limited eastbound rail infrastructure from the Kuzbass region in Western Siberia, where coal production is centered, leads to congestion, delays, and longer turnaround times. Russia’s largest coal transshipment port, Vostochny, is located on the Pacific coast and maintains a competitive advantage for exporting to North Asia and China, but increased exports have caused railway and seaport bottlenecks. As a result, India has sought out northern shipping routes from Russia, and more broadly, total seaborne shipments of coal increased nearly 18% year over year in the first part of 2023.

Principal contributor: Gavin Clark

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Energy News Beat

We expect average wholesale electricity prices for 2024 in most areas of the country to be close to or slightly lower than in 2023 because of relatively stable generation fuel costs. However, periods of high demand or power market supply constraints could lead to temporary spikes in wholesale prices.

Electricity prices in U.S. wholesale markets are determined by a number of factors, but the natural gas price is the most important driver because it is often the highest-cost (marginal) fuel dispatched for power generation and many U.S. wholesale electricity markets set prices at the marginal cost. Natural gas-fired generation is the largest source of U.S. electricity. We expect the natural gas price for U.S. electricity generation to average $2.91 per million British thermal units (MMBtu) in 2024 in our January Short-Term Energy Outlook. The price averaged $3.29/MMBtu in 2023. Lower natural gas prices should keep average wholesale power prices in most regions less than or close to last year.

The highest U.S. natural gas prices in 2023 were in the Pacific states of California, Oregon, and Washington where the price of natural gas charged to power generators averaged $6.96/MMBtu through October. As a consequence, the Pacific Northwest had the highest U.S. wholesale electricity prices as well, averaging $82 per megawatthour (MWh) last year. We expect fuel costs to remain somewhat elevated in the Pacific Northwest, and we forecast the region’s wholesale power prices to average $67/MWh in 2024.

We expect U.S. electricity prices this year will be relatively similar to 2023 in many of the wholesale markets operating in the Eastern Interconnection, where forecast 2024 wholesale prices outside of the Northeast generally range between $30/MWh and $40/MWh. The wholesale markets in the Northeast, specifically New York and New England, generally have some of the highest wholesale prices in the nation after the Pacific Northwest. We expect the Northeast wholesale prices to increase in 2024, averaging $48/MWh in New York (up 26%) and $60/MWh in New England (up 45%).

U.S. wholesale power prices are typically calculated on an hourly or daily basis and are designed to reflect market conditions at a specific time. Market stresses, such as extremely high temperatures or temporary supply constraints, can lead to spikes in wholesale prices. For example, wholesale prices in the ERCOT market (which covers most of Texas) exceeded $2,500/MWh during a handful of hours in August 2023, which resulted in ERCOT’s monthly price averaging $355/MWh. Prices also spiked temporarily in the western wholesale markets during summer 2023.

Principal contributor: Tyler Hodge

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Energy News Beat

In our latest Short-Term Energy Outlook, we forecast that wind and solar energy will lead growth in U.S. power generation for the next two years. As a result of new solar projects coming on line this year, we forecast that U.S. solar power generation will grow 75% from 163 billion kilowatthours (kWh) in 2023 to 286 billion kWh in 2025. We expect that wind power generation will grow 11% from 430 billion kWh in 2023 to 476 billion kWh in 2025.

In 2023, the U.S. electric power sector produced 4,017 billion kilowatthours (kWh) of electric power. Renewable sources—wind, solar, hydro, biomass, and geothermal—accounted for 22% of generation, or 874 billion kWh, last year. Annual renewable power generation surpassed nuclear generation for the first time in 2021 and coal generation for the first time in 2022.

In contrast to growing generation from renewables, we forecast that coal power generation will decline 18% from 665 billion kWh in 2023 to 548 billion kWh in 2025. We forecast natural gas will continue to be the largest source of U.S. electricity generation, with about 1,700 billion kWh of annual generation in 2024 and 2025, similar to last year. We expect nuclear power generation will stay relatively flat, rising from 776 billion kWh in 2023 to 797 billion kWh in 2025.

