Mitsui OSK Lines eyes involvement in Arctic LNG 2
Japanese shipowner Mitsui OSK Lines (Mol) aims to be involved in Novatek's 19.8mn t/yr Arctic LNG 2 project, the firm's senior adviser Mike Rowley said today.
The shipowner already owns three Arc7 ice-class vessels under long-term charters with the 16.5mn t/yr Yamal LNG project, also operated by Novatek. The Russian producer recently reached a final investment decision (FID) for its 19.8mn t/yr Arctic LNG 2 with its partners in the project.
Mol is looking at opportunities for involvement with the Arctic LNG 2 project, Rowley said, as well as offshore LNG facilities. This is despite a joint venture announced between Novatek and Sovcomflot for the building and management of Arctic LNG 2's Arc7 vessels, to be built by the Rosneft-led Zvezda shipyard in Russia's far east.
But there may be space for other firms such as Mol to be involved in the project as the Russian joint venture may not supply all 17 Arc7 vessels expected to be ordered for the project, a Mol representative told Argus.
All Arc7s required for Arctic LNG 2 will probably have to be built at the Zvezda shipyard, the representative said, because of changes to the Russian Merchant Shipping Code. These require vessels performing cabotage with hydrocarbon cargoes to be Russia-flagged. LNG from the Arctic LNG 2 project is set to be transshipped at purpose-built facilities in Murmansk and on the Kamchatka peninsula.
The expected capacities for the new Arc7 vessels are unlikely to be significantly different from the 15 Arc7 vessels ordered from South Korean shipbuilder DSME for the Yamal project, the representative added, despite the Zvezda shipyard signing an agreement for designs with a different South Korean shipbuilder, Samsung Heavy Industries, which will remain a technical partner in the project.
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New Zealand’s Genesis Energy to resume coal imports
New Zealand’s Genesis Energy to resume coal imports
Sydney, 8 May (Argus) — New Zealand's upstream firm and utility Genesis Energy plans to resume thermal coal imports later this year to feed its dual gas- and coal-fired Huntly power plant. The resumption was because of lower domestic gas production and rapidly declining coal stockpiles, and will mark the firm's first coal imports since 2022. Coal inventories at the 953MW Huntly plant, — New Zealand's largest power station by capacity and the country's only coal-fired facility — recently slipped below 500,000t, down from 624,000t at the end of March, and will fall below 350,000t by the end of the winter. This will trigger a need to purchase more coal to maintain a target operational stockpile of around 350,000t ahead of winters in 2025 and 2026, the company said on 8 May. Imports are currently the most efficient option for the quantity the company will need, with a delivery time of around three months, chief executive Malcolm Johns said. Genesis typically imports from Indonesia, the company told Argus . Gas production in New Zealand has dropped at a faster rate than expected, with major field production in April down by 33pc on the year, Genesis said. Lower gas availability typically leads to more coal burn, because the Huntly plant runs on gas and coal. This is in addition to an extended period of low hydropower inflows in recent months, which required higher thermal generation to ensure supply security. A prolonged outage at Huntly's unit 5 gas turbine between June 2023 and January 2024 also led to an even greater need for coal-fired generation, Genesis said. Biomass transition The company — which is 51pc owned by the state — is the second-largest power retailer in New Zealand, behind domestic utility Mercury, according to data from the Electricity Authority. It has a NZ$1.1bn ($659mn) programme for renewable power generation and grid-scale battery storage , which includes a potential replacement of coal with biomass at Huntly. But the transition to biomass "will take some years," Johns said. Genesis has successfully completed a biomass burn trial at Huntly last year and has collaboration agreements with potential New Zealand pellet suppliers, but there is currently no local source for the type of pellets needed for the plant. Genesis is hoping to move to formal agreements "as soon as counterparties are able". The company will not consider importing pellets, it told Argus . "We will only use biomass if we can secure a local New Zealand supply chain that is sustainable and cost-effective," it said. Domestic gas production New Zealand's three-party coalition government said separately on 8 May that the "material decline" in local gas production threatens energy security, blaming the previous Labour party-led government for "policy decisions which have disincentivised investment in gas production." The decisions — which were part of the former government's pledge to achieve a carbon-neutral economy by 2050 — led to a reduction in exploration for new gas resources since 2021, while suppressed maintenance drilling reduced production from existing gas fields, according to a joint release from energy minister Simeon Brown and resources minister Shane Jones. "Due to this significant reduction in gas production, the government has also been advised that some large gas consumers are expressing concern about their ability to secure gas contracts," the government said. Major industrial users such as Canada-based methanol producer Methanex have been forced to reduce production as a result, it noted. "We are working with the sector to increase production, and I will be introducing changes to the Crown Minerals Act to parliament this year that will revitalise the sector and increase production," Jones added. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EPA sets new oil and gas methane reporting rules
