18th September 2024

Morning guys and gals. This is Both Barrels with all that’s been going down in oil, gas, and energy, without the hot air.

• 👎 Wirth rips into Biden’s gas policy

• ✅ Sounion salvage success

• ❌ BP’s finished with US onshore wind

• 🇨🇳 Chinese refineries feeling the heat

• ➕ plus Miliband’s madness; Aramco doubles down on MidOcean LNG; US gas power capacity booming; Johan Castberg ready for action; better days ahead for deepwater drilling; a lifeline for Petroperu; and plenty more.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Boom times for US gas power capacity - utilities in the US are announcing plans for the highest volume of new natural gas-fired capacity in years as the AI boom is driving demand for electricity. Power demand has been largely flat for a decade but has now started rising again thanks to data centers and a broad push for electrification. Great news for gas, which makes up about 42% of the US power supply.

• BKV going public - the Denver-based gas producer is hoping to raise up to $315m in an IPO on the New York Stock Exchange. Rate cuts have encouraged more companies to consider going public but persistent low natural gas prices mean the timing isn’t ideal. Peak Resources, a small Powder River Basin E&P is also going public. Needs must, I guess.

• Fountain of fire at Energy Transfer pipeline - an NGL pipeline in La Porte, Texas, caught fire, forcing a widespread evacuation. Some reports suggest the pipeline went up in flames after being hit by a car. Ooops.

• Waterous makes $241m Greenfire buy - the Calgary-based fund bagged a 43% stake in Greenfire, which owns two oil-sands well sites south of Fort McMurray, Alberta, Canada.

• Dorchester Minerals expands in the Permian - the company has acquired ~17,000 net acres in the Delaware and Midland basins, and in Colorado, in two acquisitions totaling $215m.

• More top ups for the SPR - looking to take advantage of low prices, the US government is seeking another 6 mmbbls to refill the much depleted SPR.

🏰 Europe

• Johan Castberg ready for action - Equinor’s FPSO has arrived on site in the Barents Sea as the ~550 mmboe field prepares for first oil towards the end of the year. Johan Castberg is expected to hit peak production of 220 kb/d of oil.

• UK North Sea ahead of emissions targets - the goal for GHG emissions from the UKCS has been hit four years early, driven by large reductions in venting and flaring. The sector had committed to cut its upstream emissions by 25% by 2027, and 50% by 2030. Not massively surprising given the sector is in terminal production decline anyway.

• Equinor hits pay at Gudrun - two exploration wells in the Norwegian North Sea have discovered an estimated ~15 mmboe.

🕌 The Middle East

• Sounion salvage success - the beleaguered oil tanker in the Red Sea that had been repeatedly bombed by the Houthis was successfully towed, still burning, to a “safe location” and an oil spill has thankfully been avoided.

• More big bucks for Saipem - a few days after announcing a $4bn contract in Qatar, Saipem has now bagged a $2bn EPC contract for the development of the Marjan oilfield in Saudi Arabia. Making it rain.

⛩️ Asia & Oceania

• Aramco doubles down on MidOcean - the Saudi behemoth continues its foray into LNG by increasing its stake in MidOcean to 49%, adding to the interest it acquired in September last year for $500m. The value of this deal was kept under wraps but MidOcean is using the proceeds to fund the acquisition of an additional 15% stake in Peru LNG from Hunt Oil Company.

• Chinese refineries going bust - three Sinochem-operated refineries with a combined capacity of 300 kb/d have declared bankruptcy in recent days after struggling under low margins and weak fuel demand. Refining margins in Asia are at multiyear lows and Chinese refinery throughput is down 17.5% year on year.

• PTTEP signs LNG supply deal with Oman - Thailand’s NOC will import 0.3 mtpa for five years from 2025. The two parties are also discussing another deal for a further 0.8 mtpa for nine years.

🗿 Central & South America

• A lifeline for Petroperu - a week after the entire board of directors resigned, Peru’s struggling NOC has received $1.5bn in financing aid from the government. As a condition of the loan, the company must slash costs and make various divestments to raise capital.

🌍 GEOPOLITICS & MACRO

• Mike Wirth rips in Biden over gas policy - the Chevron boss said that Biden’s moratorium on LNG exports "elevates politics over progress" and that the “attacks on natural gas” increase energy costs, threaten reliable supplies, slow the switch from coal to natural gas, and hamper the development of AI. “AI’s advance will depend not only on the design labs of Silicon Valley, but also on the gas fields of the Permian basin”. Well said Mike, well said.

• A rosy outlook for deepwater drilling - it might not feel like it right now given current market sentiment, but Noble Corp’s CEO thinks rates for deepwater drilling rigs may climb to near record levels of $600k/d in 2026 as offshore drilling demand accelerates. With US shale slowing, new supply growth will need to come from elsewhere, and deepwater is a likely source of those barrels.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• BP selling its US onshore wind - the company owns 10 operating onshore wind energy assets across seven states, and said that the “the business is likely to be of greater value for another owner”. Like other majors, BP’s new CEO is shrewdly reigning in low carbon investments as investors have unsurprisingly tired of seeing value destroyed by unprofitable wind and solar strategies.

🛢️ BOTTOM OF THE BARREL

Here’s Ed Miliband - the UK’s Energy Secretary who’s on a blind crusade to destroy the country’s oil and gas sector - complaining that Petroineos is shutting down its refinery in Scotland…

Bob said it best:

👋 BEFORE YOU GO 

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

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