Crude Summit: US overlooks natural gas, says Dunn
A lack of investment in natural gas infrastructure is placing a headwind on efforts to decarbonize in the US as the administration of President Joe Biden overlooks the role of gas in reducing emissions, pipeline operator Williams' chief operating officer Michael Dunn said today.
Power companies and industrial consumers in the northeastern US are switching to coal and fuel oil for generation needs this winter because of a lack of natural gas infrastructure arising from permitting issues, exacerbating emissions, Dunn said at the Argus Americas Crude Summit in Houston, Texas.
"It gets cold every winter, and this happens every winter, where emissions go up dramatically because infrastructure has been stopped," Dunn said. "Many of us in the midstream space have been stopped in our tracks from various permitting issues [despite that] we have solutions that can improve emissions today."
The gas pipeline company in 2020 shelved plans to build the $1bn Northeast Supply Enhancement project that would have brought 400mm cf/d of gas to New York City, after New York and New Jersey denied key water permits.
But it has been market forces, and not regulatory action, that has encouraged industries to switch off emissions-heavy energy sources like coal, a fact that is "lost" on the Biden administration when it comes to natural gas, Dunn said.
"There's a lot of coal that has come off because of the market forces, not regulation," Dunn said. "Regulation has had its impact on permitting, but if you look at the emissions improvements this country has made, it has been on the back of natural gas."
More standards needed for RSG
In regard to its own decarbonization efforts, Williams is leaning on solar to re-power a few its facilities, with 16 projects under development that would provide 375MW of low-carbon power to the company. Williams has also touted efforts to build out the development of so-called responsibly sourced natural gas (RSG)that has had its environmental footprint assessed by an independent third party, with an eye toward cutting methane emissions and water use. But efforts to build out responsibly sourced gas in the US remain in their infancy and more work is needed to create centralized standards, Dunn said. "There needs to be some standards developed in that regard so everyone is working with the same certifications," Dunn said. "It is really going to be the cost of doing business in our industry, especially in the midstream and upstream space."
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Yara first-quarter gas consumption higher on year
Yara first-quarter gas consumption higher on year
London, 29 April (Argus) — Europe's largest fertiliser producer Yara's European gas consumption in the first quarter was up by 26pc on the year, but remained far lower than in the second half of last year. Norway-based Yara's gas consumption across Europe in January-March totalled 29.2 trillion Btu, well above the 23.1 trillion Btu a year earlier, but drastically down from 37.5 trillion Btu in the fourth quarter last year, the company's latest quarterly report shows. Yara did not report its European ammonia production for the first quarter, but the company's global output totalled 1.74mn t, up from 1.38mn t a year earlier. Yara's first-quarter European gas consumption fell from the preceding three months, despite its average European gas costs falling to $11.70/mn Btu from $13/mn Btu. The firm's European gas costs have declined sharply since peaking at $34.50/mn Btu in the third-quarter 2022, when European wholesale prices hit all-time highs ( see price graph ). Yara's quarterly spending on European gas supplies fell to $343mn in January-March, the lowest since at least summer 2021 when the company began reporting this data, and around one third the $1.08bn peak in April-June 2022. Yara's European gas consumption also fell despite a 37pc annual increase in total fertiliser deliveries in Europe . Lower curtailments, improved production economics and "volume catch-up" had supported output, Yara said. But while European deliveries improved on the year, they remained "below normal" — particularly for nitrates — and Yara sourced a larger share of its European deliveries from its global plants, the company's chief financial officer Thor Giaever said. Yara had hinted earlier this year its ammonia assets might run at 90pc or more of capacity as the company expected to boost production this year . But one explanation for the lower gas demand compared to the previous quarter is Yara may be maximising production at more efficient plants like Sluiskil in the Netherlands and Brunsbuttel in Germany, while ramping down less efficient plants, allowing the company to maintain or increase production while consuming less gas. Yara last year curtailed 19pc of its European ammonia capacity , turning towards greater imports of ammonia to replace the lower production. And that remains key to Yara's business plans , which the company said last week focused on "further strengthening operational resilience and flexibility". Argus assessed European ammonia production prices based on the TTF front-month price at roughly a $100/t discount to northwest European import prices in its last weekly assessment on 25 April, suggesting a still-significant financial incentive to produce ammonia domestically. The European fertiliser market remains under pressure by large volumes from Russia, meaning Europe has swapped an energy dependency on Russia for a food dependency, chief executive Svein Tore Holsether said, echoing previous statements . Comparing global assets Yara consumed 54.4 trillion Btu of gas globally in January-March, down from a multi-year high of 61.9 trillion Btu in October-December ( see consumption graph ). European consumption accounted for roughly 54pc of Yara's global gas demand in January-March, well down from 61pc in the previous quarter. And Yara spent $485mn on gas worldwide in January-March, 71pc for European supply, a lower proportion than at any other point since 2021. Yara's global average gas cost was $8.90/mn Btu in January-March, 24pc below its reported European cost. That discount has been a significant driver for Yara and others to increase production abroad rather than in Europe over the past two years. Yara forecasts its European gas costs at $9.70/mn Btu and $10.50/mn Btu in the second and third quarters of this year, respectively, holding well above its global average gas costs of $7.70/mn Btu and $8.40/mn Btu during those same periods. Globally, the firm aims to produce 8.6mn t of ammonia in 2025, significantly up from 7.8mn t in 2023, it said. By Brendan A'Hearn Yara European vs global gas costs $/MMBtu Yara European vs global gas consumption million MMBtu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Service firms talk up long-term gas prospects
