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Big Oil Is In Desperate Need Of New Discoveries

Big Oil Is In Desperate Need Of New Discoveries

The year 2020 was a watershed moment for the fossil fuel sector. Faced with a global pandemic, severe demand shocks and a shift towards renewable energy, experts warned that nearly $900 billion worth of reserves–or about one-third of the value of big oil and gas companies–were at risk of becoming worthless.

Even Big Oil mostly appeared resigned to its fate, with Royal Dutch Shell (NYSE:RDS.A) CEO Ben van Beurden declaring that we had already hit peak oil demand while BP Plc. (NYSE:BP)—a company that doubled down on its aggressive drilling right after the historic 2015 UN Climate Change Agreement--finally gave in saying “..concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted.” BP went on to announce one of the largest asset writedowns of any oil major after slashing up to $17.5 billion off the value of its assets and conceded that it “expects the pandemic to hasten the shift away from fossil fuels.”

Yet, an ironic twist of fate might mean that rather than huge oil and gas reserves remaining buried deep in the ground, the world could very well run out those commodities in our lifetimes.

Norway-based energy consultancy Rystad Energy has warned that Big Oil could see its proven reserves run out in less than 15 years, thanks to produced volumes not being fully replaced with new discoveries.

According to Rystad, proven oil and gas reserves by the so-called Big Oil companies, namely ExxonMobil (NYSE:XOM), BP Plc., Shell, Chevron (NYSE:CVX), Total ( NYSE:TOT), and Eni S.p.A are falling, as produced volumes are not being fully replaced with new discoveries.

Source: Oil and Gas Journal

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

Oil Tanker Spotted in Risky Active Pass Alarms Activists

Oil Tanker Spotted in Risky Active Pass Alarms Activists

Officials promise no repeats. But advocates say the incident raises new concerns about regulation of tankers in BC’s waters.

On a calm Friday afternoon in late April, avid naturalist Barry Swanson was watching Active Pass from his home on Galiano Island, keeping an eye out for the pod of southern resident killer whales that swim by every couple of days.

Instead of orcas, he was shocked to see an oil tanker traversing the narrow channel.

The MV Kassos was sitting low in the water, its hull heavy with petroleum products bound for Los Angeles.

Swanson is the co-founder of the non-profit Salish Sea Orca Squad, a group that works to raise awareness about the region’s killer whales. In an interview with The Tyee, he says he was very concerned to see dangerous cargo being shipped through the narrow waterway.

Active Pass sits between Mayne and Galiano Island. The channel is deep but narrow — 302 metres wide at its skinniest — and features strong currents, rip tides and a blind corner, according to Fisheries and Oceans Canada. It’s also a route favoured by BC Ferries, connecting Tsawwassen to Swartz Bay and the mainland to the Southern Gulf Islands.

It’s extremely unusual for an oil tanker to take Active Pass instead of the neighbouring Boundary Pass, favoured by almost all other commercial routes for its wider, calmer waters. Swanson says he’s never seen an oil tanker take the pass before.

“When you have a tanker travelling through these waters… there is always tremendous danger with dangerous goods being spilt in any amount. It would be a disaster for that to happen,” Swanson says.

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

A Hunger Strike Against Big Oil

A Hunger Strike Against Big Oil

Ann Wright reports on Diane Wilson’s stand against channel dredging in mercury-laden Matagorda Bay, Texas. 

Diane Wilson in mid April. (Diane Wilson)

Texas shrimper, fisherwoman, author and internationally known environmentalist Diane Wilson on Monday was on Day 27 of her hunger strike to gain national solidarity and publicity to pressure the U.S. Army Corps of Engineers to rescind its permit for big oil to dredge a channel in mercury-laden Matagorda Bay, Texas.

The dredged channel would allow massive oil tankers into the bay to take on crude oil that will be exported from the U.S.

“I am risking my life to stop the reckless destruction of my community. Oil and gas export terminals like the project I am fighting pollute our air, water, and climate — only to pad the pockets of fossil fuel CEOs,” said Diane Wilson. “The Biden administration needs to stop the dredging and stop oil and gas exports.”

