Tom Whipple and Steve Andrews, Editors
Quote of the Week
“For natural gas, I have heard about the possibility of negative prices. I also think it could happen. That’s because natural gas has even more limited storage capacity and its production is also more rigid. So, it may happen. But I don’t think it will be a dominant or long-lasting scenario.” Wang Yusuo, chairman of enn Energy Holdings
Graphics of the Week
1. Energy prices and production
The four-week run of climbing crude prices continued through Wednesday, but prices fell on Thursday and Friday as doubts arose over the prospects for China’s economy and rising tensions with the US over the virus, the trade deal, and Hong Kong. Beijing said on Friday that it would not publish a growth target for 2020, casting doubts as to how quickly demand for oil will revive. Futures prices closed Friday above $33 in New York and $36 in London.
In a sign that oil markets are returning to relative normality, the gap between the price of an actual physical barrel of oil and futures prices has narrowed sharply. In April, a barrel of oil in the North Sea cost $10 less than the price on a Brent oil futures contract, a decade-high gap for the world’s benchmark oil price. Now, the gap has shrunk to less than $2 a barrel as the oil market rebalances, and traders are no longer in panic mode to find buyers for unwanted crude.
Concerns about sufficient storage for excess crude seem to be disappearing. A substantial decline in stockpiles at Cushing the week before last indicates the supply glut is starting to ease; however, a surprise increase in US gasoline inventories reflects underlying demand weakness in the US. The economic outlook remains uncertain, with another 2.44 million Americans filing for unemployment last week.
For the immediate future, the direction oil prices will depend mainly on the course of the pandemic. Should new outbreaks of the virus force further shutdowns, especially in China, Europe, or North America, oil prices could fall precipitously again. There are, however, warning signs that any recovery in the oil markets will be long and slow.
Six weeks ago, analysts and traders were saying that the demand for oil was down from the usual 100 million b/d to 80 or even 70 million. Some of this lost demand has returned, but it is not yet clear how much. The markets have been watching the relaxation of quarantine standards in China, Europe, and the US, but the impact on the demand for fuel is not yet clear. Beijing’s crude oil imports are reported to be at pre-crisis levels, but China has a long record of buying excess quantities of oil at low prices. Indeed, the demand for jet fuel will not recover for a long time.
The OPEC+ agreement says that their exports should be down by 10 million b/d, and the Saudis said they would toss in an extra million b/d for good measure. The problem is that the major exporters, such as Russia and the Gulf Arabs, derive much of their state revenue from oil exports. Questions are already arising as to whether they all will adhere to their quotas.
US shale output responds faster to price changes than other oil sources, but analysts disagree on how much oil supply will be cut. Most US oil production now comes from offshore and fracked shale oil wells. Offshore drilling and production platforms are costly and long-term projects, so there is little to curtail offshore production and endanger the ultimate amount of oil recovered.
According to the EIA, US shale oil production in February and March was some 9 million b/d before the full force of the pandemic led to nationwide shutdowns. The current EIA forecast for June shale oil production in May is 8.0 million b/d and for June 7.8 million.
The US Energy Secretary Dan Brouillette said Thursday that more than 2.2 million b/d of all US oil production had been shut down. “We’ll probably see that climb a little more before we start to see the demand curve pick up again.”
However, Bloomberg notes that buried in EIA’s latest estimate for the week of May 8th of total us oil production of 11.6 million b/d is an adjustment for “unaccounted oil.” This suggests that US crude oil production was not 11.6 million b/d in the week but rather, a million b/d lower at around 10.6 million b/d. Genscape, a unit of Wood Mackenzie, said production by May 20th had dropped almost 20 percent, or 2.3 million b/d, from a peak of 13.24m in March. The volume lost already is practically as much as Russia and Saudi Arabia last month pledged to cut in a historic supply deal that begins in June.
Genscape’s latest numbers, based on satellite monitoring and heat sensors at facilities across the US, suggested the most significant reductions were in Texas’s Permian shale – down 1.15m barrels a day – and North Dakota’s Bakken – down 480,000 b/d. Research officials at Standard Chartered said producers had already cut about 1.5 million b/d more than official estimates. They predicted that total US output could drop below 10 million b/d in the coming weeks, down more than 3 million b/d since March.
