NEWS OF THE DAY:
Marathon Petroleum Weighs the Sale of Alaska Refinery
Gerson Freitas Jr., Barbara Powell, Bloomberg News, November 2, 2021
Marathon Petrolelum Corp. is weighing a sale of its Kenai refinery in Alaska as the U.S. largest independent crude processor seeks to further streamline operations.
The decision makes Kenai the third U.S. refinery for sale, after Marathon rival Phillips 66 put its Alliance Refinery in Belle Chasse, Louisiana up for sale after damage caused by Hurricane Ida and as LyondellBasell Industries NV seeks to sell its Houston refinery. The Kenai refinery is one of Marathon’s smallest, running about 68,000 barrels a day.
Marathon’s move was disclosed Tuesday in its third-quarter earnings statement. It comes even as U.S. refining margins are rebounding from lockdowns, with gasoline demand now at near pre-pandemic levels and stocks at the lowest since November 2017, easing pressure on refiners to slash costs. Marathon posted a $694 million profit in the quarter, reversing a $886 million loss a year earlier.
Related:
World Oil Refining Industry Report 2021 – Oil Refining Market Trends, Challenges and Outlook to 2025
OIL:
Crude Drifts Lower On EIA Inventory Report
Irina Slav, OilPrice.Com, November 3, 2021
- Crude oil prices fell after the EIA reported an oil inventory build of 3.3 million barrels
- The authority also reported mixed results in gasoline and middle distillates
Crude oil prices drifted lower today after the Energy Information Administration reported an oil inventory build of 3.3 million barrels for the week to October 29.
This compared with a build of 4.3 million barrels that paused the oil price rally last week.
The authority also reported mixed results in gasoline and middle distillates.
In gasoline, the EIA estimated an inventory decline of 1.5 million barrels for the seven days to October 29, with production averaging 10.2 million bpd.
This compared with a stock draw of 2 million barrels for the previous week and average daily production of 10.1 million bpd.
In middle distillates, the EIA reported an inventory build of 2.2 million barrels for the week to October 29. This compared with a decline of 400,000 barrels estimated for the previous week.
Production of middle distillates averaged 4.8 million bpd last week, which compared with 4.6 million bpd a week earlier.
Oil prices were down at the time of writing after the American Petroleum Institute estimated a crude oil inventory build of almost 3.6 million barrels. This was the sixth consecutive inventory build estimate by the API.
Prices, however, remain elevated as OPEC+ sticks to its plan to add a moderate amount of oil to global supply every month despite higher demand and pleas from major consumers.
The extended cartel is meeting tomorrow for its monthly update on policy but major surprises are unlikely. Signals from Saudi Arabia, Kuwait, and Iraq, among others, have pointed in the direction of continued supply discipline. Some of that discipline is not voluntary, however.
Several OPEC members are struggling to boost production by the agreed amount because of years of underinvestment and insufficient maintenance. As a result, OPEC+ has been adding less than the agreed 400,000 bpd to global supply. Even that, however, doesn’t seem to be enough to motivate those members of the group that can increase production to do it.
GAS:
Nord Stream 2 is still months from easing Europe’s gas woes
Patrick Donahue, Bloomberg News, November 3, 2021
Russia’s Nord Stream 2 may need a few more months to clear remaining red tape before the controversial pipeline begins pumping natural gas to Germany to help ease Europe’s energy crunch.
The Baltic Sea project — which has raised concerns over the Kremlin’s control of energy supplies to the continent, including among Germany’s Greens — is complete and awaiting certification from national and European Union authorities. Russian President Vladimir Putin has pledged to step up gas supply, and has said Nord Stream 2 can be activated “the day after” regulatory sign-off.
However, the pipeline might not be approved until May if regulators use all the time they’re allowed. Whether the bureaucrats would be willing to accelerate the process if Europe’s energy woes intensify remains to be seen.
Soaring energy prices coupled with below-capacity deliveries in recent weeks have prompted accusations from European officials that Russia is curbing supply to pile pressure on authorities to grant certification for the new link.
The political dial is unlikely to move much. The German government under outgoing Chancellor Angela Merkel has been steadfast in its support for the project over the objections of the U.S. and some European Union partners, as well as Russia’s neighbor Ukraine.
