Home » Posts tagged 'international energy agency'

Tag Archives: international energy agency

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers.  The factors afflicting the gas market are multiple. Prices had already fallen below $2/MMBtu at the start of 2020, weighed down by oversupply. But it wasn’t a problem confined to the U.S. There was also a global glut of LNG due to a wave of capacity additions in 2019.  

That was the situation heading into 2020. But just as the Covid-19 pandemic tore apart the oil market, natural gas also went into a tailspin. Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency. 

Buyers of U.S. LNG are now cancelling shipments at a rapid clip. U.S. LNG exports have declined by more than half compared to pre-pandemic levels.

“There would have been too much LNG in the world even without Covid-19,” Ben Chu, a director at Wood Mackenzie’s Genscape service, said in a statement. “Covid-19 has made it worse.”

Buyers abroad are willing to pay a cancellation fee instead of receiving shipment from U.S. exporters, a sign of how badly the market has deteriorated. For August delivery, between 40 and 45 cargoes have been cancelled, nearly double the rate of cancellation in June. 

Typically, cheaper gas can stimulate demand, particularly in the electric power sector. But that outlet is not as large as it may have been in the past, not least because gas has already been cheap for quite some time. Thus, the coal-to-gas option is limited. Without an export route, and without larger uptake from utilities, the gas glut has deepened. 

…click on the above link to read the rest of the article…

WTI Extends Losses Below $20 After Record Surge In Crude Inventories

WTI Extends Losses Below $20 After Record Surge In Crude Inventories

WTI crashed below $20 (tagging $19.20) overnight after API reported huge inventory builds and was not helped by comments from the International Energy Agency that a historic production cut deal won’t be enough to counter a record demand slump this year.

This appears to confirm a key gauge of the oil market’s health which is at its weakest in more than a decade as supplies build and futures contracts roll over. West Texas Intermediate crude for May delivery traded at more than $7 a barrel below its June contract on Tuesday, the deepest contango since 2009. The May contract is nearing expiration and exchange-traded funds, including the United States Oil Fund, have been selling front-month contracts and buying second-month futures.

Source: Bloomberg

Simply put, this is an indication of extreme oversupply.

“At least over the next month or so, before these cuts have an opportunity to kick in, we are going to be very stressed on inventories,” Bart Melek, head of commodity strategy at TD Securities, said by telephone.

And so all eyes are once again on the inventories for any positive signs…

API

  • Crude +13.143mm (+10.1mm exp)
  • Cushing +5.361mm
  • Gasoline +2.226mm (+7.1mm exp)
  • Distillates +5.64mm (+1.8mm exp)

DOE

…click on the above link to read the rest of the article…

Many signs of peak oil and decline

Many signs of peak oil and decline

Preface.  Recently the IEA 2018 World Energy Outlook predicted an oil crunch could happen as soon as 2023.  Oil supermajors are expected to have 10 years of reserve life or more, Shell is down to just 8 years.

Political shortages are as big a problem as geological depletion. At least 90% of remaining global oil is in government hands, especially Saudi Arabia and other countries in the middle east that vulnerable to war, drought, and political instability.

And in 2018, the U.S. accounted for 98% of global oil production growth and since 2008, the U.S. accounted for 73.2% of the global increase in production (see Rapier below).   What really matters is peak diesel, which I explained in “When trucks stop running”, and fracked oil has very little diesel, much of it is only good for plastics, and yet America may well be the last gasp of the oil age if production isn’t going up elsewhere.

Related

2019. When will ‘peak oil’ hit global energy markets? dw.com.  Darren Woods, CEO of ExxonMobil predicts a 25% rise in global energy demand for the next two decades, due to “global demographic and macroeconomic growth trends. When you factor in depletion rates, the need for new oil grows at 8% a year,” he told analysts in March.

***

Clearly the depth of wells we need to drill show we are reaching peak oil production:  2019-11-19 The Truth About The World’s Deepest Oil Well

How deep into the ground do we have to go to tap the resources we need to keep the lights on? How deep into the ground are we able to go? 

The first oil well drilled in Texas in 1866 was a little over 100 feet deep: the No 1 Isaac C. Skillern struck oil at a depth that, from today’s perspective, is ridiculously shallow.

…click on the above link to read the rest of the article…

The “Twin Threats” Facing Big Oil

The “Twin Threats” Facing Big Oil

Wolfcamp rig

The global oil and gas industry is facing the “twin threats” of the loss of profitability and the loss of social acceptability as the climate crisis continues to worsen. The industry is not adequately responding to either of those threats, according to a new report from the International Energy Agency (IEA).