After the pandemic subsides, the oil industry may not have a bright future. According to Wood Mackenzie, national oil companies (NOCs) are set to slash their exploration budgets by 26 percent on average this year. The consultancy analyzed media announcements and tracked well plans of 11 large spenders—three Chinese NOCs, Thailand’s PTTEP, Malaysia’s Petronas, India’s ONGC, Qatar Petroleum, Russia’s Rosneft and Gazprom, Brazil’s Petrobras, and Mexico’s Pemex.
Although all of those NOCs are cutting exploration budgets in the near term, exploration is an essential part of NOCs’ business for the longer term, much more so than exploration is for the supermajors. NOCs invested on average 17 percent of their upstream budgets in exploration between 2015 and 2019, while the international oil majors spent an average 8 percent.
2. Geopolitical instability
Iran: Despite a call by the Ayatollah to expel all Americans from the Middle East and a warning to the US against making threats to Iranian tankers, Iran has toned down its approach to the West. The change reflects an effort to avoid confrontation with the US that could benefit President Trump in the November election. The shift in policy is most evident in Iraq, where Iran has backed a pro-American prime minister and ordered its proxy militias to cease their rocket attacks on American forces. While publicly dismissive of any change in the Iranian posture, Washington has quietly reciprocated in modest and indirect ways. The openings represent an incipient détente that, even if it does not last or lead to the end of the confrontation between Iran and the US, has lowered the temperature of the relationship, reducing the risk of open conflict.
Part of the change in policy may be related to the new surge in coronavirus cases in Iran. When the country began to reopen late last month, commuters packed subways and buses, and traffic snarled highways. Shoppers crowded the bazaars. Worshipers resumed communal prayer at mosques during Ramadan evenings. Three weeks later, the country has been hit by a new surge of coronavirus cases.
Since Iran’s outbreak first erupted in the holy city of Qom, religious leaders have resisted calls for quarantines, protested orders to close shrines, cast the coronavirus as an American conspiracy, and promoted traditional Islamic medicine, such as camel urine, as a panacea for COVID-19. Their actions have angered health officials and raised doubts about whether the clergy are fit to rule within the Iranian population. Iran has now reported some 7,500 deaths and 135,000 infections. The security services currently are conducting disease surveillance, disinfecting public spaces, and even overseeing victims’ burials, a role long reserved for civilian authorities and Shiite clerics.
Iraq: The Kurdistan Regional Government has lost most of the oil revenue that supports its economy and has no clear plan for eliminating deficits. Erbil is descending into a financial crisis with the potential to undermine social stability and oil investment. Because of low oil prices, pandemic-related disruptions, and political disputes with Baghdad, the KRG’s total revenues fell below $200 million in April. This is about $1.3 billion short of the income it needs to meet expenses.
Iraqi Finance Minister Allawi has proposed a $338 million payment to Kurdistan to cover public-sector salary payments for April, in exchange for finalizing a longer-term oil and budget deal within a 30-day window.
Libya: Libyan fighters backed by the Turks captured a vital airbase west of Tripoli on Monday, using drones to destroy newly arrived Russian air defense batteries. On Thursday, they ousted Haftar’s forces from a principal town south of Tripoli. These developments are a substantial setback for the eastern-based militias, led by Gen. Haftar.
The chief of Haftar’s air force vowed to unleash the “largest aerial campaign in Libyan history” with all Turkish positions now “legitimate targets for our air force.” The comments came as the head of security in the Tripoli administration said officials received information that several Soviet-era jets had arrived in Haftar’s eastern stronghold from a Russian base in Syria. After a series of losses. Haftar raised the prospect of a new escalation in the war with a threat to target Turkish forces backing the government, prompting Ankara to warn it would retaliate.
Backed by the United Arab Emirates, Russia, and Egypt, Haftar’s forces still hold all of eastern Libya and much of the south, including most oil facilities. But its presence in the northwest, where Libya’s population is concentrated, is shrinking. Libyan oil production is down to about 100,000 b/d, which is consumed locally. It is doubtful there will be any oil exported from the country soon.
Venezuela: Five Iranian oil tankers carrying 60 million gallons of motor fuels are crossing the Atlantic to deliver their cargoes to the Maduro government in violation of US sanctions on Caracas. Without gasoline, Venezuela is likely to grind to a complete halt. Even the Russians pulled out of supporting Venezuela for fear of the damage US sanctions could cause. The US currently has significant naval forces in the Caribbean as part of an effort to stop drug smugglers. However, the word from Washington is that it is not interested in using military force to turn back the tankers.
