🛢️ Oil’s $100 Leap & Alaska’s Gas Game 🎯

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Today’s Key Takeaways: Eclipse impacts on solar power generation. Supply shocks push $100 per barrel oil. Looming decisions on importing LNG for Railbelt utilities. AI could add 1 million tons to copper demand by 2030.


What happens to solar power when the moon blocks the sun?
Jason Plautz, Politico, April 8, 2024

U.S. power system operators are planning for a drop in solar generation Monday as darkness covers a swath of the United States.

Monday’s total solar eclipse will offer U.S. power grid operators a chance to help answer a pressing question: What happens to a solar-rich grid when there’s suddenly no sunlight?

Grid planners aren’t expecting power shortages because of the eclipse, when the moon will block the sun and create a path of total darkness running from Texas to Maine. Operators contacted by E&E News say they’ve been preparing for months and will have ample supply to cover any lost solar generation.

Those losses could be significant. In Texas — where eclipse coverage will range from 81 percent to full totality — the state’s main grid operator could lose more than 90 percent of its solar capacity, enough to power at least 2.8 million homes. Even areas thousands of miles away from the path of total eclipse coverage could see solar generation cut in half.



ODDS OF $100 OIL INCREASE THANKS TO SUPPLY SHOCKS: The odds of oil prices reaching $100 per barrel this year are increasing further on the back of new geopolitical tensions and tighter supplies.

OPEC+ supply cuts and heightened military tensions between Israel and Iran prompted oil benchmarks to rise above $90 per barrel last week for the first time since October, as we wrote last week. Now, analysts are concerned that markets could be squeezed further in the coming weeks due to current sanctions and Mexico’s recent decision to halt some crude exports – and if the U.S. moves to reimpose sanctions on Venezuela’s oil industry. Ahead of this month’s elections, Venezuelan President Nicolas Maduro has shown few signs of following through on his pledge to hold “free and fair” presidential elections—one of the requirements outlined by the U.S. as a requirement for easing the harsh penalties against its oil exports.

For oil, “the bigger driver right now is on the supply side,” Energy Aspects founder and director of oil research Amrita Sen told Bloomberg in an interview yesterday. “You have seen quite a few pockets of supply weakness, and demand overall on a global basis is healthy,” Sen added. Read more here.

From the Washington Examiner, Daily on Energy, April 8, 2024


Railbelt utilities move closer to decisions on importing natural gas as legislators debate energy bills
Sean Macguire, Anchorage Daily News, April 7, 2024

Utilities in Alaska’s Railbelt are getting closer to importing natural gas as legislators debate energy bills intended to bridge a looming shortfall of Cook Inlet gas.

Natural gas is used to generate more than 80% of the Railbelt’s heat and power. Since Hilcorp told utilities in 2022 that its contracts would not automatically be extended, utility managers have discussed importing natural gas as likely the best available alternative. Power and heating prices would be expected to increase substantially.

The Alaska Department of Natural Resources expects a Cook Inlet gas shortfall by 2027. The supply gap is expected to grow exponentially larger in subsequent years without new gas production.

Large-scale imports of gas will likely not be available until 2030 due largely to federal permitting requirements, according to consultants for Enstar. John Sims, president of Enstar, told legislators last week that small-scale LNG imports by barge are possible sooner. But, he said, “They’re much more expensive.”



AI could add 1 million tonnes to copper demand by 2030, Trafigura chief economist says
Staff Writer, Mining.Com, April 8, 2024

Artificial Intelligence has the potential to add 1 million tonnes per annum (Mtpa) of copper demand by 2030, according to Trafigura’s chief economist.

The surge in demand, driven by AI boom, could exacerbate the copper supply-demand imbalance, leading to higher prices, Saad Rahim said during the Financial Times Commodities Global Summit in Switzerland.

“If you look at the demand that is coming from data centers and related to that from AI, that growth has suddenly exploded,” said Rahim.

The one million tons is “on top of what we have as four-to-five-million-ton deficit gap by 2030 anyway”, Rahim said. “That’s not something that anyone has actually factored into a lot of these supply and demand balances.”

Rahim did not say what global copper demand would be in 2030.

Copper’s superior conductivity makes it an essential material for maximizing efficiency in electricity transmission and distribution. Moreover, copper’s ductility and malleability make it ideal for shaping into compact system components such as electrical connectors.

Even before AI, data centers relied on copper for various electrical applications, including power cables, busbars, electrical connectors, heat exchangers, cooling sinks, and power distribution strips.

It’s estimated that 1MW of datacenter power capacity could necessitate anywhere between 20 to 40 tons of copper.

To illustrate the scale of demand, Microsoft’s $500 million data center in Chicago required 2,177 tonnes of copper for its construction.

The North American data center infrastructure market is projected to expand from a $33 billion business in 2020 to $70 billion in 2030 and a substantial $185 billion in 2040.

Estimates suggest that copper consumption for data centers will rise from 197,000 tonnes in 2020 to 238,000 tonnes in 2030 and further to 293,000 tonnes in 2040.