18th July 2024

Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air. Here’s what hit the wires today:

• 👊Trump promises US O&G support

• 🔥Wildfires continue to disrupt oilsands

• 🪆Replacing Russia’s gas

• 🆙Crude back above $100?

• ➕ plus Total in Nigeria divestment; legal wranglings over US drilling; crude inventories fall; shards of wind turbine on the beach; and plenty more.

Here goes…

📈THE NUMBERS

Oil prices jumped ~2% yesterday following a large draw in US crude stocks before settling this morning.

🗞️ WELL-HEADLINES

🗽North America

• Canadian wildfires continue to disrupt oilsands - MEG Energy has become the latest producer to take precaution, evacuating all non-essential personnel from its Christina Lake Regional Project. Some reports suggest ~400kb/d of production could be under threat from the latest surge in fires. See for yourself with live fire maps here.

• US court overturns Alaska oil lease - a judge has ruled that the government violated the law when holding the 2022 sale of nearly a million acres of federal waters in Alaska. Anyway, only one bid was made in the sale due to limited industry interest.

• Judge orders pause on Wyoming O&G permits - more legal battles…the lawyers must be loving it. No more leases will be allowed to be awarded on 120,000 acres of federal land in Wyoming until a reevaluation of the environmental impacts of new leases is finished.

• LLOG bags 41 deepwater blocks in the GoM - the exploration blocks comprise of 236,000 acres in the East Breaks and Alaminos Canyon areas. LLOG didn’t disclose the seller or the purchase price.

• Crude inventories fall but gasoline builds- last week saw a decline of 4.9 mmbbls to 440.2 mmbbls, according to the EIA. Analysts had predicted a much smaller decline. Gasoline stocks rose by 3.3 mmbbls, compared with expectations for a 1.6 mmbbls draw.

• US imports of Canadian crude at record high of 4.4 mmb/d - thanks to the recent opening of the Trans Mountain expansion pipeline. Most of the barrels though the new pipeline are being absorbed by US West Coast refiners which are set up to process heavy crude like that produced in Alberta, while some head to Asia.

🏰Europe

• Final Russian piped gas soon to cease - while most piped volumes to Europe were cut-off in 2022, about ~30bcm still makes its way to Europe via Ukraine and Turkey. However, some of these volumes will soon shut off when a gas transit agreement between Ukraine and Russia expires on 31 December this year. Europe will have to make up the shortfall by increasing its LNG imports further. Good news for the US and Qatar (and Russian LNG - which the EU still imports).

⛩️ Asia & Oceania

• Excitement running high for IEC - Indonesia Energy Corporation is set to drill wells later this year and next at its Citarum block, onshore Java, which it claims has over 1 bnboe of prospective resources.

🦁Africa

• Total in $860m Nigeria sale to Chappal - the deal includes Total’s 10% interest in the Shell-operated SPDC JV which controls 18 licences in the Niger Delta, and produces ~14 kb/d net to Total’s 10%. The portfolio also includes some producing gas licences. Now for the fun task of securing Nigerian regulatory approvals!

• First gas at Perenco’s Cameroon gas-to-industry project - gas is being delivered directly from Perenco’s Bipaga Gas Processing Centre to a nearby the ceramic manufacturing plant.

🗿Central & South America

• Qatar farms into Suriname licence - QatarEnergy acquired the 20% stake in Block 5 from Chevron, who is the operator and will retain a 40% interest. Suriname has seen a raft of offshore discoveries in recent years and the country’s first major offshore oil production is expected in 2028.

🌍 GEOPOLITICS & MACRO

• Trump promises support for oil & gas - some energy highlights from an interview with Bloomberg:

  • “We have more liquid gold than anybody”

  • “We need energy at low prices. The advantage we have over almost every country including the very large ones is that we have more energy than anybody. We have more of the real energy, the energy that works”

  • “Wind does not work. It’s too expensive”

  • I can’t argue with any of that.

• Crude back above $100 within a year? - JP Morgan thinks there’s a good chance, citing a lack of incentives for producers to invest in significant quantities of new supply at current prices. Meanwhile, ING forecasts Brent at $88/bbl in Q3 2024, dropping to $80/bbl next year. But, as we’ve said before, oil price forecasting is a fool’s errand. No one really has a clue.

💨CARBON, CLIMATE, & OTHER ENERGY STUFF

• UAE considering a second nuclear plant - having recently completed the 4th unit of its first $25 billion nuclear reactor, the country is lining up another to help meet growing power demand driven by population growth and an expanding industrial sector. Smart chaps.

• US wind farm shut down after turbine debris washes up on the beach - beach-goers in Nantucket were recommended to wear shoes due to sharp fiberglass shards being strewn across the sand. A turbine fell apart at the offshore Vineyard Wind project, the US’ first commercial offshore wind farm. It hasn’t been a great year or two for offshore wind…

🛢️ BOTTOM OF THE BARREL

Reason 28,173,435 why energy demand will continue to grow, and why reliable, affordable energy should be everyone’s top priority:

and the one simple reason why solar are wind are not the answer. Intermittency:

👋 BEFORE YOU GO

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

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