The US Supreme Court declined to review a federal court’s ruling that allowed Canadian mining firm Crystallex to take over shares of Venezuela-owned US refiner Citgo. This action would be in compensation for the $1.4 billion expropriations of Crystallex assets in Venezuela. If this seizure goes through, Venezuela will lose control of Citgo.
Propane is used by about 90 percent of Venezuelan households. After a processing plant caught fire and forced distribution to be rationed, shortages have appeared all over the country.
3. Climate change
An executive order from President Trump directs agencies to consider what sort of deregulatory action they might take that could spur economic growth. The order directs agency heads to “identify regulatory standards that may inhibit economic recovery,” highlighting that regulations could be permanently or temporarily lifted. On Wednesday, Democrats blasted the Trump administration’s moves to roll back environmental regulations during the coronavirus crisis, with one senator saying a “pandemic of pollution″ has been released.
The Environmental Protection Agency has weakened regulations dealing with fuel efficiency and mercury emissions. It has waived enforcement on a range of public health and environmental mandates, saying industries could have trouble complying with them during the coronavirus pandemic. The rollbacks are among dozens of actions by the EPA to ease requirements on the industry to monitor, report, and reduce toxic pollutants, heavy metals, and climate-damaging fossil fuel emissions.
Analysis of global climate data shows the planet is heating up unevenly. Globally, average temperatures are a little more than 1 degree Celsius (1.8 F.) warmer than in the preindustrial era. However, roughly one-tenth of the world’s surface area has already experienced 2 degrees Celsius of warming — an amount that UN scientists say will trigger dangerous climate impacts. In the US, more than 70 counties have passed the 2-degree threshold.
Changes in one part of the planet can destabilize climate systems elsewhere. Scientists say the loss of sea ice north of Japan has triggered a chain reaction that threatens an entire Pacific ecosystem. Historically, when the ocean surface froze, it would expel vast amounts of salt into the waters below, creating a dense, nutrient-rich current that flowed East across the Pacific. With less of the ocean freezing, that current is weakening, and animals such as salmon are suffering.
Climate change is also transforming the systems that circulate air around the globe. As the sun strikes the equator, vast columns of hot air then rise out toward the middle latitudes, then sink as they cool. In a warmer world, that air travels farther toward the poles, creating new “hot spots,” such as the one-off the coast of Uruguay. Research suggests this warm ocean blob is shifting southward at a rate of 40 miles per decade.
Millions of people across Bangladesh and eastern India are taking stock of the devastation left by Cyclone Amphan. It is the first super cyclone to form in the Bay of Bengal since 1999. Though its winds weakened by the time it struck land, it was still classified as a very severe cyclone. The affected areas include the Sunderbans, mangroves spread over an area of more than 10,000 square kilometers that spans both India and Bangladesh – the swampy islands are home to more than four million of the world’s poorest people.
Researchers forecast as many as 19 named storms will appear in the Atlantic this year, at least six of which are likely to become hurricanes. A typical season produces 12 storms. In all, 6 to 10 hurricanes could form, with 3 to 6 carrying winds of 111 miles per hour or more. Warm waters, the lack of a Pacific El Nino, and a greater African monsoon were among the reasons cited by the agency, who joined commercial and academic researchers in forecasting an overactive season.
4. The global economy and the coronavirus
The CDC says that during the 1918-1919 pandemic (aka the “Spanish Flu”), about 500 million people or one-third of the earth’s population were infected. The death toll is estimated to have been somewhere between 17 and 50 million. The COVID-19 virus is not the same as the one that swept the world 100 years ago, and mortality from the infection is likely to be different. However, the world’s population is now 4X larger than 100 years ago, so many more people may become infected. Without a vaccine, the number of infections could eventually be in the billions and the death toll in the tens of millions.
While medical practices have made much progress in the last century, there is still no vaccine to stop the virus or even a satisfactory treatment. For a large part of the earth’s 7.6 billion people, modern medicine is no better than it was 100 years ago, and while the virus’ mobility is much higher.
Global coronavirus cases surpassed 5 million on Wednesday, with Latin America overtaking the US and Europe in the past week to report the largest share of new cases globally. Latin America accounted for around a third of the cases reported last week, while Europe and the US each accounted for just over 20 percent. A large number of the new cases came from Brazil, which now has the second-largest outbreak in the world, behind the US.