“Oil and gas companies have been proficient at delivering the fuels that form the bedrock of today’s   energy system; the question that they now face is whether they can help deliver climate solutions,” the IEA said.

The report, whose publication was timed to coincide with the World Economic Forum in Davos, critiques the oil industry for not doing enough to plan for the transition. The IEA said that companies are spending only about 1 percent of their capex on anything outside of their core oil and gas strategy. Even the companies doing the most are only spending about 5 percent of their budgets on non-oil and gas investments.

There are some investments here and there into solar, or electric vehicle recharging infrastructure, but by and large the oil majors are doing very little to overhaul their businesses. The top companies only spent about $2 billion on solar, wind, biofuels and carbon capture last year.

Before even getting to the transition risk due to climate change, the oil industry was already facing questions about profitability. Over the past decade the free cash flow from operations at the five largest oil majors trailed the total sent to shareholders by about $200 billion. In other words, they cannot afford to finance their operations and also keep up obligations to shareholders. Something will have to change. 

…click on the above link to read the rest of the article…

IEA: An Oil Glut Is Inevitable In 2020

IEA: An Oil Glut Is Inevitable In 2020

Sohar oil tanks

Despite the OPEC+ cuts, the oil market is still facing a supply surplus in 2020, according to a new report from the International Energy Agency (IEA).

OPEC+ announced additional cuts of 500,000 bpd, which sounds more impressive than it is because the group was already producing under its limit. In November, for instance, OPEC was producing 440,000 bpd below the agreed upon ceiling.

Saudi Arabia agreed to shoulder an additional 400,000 bpd of voluntary cuts. But the deal also exempts 1.5 million barrels per day (mb/d) of Russia’s condensate production, allowing Russia to actually increase condensate output by 0.8 mb/d.

Still, the deal should take supply off the market. “If all the countries comply with their new allocations and Saudi Arabia delivers the rest of its voluntary cut of 0.4 mb/d, the fall in production volume versus today will be about 0.5 mb/d,” the IEA said.

OPEC said in its own report that the oil market would be largely in balance in 2020, albeit with a temporary glut in the early part of the year. The IEA sees inventories building at a rate of 0.7 mb/d in the first quarter.

The IEA cut its forecast for non-OPEC supply growth from 2.3 mb/d to 2.1 mb/d, due to weaker growth from Brazil, Ghana and the United States. The U.S. typically gets all of the attention, but disappointing news from Brazil and Ghana also led the IEA to revise forecasts lower.

Notably, Tullow Oil revealed a major disappointment from its Ghana operations, causing a complete meltdown in its share price this week. Its stock fell nearly 70 percent in a single day as investors overhauled their valuation of the company. Tullow admitted that its production from Ghana would decline in the years ahead.

…click on the above link to read the rest of the article…

The Country Using The Most Electricity May Surprise You

The Country Using The Most Electricity May Surprise You

In 2017, global electricity consumption increased 2.5 percent to reach 25,721 Twh.

When it comes to consumption, China uses the most of any country at 25.9 percent, followed by the United States with 17.5 percent; but, as Statista’s Niall McCarthy noteson a per capita basis, the situation is different.

According to the IEA Atlas of Energy, electricity consumption in Iceland was 54.4 megwatt hours per capita in 2017, the highest level of any country.

Infographic: Which Countries Use The Most Electricity?  | Statista

You will find more infographics at Statista

That’s primarily due to abundant natural resources that make electricity production affordable along with energy-intensive industries. The harsh and dark Icelandic climate also contributes to heavy demand for electricity.

The situation is similar in Norway which comes second with 23.7 megawatt hours per capita.

Bahrain, Qatar and Kuwait follow due to considerable demand for air conditioning.

Many signs of peak oil and decline

Many signs of peak oil and decline

Preface.  Recently the IEA 2018 World Energy Outlook predicted an oil crunch could happen as soon as 2023.  Oil supermajors are expected to have 10 years of reserve life or more, Shell is down to just 8 years.

Political shortages are as big a problem as geological depletion. At least 90% of remaining global oil is in government hands, especially Saudi Arabia and other countries in the middle east that vulnerable to war, drought, and political instability.

And in 2018, the U.S. accounted for 98% of global oil production growth and since 2008, the U.S. accounted for 73.2% of the global increase in production (see Rapier below).   What really matters is peak diesel, which I explained in “When trucks stop running”, and fracked oil has very little diesel, much of it is only good for plastics, and yet America may well be the last gasp of the oil age if production isn’t going up elsewhere.