New installations of generating capacity support the increase in our renewable generation forecast. Wind and solar developers often bring their projects on line at the end of the calendar year. So, the new capacity tends to affect generation growth trends for the following year. Solar is the fastest-growing renewable source because of the larger capacity additions and favorable tax credits policies. Planned solar projects increase solar capacity operated by the electric power sector 38% from 95 gigawatts (GW) at the end of 2023 to 131 GW by the end of 2024. We expect wind capacity to stay relatively flat at 156 GW by the end of 2024, compared with 149 GW in December 2023.

Principal contributor: Katherine Antonio

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Energy News Beat

In our January Short-Term Energy Outlook (STEO), we expect average U.S. retail gasoline prices to decrease in 2024 because of increased inventories related to increased refinery capacity. In 2025, we expect slightly reduced gasoline consumption to further decrease prices. We expect similar supply-side factors to lower retail diesel prices in 2024 and 2025, although U.S. diesel consumption will likely exceed 2023 in both 2024 and 2025.

Source: EIA

We expect crude oil prices in 2024 to be similar to those in 2023. As a result, our lower gasoline and diesel price outlooks next year reflect narrowing crack spreads, the difference between the wholesale prices of gasoline and diesel compared with crude oil. Crack spreads reflect the price of refining, and a lower crack spread indicates lower refining cost. Our lower forecast crack spread for gasoline is driven by our expectation of increasing availability of supply even as consumption is reduced.

In 2023, additional refinery capacity came online, raising U.S. operable refinery capacity from 18.06 million barrels per day (b/d) in January 2023 to 18.31 million b/d in December 2023. We expect the availability of the new refinery capacity will ease price pressure on petroleum products in 2024. In 2025, we expect lower crude oil prices, which will also reduce gasoline and diesel prices.

New international production from refineries in the Middle East, particularly Kuwait, have also increased the pool of gasoline and diesel on world markets. Increasing global refined products supply will contribute to easing international price pressure on both fuels. We expect gasoline consumption to remain relatively flat in 2024 and to decrease only slightly in 2025, by less than 1%. In both years, we expect slowing but consistent economic growth. Flat or decreasing gasoline consumption despite economic growth is relatively uncommon. Since 1990, gasoline consumption has declined amid positive economic growth in only two years (2010 and 2012).

Although we expect more diesel production and less strain on U.S. and global inventories to reduce diesel prices in 2024 and 2025, we also expect annual U.S. average diesel consumption to grow modestly, by 1.3%, or about 50,000 b/d, in 2024 supported by continuing economic growth.

Our forecast for gasoline and diesel prices is subject to significant uncertainty, including any factors that might affect crude oil prices and pass through to retail fuel prices. In addition, prices could be higher if more unplanned refinery shutdowns, further disruptions to international trade flows, or new logistical bottlenecks that hinder the movement of fuels between regions occur. By early 2025, we currently expect LyondellBasell’s Houston refinery in Texas will close and Phillips 66’s Rodeo refinery in California will complete its ongoing conversion to renewable diesel production, although the timing of both may vary based on market conditions and the schedules of the owners.

Principal contributor: Kevin Hack

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Energy News Beat

A unit of French energy giant TotalEnergies has recently completed the 100th LNG bunkering operation with its chartered vessel, Gas Vitality, in Marseille.

The 135 meters long 18,600-cbm LNG bunkering vessel, owned by Japan’s MOL, completed the milestone operation on January 1, 2024 in the Port of Marseille-Fos, according to V.Group, which manages the vessel via its unit V.Ships France.

The bunkering involved a transfer of 8,000 cbm of LNG to MSC’s containership with a capacity of 15,000 TEU, MSC Freya, it said.

Concurrently, the 2023-built MSC Freya performed cargo handling operations.

VesselsValue data shows that EPS is the owner of MSC Freya while MSC charters the ship.

Chinese shipbuilder Hudong-Zhonghua has held a naming ceremony for Gas Vitaly in October 2021 and the vessel arrived in France in December the same year.

It is the first LNG bunkering vessel to be based in France.

Gas Vitality has similar specifications as its sister ship, Gas Agility, which works for TotalEnergies from the Dutch port of Rotterdam.

Since November 2020, TotalEnergies Marine Fuels has completed more than 200 LNG bunkering operations with the two vessels, it said in October last year.

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Japan’s liquefied natural gas imports dropped 8.1 percent in 2023, and the country lost its position as the world’s top LNG importer to China.

