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The Trans Mountain Expansion Project, now finally completed and operational after years of delays, is changing the fortunes of the oil sands.
Canada’s oil sands producers have started ramping up production last year in anticipation of the start-up of exports through the TMX pipeline.
The production increases in the oil sands are the result of the expansion of operational projects with existing infrastructure.

Canada’s oil output is booming as producers ramp up projects and extraction amid expanded market access and narrowing discounts of the Canadian heavy crude to the U.S. benchmark.

The Trans Mountain Expansion Project, now finally completed and operational after years of delays, is changing the fortunes of the oil sands producers in Alberta, giving them access to markets in Asia and the U.S. West Coast.

Constrained for years due to insufficient egress, Canada’s oil now has nearly 600,000 barrels per day (bpd) of additional market access. The expanded Trans Mountain pipeline is tripling the capacity of the original pipeline to 890,000 bpd from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

And producers are taking advantage of this. They began ramping up production at the end of last year in anticipation of the Trans Mountain Expansion (TMX) start in the first half of this year. Canadian oil firms now get more bang for their buck as the discount of Western Canada Select (WCS), the benchmark for Canadian heavy crude sold at Hardisty in Alberta, has narrowed relative to the U.S. crude oil benchmark, West Texas Intermediate (WTI) in recent weeks.

Moreover, the production increases in the oil sands are the result of the expansion of operational projects with existing infrastructure, so the capital expenditure – which is very high for this type of crude extraction – has been lower than for building projects from scratch.

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Russia Discovers Massive Oil and Gas Reserves in British Antarctic Territory

May 23, 2024

Russia Discovers Massive Oil and Gas Reserves in British Antarctic Territory

Russia’s Rosgeo uncovered oil and gas reserves in British Antarctic territory, estimated at around 511 billion barrels.
The discovery poses environmental risks and challenges the 1959 Antarctic Treaty, which prohibits oil developments in the region.
Geopolitical tensions rise as Russia’s activities in Antarctica are viewed as a move towards resource extraction rather than scientific research, sparking concerns among international observers.

Russia has found huge oil and gas reserves in British Antarctic territory, potentially leading to drilling in the protected region.

The reserves uncovered contain around 511bn barrels worth of oil, equating to around 10 times the North Sea’s output over the last 50 years.

The discovery, per Russian research ships, was revealed in evidence submitted to the Commons Environment Audit Committee last week. The committee was assessing questions regarding oil and gas research on ships owned by the Kremlin’s Rosgeo, the largest geological exploration company in Russia.

Antarctica is currently protected by the 1959 Antarctic Treaty, which prohibits all oil developments in the area.

It was set up to ensure the region was used “exclusively for peaceful purposes” and would “not become the scene or object of international discord.”

The committee heard from minister David Rutley, who assured MPs Russia was conducting scientific research in the region. “Russia has recently reaffirmed its commitment to the key elements of the treaty,” he said.

But Klaus Dodds, a professor of geopolitics at Royal Holloway University, argued the Antarctic policy environment was “arguably at its most challenging since the late 1980s and early 1990s.”

Russia’s invasion of Ukraine has created “widespread concern that a worsening relationship with the country will spark strategic competition and make it even more explicit in Antarctica.”

He believes Russian activity in the region equated to hunting for oil and gas as opposed to scientific research.

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Is China’s Oil Demand Set For A Major Bounce Back?

May 11, 2024

Is China’s Oil Demand Set For A Major Bounce Back?

China’s extraordinary economic expansion almost singlehandedly drove a supercycle in key commodities since the mid-90s.
This robust performance across several major sectors in China’s economy is in sharp contrast to the growth drivers seen last year.
China continues to buy oil from Russia and Iran at a discounted price.

