Manup Industry Roundup - W1923: NEWSL -02
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The Organization of the Petroleum Exporting Countries (OPEC) has made a very slight change to its annual oil demand forecast in its monthly report.
OPEC now sees global oil demand grow by 2.33 million bpd this year and the strong growth in the Chinese market of 800,000 b/d is likely to be offset by downside risks elsewhere.
Below are the oil and gas stories and news that made headlines this week carefully curated by Manup.
Oil & Gas Updates
Renewable Energy Watch
OPEC: World Oil Demand To Rise By 2.33 Million Bpd In 2023
For the third month running, OPEC has barely changed its forecast of global oil demand, predicting growth of 2.33 million barrels per day, or 2.3% Y/Y growth, good for a very slight increase from its previous forecast of 2.32 million barrels per day.
According to OPEC, strong growth in the Chinese market of 800,000 b/d is likely to be offset by downside risks elsewhere such as the U.S. debt ceiling.
The EIA’s latest growth prediction of a decline of 420,000 barrels per day (kb/d) in what experts refer to as the call on OPEC (i.e. global demand minus non-OPEC supply) in the current year, a level 1.87 million barrels per day (mb/d) lower than its July 2022 forecast.
Other agencies expect lackluster growth: Standard Chartered sees “the call” growing by just 63,000 b/d, 1.41mb/d less than its July 2022 forecast, while the International Energy Agency (IEA) expects growth of 400kb/d, 2.326mb/d below its July 2022 forecast.?
At least one expert has predicted that oil demand will hit an all-time high in the current year. Commodity experts at StanChart have predicted that global oil demand will set a new all-time high of 102.24mb/d in August, surpassing the previous record of 102.2mb/d set in August 2019.
That it has taken no less than four years for global demand just to get back to the previous high. Indeed, StanChart reckons that had it been business-as-usual during those four years, global oil demand would have increased by another 5mb/d.
Even better, StanChart sees oil demand setting fresh all-time highs in both November and December with demand set to rise above 103mb/d for the first time in June 2024.
LOWER OUTPUT
OPEC report also showed OPEC's oil production fell in April, reflecting the impact of earlier output cuts pledged by OPEC+ to support the market as well as some unplanned outages.
For November last year, with prices weakening, OPEC+ agreed to a 2 million bpd reduction in its output target - the largest since the early days of the COVID-19 pandemic in 2020. The April 2 voluntary cuts add to this total.
OPEC said its April output fell by 191,000 bpd to 28.60 million bpd, with declines in Iraq and Nigeria. Iraq's northern exports were halted while some of Nigeria's exports were disrupted by a labour dispute.
The report kept its forecast that non-OPEC supply would rise by 1.4 million bpd in 2023 and flagged factors that could limit or curb supplies, such as investment levels and the war in Ukraine.
While overall investment levels in non-OPEC supply in 2023 are expected to be just above pre-pandemic levels, and they are still short of a $747 billion high reached in 2014 as oil companies focus on capital discipline.
Report: Demand For Subsea Production Equipment Ramping Up
Operator demand for subsea trees, manifolds, and other subsea equipment is ramping up as evidenced by orders placed in the 1Q 2023, according to Evercore ISI’s latest Offshore Oracle report.
Both SLB and Baker Hughes “got off to a great start” for their subsea equipment offerings in the first quarter of this year following “a resurgence in offshore exploration and development,” according to the report.
Evercore noted that SLB booked subsea orders for Brazil from multiple operators (Petrobras, PRIO, and Enauta), as well as a global well construction and reservoir evaluation contract with Shell that includes Brazil, Egypt, and the Crux project in Australia.
According to the report, Baker Hughes also reported strong 1Q subsea bookings, with the oilfield services company receiving a major award for the Agogo field offshore Angola. The 23 trees and 11 manifolds award was the company’s largest subsea tree order in almost five years.
Wood Mackenzie has forecasted that up to 435 trees could be awarded this year, up from nearly 350 trees in all of 2022 and up sharply from a record low 88 trees ordered in 2016.
Latin America is expected to remain the key driver of subsea tree awards, with up to 132 trees or 30% of all trees ordered, but Africa could be in a close second place with up to 120 trees or 28% of all trees awarded.
Shale Oil Drilling Getting Cheaper
The cost of drilling for shale oil is dropping for the first time in about two years as demand for equipment and workers wavers.
Prices for key oilfield inputs such as steel pipe and fracking crews are softening, according to executives from shale specialists such as Diamondback Energy Inc. and Marathon Oil Corp.?
Some of the price relief for shale-oil explorers has been driven by a deep depression in natural gas markets that is spurring companies to suspend or cancel drilling, freeing up rigs to migrate to more-profitable crude projects.
“It is a cost deflation,” Diamondback Chief Executive Officer Travis Stice cited a $25-a-foot drop in the cost of steel pipe as an example.
At the same time, oilfield-service providers like Halliburton Co. are pushing back, pledging to mothball equipment rather than see their fees shrink. Halliburton and fellow oilfield titan SLB have been among this year’s worst-performing energy stocks in the S&P 500 Index.
Executives with one of the most-closely watched shale drillers – EOG Resources Inc. – said inflation pressures are easing. Costs should continue to deflate into next year.