The Army Corp of Engineers is not commenting.

Expansion of Ship Channel

Wilson is challenging the dredging operation funded by Houston-based oil and gas firm Max Midstream to expand the Matagorda Ship Channel in order to bring massive ships into the oil terminals to increase global oil exports out of Texas. The dredging will stir up mercury contamination in the area around the 3,500-acre Alcoa Superfund Lavaca Bay site, one of the largest polluted areas in the U.S., as well as covering up 700 acres of oyster reefs and increasing salinity in the bay, which would devastate local fisheries. The U.S. government has issued pollution reports over the past 30 years concerning the dangerous levels of mercury contamination from the Alcoa site.

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

Germany’s Political Crisis and the Future of Nord Stream 2

GERMANY’S POLITICAL CRISIS AND THE FUTURE OF NORD STREAM 2

Germany’s Political Crisis and the Future of Nord Stream 2

In a Blinken of an Eye

The Biden Administration entered the White House accompanied by hopes that it would return to some kind of normal in its relations with the European Union. While Biden, unlike Obama, would not score a Nobel Peace Prize solely for his existence, his victory was warmly welcomed in capitals around Europe as a sign that liberalism would vanquish populism ushering in a new era of “business as usual” in the form it was practiced during the Obama Administration.

Once in office, however, the Biden Administration has been working overtime in order to dispel any notion of a relationship of mutual respect between two more or less equal allies, US and EU. Instead, Biden officials have acted as if US and EU are a contemporary version of the Austro-Hungarian Empire, two countries with ostensibly separate political systems linked by a personal union in the form of the Emperor (Biden), held together by a common army (NATO) whose main task is preventing any separatism by “Hungary” (the EU) and whose foreign policy is made wholly in “Austria” (United States). Events like Brexit merely represent a part of the empire moving from “Hungary” to “Austria” for a variety of cultural and racial reasons. In practice it meant that, in addition to Biden replying affirmatively to a court journalist’s question whether Vladimir was a “killer” and Blinken provoking a major row with a Chinese delegation by informing them the US intended to deal with China from a “position of strength”, Blinken also issued a blunt warning to European companies working on Nord Stream 2 could be subject to US sanctions if they did not immediately withdraw from the project.

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

J.Hawk, SouthFront, nordstream 2, germany, oil and gas industry, nato, united states, joe biden, russia

 

What To Expect From Today’s OPEC+ Meeting: Another Saudi Surprise?

What To Expect From Today’s OPEC+ Meeting: Another Saudi Surprise?

After Wednesday’s JMMC meeting ended without reaching a recommendation (as is customary and expected), the key decision-making OPEC+ meeting – where ministers will hammer out May’s output quotas – begins at 1pm London Time. As Newsquawk notes, market expectations are skewed towards an extension of current cuts, but a clear stance from Saudi – who have a tendency to surprise in recent months – remains to be seen, namely on the decision regarding the extra 1MM barrels the Kingdom has kept offline since the start of the year.

Commenting on today’s key event, Bloomberg’s Jake Lloyd-Smith reminds us that Saudi Arabia has sprung some big surprises in the oil market already this year, and may do so again today as OPEC+ grapples with a thorny decision on supply. That could make for a volatile session before the long weekend, and already has with oil whipsawing from gains to losses in jittery trading, amid market rumors that OPEC+ is i) considering a return to phased monthly oil-output hikes and ii) is also considering maintaining current cuts, according to a delegate… which pretty much covers every base so is completely useless.

As such, while the consensus view is the grouping will stick with deep output curbs to safeguard crude’s recovery, there’s an outside chance of alternative outcomes. These span the twin extremes, from releasing barrels to tightening further.

