Tag: pipelines

Best in Energy – 9 March 2023

Tesla plans to eliminate dependence on rare earths

U.S. energy secretary address to Houston CERAWeek

U.S. oil well initial productivity is declining ($WSJ)

Keystone ordered to trim pipeline pressure ($BBG)

U.S./EU embark on race for energy subsidies ($BBG)

U.S. LNG exports projected to grow in 2023 and 2024

Nord Stream sabotaged by pro-Ukraine team ($WSJ)

Russia/NATO energy war enters attrition phase ($FT)

U.K. workforce remains smaller than before pandemic

India tries to improve electric reliability in April/May

(see also formal press release by the power ministry)

China’s refined petroleum exports set to slow

U.S. solar installers forecast to rebound in 2023

U.S. oil firms embrace hydrogen production idea

U.S./Australia submarine sales agreement ($WSJ)

U.S. PETROLEUM INVENTORIES including the strategic reserve increased by +2 million barrels over the seven days ending on March 3. Stocks have increased in 10 of the last 14 weeks by a total of +31 million barrels from their recent low on November 25, 2022, arresting the previous downward trend. Inventories are still -231 million barrels (-12% or -2.15 standard deviations) below the prior ten-year seasonal average. But the deficit has narrowed from -278 million barrels (-15% or -3.05 standard deviations) in November:

Best in Energy – 8 March 2023

Russia/India switch trade settlement out of dollars

India’s heightened risk of evening power shortages

Nord Stream sabotage linked to Ukraine ($NYT)

Ukraine denies involvement in pipeline sabotage

U.S. shale chiefs recognise end of revolution ($FT)

Tesla shifts focus to cutting manufacturing costs

Nuclear generation deployment is shifting to Asia  

China’s military researchers study Ukraine conflict

Europe boosts diesel from Middle East and Asia

Tech sanctions to spur industrial espionage ($FT)

U.S./China struggle to stabilise relationship ($WSJ)

U.S. CENTRAL BANK chief Jerome Powell toughened his rhetoric on core inflation during congressional testimony, sending forecasts for interest rates surging higher on March 7. Rate traders expected interest rates to end 2023 at around 5.55% up from a forecast of 5.38% on March 6:

SINGAPORE distillate inventories remain at their lowest level for the time of year since 2008. Stocks are -4 million barrels (-36% or -1.91 standard deviations) below the prior ten-year seasonal average. The deficit has only narrowed slightly from six months ago when it was -4 million barrels (-34% or -2.21 standard deviations):

Best in Energy – 3 March 2023

China’s abandonment of coronavirus suppression

China predicts rise in gas consumption

Debt relief in return for climate policies

U.S. interstate gas pipeline construction

U.K. auto sector’s future in doubt ($FT)

Bangladesh tenders for more LNG

Interest rate traders probe Fed reactions

NORTH INDIA has experienced above-normal seasonal temperatures since early February, driving an increase in air-conditioning and refrigeration demand and boosting electricity consumption to a record level. Temperatures in New Delhi’s Palam suburb have been above the long-term seasonal average for 18 out of 22 days since February 9:

U.S. GAS INVENTORIES are depleting much more slowly than normal for the time of year. As a result, inventories were +209 billion cubic feet (+11% or +0.55 standard deviations) above the prior ten-year seasonal average on February 24 up from a deficit of -427 billion cubic feet (-13% or -1.52 standard deviations) on September 9, 2022:

Best in Energy – 22 February 2023

EU gas consumption fell 19% in Aug-Jan period

U.S. Treasury outlines Russia sanctions strategy

China’s renewable energy deployment (trans.)