By official numbers, Belgium has been the country hit hardest in the world by the coronavirus. The nation of 12 million has the highest mortality rate among confirmed cases, at 16.4 percent. And it has the most deaths in terms of its population: 78 deaths per 100,000 people, according to the statistics compiled by Johns Hopkins University. However, other ways of estimating virus-related deaths suggest that the Belgian method of counting might turn out to be among the most accurate in the world and that other countries may be significantly undercounting their death tolls.
“Our way of counting things is the most scientifically correct and honest,” Yves Van Laethem, a virologist and Belgian government spokesman, told reporters last week. Van Laethem says that Belgium’s official coronavirus toll closely tracks “excess deaths” for the pandemic period — the number of deaths that exceed what would be expected for the period, based on the country’s historical death rates. Many newspapers across the world have concluded that the “excess deaths” since the pandemic began is a more accurate way of assessing the virus’s impact.
For those looking to “herd” immunity as a solution to the pandemic, a recent Swedish antibody study shows there will be a long road to immunity as Sweden’s COVID-19 toll mounts. The study found that just 7.3 percent of Stockholmers developed COVID-19 antibodies by late April, which could fuel concern that a decision not to lock down Sweden against the pandemic may bring little herd immunity.
United States: Roughly one-quarter of the labor force in Nevada, Michigan, and Hawaii is unemployed, and nearly every other state registered a record-high jobless rate last month. The figures released by the Labor Department on Friday illustrate how closed shops and factories, sharp declines in tourism, and a slew of measures meant to arrest the spread of the pandemic have hit some regions more than others, but all contributing to the highest national unemployment rate since the Great Depression.
Even as states begin to reopen for business, a further 2.4 million workers joined the nation’s unemployment rolls last week. There is growing concern among economists that many of the lost jobs are gone for good. The Labor Department’s report of new jobless claims, released Thursday, brought the total to 38.6 million since mid-March, when the widespread shutdowns began.
While workers and their employers have expressed optimism that most of the joblessness will be temporary, many who are studying the pandemic’s impact are worried about the employment situation. “I hate to say it, but this is going to take longer and look grimmer than we thought,” Nicholas Bloom, an economist at Stanford University, said of the path to recovery. He estimates 42 percent of recent layoffs will result in permanent job loss. “Firms intend to hire these people back,” he said, referring to a recent survey of businesses by the Federal Reserve Bank of Atlanta. “But we know from the past that these aspirations often don’t turn out to be true.” Federal Reserve chair Jerome Powell said last week, “We are now experiencing a whole new level of uncertainty, as questions only the virus can answer complicate the outlook.”
Dallas, Houston, Southeast Florida’s Gold Coast, the entire state of Alabama, and several other places in the South that have been rapidly reopening their economies are in danger of a second wave of coronavirus infections over the next four weeks. The risk for resurgence is high in places where cases are already rising fast, including the counties of Crawford, Iowa; Colfax, Neb.; and Texas, Okla. and the city of Richmond. It is challenging to forecast during a transitional period because models have trouble capturing how people actually behave, including adherence to social distancing and hand-washing practices.
According to the new University of London model, the coronavirus may still be spreading at epidemic rates in 24 states, particularly in the South and Midwest, highlighting the risk of a second wave of infections in places that reopen too quickly or without sufficient precautions. The model incorporates cellphone data showing that people sharply reduced their movements after stay-at-home orders were broadly imposed in March. The model shows problems ahead with restrictions easing and mobility increasing with Memorial Day and the unofficial start of summer.
China abandoned its decades-long practice of setting an annual target for economic growth amid the uncertainty of the pandemic and said it would continue to increase stimulus measures. Beijing’s announcement foreshadows more financial pain for a world that has become increasingly reliant on China as an engine of growth. Premier Li Keqiang, in the annual policy address on Friday that laid out a renewed focus on maintaining employment and investment, said Beijing remains committed to implementing the terms of the ‘phase one’ trade deal against a backdrop of escalating tensions with the US.
In the absence of larger-scale stimulus, economists now say China’s policymakers will focus on getting the economy to muddle through while trying to create employment and stable living conditions for tens of millions of Chinese workers. Mr. Li said the government planned to create 9 million new jobs in 2020, lower than last year’s target of 11 million new jobs.
The emergence of dozens of new coronavirus cases around a northeastern Chinese city has prompted authorities to lock down the area and replace some officials. Residents in parts of Jilin province are being ordered to stay home. Traffic into and out of some localities is being curtailed to prevent the virus from spreading,
According to government reports from the municipal area of about four million people, the outbreak in the manufacturing city of Jilin and a suburb, Shulan, has infected around 40 people in recent weeks. No deaths have been reported, so the entire province has reported only two of China’s 4,638 fatalities associated with Covid-19.