At issue is the varied recovery across key regions. For every rosy demand metric from the U.S. or China, there’s a poor one from Europe as lockdowns make a comeback. In addition, Riyadh faces a headache from rival Iran, which has been pushing clandestine barrels into China despite U.S. sanctions…

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

opec+, oil and gas industry, zerohedge, saudi arabia, russia, iran, china, united states, economic sanctions, oil, oil price, bloomberg

The Hidden Joule | Why Oil & Gas is Critical to Understanding Sustainability

The Hidden Joule | Why Oil & Gas is Critical to Understanding Sustainability

In this episode, we breakdown the difference between cost, price, and the value of oil and why this is so important. Additionally, we dive into the scaling effects of concentrated energy sources and how these differ from diffused, and the challenges of decarbonization without collapsing our society and standard of living.

hidden joule, art berman, oil and gas industry, sustainability, canacord genuity

Youth Climate Activists Aim to Rally Support for Indigenous Land Defenders

Youth Climate Activists Aim to Rally Support for Indigenous Land Defenders

The Sustainabiliteens hope to show solidarity with TMX protesters.

Best known for their ability to draw massive crowds in support of climate justice, the Sustainabiliteens are taking a different approach for today’s global day of youth action by drawing attention to the work of Indigenous activists fighting the Trans Mountain Pipeline expansion project.

Along with hundreds of young people across Canada and many more worldwide, the Sustainabiliteens, a group of high school-aged activists from across Metro Vancouver, will be gathering outside Environment Canada’s downtown Vancouver offices at 10 a.m.

In addition to calling for an end to the Trans Mountain pipeline expansion project, the group will be acting in solidarity for the first time with Indigenous land defenders, particularly the Tiny House Warriors and Braided Warriors, who have faced arrests for their actions and allege brutality on the part of arresting police officers.

“In the past, Sustainabiliteens hasn’t done the best job of standing in solidarity with Indigenous peoples,” said Tavie Johnson, a member of the group, which she says is largely made up of white people.

“Traditionally the environmental movement and the conservation movement have been very whitewashed, and we know that we can’t have climate justice without racial justice and Indigenous sovereignty and Indigenous rights. All of those are extremely interconnected.”

While the Sustainabiliteens drew over 100,000 students, workers, parents and elders to strike for the climate in September 2019, this time they want people to stay home and watch their livestream on Instagram or Facebook accounts because of the pandemic.

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

Katie Hyslop, TheTyee.ca, protests, oil and gas industry, sustainability, trans mountain pipeline, british columbia

Governments Are Making Taxpayers Subsidize Corporate Cleanup of Oil and Gas Wells

Governments Are Making Taxpayers Subsidize Corporate Cleanup of Oil and Gas Wells

Companies are responsible for dormant wells, but the public is helping foot the bill.

The B.C. and Canadian governments have promoted a $100-million fund to clean up dormant oil and gas wells in the province as a “win-win” for the environment and the economy.

But the biggest winners may be the major oil and gas companies that own the sites.

“To find out the major recipients of this are companies that are perfectly able to clean up their own mess is not surprising, but disappointing,” said Peter McCartney, climate campaigner with the Wilderness Committee environmental group.

“It’s another subsidy,” he said.

McCartney received information on the grant recipients from B.C.’s Ministry of Energy, Mines and Low Carbon Innovation in response to a freedom of information request that he shared with The Tyee. The document provides details on the first $50 million to be distributed in the province.

A quarter of that money, $12.4 million, is dedicated to cleaning up sites where Canadian Natural Resources Ltd. is the permit holder. The corporation, based in Calgary, is worth $45 billion.

The second biggest share, $7.9 million, is for Petronas Energy Canada Ltd. sites. The Canadian subsidiary’s parent company is owned by the Malaysian government.

Media contacts for CNRL and Petronas didn’t respond to requests for comment.

Other prominent companies among the 41 permit holders listed include Enerplus Corp., Ovintiv Canada ULC, ExxonMobil Canada Energy, Husky Oil Operations Ltd., Imperial Oil Resources Ltd., Cenovus Energy Inc., Painted Pony Energy Ltd., Tourmaline Oil Corp. and Whitecap Resources Inc.