With Olaf Scholz, a Social Democrat whose party has firmly backed the pipeline, seeking to form a new government to succeed her, a shift in policy is not on the horizon.
Still, the Greens, the second-largest political force negotiating for a coalition, have long opposed the project. Co-leader Robert Habeck, who will play a leading role in any new government, on Wednesday reinforced the party’s calls for the pipeline to adhere to EU rules and accused Russia of using the project as a tool for blackmail.
“If you ask me if Nord Stream 2 should be allowed to go online, I would say only if all European rules are adhered to,” Habeck said in an interview with Deutschlandfunk radio. “I wouldn’t see that as being the case right now and would doubt that.”
Here’s a look at what to expect:
GERMAN APPROVAL
Germany’s Federal Network Agency has until Jan. 8 to issue a draft decision on certification, the end of a four-month window after the paperwork was submitted to German authorities.
Approval appears to be a foregone conclusion after the Economy Ministry in Berlin issued an assessment last month saying that Nord Stream 2 poses no risk to the energy supply of Germany and the EU.
EU FINDING
The draft decision will then be handed over to the European Commission for review, particularly on whether the pipeline meets EU rules stipulating that the gas-transport business is separate from production and sales — a process known as unbundling.
A group of senior European Parliament lawmakers wrote a letter to EU Energy Commissioner Kadri Simson last month warning that Nord Stream 2 doesn’t conform with unbundling requirements. They called for a “clear and robust” adherence to European energy rules, a point echoed by the German Greens’ Habeck.
But the Commission’s finding isn’t binding, limiting the scope to halt the project. More likely is a delay. The EU has two months to reach a conclusion, which can be extended for another two months.
Only then can Germany’s regulator grant certification — potentially putting Nord Stream 2’s starting date well into next year.
“If the German regulator allows supplies tomorrow, deliveries will begin the day after tomorrow,” Putin said in Sochi last month.
POLITICAL BACKING
Opposition to the pipeline, particularly among eastern EU member states such as Poland, remains strong, and the government in Warsaw last month called on the Commission to launch a probe into possible market manipulation by Nord Stream 2 owner Gazprom PJSC.
The EU executive arm said it’s quizzing gas producers and suppliers as it examines “all allegations of possible anti-competitive conduct” to check whether current price increases are related to antitrust breaches.
A political demise of the project is all but ruled out. Merkel agreed in a declaration with the U.S. that Germany will take action if Putin weaponizes energy, but there is little intention in Berlin to shut down the pipeline.
Scholz is holding talks to form a government with the Greens and pro-business Free Democrats, both of which were outspoken opponents of Nord Stream 2 on the campaign trail. But as the largest party in the government, the SPD would almost certainly block any language in a coalition accord that would endanger the project.
Related:
Facing Shortage of Natural Gas China Receives Emergency Shipment of LNG from Russian Arctic
Malte Humpert, High North News, November 3, 2021
MINING:
UN at COP26: “Enough of mining…we are digging our own graves”
Erik Els, Mining.Com, November 2, 2021
It did not take long for COP26 to turn into a farce this week with UN Secretary General António Guterres pleading with the gathered highnesses and excellencies to declare enough is enough.
Socialist party ex-PM of Portugal, Guterres delivered a rousing 10-minute speech at the opening ceremony saying (around the 0:45 mark) “we face a stark choice – either we stop it or it stops us”:
“It is time to say enough!
“Enough of treating nature like a toilet, enough of burning and drilling and mining our way deeper. We are digging our own graves.”
Who’s going to tell him?
Related: COP26 will be a colossal mining cop-out
POLITICS:
From the Washington Examiner, Daily on Energy:
GOP CLIMATE PLAN: A group of Republican senators is introducing a clean energy and climate strategy today that challenges the Biden administration and Democrats’ agenda of massively expanding clean energy while reducing fossil fuel production and use.
Sens. Dan Sullivan of Alaska, Kevin Cramer of North Dakota, and Cynthia Lummis of Wyoming — all representing major oil and gas producing states — are releasing the “American Energy, Jobs, and Climate” plan, which aims to cut global emissions up to 40% from today’s levels by 2050, according to a fact sheet obtained exclusively by Josh.
The plan is notable in that Republicans are setting an emissions reduction target (which they haven’t done before).