Chinese doctors see the coronavirus manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan. This suggests that the pathogen may be changing in unknown ways and complicating efforts to stamp it out. Patients found in the northern provinces of Jilin and Heilongjiang appear to carry the virus for a more extended period and take longer to test negative, one of China’s top critical care doctors told state television last week.
After a brief period of calm that came with the signing of the trade deal in January, the US-China relationship has worsened dramatically in the past few months. The pandemic dispute is adding a new and deadly edge to the increasingly bitter rhetoric. The agreement’s centerpiece was China’s promises to buy more US goods and services, but even before the coronavirus hit, analysts were questioning whether those targets were realistic. With both Chinese demand and US manufacturing and transport capacity down due to the virus — according to people with inside knowledge of the country’s energy industry — and prices falling for energy and other goods, those promises look even further out targets.
Chinese oil demand is all but back to levels last seen before the national lockdown, according to people with inside knowledge of the country’s energy industry. In a remarkable turnaround, after Chinese demand crashed by about 20 percent in February, gasoline and diesel consumption has fully recovered as factories reopen and commuters drive rather than using public transport.
Determining the exact level of Chinese oil demand is a complicated exercise. Still, executives and traders who monitor the country’s consumption said it was at about 13 million b/d in April, just shy of the 13.4 million b/d in May 2019 and 13.7 million b/d in December 2019. The overall number would be higher were it not for jet-fuel demand, which is still running well below a year’s ago level. China is building new oil-storage capacity and is taking every advantage of today’s unusually low oil prices
Brazil: The coronavirus outbreak worsened last week, and now has the second-highest number of reported cases in the world. However, experts doubt Russia’s official coronavirus toll, and intelligence officials and foreign leaders also question China’s numbers. Brazil is approaching 350,000 cases and 23,000 deaths, per Johns Hopkins.
President Jair Bolsonaro has been widely criticized for his handling of the outbreak. The far-right former army captain has long snubbed social-distancing measures, arguing instead for reopening the economy. He has also become an increasingly strong advocate for the use of the malaria drug chloroquine as a possible remedy for COVID-19. On Wednesday, the Health Ministry issued new guidelines for the broader use of anti-malarial drugs in mild coronavirus cases.
São Paulo, the largest city in the Western Hemisphere, with a population of 12 million, is emerging as the coronavirus pandemic’s latest global hot spot. Confirmed cases in the city have soared 34 percent, and at least 510 people have died in the past week as the public health infrastructure buckles and President Bolsonaro continues to shrug off the crisis. “This is the picture of Bolsonaro’s Brazil,” said Gerson Salvador, an infectious-disease specialist in the intensive care unit at São Paulo’s University Hospital. “People are being exterminated. There is no organized system to care for them. They are being advised to go out and given no alternative but to work.”
Saudi Arabia: The agreement by Saudi Arabia’s Aramco to acquire a 70 percent stake in Saudi Basic Industries Corporation from the country’s sovereign wealth fund looked like a meaningless accounting trick that transfers money from one side of the Saudi balance sheet to another.
Saudi Arabia’s sovereign wealth fund is planning to borrow about $10 billion by pledging some of its stakes in SoftBank’s technology investment vehicle. The Public Investment Fund, which has been on an overseas acquisition spree recently, is speaking with investment banks about a margin loan backed by some of its investments in the $100 billion Vision Fund. These moves are an indication that the Saudis have serious financial problems with insufficient oil revenue to cover the kingdom’s budget.
5. Renewables and new technologies
The impact of the coronavirus epidemic on the transition to renewable fuels was a topic of much discussion last week. There is general agreement that in the short term, new solar and wind projects and the movement to EVs will be delayed by the widespread disruption caused by the virus. In a new report, the IEA says that the renewable energy industry will see a decline in growth this year, but it will recover and start growing again next year. The IEA notes that global energy demand is likely to drop by 6 percent this year. Whether a recovery will be made with a larger share of renewables in the global energy mix is an open question.
The spread of the virus has already resulted in a record drop in emissions and a vivid demonstration of how much the air can improve with less use of fossil fuels. In the US, where generous subsidies have gone to support fossil fuels for decades, the Trump administration is still promoting the growth of fossil fuels, removing regulations that it regards as harming economic growth and imposing fees retroactively on the renewables industry. Thus far, Congress has appropriated trillions of dollars to restore the economy with little consideration of promoting new forms of energy and reducing carbon emissions.