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

the tyee, oil and gas industry, andrew macleod, british columbia,

Rating agency S&P warns 13 oil and gas companies they risk downgrades as renewables pick up steam

Firms including Woodside, Chevron, Shell and Exxon Mobil, told they could be downgraded within weeks.

Royal Dutch Shell rig operators in Texas. Oil and gas companies have been told they could be downgraded between one and two notches as S&P increases risk rating for the entire sector.

Royal Dutch Shell rig operators in Texas. Oil and gas companies have been told they could be downgraded between one and two notches as S&P increases risk rating for the entire sector. Photograph: Bloomberg/Getty Images

Rating agency S&P has warned 13 oil and gas companies, including the some of the world’s biggest, that it may downgrade them within weeks because of increasing competition from renewable energy.

 

On notice of a possible downgrade are Australia’s Woodside Petroleum as well as multinationals Chevron, Exxon Mobil, Imperial Oil, Royal Dutch Shell, Shell Energy North America, Canadian Natural Resources, ConocoPhillips and French group Total.

S&P said it was also considering downgrading four large Chinese producers – China Petrochemical Corp, China Petroleum & Chemical Corp, China National Offshore Oil Corp and CNOOC.

The rating agency said it had increased its risk rating for the entire oil and gas sector from “intermediate” to “moderately high” because due to the move away from fossil fuels, poor profitability and volatile prices.

It said it also had a negative outlook for two other big oil and gas companies, British multinational BP and Canadian group Suncor, but did not plan to immediately reassess their credit ratings.

“In particular, we note significant challenges and uncertainties engendered by the energy transition, including market declines due to growth of renewables; pressures on profitability, specifically return on capital, as a result of high dollar capital investment levels over 2005-2015 and lower average oil and gas prices since 2014; and recent and potential oil and gas price volatility,” S&P said on Wednesday.

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

 

One Little Problem with the “All-Electric” Auto Fleet: What Do We Do with all the “Waste” Gasoline?

One Little Problem with the “All-Electric” Auto Fleet: What Do We Do with all the “Waste” Gasoline?

Regardless of what happens with vaccines and Covid-19, debt and energy–inextricably bound as debt funds consumption– will destabilize the global economy in a self-reinforcing feedback.

Back in the early days of the oil industry (1880s and 1890s), the product that the industry could sell at a profit was kerosene for lighting and heating. Since there was no automobile industry yet, gasoline was a waste product that was dumped into streams.

Why couldn’t the refiners produce only kerosene? Why did they end up with “worthless” gasoline?

The answer is a barrel of oil produces a variety of products. While there is some “wiggle room” to produce more diesel and less gasoline, etc., it isn’t possible to turn a barrel of oil into only one product.

John D. Rockefeller became very wealthy by cornering much of the oil market in the 19th century. But he didn’t become fabulously wealthy until the 20th century, when the rise of automobiles created a market for all the “waste” gasoline.

Rockefeller became super-wealthy when all the products of each barrel of oil could be sold at a premium rather than just a portion of the products.

This reality has been forgotten: the price that can be fetched for a barrel of oil depends on the demand for all the products, not just a few of the products.

Those demanding an all-electric auto-truck fleet as a “green” alternative will re-create the dilemma of what to do with the “waste” gasoline. The world will still want fuel for all those container ships bringing all the goodies of a consumerist society, all those cruise ships visiting ports of call, jet fuel for all those exotic vacations enabled by 550 mile-per-hour aircraft, and oil-based lubricants, plastics and petro-chemicals, and so oil will still be pumped and refined, and almost half of it will be gasoline.

We can either use it or throw it away but we can’t magically turn a barrel of oil into only one product.

This is a topic worthy of your understanding, so grab a vat of your favorite beverage and turn off all distractions.

Longtime readers know I’ve focused on energy-oil markets for 15 years. Despite ups and downs in price, the oil market has been remarkably stable.

This stability is about to transition to chronic instability: wild swings in price, shortages, and social chaos in both producing and consumer nations.