According to the provisional data released by the country’s Ministry of Finance, Japan imported 66.15 million tonnes of LNG last year.

This compares to 71.99 million tonnes in 2022, which marked a decline compared to the year before.

LNG imports in December rose 7.2 percent year-on-year to 6.49 million tonnes. They also rose compared to 5.33 million tonnes in November.

Japan’s coal imports for power generation decreased 8.1 percent in December to 8.31 million tonnes, while coal imports dropped 11.9 percent to 101.54 million tonnes in 2023.

Japan paid about $44.2 billion for LNG imports in 2023, a decrease of 22.6 percent compared to 2022.

According to the data, the December LNG import bill of about $4.43 billion decreased 19.6 percent compared to the same month last year.

State-run Japan Oil, Gas and Metals National Corp (JOGMEC) only published the arrival-based monthly spot LNG price in December. It did not release the contract-based price.

The average price of spot LNG cargoes that were delivered in Japan within the month of December regardless of the month when the contract was made was $16.9/MMBtu.

JOGMEC also said in a report this week that the “Northeast Asian assessed spot LNG price JKM for the previous week (January 15 – January 19) fell to mid $9s on January 19 from low $10s the previous week as inventories remain high with weak demand.”

METI announced on January 17 that Japan’s LNG inventories for power generation as of January 14 stood at 2.58 million tonnes, up 0.07 million tonnes from the previous week.

As per LNG shipments going to Japan in 2023, deliveries from Asia decreased 10.2 percent to 16.1 million tonnes, the ministry’s data shows.

Middle East LNG shipments decreased 11.7 percent to 5.95 million tonnes in 2023.

Moreover, shipments from Russia dropped 10.7 percent to 6.13 million tonnes, while US deliveries increased 33.6 percent to 5.52 million tonnes in 2023.

The data does not include spot volumes.

Japan was the world’s top LNG importer in 2022, overtaking China, but both of the countries took fewer volumes compared to the year before.

China has overtaken Japan to become the world’s top importer of LNG last year.

China’s LNG imports rose 12.6 percent to about 71.32 million tonnes in the January-December period.

This means that China imported some 5.17 million tonnes of LNG more than Japan in 2023.

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Energy News Beat

A joint venture consisting of China Gas, Wah Kwong Maritime Transport, and CSSC Shipping is expected to order two more liquefied natural gas (LNG) carriers from Dalian Shipbuilding Industry (DSIC) this year, according to shipbuilding sources.

China Gas has a 30 percent stake in Sea Jade Investment, Wah Kwong owns 45 percent, and CSSC Shipping owns 25 percent.

The JV ordered two 175,000-cbm LNG carriers at DSIC in August last year.

Besides two firm LNG carriers, the deal also included two optional vessels.

Sources told LNG Prime on Wednesday that Sea Jade Investment is expected to exercise the option for the two LNG carriers by the end of March.

CSSC’s DSIC and the JV extended the letter of intent (LoI) for the two optional vessels from the end of 2023 to the end of March, according to the sources.

The first two vessels will feature WinGD dual-fuel low-speed engines with integrated ICER system, a reliquefaction unit, and GTT’s Mark III Flex membrane containment system.

DSIC is scheduled to deliver the first two vessels in 2027, and each of these ships were tipped to be worth about $235 million.

The sources said that the optional vessels are also for delivery in 2027, while the price tag could reach more than $235 million per vessel.

Following delivery, the first two LNG carriers will serve China Gas Hongda Energy Trading, a unit of China Gas, under 20-year charter deals, Hong Kong-based natural gas operator and distributor, China Gas, previously said.

The charter hire for each LNG carrier will be at a daily hire rate of about $80,000 to $100,000 per month, it said.

If the contract is confirmed, DSIC will have 15 175,000-cbm LNG carriers on order.

In June last year, DSIC kicked off the construction of the first of eight 175,000-cbm LNG carriers for compatriot China Merchants Energy Shipping (CMES), a unit of China Merchants Group.

Back in March 2022, CMES placed an order for two dual-fuel LNG carriers, DSIC’s first order for large LNG carriers, and after that added six more vessels.

Besides these orders, DSIC will build three LNG carriers for a joint venture consisting of units of Cosco Shipping Energy Transportation and Sinopec.

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