Meanwhile, in Europe, which does not have much of a fossil fuel industry left to protect, the EU is set to launch a New “Green New Deal.” The IMF and the IEA have said that macroeconomic recovery should be made with climate change in mind. A coalition of 150 companies worth a combined $2.4 trillion recently signed a statement calling on governments to ensure their pandemic response is “grounded in bold climate action.” On May 27, the European Commission will unveil details on its “Green Deal” strategy, which will offer a green economic recovery package to achieve the EU’s aim to reach net-zero emissions by 2050.
The EU has an upcoming hydrogen strategy paper to determine how to drive demand in a range of sectors, including heavy industry and transport. The EC’s paper looks at how to use hydrogen in new ways, how to produce it competitively at scale, and how to speed up research and development to give the EU industry an edge. Clean low-carbon hydrogen is likely to get support from the EC’s coronavirus pandemic recovery plan, expected in the coming days. EC President Ursula von der Leyen has cited both clean hydrogen and offshore wind as critical technologies for the EU to invest in as part of this plan. Offshore wind could be used in electrolyzers to produce renewable green hydrogen from water. The EC favors renewable green hydrogen in the long term, as it creates links with the power sector and can be used for grid management and power storage, as well as feedstock for industry.
After 180,000 kilometers, the successful trial operation of the world’s first two hydrogen trains was officially completed at the end of February. Two pre-series trains of Alstom’s Coradia iLint model have been in passenger service since September. Fourteen Coradia iLint trains will replace existing diesel engines. The Local Transport Authority of Lower Saxony was the first company to believe in hydrogen, investing in it with the order and thirty years of maintenance and power supply.
A consortium in Australia is evaluating the concept of hydrogen fuel cell electric buses for public bus transport. The group will investigate deploying an initial 100 hydrogen-electric buses in cities across Australia, to use this as a seed for a more widespread roll-out.
The world’s largest green hydrogen production facility plans to start operations in southern California by 2023, promising to supply the state with the zero-carbon fuel at a cost competitive with conventional hydrogen production technology. SGH2’s Lancaster, California plant will produce some 40,000 tons of hydrogen annually, sufficient to fuel 2,200 fuel cell electric vehicles per day. Whether the problems of distributing and storing hydrogen for use in automobiles can ever compete with electricity is still an open question.
In recent years progress was made in producing hydrogen from sunlight and wind energy and storing hydrogen inside metal matrices. Hydrogen may become a financially viable source of non-polluting energy for trains, long-distance trucks, buses, or even planes.
These days, hardly a week goes by without announcements about what might be a significant improvement in electrical energy storage batteries for vehicles or as a buffer for intermittent wind and solar power. Last week, scientists at the Chalmers University of Technology in Sweden, and Xi’an Jiaotong University in China announced that they had developed a multifunctional interlayer between the electrolyte and the Li-metal anode that helps improve solid-state battery current density tenfold.
Not to be outdone by Tesla, General Motors announced last week that it is “almost there” on developing an electric vehicle battery that will last one million miles. The automaker also is working on next-generation batteries even more advanced than the new Ultium battery that it unveiled in March. “Multiple teams” at GM are working on such advances as zero-cobalt electrodes, solid-state electrolytes, and ultra-fast charging. Reuters reported in early May that Tesla, in partnership with Chinese battery maker CATL, plans to introduce its million-mile battery later this year or early next.