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

Why The World Might Not Have Enough Oil To Meet Demand Trough 2050

Why The World Might Not Have Enough Oil To Meet Demand Trough 2050

The world is on track to run out of sufficient oil supplies to meet its needs through 2050, despite lower future demand due to the Covid-19 pandemic and the accelerating energy transition – unless exploration speeds up significantly and capital expenditure of at least $3 trillion is put to the task, a bombshell report by Rystad Energy reveals.

To meet the global cumulative demand over the next 30 years, undeveloped and undiscovered resources totaling 313 billion barrels of oil need to be added to currently producing assets. Rystad Energy calculates that to match this requirement, exploration programs will have to discover a worthy-to-develop resource of 139 billion new barrels of liquids by 2050, an impossible task if this decade’s low exploration activity levels persist.

The target is high because not all existing discovered volumes are profitable to develop. In theory, the total undeveloped supply would amount to 248 billion barrels of oil between 2021 and 2050. However, when we dive deeper into these discoveries and look at their discovery decade and current status, we find that about 74 billion barrels are highly unlikely to materialize and need to be replaced by new discoveries.

Looking at the global conventional exploration potential, there are two main sources for these new volumes: further appraisal of existing fields and resources, and new discoveries.

The first source includes projects in their early production stage, projects under development, and unrisked volumes in discovered assets. We expect that some future exploration activity will lead to reservoir delineation and enhancement of resource estimates, while technological improvements and other secondary recovery techniques will also increase recoverable volumes.

Projects in the above-mentioned categories are currently forecast to contribute around 378 billion barrels of liquids supply between 2021 and 2050…

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

Paying Politicians to Criminalize Protests

Paying Politicians to Criminalize Protests

A few years ago, massive protests against the Dakota Access Pipeline at Standing Rock changed the popular narrative about what climate activism looked like. The protests made clear that ramming dangerous pipelines through vulnerable communities wasn’t going to be easy anymore.

But since then, rather than scaling back their attacks on these communities, the fossil fuel industry decided to attack them even more fiercely.

Indigenous water protectors at Standing Rock were subject to a violent law enforcement response. They were blasted with water cannons in the freezing cold and faced down by heavily armed police in military vehicles.

Now the industry wants to criminalize anti-fossil fuel protests altogether, pushing new laws that turn routine acts of civil disobedience into serious felonies. They’ve found willing partners in the American Legislative Action Council (ALEC). Industry and ALEC efforts have passed such laws in 13 states.

My colleague Gabrielle Colchete and I studied these anti-protest laws in our recent report, “Muzzling Dissent: How Corporate Influence Over Politics Has Fueled Anti-Protest Laws.”

We focused on three states: Louisiana and West Virginia, where these laws have been passed, and Minnesota, where bills have been introduced numerous times (one even passed the legislature, but was vetoed by the governor).

In all three states, controversial fossil fuel infrastructure has faced significant resistance from affected communities. And in every case, the fossil fuel industry has been a major source of campaign money for the legislators who introduced these bills.

For example, in Louisiana, the lead sponsor of the anti-protest bill received $6,600 from oil and gas interests, the third highest of 40 industry sectors he received campaign contributions from. And in West Virginia, the lead sponsor of the anti-protest bill received substantial contributions from Dominion Energy, owner of the failed Atlantic Coast Pipeline project that passed through the state.

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

Low prices batter oil industry (and later the rest of us)

Low prices batter oil industry (and later the rest of us)

It is a sign of the times that the largest oil company in the world, Saudi Aramco, the state oil company of the Kingdom of Saudi Arabia, must borrow money to pay its shareholder dividend. I have written about the twice-delayed and often troubled initial public offering of the company previously (here and here).

Now it seems that the cash which the company is generating from operations is far less than the dividend payout—which leaves nothing for new drilling to replace reserves and other capital expenditures needed to keep the company going. Hence, the need to borrow.

