10th July 2024

Good morning ladies and gents. Here’s what happening in the hydrocarbon hinterlands today:

• ↘️ US gas boom finally slows

• 🌡️ How hot is it really in the US?

• 🟢 Shell greenlights Manatee

• 💸 Aramco taps the bond market

• ➕ plus hybrids are making a comeback; South Africa, the new frontier?; Oxy’s huge carbon credit sale; wildfires disrupt oilsands; LNG Canada’s milestone; Malaysian FPSO M&A rumors.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• EIA expects declining gas output in 2024 - low, and sometimes negative, US gas prices look to finally be taking their toll. The EIA expects output to fall from a record 103.8 bcf/d in 2023 to 103.5 bcf/d this year as several producers rein in drilling. Domestic demand, meanwhile, is set to reach a new record of 89.4 bcf/d.

• Final weld at LNG Canada - Fluor has announced the key milestone at the 12.7 mtpa facility in British Columbia. More than 380 pipe welders have worked on the project since construction began in 2018. The first shipment is due in H1 2025.

• Alberta wildfires disrupting oilsands - Cenovus has evacuated non-essential staff from its Sunrise project as a precaution, but said output has not been affected. Last week Suncor shut down its Firebag facility which has a capacity of 215 kb/d.

• US court denies request to stay new methane rules - various states are fighting new methane emissions regulations from the US gov’t that they say are a “blatant attack on America’s oil and gas industry”.

🏰 Europe

• Wellesley discovers oil at Gnomoria - the Norwegian indy said the North Sea discovery holds an estimated 5-25 mmboe of recoverable reserves.

🕌 The Middle East

• Aramco returns to the bond market - the Saudi leviathan is looking to raise $3bn by selling bonds maturing in 10, 30, and 40 years. Analysts expect the dosh will be used to fund its ongoing international acquisition spree, likely in Asian downstream assets or perhaps LNG.

⛩️ Asia & Oceania

• Japan backs Vietnam gas development - JBIC is contributing $415m in debt financing to the giant Block B gas development offshore Vietnam. The project, which is set to cost ~$10bn in total, includes a gas pipeline to onshore power stations.

• MISC downplays M&A rumors - the FPSO subsidiary of Petronas, MISC, is reportedly in talks to acquire a significant stake in its compatriot and FPSO peer, Bumi Armada. MISC said it would “communicate with relevant stakeholders if and when there is material development”.

🦁 Africa

• South Africa, the next frontier? - Shell is applying for approval to drill ultra-deepwater wells offshore South Africa. South Africa shares subsurface formations with Namibia so the hopes are it can repeat its neighbor’s recent exploration success.

🗿 Central & South America

• Shell greenlights Manatee - Shell has taken FID at the undeveloped gasfield offshore Trinidad & Tobago. The 600 mmcf/d field will supply the gas-deprived 15 mtpa Atlantic LNG facility which has seen its utilization fall to ~60% due to declining gas output in the Caribbean island nation.

🌍 GEOPOLITICS & MACRO

• NATO gathers in Washington - look, I’m no fan of Putin, but imagine you’re a kid in the playground and a bunch of the other kids join a group that was set up decades ago with the sole purpose of opposing your family. Now they’re all getting together behind the swings to decide how they can ruin you. There has to be a better way.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Hybrids are making a comeback - as demand growth for EVs slows, hybrid sales are taking off in Europe and the US. Hybrids make a lot of sense: they have much smaller batteries than EVs, no range anxiety, and great fuel efficiency. If you want to understand the benefits of hybrids from an efficiency / battery / natural resource perspective then I’d highly recommend this article.

• Oxy sells 500kt of carbon credits to Microsoft - the credits will come from Oxy’s under-construction Stratos direct air capture facility in Texas, due online next year. The price wasn’t disclosed but the current costs of DAC are about $500-1000 / tCO2, which means this deal was probably worth a whopping ~$250m. If you ask me, DAC is a fantasy and will never reach meaningful scale and economic viability.

• India racing to build hydro plants in contested region - in a move that will no doubt rankle China, India is planning to spend $1bn to speed up the construction of 12 hydropower stations in the Himalayan state of Arunachal Pradesh, an area claimed by China.

🛢️ BOTTOM OF THE BARREL

It’s pretty hot in parts of the US right now. The headlines will scream about records and climate change-induced extreme weather. But what does the data show about heat in the US?

Shoutout to Chris Martz who’s doing a great job over on Twitter scrambling the minds of climate doomers with data-based, objective reasoning:

The UK is f****d.

"Starmer’s plans, combined with his undoubtedly temporary but near-dictatorial powers, look set to complete the UK’s final descent into economic oblivion" as Doomberg puts it.

👋 BEFORE YOU GO 

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Thanks for reading. Have a day out there. 🛢️🛢️