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Equinor gets nod for strong Oseberg 2024-25 gas output

  • : Natural gas
  • 24/09/04

The Norwegian energy ministry has given the green light for a high Oseberg gas production quota for the 2024-25 gas year, but has concerns about the effect of an acceleration of gas exports on oil production.

While the ministry would not reveal to Argus how much gas it has permitted state-controlled Equinor to produce from Oseberg in October 2024-September 2025, other details from the permit approval letter suggest that the quota is again high. But the ministry has cautioned that Equinor must ensure maximum recovery of the oil in the main Oseberg Brent reservoir. It has ordered the field's operator to include an updated overall drilling plan in its 2025-26 permit application.

Gas blowdown has begun at the main parts of the Oseberg field, which involves a shift to gas production rather than gas injections as the amount of oil that can be profitably extracted declines. The gas production permit — for Oseberg, Oseberg Sor and Oseberg Ost combined — was 7bn m³ in each of the past three gas years including 2023-24, up from 5bn m³ in 2020-21 and 4bn m³ in 2019-20 (see graph).

The Oseberg licensees also plan to produce part of the gas in 2024-25 that has been "carried forward" from previous gas years. The Oseberg permit has flexibility within defined constraints — shareholders can under or overproduce against their quota and balance it out with higher or lower output in the following gas years.

To ensure sufficient gas production capacity to support its planned 2024-25 exports, Equinor initially submitted a request to the Norwegian Offshore Directorate (NOD) to accelerate two gas wells that it had previously planned to drill after two time-critical oil wells. Following discussion with the NOD, Equinor adjusted its plan and now aims to recomplete one gas well and speed up another gas well. Compared with the option of accelerating two gas wells, this entails a lower risk of the two oil wells being pushed back past the remaining time window for viable drilling, the ministry said. This balance between consideration of remaining oil and ensuring gas production capacity is "satisfactory", according to the NOD.

The ministry, after considering the directorate's advice, assessed that Equinor's requested 2024-25 gas production volume and drilling plan "support good resource management". But the ministry expressed concerns that Equinor's plan to delay drilling of oil wells to prioritise gas wells will mean that reservoir pressure becomes too low for profitable oil extraction.

The ministry specified that it is approving the 2024-25 gas production and drilling plan on the basis that Equinor will extract gas "to the greatest extent possible" from reservoir segments that have the least remaining oil potential, so that the pressure at oil reservoirs is maintained for as long as possible. Equinor must continue to monitor the reservoir, the ministry said. And it should take measures if gas extraction has unexpected consequences and inform the resource authorities of this, the ministry said.

The NOD emphasises that the Oseberg C facility has a shorter expected lifetime than the facilities at the Oseberg field centre. Since only Oseberg C can drill wells to the northernmost segment of Oseberg, called Alpha Nord, all necessary oil and gas wells for this segment must be drilled early enough for reserves to be produced before Oseberg C is shut down. Equinor must also investigate and implement other measures such as low-pressure production to achieve the greatest possible value creation from the Oseberg field, the ministry said.

Equinor must submit its application for a 2025-26 gas permit by 1 February. Its plan needs to include an updated overall drilling strategy, and it needs to be clarified with the ministry in good time for submission, the ministry said.