6. The Briefs (selections from the press – date of article in The Energy Bulletin Weekly is in parentheses – see more here: daily.energybulletin.org/ )
The global plunge in electricity demand will drag on long after nations lift stay-at-home orders, leading to the biggest annual drop since the Great Depression and fundamentally reshaping power markets. As economies struggle to recover, worldwide electricity consumption will decline 5 percent in 2020, the most in more than eight decades, according to the IEA. In Europe, analysts say a full recovery could take years. The prolonged slowdown will increase economic pressure on older, uneconomic power plants — especially those that burn coal — and help speed the transition toward cleaner and cheaper wind and solar. (5/21)
Natural gas to decline 2 percent in 2020: Thanks to declining commercial and industrial natural gas demand driven by lockdowns to curb COVID-19’s spread, Rystad Energy predicted Monday that global gas demand will drop nearly two percent this year. (5/21)
Natural gas, the poster child of the fossil fuel industry and the bridge fuel to a renewable future, has suffered its fair share of problems amid the coronavirus pandemic. And it may suffer the same fate as oil, at least when it comes to storage. It may also suffer the same fate with regards to negative prices. Prices have plummeted because the outbreak came amid an already oversupplied gas market, pretty much the same as the oil market. (5/19)
A UK judge dismissed a lawsuit against Eni and Shell brought by the Nigerian government alleging that the oil and gas supermajors knew about $1.1 billion in bribes given to secure an oil license in Nigeria nearly a decade ago. The judge in London dismissed the case on the grounds that the UK has no jurisdiction to try the lawsuit. (5/23)
Worldwide maintenance issues: The coronavirus pandemic has disrupted maintenance at oil and gas projects and refineries from Russia’s Far East to the coast of Canada, storing up problems for an industry already reeling from slumping prices. Lockdowns to stop the spread of COVID-19 have snarled the supply of spare parts and have prevented maintenance workers from doing their jobs. Regular repairs are needed to keep wells pumping, pipelines and refineries functioning and ships moving. Without maintenance, the risk of glitches or unplanned outages increases and delays risk driving up the cost of work later. (5/19)
Kuwait and Saudi Arabia agreed to stop production from the Al-Khafji crude oil field – part of their shared Neutral Zone – as of June 1. The shutdown comes just months after both countries agreed to resume production at the Neutral Zone. Total production at the Zone, which comprises the offshore Al-Khafji and onshore Wafra fields, was 260,000 b/d in April, with each country sharing output 50-50. (5/18)
Chinese oil imports booming: While the rest of the world is tentatively coming out of lockdowns, China is taking advantage of the cheapest crude oil in years to stock up as demand is starting to return in the world’s largest oil importer. At present, a total of 117 very large crude carriers (VLCC) are traveling to China for unloading at its ports between the middle of May and the middle of August. The fleet en route to China could be the largest number ever of supertankers traveling to the world’s top oil importer at one time. (5/18)
Nigeria imported a total of 20.89 billion liters of petrol in 2019, the National Bureau of Statistics (NBS) stated Wednesday. This figure represented a six-year high after the country had imported 20.14 billion liters in 2018, representing a five-year high. (5/21)
In Angola, the coronavirus pandemic has done in a handful of months what even a 27-year civil war did not: it has brought oil drilling to a halt in Africa’s second-largest oil producer. The consequences could be grave for a poor country that relies heavily on oil revenues and is saddled with debts that exceed its economic output. The halt in oil exploration could represent a setback for one of the most ambitious economic reform drives on the continent, aimed at cleaning up corruption and attracting foreign money. (5/20)
In Liberia, launching the next licensing round fully online, in times of high inflation and depressed commodity prices, is a brave and laudable step – one that needs to be fully backed by Liberia domestically. While terms for the oil companies are reasonably favorable, exploration results to date have been distinctly mixed. (5/19)
Venezuela’s request to the US Supreme Court was denied. Venezuela asked for a reconsideration of a lower court’s decision allowing a PDVSA creditor to go after US refiner Citgo, its most valuable overseas asset. While the US appeals court decision stands, any creditor seeking to seize Citgo assets would need specific approval from the US Department of Treasury. (5/20)
In Venezuela, a dollar could once theoretically buy about 5 billion gallons of gasoline — more than enough to supply the state of Michigan for a year. Now, a dollar gets you half a pint, if you’re lucky. (5/21)
The US oil rig count fell by 21 last week to 237, down 65 percent from 683 in March, Baker Hughes Co. reported. The total number of active gas rigs in the US held steady at 79. (5/23)
Where the drilling stopped: Since March 17, 71 percent (308 rigs) of the rigs taken out of service were in the top three US crude oil-producing regions: the Permian region, the Eagle Ford, and the Bakken region. In mid-March, the Permian region had 405 operating rigs. By May 12, that number had fallen by 57 percent to 175 rigs. The Eagle Ford and Bakken regions saw similar declines in their rig counts, of 64 percent and 69%, respectively, in that time. (5/21)