EPA sets new oil and gas methane reporting rules
Washington, 7 May (Argus) — Federal regulators have updated emissions reporting requirements for oil and gas facilities as they prepare to implement a methane "waste" fee for the industry. The US Environmental Protection Agency (EPA) on Monday finalized new rules it says will improve the accuracy of data from the oil and gas sector under the federal greenhouse gas emissions reporting program. Oil and gas facility owners and operators will be required to estimate emissions from additional types of equipment under the rule, and they can draw on newer technologies, like remote sensing, to help estimate emissions. "EPA is applying the latest tools, cutting edge technology, and expertise to track and measure methane emissions from the oil and gas industry," agency administrator Michael Regan said. "Together, a combination of strong standards, good monitoring and reporting, and historic investments to cut methane pollution will ensure the US leads in the global transition to a clean energy economy." Data to support new fee The revisions to the "Subpart W" reporting requirements will be used to determine the amount of methane that will be subject to a "waste emissions charge" created by the Inflation Reduction Act. Under the law, the charge will be calculated based on the annual data that about 8,000 oil and gas sources are now required to report. The charge will begin at $900/t for 2024 methane emissions above a minimum threshold using current measurement data. It will then rise to $1,200/t in 2025 and $1,500/t in subsequent years. Industry officials had raised "serious concerns" about several aspects of the original proposal , warning it could lead to inflated emissions data. "We are reviewing the final rule and will work with Congress and the administration as we continue to reduce GHG emissions while producing the energy the world needs," American Petroleum Institute vice president of corporate policy Aaron Padilla said. The industry group previously said it will ask Congress to repeal the fee, which is only likely to occur if Republicans win control of the White House. Data collected since 2010 Oil and gas facilities have reported emissions under Subpart W since 2010. To simplify reporting, operators often count the equipment they have deployed, and use industry-wide averages to estimate emissions, in addition to other direct and indirect measurements. The industry has argued the Subpart W data is not accurate enough to collect the methane charge, which is expected to cost operators more than $6bn over the next decade. Environmental groups have had their own criticisms of the data, which they say omits vast amounts of emissions such as those from "super-emitter" events and poorly maintained flares. The final rule seeks to respond to some of those concerns by relying on updated emission factors, incorporating additional empirical data on emission rates, collecting data at a more granular level and relying on remote sensing technologies to detect large emission events. EPA also revised Subpart W to include more types of sources, including produced water tanks, nitrogen removal units and crankcase venting. The final rule also sets a threshold of 100 kg/hr of methane for requiring the reporting of emissions from "other large release events." The new data rules will take effect on 1 January 2025 and will first apply to reports submitted in early 2026 for next year's emissions. EPA is allowing the use of the new methodologies for calculating 2024 emissions, but operators can still use the existing rules. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Gorgon LNG train to be out for five weeks
Australia’s Gorgon LNG train to be out for five weeks
Singapore, 7 May (Argus) — One of three trains at Australia's 15.6mn t/yr Gorgon export terminal will be off line for five weeks, a source familiar with Gorgon operations told Argus on 7 May. The train has been off line since 30 April because of a mechanical fault in a turbine. The five-week shutdown expectation is slightly longer than the initially expected shutdown period of about 2-3 weeks, traders said. Each week of downtime on one train at Gorgon reduces the terminal's available liquefaction capacity by about 100,000t. The five-week shutdown is likely to reduce the terminal's production by about 5-8 cargoes, traders said. One standard-sized cargo is roughly equivalent to 60,000-70,000t of LNG. But overarching sentiment from market participants is that the impact on both prices and supply will be limited, as only one train is affected and there are ample cargoes for June and July. There will be a temporary