Oseberg gas permit vs production bn m³

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24/10/10

Mexico’s Sep inflation slows with energy prices

Mexico’s Sep inflation slows with energy prices

Mexico City, 10 October (Argus) — Lower energy prices supported an easing in Mexico's consumer price index (CPI) in September for a second consecutive month. The CPI slowed to an annual 4.58pc in September, down from 4.99pc in August, Mexico's statistics agency Inegi said on 9 October. This was lower than both Mexican bank Banorte's own 4.59pc estimate and its analysts' consensus estimate of 4.61pc. Energy inflation eased for a second month, dropping to 6.9pc from 7.9pc in August and 9.2pc in July, with LPG prices — the largest component — slowing to 14.7pc in September from 16.8pc in August and 25.6pc in July. Seasonal rains, now ending, have largely reversed the price spikes in farm goods caused by extreme drought earlier this year, with fruit and vegetable inflation slowing to 7.65pc in September from 12.6pc in August, making it the first single-digit rate since November 2023. "Despite the positive performance of agricultural items since August, lingering risks could turn them negative again," Banorte said in a note, emphasizing that above-normal rainfall will be needed in the coming months to avoid a return to drought and price spikes next year. For now, Mexican weather agency Conagua still estimates relatively heavy rains in October, but "more adverse" conditions for November and December, with no state forecast to exceed the upper range of historical rainfall. Core inflation, which strips out volatile food and energy, eased in September to 3.9pc from 4pc, moving within the central bank's 2pc to 4pc target range for the first time since February 2021. Inside core, said Banorte, packaged and manufactured goods continue to improve, standing at 2.9pc from 3pc in August. Services also moderated, adjusting to 5.1pc from 5.2pc. "A downward trend in the latter is needed to corroborate additional gains for the core," Banorte said. "This will still take some time, especially given that the margin for additional declines in goods may be running out." The Mexican bank added that within this context, it maintains its estimate for full-year 2024 core inflation to hold to 3.9pc. Though less weighted than core inflation, the bulk of September's easing in the headline was due to non-core inflation, including prices on more volatile items such as fuels and farm goods. Inegi reported non-core moving to 6.5pc in September from 8pc in August. Despite two months of better-than-expected price improvements, Banorte warned that "risks remain," with energy prices susceptible to gains amid "geopolitical tensions in the Middle East and economic stimulus in China." Still, there is "room to adjust gasoline subsidies" to cushion these effects, it added. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hurricane Milton leaves 3.4mn in the dark


24/10/10
24/10/10

Hurricane Milton leaves 3.4mn in the dark

New York, 10 October (Argus) — About 3.4mn customers in Florida were without power this morning after Hurricane Milton pummeled the state with heavy rainfall and strong winds. Utility crews began the process of assessing and repairing the damage caused by the hurricane which tore down trees and downed power lines after slamming into Florida's west coast as a powerful Category 3 hurricane late Wednesday. Florida Power & Light had about 1.2mn homes and businesses without electricity, Duke Energy reported about 875,000 outages, while about 592,000 customers of Tampa Electric were affected, according to independent tracker Poweroutage.us. Milton, which has since weakened to a category 1 storm with maximum sustained winds of 85mph, is now moving off the east coast of Florida. "On the forecast track, the center of Milton will continue to move away from Florida and pass to the north of the Bahamas today," according to the National Hurricane Center. The risk of life-threatening storm surge remains on the eastern coast of Florida, while hurricane-force winds are expected to linger for a few more hours. Major flooding as a result of heavy rainfall also continues to pose a threat. A recovery in road fuel supplies, which were strained by the pre-storm evacuation of hundreds of thousands of residents, will depend on the extent of power, roadway and port outages. The state has waived statutes regulating the sale, storage and distribution of liquid fuels . By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation slows to 2.4pc in Sep


24/10/10
24/10/10

US inflation slows to 2.4pc in Sep

Houston, 10 October (Argus) — US inflation slowed slightly less than expected in September, but still came in at the lowest annual rate since February 2021, in the first major inflation report since the Federal Reserve started cutting interest rates last month. The headline consumer price index (CPI) eased to an annual 2.4pc in September, down from 2.5pc in August, according to the Labor Department. The decline was less than the 2.3pc forecast in a survey of economists by Trading Economics. Excluding volatile food and energy, so-called core inflation rose to a 3.3pc annual pace, higher than forecasts for core inflation to match the prior period's 3.2pc pace. Today's report is the final CPI report ahead of the next Federal Reserve policy decision on 7 November and it follows a much stronger than expected employment report for September, which together could prompt the Fed to move more cautiously. Still, CPI has come down sharply from its peak of 9.1pc in mid-2022 and, despite aggressive Fed tightening, hiring has continued at a healthy rate and the overall economic expansion remains on track, partly thanks to falling energy prices. The energy index contracted by an annual 6.8pc pace in September after contracting 4pc through August. The food index rose by an annual 2.3pc following a 2.1pc gain in the prior period. Transportation services rose by 8.5pc. Within energy, the gasoline index fell by 15.3pc after a 10.3pc decline in the prior period. Energy services rose by 3.4pc after a 3.1pc gain. Natural gas services rose by 2pc. Shelter rose by 4.9pc after a 5.2pc gain. Transportation services rose by 8.5pc following a 7.9pc gain. Auto insurance was up 16.3pc. On a monthly basis, CPI rose by 0.2pc in September, matching gains in August and July, Labor said. Shelter rose by 0.2pc and food increased by 0.4pc, together accounting for over 75pc of the monthly headline increase, Labor said. The energy index declined by 1.9pc over the month, after falling by 0.8pc in the prior month . By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Strike starts at Chevron Australia's LNG sites: Update