Since the mid-1990s, China’s extraordinary economic expansion almost singlehandedly drove a supercycle in key commodities prices it required to power such growth, including oil and gas. In 2013, it became the world’s largest net importer of total petroleum and other liquid fuels and, as late as 2017, its still high rate of economic growth allowed it to overtake the U.S. as the largest annual gross crude oil importer in the world. Late 2019 saw much of this activity grind to a halt as Covid hit the country, and the economic slowdown was exacerbated by its Draconian ‘zero-Covid’ policy that saw complete shutdowns of major economic centres at the slightest hint of infection. However, 2023 saw it achieve its official gross domestic product (GDP) growth target of “around 5 percent” – posting 5.2 percent in the end. The same official target is in place this year, with the key questions for oil markets being whether this will be achieved and if so, how easily?

16 April saw China’s National Bureau of Statistics release the country’s Q1 GDP figure, which showed a 5.3 percent year-on-year increase. This was way above consensus analyst expectations of 4.6 percent and was also a rise from the Q4 2023’s 5.2 percent. “Aside from the continued decline in the property sector, policy support is filtering through investment,” Eugenia Victorino, head of Asia strategy for SEB in Singapore exclusively told OilPrice.com. “With property sales now 60 percent lower than their mid-2021 peak, transaction volumes are now comparable to levels last seen in 2012,” she added…

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The Cold Hard Truth About Renewable Energy Adoption

May 3, 2024

The Cold Hard Truth About Renewable Energy Adoption

The energy transition is essential but complex and challenging.
The pace of the transition and the balance between future and current energy security are key issues.
Economic and logistical barriers, as well as geopolitical and environmental concerns, need to be addressed for a successful transition.

The future of the global energy sector is caught up in a messy and misleading ideological debate. Depending on which politically informed echo chamber one inevitably finds themself confined to on social media, they are either told that the energy transition is a dangerous myth that will end in economic disaster and permanent rolling blackouts, or that clean energy is going to save the world overnight – as soon as conservatives get out of the way. As usual, the truth lies somewhere in between.

The energy transition is strictly necessary. But it’s going to be very, very hard. It’s damaging to deny that there will almost certainly be shocks, missteps, and setbacks as we undergo one of the most disruptive chapters in industrial history. In large part we’re relying on untested and in many cases as-yet unproven technologies to emerge in the nick of time.

There’s a temptation to sugar-coat the scale of the imperative to make the energy transition more palatable and less daunting. But there’s no denying it – it’s a very uncomfortable, and even frightening, petition to be in. And there will be winners and losers as economic priorities shift – the energy transition is good for humanity as a whole, but it certainly isn’t good for everyone. Acknowledging these difficult truths is essential to properly planning for and managing humanity’s greatest cooperative project.

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

The Permian Shrugs Off Below-Zero Natural Gas Prices in Texas

May 2, 2024

The Permian Shrugs Off Below-Zero Natural Gas Prices in Texas

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April.
Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity.
In the oil rig basins, producers aren’t rushing to boost oil production, but aren’t scaling back production, either.

Permian producers are not shutting in oil wells with associated natural gas despite the fact that the Texas regional gas price has been stuck at below-zero levels since early March.

Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity as producers are look to maximize oil realizations at West Texas Intermediate crude prices at above $80 per barrel.

But the U.S. natural gas benchmark, Henry Hub, has been depressed below $2.00 per million British thermal units (MMBtu) since early February due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks.

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April as the recent rise in oil prices prompted producers to bring drilled but uncompleted wells online. The Waha hub prices remained below zero for most of March and April amid high production and not enough takeaway capacity.

The price at the Waha Hub rose by $1.25 in the latest reporting week, from -$1.18/MMBtu to $0.07/MMBtu on April 24, only the second day the price was above zero since April 1, per EIA data.

The negative Waha gas prices and the supply glut are creating a problem for Permian producers regarding how they should dispose of part of the excess natural gas output.

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

Ukrainian Drones Hit Major Rosneft Refinery in Russia

May 2, 2024

Ukrainian Drones Hit Major Rosneft Refinery in Russia

Just as Russia had started to bring back some refinery capacity damaged by Ukrainian drone attacks earlier this year, a new wave of drone attacks hit a major refinery owned by Rosneft, for a second time.

Rosneft’s Ryazan refinery southeast of Moscow caught fire after the overnight drone attack, an anonymous Ukrainian military source with knowledge of the situation told Bloomberg News on Wednesday.