Service firms talk up long-term gas prospects
New York, 29 April (Argus) — Leading oil field service firms are bullish on the outlook for natural gas demand in coming years even though the fuel remains stuck in the doldrums for now, with US prices near pandemic lows amid oversupply after a mild winter. "This is the age of gas," Baker Hughes chief executive Lorenzo Simonelli says, adding that global demand for the power plant and heating fuel is due to climb by almost 20pc through 2040. "Gas is abundant, lower emission, low cost, and the speed to scale is unrivalled," he says. Halliburton also sees natural gas as the "next big leg of growth" in North America, driven by demand for LNG expansion projects, although its current plans do not envisage any comeback this year. Given a shrinking fracking fleet and lack of new equipment being built, the stage is set for an "incredibly tight market" in future, chief executive Jeff Miller says. A recovery in natural gas activity in the US may not happen until the end of this year or even 2025, Liberty Energy chief executive Chris Wright says. "Customers need to see that prices have firmed, that export volume demand actually is pulling upward at a meaningful rate," he says. On recent first-quarter earnings calls, service firms were upbeat about international growth prospects in the face of escalating geopolitical tensions in the Middle East. The backdrop remains one of growing demand for oil and gas and an "even deeper focus" on energy security, according to Olivier Le Peuch, chief executive of SLB, the world's biggest oil field service company. SLB, formerly known as Schlumberger, expects overseas growth momentum to make up for a slowdown in North America this year. "The relevance of oil and gas in the energy mix continues to support further investments in capacity expansion, particularly in the Middle East and in long-cycle projects across global offshore markets," Le Peuch says. But results in North America will be depressed by the combination of low gas prices, capital discipline and producer consolidation. International rescue Halliburton expects international revenue growth in the "low double-digits" for the full year, with some margin expansion given the tight market for equipment and labour. Steady activity levels are seen in North America after land completion activity bottomed out in the fourth quarter of 2023 and rebounded in the first quarter. "The world requires more energy, not less, and I'm more convinced than ever that oil and gas will fill a critical role in the global energy mix for decades to come," Miller says. The positive outlook is reinforced by customers' multi-year activity plans across markets and assets. Baker Hughes forecasts "high single-digit growth" when it comes to the outlook for international drilling and completion spending this year. But customer spending in North America is expected to fall in a "low to mid-single-digit range" when compared with 2023. "We continue to anticipate declining activity in the US gas basins, partially offsetting modest improvement in oil activity during the second half of the year," Simonelli says. Beyond 2024, upstream spending is seen growing further across international markets, albeit at a "more moderate" pace than seen in recent years, according to Baker Hughes. SLB paced a decline among oil service stocks at the end of January when state-controlled Saudi Aramco scrapped plans to increase crude output capacity to 13mn b/d from 12mn b/d. But Saudi Arabia has stepped up its plans to boost gas output, by 60pc by 2030. This new energy mix was not anticipated six months ago, but it will "not have a natural impact on our ambition for growth" in Saudi Arabia, Le Peuch says. And Saudi gas plans will require substantial investment in gas infrastructure, which is a "long-term net positive" for Baker Hughes, Simonelli says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
BP inks another LNG deal with Korea's Kogas: Correction
BP inks another LNG deal with Korea's Kogas: Correction
Corrects total volume of LNG supplied in paragraph 2 Singapore, 29 April (Argus) — BP has signed another long-term LNG sales and purchase agreement with South Korean state-owned importer Kogas, the former said today. BP will provide Kogas with up to 9.8mn t of LNG over 11 years from mid-2026 on a des basis. But other details regarding pricing and the origin of the contracted supplies were not available. This most recent deal is in addition to the existing long-term sales and purchase agreement between the two companies that was signed in 2022. Kogas on 22 April 2022 signed an 18-year LNG purchase agreement to buy 1.58mn t/yr of LNG from BP that will begin in 2025. Australian independent Woodside Energy and Kogas in February signed a sales and purchase deal for term supplies of LNG to South Korea. The deal for 500,000 t/yr on a des basis will start in 2026 and run for 10½ years. Kogas may be seeking more imported term supply as the firm has increased its downstream contractual supply deals. Kogas signed a series of deals to supply gas to subsidiaries of the country's state-controlled utility Kepco in December 2023. By Simone Tam Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Singapore’s Jadestone cuts 2024 output guidance
Singapore’s Jadestone cuts 2024 output guidance
Sydney, 29 April (Argus) — Singapore-listed independent Jadestone Energy has cut its 2024 oil and gas production guidance, citing disappointing first-quarter group production. Jadestone said the impact of planned and unplanned downtime across its portfolio resulted in it narrowing its guidance from 20,000-23,000 bl of oil equivalent (boe/d) to 20,000-22,000 boe/d in its results for 2023 published on 29 April. Average production for January-March was 17,200 boe/d, which Jadestone said reflected the impact on its Australian assets, including the 6,000 b/d Montara oil field, of an active cyclone season at the start of 2024. The firm produced 14,000 b/d in 2023, up from 11,500 b/d in 2022. But problems at Montara and lower realised oil prices resulted in a loss of $91mn in 2023 following a $9mn profit recorded in 2023. Jadestone's realised oil price of $87.34/boe in 2023 was 16pc lower than $103.85/boe a year earlier. Proved and probable reserves at the end of 2023 totalled 68mn boe, a 5pc increase on a year's earlier 64.8mn boe, mainly because of the acquisition of a 9.52pc stake in Thailand's Sinphuhorm gas field and increases at the Cossack, Wanaea, Lambert and Hermes oil fields offshore Australia and the Akatara gas field in Indonesia's Sumatra. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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