Buyuma Weekly Energy Roundup(Wk 8)
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Welcome to this week's?Buyuma roundup newsletter covering?the latest energy?news that made waves.
Due to high prices and the demand for energy security, the US is poised to become the leading exporter of LNG in 2023 and potentially pave the way for $100 billion in new developments to support long-term growth, according to a new report from energy intelligence group Wood Mackenzie.
Below are?updates that made the headlines in the Oil and Gas industry
WoodMac: US Could See $100 Billion In New LNG Projects Over Next 5 Years
High prices and the demand for energy security will drive the US to be the leading exporter of LNG in 2023 and potentially pave the way for $100 billion in new developments to support long-term growth, according to a new report from Wood Mackenzie.
In 2022, the US was the third-largest exporter of LNG at 76.4 million metric tonnes per annum (mmtpa). With the resumption of the Freeport facility, the US will surpass Qatar and Australia this year to export 89 mmtpa.
However, it won’t stop there. Wood Mackenzie predicts that based on the combination of projects already under construction and momentum of potential projects, US LNG capacity could grow between 70 mmtpa and 190 mmtpa before the end of the decade, potentially more than doubling current exports
To achieve this, a slew of new projects will have to launch, which could lead to as much as $100 billion in new projects in the next 5 years, Wood Mackenzie reported.
Record-high prices and the need for energy security drove buyers, which included portfolio players and US producers and infrastructure companies, to seek long-term US LNG deals in 2022 and created huge contracting momentum for projects,” said Giles Farrer, head of gas and LNG asset research for Wood Mackenzie.
Last year alone, 65 million tpy of long-term US deals were signed, dwarfing the 18.5 million tpy we saw in 2021. This activity has pushed a host of pre-final investment decision (FID) US projects forward and we could see a wave of FIDs this year and next.
According to Farrer, projects will be undertaken by both privately and publicly owned developers and most pre-FID projects are currently seeking external financing for this investment. “In most cases, project financing will support between 60-80% of the required capital, with the remainder either financed via equity raises and/or balance sheet.
Aramco Now 3rd Largest Company by Market Cap
Saudi Aramco is now the third largest company by market capitalization, according to?companiesmarketcap.com,?a list of the world’s largest public companies by market cap which updates rankings frequently.
The list places Aramco in third with a market cap of $1.866 trillion, behind Microsoft with a market cap of $1.896 trillion, and Apple with a market cap of $2.363 trillion.
Back in May 2022, the?companiesmarketcap.com?list?ranked Aramco as the largest company by market cap,?with a market cap of $2.38 trillion. The list at the time placed Apple in second position, with a market cap of $2.30 trillion.
Currently, ExxonMobil, ranks in 12th with a market cap of $452.04 billion.Chevron places 24th in the list, with a market cap of $313.11 billion, while Shell ranks 43rd with a market cap of $212.20 billion, TotalEnergies ranks 68th with a market cap of $158.00 billion, PetroChina is 88th with a market cap of $134.51 billion, and ConocoPhillips ranks 93rd with a market cap of $128.49 billion.
Aramco is currently scheduled to publish its 2022 dividend and “key” financial results, and its 2022 financial statements, on March 12 and 13, respectively, the company’s website shows.
Where Is the Safest Offshore Region for Oil & Gas Right Now?
Where is the safest offshore region for oil & gas right now?
There are two perspectives that can be taken on this question, according to Alex Robak, an analyst at global risk intelligence company Dryad Global.
“From one perspective, one can look at the overall absence of risk - from this perspective, we can easily say that either the United Kingdom’s North Sea or Canada’s Nova Scotian continental shelf is the safest region for offshore oil and gas operations right now,”
“From an alternative perspective, we can take a look at regions in which there is an ongoing presence of risk, yet there exists an absence of direct threats or incidents. This perspective would point to either the Mediterranean Sea or West Africa as the safest region right now for offshore oil and gas production”
Simply looking at the overall absence of risk would lead one to conclude that either Canada or the United Kingdom are the most secure regions in the world for offshore oil and gas
Canada’s offshore industry accounts for approximately one million barrels per day, and its geographic location along the Nova Scotian continental shelf has been a benefit in that there is little to no risk to its continued operation on a day-to-day basis
“The United Kingdom’s offshore facilities in the North Sea are similarly well positioned geographically. Additionally, both countries have strict regulatory frameworks in place to protect offshore oil rigs from potential security threats that may arise
The Dryad Global analyst outlined that, from the “second perspective”, Dryad “can point to West Africa as a region in which one would attribute a moderate risk factor”.
“However, as there has been a decline in overall piracy and armed robbery incidents in the past few years, this risk has seemingly not translated into any sort of meaningful threat to day-to-day operations”
“This is the result of regional governments and international organizations having taken significant steps to combat maritime crime through military means and intelligence sharing”
“Alternatively, the Mediterranean Sea is a region in which geopolitical instability has created an environment with a moderate level of risk as a result of the ongoing crisis in Libya. This conflict has continually threatened oil supply to Europe over the past year. Despite this, there is very little in the way of active threats to operations of offshore oil rigs themselves in any meaningful way,” Robak continued.