Related articles:

2019-6-10 World crude production outside US and Iraq is flat since 2005

***

Rapier, R. 2019. The U.S. accounted for 98% of global oil production growth in 2018. Forbes.

Earlier this month BP released its Statistical Review of World Energy 2019.   The U.S. extended its lead as the world’s top oil producer to a record 15.3 million BPD (my comment: minus 4.3 million BPD natural gas liquids, which really shouldn’t be included since they aren’t transportation fuels). In addition, the U.S. led all countries in increasing production over the previous year, with a gain of 2.18 million BPD (equal to 98% of the total of global additions),… which helped offset declines from Venezuela (-582,000 BPD), Iran (-308,000 BPD), Mexico (-156,000 BPD), Angola (-143,000 BPD), and Norway (-119,000 BPD).

Peak demand?  Hardly: “the world set a new oil production record of 94.7 million BPD, which is the ninth straight year global oil demand has increased.

Fickling, D. 2019. Sunset for Oil Is No Longer Just Talk. Bloomberg.

 …click on the above link to read the rest of the article…

Renewables power forward

Renewables power forward 

Renewable energy continues to outperform and outmuscle traditional sources of energy in the majority of countries across the globe. Renewables are now the cheapest power technology for new electricity generation across two-thirds of the world.  This is the startling finding of a new study from an authoritative agency published earlier this month. 

Bloomberg New Energy Finance’s assessment of the global energy picture is more objective that those of the oil and gas companies (like British Petroleum), or even of supposedly non-aligned agencies like the International Energy Agency, which tend to assume that that world will deviate only slowly from a business-as-usual path. On the other hand, BNEF is more concerned with global finance and investment opportunities: it tends to be clear-eyed and much more realistic about what the future holds.

Megawatt-scale wind turbine blades delivered

The numbers speak for themselves: solar photovoltaic modules, wind turbines and utility-scale lithium-ion batteries (the essential partner for solar and wind), are set to continue down strong cost-reduction curves of 28%, 14% and 18% respectively for each doubling in global installed capacity. This irresistible market pressure means that by 2030, the energy generated or stored and dispatched by this triumvirate of transformative technologies will undercut electricity generated by existing coal and gas plants almost everywhere.

In the BNEF scenario, the electrification of the major economic sectors substantially drives up the global demand for electricity.  But this power is not generated by carbon-based fuels. The world changes from two-thirds fossil fuels in 2018 to two-thirds zero carbon energy by 2050. For wind and solar this is 50-by-50: supplying 50% of the worlds electricity by 2050–effectively ending the era of fossil-fuel dominance in the power sector.

 …click on the above link to read the rest of the article…

‘High’ Oil Prices Are Already Dampening Demand

‘High’ Oil Prices Are Already Dampening Demand

Fatih Birol

Crude oil prices are affecting demand for the commodity negatively, the International Energy Agency’s head Fatih Birol told S&P Global Platts in an interview.

“The higher oil price environment may, if they stay around this level, also have an impact…put some downward pressure under demand growth,” Birol said. The warning follows the release of IEA’s latest Oil Market Report, in which the authority kept its oil demand growth projections for this year unchanged at 1.4 million bpd.

The agency’s boss noted that Brent over US$70 a barrel is affecting demand the most in the emerging markets that account for the most of demand growth, including China and India, but also the United States.

“So it will not be a surprise if we are to revise our demand numbers in the next edition of the oil market report if the prices remain at these levels,” he told S&P Global Platts.

For those that are watching oil price movements and the reactions of the world’s largest importers, this is not news. After a slump in the fourth quarter of last year, Brent has rebounded by about 40 percent, trading above US$70 at the moment.

Prices were pushed up by the entry into effect of the latest OPEC+ round of production cuts with Saudi Arabia leading the charge and cutting considerably more than it had agreed to, yet again in a bid to raise prices to levels it feels more comfortable with. However, these are levels that India and China do not feel equally comfortable with.

India relies on exports for more than 80 percent of its oil consumption and China is more dependent on imports than it would like to be. So, it is no wonder that the climb in prices “will definitely hurt oil demand if it soared especially in the important demand growth centers such as India,” according to Birol.

THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports

THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports

The Middle East is heading for a crisis in its oil industry.  Unfortunately, the market doesn’t realize there is any danger on the horizon because it mainly focuses on how much oil the Middle East is producing rather than its exports.  You see, it doesn’t really matter how much oil a country produces but rather the amount of its net oil exports.