The refinery in the region of Ryazan, whose main city of the same name is some 120 miles southeast of Moscow, was first attacked by drones in the middle of March. The first attack also led to a fire.

This year, Ukraine has stepped up attacks on oil refineries in Russia, which have reduced Russian refining capacity, and, reportedly, have the White House concerned about rising international prices.

The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington’s assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported in March, citing sources familiar with the exchange.

As of mid-April, Russia had brought back online some oil refining units, reducing the capacity taken offline by Ukrainian drone hits to around 10%, from 14% at the end of March.

The refining capacity in Russia that was offline due to drone attacks was estimated by Reuters in mid-April at around 660,000 barrels per day (bpd), compared to 907,000 bpd offline at the end of March.

Russia said in early April it can repair all damaged units within two months.

Russia’s Energy Minister Nikolai Shulginov said that all damaged refineries in the country would be restarted by the beginning of June.

“Repairs are underway at the refineries. We plan to re-launch a number of refineries after repairs in April-May, possibly before the beginning of June,” Russian news agency Interfax quoted Shulginov as saying.

“All facilities that were damaged will be re-commissioned,” the minister added.

The Four Key Reasons Why The U.S. Will Never Stop Targeting Russia’s LNG Sector

May 1, 2024

The Four Key Reasons Why The U.S. Will Never Stop Targeting Russia’s LNG Sector

LNG has become the most important swing energy source in an increasingly insecure world.
Energy exports remain the foundation stone of Russia’s essentially petro-economy.
Russia’s LNG industry is closely associated in Russia with President Vladimir Putin personally.

Perhaps even more than its targeting of Russian oil exports, the U.S. has been laser-focused on its liquefied natural gas (LNG) sector as they key area it wants to effectively destroy over the long term. Last week’s suspension of Russia’s flagship Arctic LNG-2 project by lead operator Novatek is the latest of Washington’s trophies in this regard, but it is very unlikely to be the last. As U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt said on 24 April: “[Novatek] has recently had to suspend production at its Arctic LNG-2 liquefaction facility, in part because of sanctions that the Biden administration has led.” He added: “We’re going to keep tightening the screws […] We’re going to continue to designate a broad range of entities involved in development of other key energy projects, future energy projects as well, and associated infrastructure including the Vostok Oil Project, the Ust Luga LNG Terminal, and the Yakutia Gas Project.” So, why is the U.S. so concerned about Russia’s LNG sector?

The first of four key reasons is that LNG has become the most important swing energy source in an increasingly insecure world. Unlike oil or gas that is transported through pipelines, LNG does not require years and vast expenses to build out a complex infrastructure before it is ready to transport anywhere. Once gas has been converted to LNG, it can be shipped and moved anywhere within a matter of days and bought reliably either through short- or long-term contracts or immediately in the spot market…

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Kazakhstan’s Oil Flows to Germany Threatened as Russia Demands Transit Fees

April 27, 2024

Kazakhstan’s Oil Flows to Germany Threatened as Russia Demands Transit Fees

Russian pipeline operator Transneft has warned Kazakhstan’s oil companies that ship crude to Germany via Transneft’s Druzhba pipeline that the customers of the Kazakh firms have until June to pay for metering services or risk a halt to supplies, trading sources told Reuters on Thursday.

In early 2023, as Russian crude flows via the Druzhba pipeline dropped off, crude oil from Kazakhstan started flowing via the Russian pipeline network to Poland for further delivery to Germany.

In December 2022, Kazakhstan’s oil pipeline operator KazTransOil applied to transport a total of 1.2 million tons of Kazakh crude oil through Transneft’s system of trunk oil pipelines in the direction of the Adamova Zastava point for further delivery to Germany.

Meanwhile, crude oil deliveries from Russia to Poland were suspended.

The northern leg of the Druzhba oil pipeline system which connects Germany and Poland via Belarus, is now used for Kazakhstan’s oil exports for the Schwedt refinery. Schwedt is the fourth-largest refinery in Germany and it gets its oil from the Druzhba oil pipeline. The refinery supplies 90% of the fuel needs of Germany’s capital city Berlin.