24/10/10
24/10/10

Strike starts at Chevron Australia's LNG sites: Update

Adds comment from Altrad spokesperson in paragraph 3 Sydney, 10 October (Argus) — Members of Australian LNG workers' union the Offshore Alliance (OA) that are employed by companies owned by engineering firm Altrad are undertaking protected industrial action (PIA) at Chevron Australia's two LNG facilities. About 140 gas maintenance workers began rolling stoppages and work bans today because of dissatisfaction with negotiations for a new enterprise bargaining agreement, the OA said. The PIA can occur for 30 days from when the results of a union members' ballot was declared on 2 October, and may be extended if agreed by the Fair Work Commission. Altrad remains committed to the continuing bargaining process, a spokesperson for the firm said on 10 October, promising to "continue to seek an equitable outcome to negotiations" in the interests of employees and Altrad. Workers are demanding union rates and conditions on every offshore and onshore oil and gas facility, the OA said, promising to push back against baseline workplace agreements presently in place. Striking staff include technicians, scaffolders, riggers, painters and plasterers working for Altrad at the Chevron's 8.9mn t/yr Wheatstone LNG and 15.6mn t/yr Gorgon LNG facilities in Western Australia state, as well as Wheatstone's offshore platform. Chevron Australia is aware Altrad employees have started industrial action, but said no impact to production are expected. "Given the nature of the work undertaken by Altrad and the mitigations in place, it is not anticipated there will be any impact to LNG and domestic gas production nor to any critical business activities at our facilities," a Chevron spokesperson said on 10 October. The dispute comes almost 12 months after Chevron reached an agreement with the OA — formed by the Australian Workers' Union and Maritime Union of Australia — on three deals regarding pay and conditions at its LNG terminals and upstream facilities. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Altrad Australia's workers strike at Chevron LNG sites


24/10/10
24/10/10

Altrad Australia's workers strike at Chevron LNG sites

Sydney, 10 October (Argus) — Members of Australian LNG workers' union the Offshore Alliance (OA) that are employed by companies owned by engineering firm Altrad are undertaking protected industrial action at Chevron Australia's two LNG facilities. About 140 gas maintenance workers began rolling stoppages and work bans today because of dissatisfaction with negotiations for a new enterprise bargaining agreement, the OA said. The workers include technicians, electrical and instrumentation technicians, scaffolders, riggers, painters and plasterers working for Altrad at the Chevron's 8.9mn t/yr Wheatstone LNG and 15.6mn t/yr Gorgon LNG facilities in Western Australia state, as well as Wheatstone's offshore platform. Chevron Australia is aware employees have started industrial action, a spokesperson said. But the firm does not anticipate any impact to LNG and domestic gas production or any critical business activities, given the nature of the work undertaken by Altrad and mitigations in place. Altrad was contacted for comment, but has yet to respond. Workers are demanding union rates and conditions on every offshore and onshore oil and gas facility, the OA said, promising to push back against baseline workplace agreements presently in place. The dispute comes almost 12 months after Chevron reached an agreement with the OA — formed by the Australian Workers' Union and Maritime Union of Australia — on three deals regarding pay and conditions at the LNG terminals and upstream facilities. 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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