US. coal production during the first 20 weeks of this year is down 43 percent compared to last year over the same time frame. (5/22)
The US coal industry is losing jobs at the fastest rate in decades as the fuel gets crowded out of an electricity market that is shrinking because of the coronavirus pandemic. The number of coal mining jobs dropped 12 percent to 43,800 in April. For an industry with a workforce the size of a small city, coal punches above its weight politically. Yet last week, the EIA projected that US coal consumption would drop 23 per cent in 2020 to 454m short tons in 2020, well below the 11 percent decline forecast at the beginning of the year. (5/19)
Weekly US coal train loadings averaged 55.1 trains/day in the week ended May 22, down 0.8 train/day from the previous week. From the year-ago week, loadings declined 44.8 trains/day to the lowest weekly average loadings per day in six years. (5/23)
A majority of India’s coal-fired power stations may miss deadlines to curb toxic emissions, hurting efforts to curb air pollution, according to non-profit group Centre for Science and Environment. As much as 70 percent of the country’s coal-fired capacity is at risk of missing the 2022 deadline for capping emissions of sulfur dioxide. (5/23)
Big wind: Siemens Gamesa Renewable Energy SA, the Spanish wind turbine manufacturer, is to build what will be the world’s biggest windmill, by the thinnest of margins. The 14-megawatt machine with a rotor diameter of 222 meters (728 feet) will be just two meters bigger than General Electric Co’s massive turbine. It’s another sign that size matters when it comes to the rapidly growing market for green power from offshore wind farms. (5/19)
EV tankers? Seven Japan-based companies have formed the e5 Consortium, with the goal of establishing new ocean shipping infrastructure services through various initiatives to develop, realize, and commercialize zero-emission electric vessels. (5/22)
OPEC solar: OPEC member Algeria plans to install up to $3.6 billion worth of solar photovoltaic projects to produce renewable electricity for export and for meeting increasing domestic power demand. The solar power facilities are expected to have a combined installed capacity of 4,000 megawatts. (5/22)
Ethiopia vs. Egypt re hydro: China and the United Nations backed calls for Ethiopia to resume talks over its plan to begin filling a giant hydropower dam that is opposed by Egypt. Ethiopia wants to start supplying the Grand Ethiopian Renaissance Dam when the next rainy season begins in July. Egypt insists on having a say in how quickly it’s filled, because it will affect the flow of the Nile River, the nation’s main source of freshwater. The US and the European Union have both urged the countries to resolve the issue peacefully. (5/22)
Another airlines casualty: Britain’s Rolls-Royce said on Wednesday it would cut at least 9,000 jobs from its global staff of 52,000 and could shut factories to adapt to the much smaller aviation market that will emerge from the coronavirus pandemic. Rolls-Royce, one Britain’s best-known industrial names, supplies engines for large aircraft such as the Boeing 787 and the Airbus A350. It is paid by airlines based on how many hours they fly, meaning its earnings will be hit by the collapse in air travel which is expected to last for years. (5/20)
Airports and airlines are rolling out temperature checks for crew and, increasingly, passengers, as well as thermal scans to spot people with elevated body temperatures. Face masks are now de rigueur for travelers across the US. Passengers on Europe’s biggest budget carrier must raise their hands to use the toilet. Forget about the perks of priority boarding at Air France. The carrier is one of several boarding passengers seated at the back of the aircraft first, to limit traffic jams in the aisle. (5/19)
Hertz files for bankruptcy: The more than a century old car rental firm Hertz Global Holdings filed for bankruptcy protection on Friday after its business was decimated during the coronavirus pandemic and talks with creditors failed to result in much-needed relief. (5/23)
Bike sales rocket: As the coronavirus pandemic shrinks life in major American cities — limiting pastimes and discouraging use of buses and subways — hundreds of thousands of Americans are flocking to one of the most basic forms of mobility: the bicycle. In March, nationwide sales of bicycles, equipment and repair services nearly doubled compared with the same period last year, according to the N.P.D. Group, a market research company. By the end of April, many stores and distributors had sold out of low-end consumer bikes. Now, the United States is facing a severe bicycle shortage as global supply chains, disrupted by the coronavirus outbreak, scramble to meet the surge in demand. (5/19)
Lebanon’s escalating economic crisis and its collapsing currency are putting the price of many foodstuffs beyond the reach of the Lebanese. The price of meat, for example, has doubled since March, with ground beef now running at about $9 a pound. (5/18)
In Yemen, coronavirus is believed to be spreading throughout the nation, where the health care system “has in effect collapsed”, the United Nations said on Friday, appealing for urgent funding. (5/22)
Spain’s cabinet is set to approve a bill setting out a path to reduce greenhouse gas emissions to net-zero by 2050 on Tuesday, putting it on course to join a handful of wealthy nations who have written the target into law. Shifting away from fossil fuels requires hefty investment across the European Union (EU) (5/20)