Mountain Valley line adds to rift on permit bill
Part of a fast-tracked permitting bill that would force the approval of the $6.6bn Mountain Valley natural gas pipeline has become a core part of debate over its path to passage.
The bill, drafted by US senator Joe Manchin (D-West Virginia), would approve all of the required federal permits for the pipeline within 30 days and explicitly seek to shield those permits from legal challenges. That could swiftly bring an end to years of litigation over the 300-mile pipeline, allowing it to complete construction and begin transporting 2 Bcf/d (57mn m³/d) of gas from West Virginia into markets in the eastern US.
That provision has won praise from Republicans such as US senator Shelley Moore Capito (R-West Virginia) whose votes could be key to reaching a filibuster-proof 60 votes when the measure comes up for a vote in the Senate next week. But it has also drawn the fury of environmental groups and some Democrats, who see it as unfair to exempt the project from having to obtain new permits after federal courts found problems with past approvals.
Having Congress "put its thumb on the scale and simply approve this project" while shutting down a chance for legal challenges is at odds with a bipartisan goal to make permitting transparent, US senator Tim Kaine (D-Virginia) said. The Mountain Valley Pipeline would cross through large parts of Virginia, where many residents oppose the project.
Kaine did not say if he plans to vote against the bill, which Senate Democrats plan to attach to a measure that would avoid a government shutdown after 30 September, but said he otherwise supports much of the bill. Manchin's bill would also set time limits on environmental reviews, expedite work on projects of "national importance" and try to fast-track construction of new electric transmission projects.
Midstream operator Equitrans Midstream, the lead developer of the Mountain Valley Pipeline, said it was still committed to bringing the project into service in the second half of 2023. The company said the permitting bill would benefit "all energy infrastructure projects" but did not say how it would affect Mountain Valley Pipeline, which it says is 94pc complete.
Manchin has previously predicted the Mountain Valley Pipeline could come on line within six months after his bill passes, offering short-term relief to high natural gas prices. Nymex Henry Hub natural gas futures settled at an average of $7.68/mmBtu on Wednesday for the winter heating season of October to March, a more than 60pc increase over spot prices last winter.
"Nothing puts more product in the market quicker and helps relieve the shortages that we have right now," Manchin said this week.
President Joe Biden says he supports the permitting bill, which was part of the negotiations to secure Manchin's vote for a new law with $369bn in climate spending. The bill would "unlock the potential" of energy projects that would promote energy security and support the construction of clean energy, the White House said.
If the bill gets enough votes in the Senate, it will still need broad Republican support to pass in the US House of Representative because of opposition from progressive Democrats. The bill has "fossil fuel's fingerprints all over the text" and the approval of the Mountain Valley Pipeline is the "rotten cherry on top," House Natural Resources Committee chairman Raul Grijalva (D-Arizona) said.
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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, operator Chevron told Argus on 7 May. The train has been off line since 30 April because of a mechanical fault in a turbine. Chevron's 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.
Brazil hydroelectric dam bursts under record rains
Brazil hydroelectric dam bursts under record rains
Sao Paulo, 3 May (Argus) — Brazilian power generation company Companhia Energetica Rio das Antas (Ceran) found a partial rupture in its 100MW 14 de Julho hydroelectric plant following record precipitation in Rio Grande do Sul state. Flooding from the record rains has left 37 dead and forced more than 23,000 people out of their homes, causing widespread damage across the state, including washed out bridges and roads across several cities. Ceran reported that the dam of the hydroelectric plant on the Antas River suffered a rupture under the heavy rains and the company implemented an emergency evacuation plan on 1 May. Ceran's 130MW Monte Claro and 130MW Castro Alves plants are under intense monitoring, the company said in a statement. Rio Grande do Sul state governor Eduardo Leite declared a state of emergency and the federal government promised to release funding for emergency disaster relief. Leite said the flooding will likely go down as the worst environmental disaster in the state's history. Brazil's southernmost state along the border with Argentina has been punished by record precipitation over the past year owing to the effects of the strong El Nino weather phenomenon, according to Rio Grande do Sul-based weather forecaster MetSul Meteorologia. Brazilian power company CPFL Energia controls Ceran with a 65pc equity stake. Energy company CEEE-GT, which is owned by steel manufacturer CSN, owns another 30pc, and Norway's Statkraft owns the remaining 5pc. The state had declared a state of emergency as recently as September 2023 because of unusually heavy rains that resulted in the death of more than 30 people. Weather forecasters expect El Nino conditions to abate in the coming months over the eastern Pacific. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chevron’s oily DJ basin buy boosts gas output
Chevron’s oily DJ basin buy boosts gas output
New York, 3 May (Argus) — Chevron's US natural gas production has surged in recent quarters due to its crude-focused acquisition of Denver-based PDC Energy last August, increasing the oil major's exposure to the US gas market months after that market entered an extended price slump. Chevron's US gas production in the first quarter was 2.7 Bcf/d (76mn m3/d), up by 53pc from the year-earlier quarter and the highest since at least 2021, according to company production data. Chevron's total US output rose by 35pc year-over-year to 1.57 b/d of oil equivalent (boe/d), while US crude output increased by 21pc to 779,000 b/d. The acreage Chevron picked up last year in the DJ basin of northeast Colorado and southeast Wyoming has higher gas-oil ratios than the rest of its US portfolio. Chevron mostly focuses US production in the crude-rich Permian basin of west Texas and southeast New Mexico. Since Chevron closed its acquisition of PDC on 7 August, US gas prices have mostly languished in loss-making territory. Prompt-month Nymex gas settlements at the US benchmark Henry Hub from 7 August 2023 to 2 May 2024 averaged $2.46/mmBtu, down from an average of $4.999/mmBtu in the year-earlier period. In a May 2023 conference call over Chevron's acquisition of PDC, chief executive Mike Wirth expressed optimism for the long-run outlook for natural gas, despite the more immediately dim outlook. "There's going to be stronger global demand for gas growth than there will be for oil over the next decade and beyond as the world looks to decarbonize," Wirth said. Despite lower US gas prices, Chevron has captured $600mn in cost savings from the PDC acquisition between capital and operational expenditures, the company told Argus . Crude prices have also been more resilient. Chevron's profit in the first quarter was $5.5bn, down from $6.6bn in the year-earlier quarter, partly due to lower gas prices. US gas prices have been lower this year as unseasonably warm winter weather and resilient production have created an oversupplied US gas market. A government report Thursday showed US gas inventories up by 35pc from the five-year average. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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