Now the Russian pipeline monopoly Transneft has recently told Kazakh suppliers that Polish state pipeline operator PERN has until June to pay for metering services at its Adamowo base on the Polish-Belarussian border, according to Reuters’ trading sources. The current service contract is due to expire on June 5, one of these sources said.

The use of the Druzhba pipeline and the Russian Black Sea ports for oil exports highlights the dependence of Kazakhstan’s oil supply on Russia.

Most of Kazakhstan’s crude oil exports are currently being handled by the network of the Caspian Pipeline Consortium (CPC). The CPC pipeline runs from the Caspian coast in northwest Kazakhstan to the Novorossiysk port on Russia’s Black Sea coast and carries 80% of Kazakh crude exports.

EU Prepares to Tighten Screws on Russian LNG Imports

April 26, 2024

EU Prepares to Tighten Screws on Russian LNG Imports

In a move that could reshape Europe’s energy landscape, the European Commission is poised to propose new sanctions targeting Russian liquefied natural gas (LNG) imports. According to Reuters sources close to the matter, the proposed measures will include a ban on shipments within the EU and sanctions on three Russian LNG projects.

The European Commission’s decision comes amid growing concerns over Europe’s reliance on Russian energy, particularly in the wake of the ongoing conflict in Ukraine. While the EU imposed a ban on Russian seaborne oil imports earlier this year, it has thus far refrained from taking similar action against LNG imports. However, with imports of Russian LNG surging since the start of the war, accounting for around 15% of EU gas supply, pressure has been mounting on Brussels to act.

The proposed ban on trans-shipments within the EU is aimed at preventing the diversion of Russian LNG cargoes to other destinations. Currently, Belgium, France, and Spain are the largest importers of Russian LNG, with many of these imports being re-exported to other countries, including China. By imposing restrictions on trans-shipments, the EU hopes to ensure that Russian LNG does not find its way to markets outside of Europe.

In addition to the ban on trans-shipments, the European Commission is also considering sanctions on three Russian LNG projects – Arctic LNG 2, Ust Luga, and Murmansk. While the details of these sanctions are still being discussed, they are expected to target projects that are not yet operational, further complicating Russia’s efforts to expand its LNG exports.

The move by the European Commission reflects growing unease within the EU over its dependence on Russian energy. With tensions between Russia and the West showing no signs of abating…

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

Russia Is Struggling to Repair Refineries Due to Sanctions

April 5, 2024

Russia Is Struggling to Repair Refineries Due to Sanctions

Due to the sanctions, Russia cannot access spare parts from Western engineering companies that have provided refinery equipment in the past, leaving Russian refiners struggling to repair damaged units, multiple industry sources in Russia have told Reuters.

Western firms including America’s UOP and Swiss ABB have supplied parts and equipment to major Russian refineries in the past. After the invasion of Ukraine, they no longer fulfill new orders from Russia, leaving local engineers scrambling to find spare parts and equipment.

One example of such difficulty is Lukoil’s Norsi refinery in Nizhny Novgorod on the Volga River. A turbine malfunctioned there in early January and Russian engineers have struggled to have the equipment replaced since then, according to Reuters sources.

This has left the refinery with a reduced capacity to produce gasoline.

The malfunction at the refinery compounded last month after a fire broke out at the facility following a drone attack.

Since all major Russian refineries use at least some part of Western technology, they could struggle to repair equipment and units that broke down or have been damaged by Ukrainian drone attacks, which have intensified in recent weeks and have taken an estimated 14% of Russia’s refining capacity offline.

Russia claims it can repair all damaged units within two months.

On Wednesday, Russia’s Energy Minister Nikolai Shulginov said that all damaged refineries in the country would be restarted by the beginning of June.

“All facilities that were damaged will be re-commissioned,” the minister added.

…click on the above link to read the rest…

Exxon Threatens to Take Billions of Dollars in Climate Investment Out of the EU

February 21, 2024

Exxon Threatens to Take Billions of Dollars in Climate Investment Out of the EU

Exxon has warned the European Union that it will leave and take billions of dollars in climate investment with it unless Brussels makes it easier to spend those billions on transition-related projects.