Iberia’s gas and power markets remain isolated

Kazakhstan plan to export oil via Russia ($BBG)

Freeport LNG obtains approval for partial restart

Derivatives go dark after cyber-attack ($BBG)

U.S. commercial property in recession ($WSJ)

Lithium prices retreat from record high ($FT)

Australia/China coal shipments resume

BRENT’s front-month futures price has fallen to $82 per barrel down from a high of $127 at the end of May 2022, after adjusting for inflation. But is that still fairly high or already below the long-term average? It depends whether or not the comparison includes the long period of low prices in the 1990s. In real terms, $82 is in the 65th percentile for all months since 1990, still fairly high. But if the 1990s are excluded, prices are in the 42nd percentile for all months since 2000 and the 48th percentile for all months since 2010, already in the lower half of the distribution:

Best in Energy – 7 December 2022

G7/Russia oil price cap evolution

China relaxes epidemic controls

India to purchase more gas for power generation

North Carolina’s 3rd day of blackouts after sabotage

Russia/China gas pipeline enters service (trans.)

Russian oil tanker spoofs position signal ($FT)

Russian oil tanker spoofs AIS maritime signals

London’s last great killer smog this week in 1952

BRENT calendar spreads slipped into contango yesterday through May 2023. The combined six-month spread moved into contango for the first time (outside the month-end expiry process when prices and spreads are unrepresentative) for the first time since November 2020, before the first successful coronavirus vaccines were announced:

LONDON is experiencing a period of unusually low temperatures this week, exactly 70 years after similar conditions between December 5 and December 9, 1952, caused the “Great Smog” resulting in 4,000 excess deaths. As temperatures dropped to freezing, domestic and commercial coal combustion surged, sending thousands of tonnes of particulates into the air over the city. A temperature inversion trapped smoke in low-lying areas along the Thames, between the hills surrounding the metropolitan area. For four days and nights, the metropolitan area was blanketed with a suffocating mixture of fog and smoke. The map below shows areas with the worst pollution, which were also the areas with the highest excess mortality:

Best in Energy – 23 November 2022

[MUST READ] U.S. Treasury publishes regulations for Russia price cap

Vitol chief says price cap will divert flow to small traders

Iran’s leaders struggle to reach out to moderates ($WSJ)

South California vessel queue dissipates  ($WSJ)

China’s coronavirus controls are multiplying

China’s renewable generation hits record high

U.S./Canada gas flows support winter reliability

Europe’s business confidence slumps ($FT)

Selective self-deception is an important leadership skill, especially in politics and diplomacy, but sometimes leaders say things they must know to be untrue, and I’m reminded of the exchange between Alice and the White Queen in Lewis Carroll’s “Through the Looking-Glass”:

“I can’t believe that!” said Alice.

“Can’t you?” the Queen said in a pitying tone. “Try again: draw a long breath, and shut your eyes.”

Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

BRENT’s front-month futures price is trading close to the average since the start of the century once adjusted for inflation. The current price of around $87 per barrel is in the 54th percentile for all months since 2010 and the 47th percentile for all months since 2000:

Best in Energy – 29 September 2022

Germany says gas consumption too high

German economists predict recession in 2023

Rotating blackouts could hit cell service¹

California’s demand response in heatwave

China says yuan stable and healthy (trans.)²

Lebanon forced to devalue currency ($FT)

Nord Stream: too early to conclude sabotage

Nord Stream fourth leak discovered ($BBG)

Nord Stream who sabotaged the lines? ($FT)

Hydrocarbon investment in energy transition

Global spending on advertising is falling

¹ Fixed line telephone systems carried their own electricity supply so the network would remain operational during power cuts. From this story it appears cell towers rely on the public distribution system and have not (yet) been prioritised in the same way as hospitals and other essential customers to ensure they remain operational during rotating power cuts. It is a classic example of how complexity and the unplanned evolutionary growth of networks can lead to the fusion or “coupling” of formerly separate systems, unintentionally creating a single point of failure (“Normal accidents”, Perrow, 1999). It is also an example of how the failure of the petroleum, gas or electricity networks can result in the failure of other systems critical to the functioning of a modern economy and society (“Brittle power”, Lovins and Lovins, 1982).