George David Banks, former international energy adviser in the Trump administration, told Josh that energy-related carbon emissions being 40% less in 2050 would represent a significant change from today.
It’s less aggressive than net-zero pledges most world leaders are now calling for in order to prevent the worst consequences of climate change, but those targets are being set domestically, not globally. He said reducing global emissions by 40% would necessarily require substantial cuts from the U.S.
“People will just dismiss it because it’s not net-zero, but in reality it’s substantial,” Banks said. “If you have a global goal and are designing policy around that, you are acknowledging U.S. responsibility for global emissions. We haven’t done this before.”
But by focusing on global emissions and not setting aside a U.S. goal, Republicans are swiping at President Joe Biden and Democrats for aiming to cut domestic emissions in half by 2030.
Proponents say that an aggressive domestic target inspires the rest of the world to do more. Republicans say U.S. targets mean nothing without international emission reductions, especially from China (the U.S. and China combine for about 40% of global emissions).
Ok, so what’s in it? The plan calls for familiar ideas favored by Republicans, such as developing and deploying clean energy technologies, including carbon capture, advanced nuclear reactors, and battery storage, and exporting those innovations abroad.
It also aims to “revitalize” manufacturing of renewable energy technologies in the U.S, such as solar panels and wind turbines, to lessen dependence on China — a goal shared by Democrats.
And it seeks to reform permitting of energy, infrastructure, and mining projects to ensure they can be built faster.
The plan would “export America’s innovations — not our jobs — and in turn, reduce global emissions,” said Heather Reams, president of Citizens for Responsible Energy Solutions, a conservative clean energy group.
Fossil fuels remain dividing line: Republican senators diverge from Democrats most glaringly in promoting an expansion of natural gas production at home, while exporting more LNG abroad, which they say would displace dirtier coal in developing countries with growing energy demand. The Republicans don’t acknowledge any need to reduce fossil fuel use or development. They make clear they continue to oppose “mandates, regulations, and taxes.” That would seem to include regulation of methane emissions.
Addressing methane leaks is not mentioned, despite it being a major problem facing the oil and gas industry that raises doubts about Republican claims that natural gas is a “clean” solution for decades to come.
CLIMATE CHANGE:
“Peer pressure” and “humiliation” is key at COP26
Ben Geman, Andrew Freedman, Axios, November 3, 2021
GLASGOW, Scotland — John Kerry, in a quick aside with a few reporters here, offered the glass-half-full take on why a bunch of voluntary pledges to ward off climate change catastrophe is good reason for real hope.
Driving the news: The U.S. special climate envoy, moments after 100+ nations agreed to steeply reduce the potent planet-warming gas methane, was asked about the absence of ways to enforce it.
- “We have incredible accountability through satellite measurements. And in most of this, it’s peer pressure and public scrutiny and humiliation and other things that act as incentives,” he said.
Why it matters: “Peer pressure” and “public scrutiny” and “humiliation” sound like a description of high school, but it also sums up the dynamic of much-hoped-for global climate cooperation. Similar dynamics have also undergirded past environmental agreements that at least initially lacked teeth.
- There’s very little diplomats can do to force countries to make good on their climate commitments in the UN process, whether it’s their formal pledges under the Paris Agreement or ad-hoc arrangements like the new methane coalition.
- That’s actually part of how Kerry sold the pledge to skeptical nations, Bloomberg reports.
- But what this format can accomplish — or at least that’s the hope — is to establish new international norms and standards that ultimately move policy. And technology is, at least in the case of methane, moving quickly to point the way.
The intrigue: Now let’s turn to the first part of Kerry’s comment, the part about accountability through satellite measurements.
- It gets to how climate watchdog groups and climate tech companies have increasingly sophisticated satellite monitoring at their disposal to pinpoint emissions sources and levels.
- For example, MethaneSAT, sponsored by the Environmental Defense Fund, aims to provide global, high-resolution coverage of methane emissions from oil and gas facilities when it launches in 2023.
- “Field information, real information, helps you better understand the magnitude of the problem and what you can do about it,” Mark Brownstein, EDF’s senior vice president of energy, told Axios.
- Similar efforts on carbon emissions hunting satellites are underway, with an ambitious organization involving former vice president Al Gore, known as Climate TRACE, already tracking carbon emissions measurements around the world.
Go deeper: What to know about COP26 in Glasgow