All of this is due, in part, to low oil prices. And, the Saudis are not the only ones suffering, of course. U.S. producers, mostly those focused on high-cost shale deposits, continue to head toward bankruptcy or merge with other stronger companies. Another part of the equation is heavy debt. Naive investors kept handing over fresh capital, oblivious to the fact that the shale oil and gas industry as a whole has been free cash flow negative for years. That’s okay for a few years, but as a long-run strategy it means a company is simply consuming the capital of its investors.

So, what does this mean for the economy and society as a whole? Normally, such developments, while bad for the industry, would be interpreted as a boon for the rest of society. After all, cheap energy means cheap fuel for consumers and business owners and more money to spend on other things. It also means lower costs for everything we make and buy since all products require energy to produce.…click on the above link to read the rest of the article…

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What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

Transportation fuel demand rose to where it had been in … 1997.

While the overall S&P 500 Index is down 2.7% in October, about flat for the three-month period, and up 2.8% for the year, the S&P 500 Energy Index is down 4.4% for the month, down 19% for the three-month period, and down 50% year-to-date.

On Friday, Exxon Mobil reported a 29% plunge in revenue in the third quarter, and a loss of $680 million – its third loss in a row, the three of them totaling $2.34 billion. And it warned of possible “significant impairment” charges on “assets with carrying values of approximately $25 billion to $30 billion,” mostly related to its North American shale gas operations. The day before, it had announced job cuts of 14,000 employees and contractors globally, including about 1,900 folks at its Houston headquarters.

Chevron [CVX], which completed the acquisition of Noble Energy in early October, announced this week that it would lay off about one quarter of Noble’s employees. Those layoffs are in addition to the cuts of 10%-15% it’s planning for its own workforce. The cuts at Noble amount to nearly 600 people, and the cuts at Chevron amount to 4,500 to 6,750 folks.

Exxon shares [XOM] have plunged 53% year-to-date to $32.62 on Friday, and thereby edged closer to their March 23 decade-low of $31.45. In July 2014, at the cusp of the Oil Bust, XOM reached a high of $135, having since then plunged by 75%.  Exxon’s dividend yield is now over 10%, but everyone knows that, like other oil companies, Exxon could reduce or eliminate its dividend if push comes to shove.

Bankruptcies by US shale oil and gas companies with less heft and diversification than Exxon and Chevron have turned into a flood. The debts listed in the bankruptcy filings over the first nine months of 2020 reached $89 billion and surpassed year-total filings in the prior peak oil-bust year 2016.

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

US Oil’s Merger Mania Won’t End Well For Energy

The long-awaited shale patch consolidation has arrived, sparking another bout of merger mania in the energy industry. It’s reminiscent of the one in the late 1990s, just as the Internet bubble was exploding. But don’t expect the stocks to rally this time.

Parallels between tech in the 1990s and today are common. But there’s been little mention of what the energy sector went through at the same time and how it suddenly looks so familiar. History’s repeating itself as it appears energy can’t attract investors — again.

Then as now, the backdrop to energy’s M&A boom is a collapse in oil prices. The difference this time, however, is the deals are happening at a quarter of the traditional premiums.

During this pandemic era, four deals have already emerged: Chevron’s takeover of Noble Energy, ConocoPhillips’s acquisition of Concho Resources, Pioneer Natural Resources’s purchase of Parsley Energy and Devon Energy’s merger with WPX Energy. This appears to be just the beginning as rumors circulate of more deals to come.

The economy has structurally changed since 2000, which makes tech’s acceleration look real and lasting. That’s not so for the energy industry, which staged a comeback in the early part of the century as tech dropped. But this time around, the sector faces worsening supply dynamics and a demand hit from which it’s likely to take years to recover.

Supply dynamics were not favorable even before the pandemic. The American shale boom and cheating on OPEC+ production quotas created an oversupplied oil market. Trade risk added to worries for shale producers, which were already treading water.

Since 2017, the pain has become clearer. Oil rallies have seldom spilled over into energy stocks beyond a brief increase in valuations spurred by private equity in 2016.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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