The Financial Times cited the company today as saying that there was way too much red tape in the EU and it took too long to get a project going, which prompted the supermajor to consider spending its $20 billion in decarbonization investments for 2022-2027 elsewhere.

“When we make investments, we’ve got very long time horizons in mind. I would say that recent developments in Europe have not instilled confidence in long-term, predictable policies,” Karen McKee, president of Exxon Product Solutions, told the FT.

“What we’re experiencing is the deindustrialisation of the European economy and we’re concerned,” McKee also said.

The European Union’s leadership has promised time and again it will facilitate transition projects but it seems it has been slow to act on this promise. According to Exxon—and a lot of other companies involved in the transition—getting a project off the ground in the EU is fraught with regulatory obstacles and “slow and torturous” permitting and funding procedures, per Exxon’s McKee.

The EU’s Green Deal plan features a “predictable and simplified regulatory environment” as one of its four pillars but judging from the reactions of the business world, this has yet to go from theory to practice. Faster access to funding is the second pillar in the EU’s lineup but that, too, is taking quite long to materialize.

It is these delays in implementation that have prompted business leaders to meet today in Belgium to press the EU leadership into going from words to actions. There is growing concern that the regulatory burden put on businesses is scaring them away, taking investments elsewhere.

There are also some European leaders, notably France’s Emmanuel Macron and Belgium’s Alexander de Croo, who have blamed red tape for the farmers’ protests.

China’s Coal Production Hit a New Record High in 2023

January 18, 2024

China’s Coal Production Hit a New Record High in 2023

Higher power demand and efforts to boost energy security pushed China’s coal production to a record-high level in 2023, according to official statistics data published on Wednesday.

Chinese coal output rose by 2.9% year-over-year to 4.66 billion metric tons in 2023, per data from China’s National Bureau of Statistics reported by Reuters.

Coal imports also rose last year, as some domestic mining operations were suspended for some time in 2023 due to safety inspections and concerns.

Higher demand after the COVID restrictions were lifted and higher domestic coal prices led to record-high coal imports into China, which soared by 61.8% year-on-year to 474.42 million metric tons in 2023, data from the General Administration of Customs showed last week.

In the latter part of 2023, China ramped up coal and natural gas production, imports, and consumption as its electricity demand jumped in the second half and looks to hit a record-high winter peak demand.

Chinese authorities have been keen to avoid a repeat of the 2022 shortages and spiking prices and have instructed utilities and producers to maximize imports and output before the winter.

China continues to rely on coal and coal-fired power generation to meet its growing power demand, and despite being the world’s top investor in solar and wind capacity, it also plans a lot of new coal-fired electricity capacity.

During the first half of 2023 alone, China approved more than 50 GW of new coal power, Greenpeace said in a report this year. That’s more than it did in all of 2021, the environmental campaign group said.

China’s coal demand is expected to drop this year and plateau through 2026, and global demand is set to decline to 2026, “but China will have the last word,” the International Energy Agency (IEA) said in its Coal 2023 annual report.

The outlook for coal in China will be significantly affected in the coming years by the pace of its clean energy deployment, weather conditions, and structural shifts in the Chinese economy, according to the agency.

Occidental’s CEO Sees Oil Supply Crunch from 2025

January 17, 2024

Occidental’s CEO Sees Oil Supply Crunch from 2025

The ratio of discovered resources versus demand has dropped in recent decades and is now at around 25%.
Oxy CEO Hollub: “2025 and beyond is when the world is going to be short of oil.”.
Oil industry executives have been warning that new resources, new investments, and new supply will be needed just to maintain the current supply levels as older fields mature.

The world would find itself short of oil from 2025 onwards as exploration for longer-producing crude reserves is set to lag demand growth, Vicki Hollub, chief executive of Occidental Petroleum, said at the Davos forum on Tuesday.

For most of the second half of the 20^th century, oil companies were finding more crude than global consumption, around five times the demand volumes, Hollub said, as carried by Reuters.