spike in prices as affected buyers — if any — will have to secure prompt cargoes to replace lost LNG from Gorgon, keeping prices supported well above $10/mn Btu, traders said. The shutdown will have a greater impact on prices if repair works drag on for longer and affect summer deliveries, they added. The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia, for the first and second half June were assessed at $10.57/mn Btu and $10.58/mn Btu on 7 May, higher by 40¢/mn Btu from the previous day. First- and second-half July ANEA prices were assessed at $10.64/mn Btu and $10.66/mn Btu, up by 36¢/mn Btu/mn Btu from a day earlier. Chevron has rescheduled deliveries of some LNG cargoes for their Asian offtakers, according to some traders. Further details are unclear. Shell might have bought around 3-4 cargoes because of the shutdown at Gorgon, according to traders. It is not clear whether the cargoes are for June or July delivery. Some traders have offered both June- and July-delivery cargoes to Chevron but the firm has responded by saying that the shortfall can be managed by optimising its own portfolio, traders said. The Gorgon LNG joint venture is operated by Chevron with a 47pc stake, while ExxonMobil and Shell hold 25pc each. By Simone Tam Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US majors widen output gap over European rivals
US majors widen output gap over European rivals
New York, 6 May (Argus) — ExxonMobil and Chevron are seeing investments in Guyana and the Permian shale basin pay off, widening a gap with their transatlantic counterparts that could get even bigger with the completion of recent mega-deals. ExxonMobil is championing a speedy ramp-up of a massive offshore oil discovery in Guyana, where production has surged to more than 600,000 b/d of oil equivalent (boe/d) in the space of just a few years. And Chevron recorded a 35pc jump in first-quarter US output from a year earlier, buoyed by better-than-expected performance from the Permian basin, as well as the $7.6bn acquisition of US independent PDC Energy that bolstered its footprint in Colorado's DJ basin. And after years of delays and cost overruns, its highly vaunted expansion project in Kazakhstan is finally close to seeing the light of day. Even though European rivals including Shell and BP are backtracking on previous plans to scale back their reliance on oil and gas production, the US majors are poised to extend their lead after dominating a recent round of industry consolidation. ExxonMobil will become the top producer in the Permian after wrapping up its $59bn takeover of shale giant Pioneer Natural Resources. Anti-trust regulators at the US Federal Trade Commission cleared the deal after barring Pioneer's former chief executive, Scott Sheffield, from gaining a seat on the board, following allegations that he sought to collude with Opec members. And Chevron is still optimistic that its pending $53bn purchase of independent producer Hess will close by the end of the year, even though ExxonMobil has thrown a spanner in the works by claiming its right of first refusal over Hess' 30pc stake in Guyana's prolific Stabroek block, where it is the operator. Chevron's attempt to muscle in on Guyana's oil riches would answer lingering concerns over its long-term growth profile. The dispute has now been referred to international arbitration in Paris and the company hopes the transaction can be completed this year. A failure of the deal to close would not "materially" hit Chevron's near-term valuation, according to bank HSBC. "However, the strategic gap between Chevron and ExxonMobil could widen over time if the Hess deal does not happen," the bank says. Advantage Exxon Excluding the Pioneer transaction, ExxonMobil forecasts its output will grow to 4.2mn boe/d by 2027 from about 3.8mn boe/d this year. Chief executive Darren Woods has doubled down on so-called "advantaged" projects including Guyana and the Permian, which offer the most profitable and low-cost barrels that will be key drivers of revenue growth. The company's share of overall production from such assets has increased to 44pc from 28pc in recent years. Woods sees the growing cash flow from those projects as vindication of his strategy to direct "counter-cyclical" investments before and during the pandemic, which were unpopular with some investors at the time. Spending discipline remains a key priority even as new projects start up. ExxonMobil has achieved $10.1bn of cost savings from 2019 levels, and is on course to hit $15bn by 2027. And Woods says there is scope for even more savings to be found. Meanwhile, Chevron says its output from the Permian is trending better than previous guidance for a 2-4pc decline in the first half of 2024, with more wells due to come on line later this year. The company is also preparing to start up its Anchor offshore platform in the Gulf of Mexico in the middle of the year, with more projects in the region to follow. "The outlook in the US is especially strong," chief executive Mike Wirth says. Chevron is guiding for 4-7pc overall output growth this year, after pumping a record 3.1mn boe/d last year. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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