² If a government or a business or any other organisation has to say publicly everything is okay, or some variant, that’s an important sign of problems and stresses. If it really was okay, there would be no need to say it. Do don’t say. So statements such as this are important markers thought not in the way policymakers intend.

U.S. PETROLEUM inventories depleted by -13 million barrels last week, the largest decline this year. Drawdowns included crude (-5 million barrels), gasoline (-2 million), jet fuel (-2 million) and distillate fuel oil (-3 million). Petroleum inventories have depleted in 86 out of the last 117 weeks by a total of -464 million barrels since the start of July 2020. Distillate inventories are just 114 million barrels, the lowest for the time of year since 1996:

Best in Energy – 27 September 2022

Russia gas pipelines hit by suspected sabotage¹

Nord Stream says three lines damaged in one day¹

U.S./EU lobby for Russian oil exports price cap

LNG market consolidated by higher credit costs

Nigeria’s electricity collapses for fourth time in 2022

California tries to balance EVs with grid limits ($WSJ)

U.S. refined petroleum exports hit record high

U.K. energy agency distracted by restructure ($FT)

U.S./China academic exchanges diminish ($FT)

U.S./China cyber-espionage (trans.)

¹ Like damage to other subsea pipelines and cables, the leaks in the Nord Stream 1 and 2 pipelines could have been caused accidentally by a trawler, a ship’s anchor dragging, or a submarine. But pipelines are marked on nautical charts and such incidents are rare. The probability of two pipelines being accidentally breached at the same time, reportedly in three separate locations, when both lines are at the centre of a major international dispute, is very low, which makes it much more likely they were unintentionally damaged by a submarine or deliberately sabotaged.

BRENT’s front-month futures price is back to year-ago levels once adjusted for core inflation excluding food and energy prices. The real price of $85 per barrel (U.S.$2022) is close to long-term averages since 2010 (53rd percentile) and 2000 (46th percentile) though still somewhat above the average since 1990 (69th percentile):

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Best in Energy – 28 July 2022

EU/Russia gas pipeline flows fall sharply

U.S. frackers warn of supply chain limits

China’s plan to centralise iron ore purchasing

U.S. leaders embrace subsidies, tariffs ($WSJ)

Grid-scale batteries used for price response

U.K. households face winter bill crisis ($FT)

West London’s local power constraint ($FT)

U.S. PETROLEUM inventories depleted by -9 million bbl in the week to July 22, with declines in commercial crude (-5 million), gasoline (-3 million), and distillate fuel oil (-1 million) as well as a drawdown in the SPR (-6 million), partially offset by increases in propane (+3 million) and other oils (+3 million). Petroleum inventories have depleted in 80 of the last 108 weeks by a total of -438 million bbl since the start of July 2020. Total stocks are at the lowest seasonal level since 2008 and show no signs of rebuilding:

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Best in Energy – 20 July 2022

EU asks member countries to cut gas consumption

EU countries most vulnerable to Russian gas cut off

(see also IMF working paper on gas shut off impact)

EU/Russia sanctions eased on food-related exports

Electric-vehicle charger market is growing rapidly

Bangladesh to start rationing electricity and gasoline

China boosts oil imports from Russia at Saudi expense

LONDON’s brief but exceptional heatwave has already ended, but 24-hour temperatures on both July 18 (27.3°C) and July 19 (27.4°C) were more than +8°C above the long-term seasonal average, straining transportation infrastructure and the electrical network.

In a normal year, London temperatures peak between July 20 and August 5, the result of seasonal lag. But weather conditions this year coincided with and compounded the normal seasonal peak pushing daily temperatures far above normal. Temperatures on both days were 2.2-2.6 standard deviations above the 2013-2021 average:

U.S REAL AVERAGE WEEKLY EARNINGS were down by almost -4.5% in June 2022 compared with June 2021, as inflation outstripped wage increases, underscoring the intensity of the squeeze on incomes and spending power:

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