The ratio of discovered resources versus demand has dropped in recent decades and is now at around 25%.

“In the near term, the markets are not balanced; supply, demand is not balanced,” Oxy’s CEO said.

“2025 and beyond is when the world is going to be short of oil.”

According to the executive, the oil market will find itself moving from an oversupply in the near term to a long period of supply shortages.

Oil industry executives have been warning that new resources, new investments, and new supply will be needed just to maintain the current supply levels as older fields mature.

One of the most persistent warnings has come for years from Saudi Arabia, the world’s largest crude oil exporter, and its state oil giant Aramco.

The Kingdom and Aramco have repeatedly said that the focus of the energy sector and the debates on the energy transition should be on how to cut emissions, not on reducing oil and gas production.

…click on the above link to read the rest…

Watchdog Has Grim Winter Warning: There May Be Blackouts

November 14, 2023

Watchdog Has Grim Winter Warning: There May Be Blackouts

North American Reliability Corp: As much as two-thirds of the United States could experience blackouts in peak winter weather.
Earlier this year, NERC issued a blackout warning for some parts of the U.S. over the summer, citing extreme temperatures.
The regulator points to the lack of gas transport infrastructure as one of the main challenges for the U.S. grid this winter.

As much as two-thirds of the United States could experience blackouts in peak winter weather this and next year, the North American Reliability Corp has warned.

These warnings have become something of a routine for the regulatory agency lately. Earlier this year, NERC issued a blackout warning for some parts of the U.S. over the summer, citing extreme temperatures.

This latest warning also has to do with extreme temperatures. Yet it’s not just the temperatures themselves that are the problem. It’s the power generation mix that is making the grid more vulnerable.

In its latest assessment, NERC cited recent data showing that up to a fifth of generating capacity could be forced offline in case of a cold snap over areas that do not normally get this kind of weather.

The regulator points to the lack of gas transport infrastructure as one of the main challenges for the U.S. grid this winter as it compromises the security of generating fuel supply. The report also notes historical evidence that extreme winter weather can also affect the production of natural gas and, as a result, reinforce the effect of weather on power supply security.

It is not just natural gas that is problematic, however. The massive buildout of wind and solar capacity has also had an impact on electricity supply reliability and could turn into a problem during the winter.

…click on the above link to read the rest…

The New Global Oil Market Order Hangs In The Balance After Hamas Attacks Israel

October 10, 2023

The New Global Oil Market Order Hangs In The Balance After Hamas Attacks Israel

Palestinian political and military organisation Hamas launched coordinated multi-pronged attacks by land, sea, and air against Israel last weekend.
The potential for the Hamas attacks on Israel to suck in other Arab states into the conflict, and for it to then become another proxy war could have major ramifications for a large number of countries.
Soaring oil prices as a result of renewed tensions in the Middle East could lead to economy-crippling levels of inflation in the West.

In what turned out to be extraordinary timing, October 3 saw a Western coalition of France’s TotalEnergies and Italy’s Eni, plus Qatar Energy, apply for the second licensing round on oil and gas blocks 8 and 10 in Lebanese waters, while only four days later Palestinian political and military organisation Hamas launched coordinated multi-pronged attacks by land, sea, and air against Israel. Lebanon is a core member of the Iran-dominated Shia Crescent of Power, which both China and Russia have long seen as the foundation stone for their expansion of power across the Middle East as a whole, as analysed in depth in my new book on the new global oil market order. Lebanon’s political and military organisation, Hezbollah – like its Palestinian counterpart Hamas – vows Israel’s destruction and praised Hamas for its “heroic operation” against Israel on October 7. Both paramilitary groups receive multi-layered support from Iran’s financial, intelligence, and military networks and each of these support facilities are inextricably linked to China and Russia, as also fully examined in my new book. The potential for the Hamas attacks on Israel to suck in other Arab states into the conflict, and for it to then become another proxy war – to add to that still raging in Ukraine – between the U.S. and Russia (and China) appears large…

…click on the above link to read the rest…

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