A perfect example of this is Mexico.  As I mentioned in a recent article, NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer, Mexico is now a net importer of oil for the first time in more than 50 years.  Furthermore, the IEA – International Energy Agency, published in their newest OMR Report that Mexico is forecasted to lose another 170,000 barrels per day of oil production in 2019.  Thus, this is terrible news for the United States southern neighbor as it will have to import even more oil to satisfy its domestic consumption.

Now, when we think of the Middle East, we are mostly concerned with its oil production.  However, the Middle Eastern countries, just like Mexico, have been increasing their domestic consumption, quite considerably, over the past 40+ years.  How much… well, let’s take a look. Since 2000, total Middle East domestic oil consumption jumped from 5.1 million barrels per day (mbd) to 9.3 mbd in 2017:

As we can see, while Middle East oil production increased by 7.9 mbd from 2000 to 2017, domestic consumption expanded by 4.2 mbd.  This means that more than 50% of the Middle East’s production growth during this period was absorbed by domestic use.  The next chart shows how the changes in the regions oil production and consumption impacted net oil exports.

 …click on the above link to read the rest of the article…

IEA 2018 World Energy Outlook: Peak oil is here, oil crunch by 2023

IEA 2018 World Energy Outlook: Peak oil is here, oil crunch by 2023

Preface. I’ve been working on a post about the latest IEA 2018 World Energy Outlook report, but the excerpts from the cleantechnica article below states most clearly why there is likely to be a supply crunch as soon as the early 2020s and the investment implications.

Meanwhile, here’s what I’ve gleaned from other summaries of the report.

Although many hope that oil companies will drill for oil when prices go up and close the supply gap looming within the next few years, very little oil has been found to drill for for several years now. The IEA 2018 report also says that shale oil will not rescue us, and likely to peak in the mid-2020s.

Oil companies do have money, but they haven’t been drilling because there’s no cheap oil to be found, so instead they’ve been spending their money buying their shares back.

From  crashoil.blogspot.com: World Energy Outlook 2018: Someone shouted “peak oil”

This excerpt is in Spanish translated to English by google.  It shows a civilization crashing 8% decline rate that the IEA hopes will be brought to an also civilization crashing 4% rate with new oil drilling projects.

“How is this alarming graph interpreted? According to the text, the red is what they call “natural decline” and corresponds to how oil production would decrease if the companies did not even invest in maintaining the current wells; As explained in the report, it is 8% per year. The pink area corresponds to the “observed decline” and is what the IEA inferred how production will actually decline if companies invest what is needed for the correct maintenance of the current deposits. This decline corresponds to 4% per year.

 …click on the above link to read the rest of the article…

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

Offshore rig

Total U.S. oil production around 2025 will almost equal the combined production of Russia and Saudi Arabia, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Turkish state-run Anadolu Agency on Friday.

The huge growth in U.S. shale production will completely change the balance of oil markets, Birol told the news agency.

The IEA’s Oil 2018 report from earlier this year sees the United States dominating the global oil supply growth over the next five years.

OPEC capacity will grow only modestly by 2023, while most of the growth will come from non-OPEC countries, led by the United States, “which is becoming ever more dominant in the global oil market,” the IEA said.

Driven by light tight oil, U.S. production is seen growing by 3.7 million bpd by 2023, more than half of the total global production capacity growth of 6.4 million bpd expected by then. Total liquids production in the United States—including conventional oil, shale, and natural gas liquids—will reach nearly 17 million bpd by 2023, “easily making it the top global producer, and nearly matching the level of its domestic products demand,” the IEA said in March this year.

“The United States is set to put its stamp on global oil markets for the next five years,” Birol said back then.

The U.S. is currently pumping oil at record levels of more than 11 million bpd, while Russia and Saudi Arabia—which also hit record highs in October and November, respectively—will curtail 230,000 bpd and 322,000 bpd of their production in the first six months of 2019, respectively.

…click on the above link to read the rest of the article…

Shale Under Pressure As Oil Falls Below $50

Shale Under Pressure As Oil Falls Below $50

fracking operation

The OPEC+ cuts still are not doing very much to boost oil prices, dashing hopes for many U.S. shale producers. With companies in the process of formulating their budgets for 2019, the prospect of $50 oil sticking around raises questions about the heady production figures expected from the shale patch.