Even before this year’s 11% slump in benchmark US oil prices, shale drillers were exercising restraint in expanding output. Rewarding investors with dividend increases and share buybacks took precedence over production growth for the first time in the industry’s young life.
That has left oilfield-service executives with the tricky choice of holding the line on pricing or discounting to retain customers and market share
领英推荐
Helmerich & Payne Inc., the biggest provider of rigs in the Permian Basin, is idling equipment rather than reducing fees.
Rig leases account for about 15% of drilling a new well, so lowering the fee doesn’t guarantee the equipment will be used, according to Helmerich CFO Mark Smith.
Rather, price concessions are broadly detrimental to rig owners because they put downward pressure on rents come contract-renewal time.
EIA: US Crude Inventories Up By 3 Million bbl
US commercial crude oil inventories increased 0.6% during the week ending May 5, according to data released by the Energy Information Administration (EIA) late Wednesday.
Inventories rose by around 3 million barrels to 462.6 million barrels, lower than the American Petroleum Institute's expectation of a rise of 3.6 million barrels.
Strategic petroleum reserves, which are excluded from commercial crude stocks, however, fell by about 2.9 million barrels to 362 million barrels last week, the data revealed.
Gasoline inventories also declined by around 3.2 million barrels to 219.7 million barrels over the same period.
Crude production remains unchanged
EIA data showed that US crude oil imports increased by 843,000 barrels per day (bpd) to around 5.55 million bpd during the week ending May 5, while crude oil exports fell by 1.86 million bpd to about 2.87 million bpd.
US crude oil production, meanwhile, remained unchanged at 12.74 million bpd over the same period.
In the Short-Term Energy Outlook (STEO) released on May 9, the EIA forecast that crude oil output in the US would average 12.53 million bpd this year, up from 11.90 million bpd in 2022.
Crude oil output in the country in 2024 is forecast to reach 11.88 million bpd.
Renewable Energy Watch
Ireland Announces Winners Of First Offshore Wind Auction
Ireland has awarded contracts to four offshore wind projects totalling nearly 3.1 GW of capacity in its first-ever offshore wind auction.
The power capacity is more than half of Ireland’s target of 5 GW of offshore wind for connection to the grid by the end of 2030 and the equivalent of powering more than 2.6m homes annually.
Four planned wind farms to be located on the east and west coasts were successful in Ireland's first auction for the generation of electricity from offshore wind.
The auction happened under the Renewable Electricity Support Scheme (ORESS), which guarantees future prices. More than 3GW of capacity has been procured from the four offshore wind projects, three to be located in the Irish Sea and a fourth off the Connemara coast, which will deliver more than 12 Terawatt-hours of renewable electricity per year, equivalent to over a third of Ireland’s entire electricity consumption this year.
The contracts were awarded to a 1.3 GW Codling project, a joint venture between EDF Renewables and Fred Olsen Seawind, RWE’s 824 MW Dublin Array, Statkraft’s 500 MW Nisa and Corio Generation’s 450 MW Sceirde Rocks.
According to Wind Energy Ireland, two projects, SSE Renewables’ 800 MW Arklow Bank and 330 MW Oriel proposed by ESB and Parkwind’s 330 MW Oriel, were unsuccessful in the auction, but there are still ways for these projects to move forward, the representative body for the Irish wind industry
The winners will now need to secure planning permission and fully finalise grid connections before reaching financial close.
ADNOC & Baker Hughes Collaborate To Advance Hydrogen Technology Solutions
ADNOC and Baker Hughes have agreed to accelerate the development and commercialization of technology solutions for green and low-carbon hydrogen.
The agreement, which follows a strategic technology collaboration agreement signed between the two companies in November 2022, will see ADNOC collaborate with Baker Hughes as a strategic partner to study and pilot, the deployment of innovative solutions from Baker Hughes’ hydrogen portfolio.
These include new growth stage decarbonization technologies Baker Hughes has invested in graphene, methane pyrolysis, and next-generation electrolysis spaces.
The agreement was signed at the UAE CLIMATE TECH conference in Abu Dhabi, where over 1,000 global policy makers, innovators, and industrial leaders met to drive technological solutions for decarbonization. The collaboration builds on ADNOC’s $15 billion commitment towards decarbonization projects by 2030.
Within the agreement, ADNOC will leverage Baker Hughes’ extensive hydrogen expertise and broad portfolio to test and develop solutions to produce low-cost green hydrogen at scale, helping to decarbonize operations. The collaboration will include exploring the application of three emerging technologies that Baker Hughes has invested in:
1) Piloting next-generation electrolyzer technology from Nemesys, to explore the possibility of installing and operating an electrolyzer at the ADNOC Research and Innovation Center (ADIRC) in Abu Dhabi, building on the center’s growing portfolio of technology development capabilities.
2) Field testing methane plasma technology from Levidian to capture carbon in the form of high-quality graphene and hydrogen in ADNOC Gas’ facilities. The graphene produced will be tested for industrial use cases by researchers at Khalifa University (RIC-2D).
3) Testing the use of Ekona Power’s growth stage methane pyrolysis technology to produce low-Green House Gases (GHG) intensity hydrogen.
Other stories we are following…
Cheers!