When asked where the safest offshore region for oil and gas is right now, Lars Petersen, the regional medical director for International SOS, which describes itself as a pioneer and leader in international health and security risk management, said, “Norway has the best supervised regulatory system in the global offshore space”.
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“Considerations on the safety of offshore regions for oil and gas workers also depends on the age and quality of the offshore installations (well defined in the Norwegian regulations), safety culture on board (company dependent) and the health of the offshore workers.
Renewable Skills Shift May Cause Talent Exodus To Oil & Gas
The seventh annual?Global Energy Talent Index (GETI), has revealed that surging fossil fuel prices are driving a skills exodus from renewables to oil and gas that could hinder the energy transition.
The report details how, as fossil fuel firms reap bumper profits from recent energy price rises, oil and gas has overtaken power as the destination of choice for over half of the renewables workforce.
Indicating an increasingly restless workforce, 87% would consider leaving their current role and 51% would move to oil and gas – a 14% increase on last year.
Pay is cited as the biggest driver of job dissatisfaction for 59% of renewables workers, followed by benefits at 50%, indicating that soaring fossil fuel salaries and perks are a major draw.
Renewables firms also face intensifying demand for their workforce, with 78% of green energy workers being headhunted for a new job and nearly a third receiving six or more approaches from recruiters in the last year. - Almost a third of renewables workers have been headhunted over six times in the past year
With the increasing adoption of digital technologies across renewables, a quarter of workers say they would leave the energy industry, and technology is now the most popular outside industry to join.
Further key findings within renewables include:
? North America has risen to second choice destination for overseas transfers in the wake of the Biden administration’s funding for wind power, second only to Europe, the world leader in renewable energy.
? When asked what drives job satisfaction, nearly half of renewables respondents point to the feeling that they are contributing to society, followed by flexible working on 39%
? Half feel that their concerns are listened to and have an impact on company policy – the highest proportion among any energy sector.
Westwood Insight: UK and Norway Exploration & Production Outlook For 2023
Exploration and appraisal
Although E&A drilling in the UK was mooted to recover in 2022, activity proceeded more slowly than expected with just five exploration and three appraisal wells completed during the year.
The results were even more disappointing with just one commercial discovery and discovered commercial volumes the lowest since 2014 when no discoveries were made.
The outlook for 2023 has got off to a positive start —there have been two finds already in 2023, both operated by Shell: Pensacola (gas) in the southern UK North Sea and Orlov (oil) in the central North Sea, close to the Nelson platform.
According to Emma Cruickshank, head of NW Europe at Westwood, UK drillers this year may be targeting 13 prospects with combined potential resources of about 1.5 Bboe, along with five appraisal wells.
Despite a lack of success in recent years in high-impact UK offshore drilling, there could be at least three wells in this category in 2023: North Sea Natural Resources’ Devil’s Hole Horst and Parkmead’s Skerryvore (both in the central UK sector) and TotalEnergies’ Benriach west of Shetland.
In Norway, exploration activity remained relatively buoyant in 2022, however, performance was disappointing compared to the last couple of years.
Although nine commercial discoveries were made from the 28 wells completed, only 214 mmboe was discovered and all discoveries were less than 40 mmboe
High levels of exploration and appraisal drilling are expected to be maintained in 2023, however, there is a clear focus on near-field exploration.
Westwood counts 38 prospects targeting about 2 Bboe of unrisked resources and seven appraisal wells chasing about 1 Bboe, with five high-impact wells planned.
In the Barents Sea, V?r Energi and Aker BP appear to be the sole players planning exploration wells in the sector this year.
Production and field developments
UK production should climb slightly this year to 1.5 MMboe/d, supported by startup of the Neptune-operated Seagull Field HP/HT tieback to bp’s ETAP complex in the central UK North Sea, and Shell’s Penguins redevelopment in the northern North Sea.
Infill drilling at Clair Ridge, Cygnus and Golden Eagle should provide uplifts to hub production. Westwood warned, however, that capital investment assumptions could change as operators revise their budgets in reaction to the UK’s energy profits levy.
Most activities are likely to focus on low-risk investments with fast-track returns, as opposed to longer-term investments exposed to fiscal and political instability. And the focus on containing emissions to comply with regulations is making capital access more challenging.
However, the North Sea Transition Authority should still sanction six new UK field developments this year, the largest being Equinor’s deepwater Rosebank oil project west of Shetland.
In Norway, Westwood expects production to reach 4.25 MMboe/d, mostly driven by additions from the recently onstream Johan Sverdrup Phase 2 in the North Sea.
Following a large number of PDO submissions last year for 22 fields, 2023 should be a record-breaker in terms of newly sanctioned projects. The fields hold combined reserves of 1.23 BBoe.