The IEA expects U.S. oil production to grow by 1.3 million barrels per day (mb/d) in 2019. But oil prices could significantly impact those projections. “Total U.S. shale oil growth is highly sensitive to WTI prices in the $40-60 range,” Morgan Stanley wrote in a December 13 note. The investment bank said that shale producers are growing more sensitive to prices below $60 but less sensitive to price spikes above $60. “If WTI remains around current levels (~$50/bbl), US growth should start to slow.”

The investment bank said that larger companies, such as ConocoPhillips or Occidental Petroleum, are less sensitive to price swings than smaller E&Ps. On the other hand, some companies could begin to slow production if prices linger at low levels. Morgan Stanley pointed to Apache Corp., Murphy Oil, Newfield Exploration, Oasis Petroleum, Whiting Petroleum and Chesapeake Energy. “With low oil prices, we see these companies slowing production growth in 2019 to spend within cash flow (or minimize outspend), [free cash flow] levels fall or turn negative, and leverage metrics move higher.”

Other analysts also see price sensitivity from the shale sector. “We expect 5-10% capex growth on average at $59 WTI, which should yield production growth of nearly 1.3mn b/d,” Bank of America Merrill Lynch wrote in a note. “However producers may budget for lower oil prices given the recent decline in prices and increase in uncertainty.”

…click on the above link to read the rest of the article…

Keeping Some of the Lights On: Redefining Energy Security

Keeping Some of the Lights On: Redefining Energy Security

Energy-security

Image: Camilla MP.

What is Energy Security?

What does it mean for a society to have “energy security”? Although there are more than forty different definitions of the concept, they all share the fundamental idea that energy supply should always meet energy demand. This also implies that energy supply needs to be constant – there can be no interruptions in the service. [1-4] For example, the International Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price”, the US Department of Energy and Climate Change (DECC) defines the concept as meaning that “the risks of interruption to energy supply are low”, and the EU defines it as a “stable and abundant supply of energy”. [5-7]

Historically, energy security was achieved by securing access to forests or peat bogs for thermal energy, and to human, animal, wind or water power sources for mechanical energy. With the arrival of the Industrial Revolution, energy security came to depend on the supply of fossil fuels. As a theoretical concept, energy security is most closely related to the oil crises from the 1970s, when embargoes and price manipulations limited oil supply to Western nations. As a result, most industrialised societies still stockpile oil reserves that are equivalent to several months of consumption.

Although oil remains as vital to industrial economies as it was in the 1970s, mainly for transportation and agriculture, it’s now recognised that energy security in modern societies also depends on other infrastructures, such as those supplying gas, electricity, and even data. Furthermore, these infrastructures increasingly interconnect and depend on each other. For example, gas is an important fuel for power production, while the power grid is now required to operate gas pipelines. Power grids are needed to run data networks, and data networks are now needed to run power grids.

…click on the above link to read the rest of the article…

IEA Chief Urges Oil Producers Not To Cut Output

IEA Chief Urges Oil Producers Not To Cut Output

oil terminal

While OPEC is considering cutting oil production again, the executive director of the International Energy Agency (IEA), Fatih Birol, called on Monday for ‘common sense’ because fresh cuts could have negative effects on the oil market.

“Currently markets are very well supplied but we should not forget that spare capacity in Saudi Arabia is very thin, therefore cutting the production significantly today by key oil producers may have some negative implications for the markets and further tightening the markets,” Reuters quoted Birol as saying at a news conference in Bratislava.

“My appeal to all producers and consumers across the world is to have common sense in these difficult days,” the IEA’s executive director said.

In its Oil Market Report for November published last week, the IEA said that surging production from the world’s biggest oil producers have more than offset Iranian and Venezuelan supply losses, while demand growth in some developing markets is slowing, pointing to a global oil oversupply next year.

Despite the implied surplus in oil supply next year, the IEA doesn’t see the oversupply as a threat to the markets.

“Although the oil market appears to be more relaxed than it was a few weeks ago, and there might be a sense of ‘mission accomplished’ that producers have met the challenge of replacing lost barrels, such is the volatility of events that rising stocks should be welcomed as a form of insurance, rather than a threat,” the IEA said in its report.

After the latest plunge in oil prices in recent weeks and after supply-demand analysis started to suggest that an oversupply may be building, OPEC and its de facto leader Saudi Arabia have started to hint at new production cuts, with speculation ranging from cuts of 1 million bpd to as much as 1.4 million bpd.

OPEC and allies meet in early December in Vienna, where they are set to discuss the state of the oil market and potential new oil production policies.

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase