NEWS OF THE DAY:
OPEC: Oil Will Be King Of The Global Energy Mix Until At Least 2045
Tsvetana Paraskova, OilPrice.Com, November 17, 2021
Oil will continue to be the fuel with the single largest share of the global energy mix by 2045, meeting 28 percent of energy demand then, OPEC Secretary-General Mohammad Barkindo said on Tuesday, stressing the need for investments in oil supply to meet consumption.
“Oil is expected to retain its number one position in the global energy mix and provide 28 percent of the world’s energy needs by 2045,” Barkindo said at the ADIPEC energy conference in Abu Dhabi, presenting OPEC’s World Oil Outlook (WOO).
The outlook says that global oil demand is expected to continue to grow into the mid-2030s to 108 million barrels per day (bpd), after which it is set to plateau until 2045. The industry will need cumulative long-term upstream, midstream, and downstream oil-related investments of $11.8 trillion by 2045, OPEC said when it first unveiled the outlook.
“Despite decelerating oil demand growth in the second part of the forecast period and strong growth in other energy sources, such as other renewables, gas and nuclear, oil is expected to retain the highest share in the global energy mix during the entire period. In 2020, oil accounted for 30% of global energy requirements. Alongside post-pandemic oil demand recovery, the share of oil is anticipated to gradually increase to a level of more than 31% by 2025, before it begins a decline and reach 28% by 2045,” according to OPEC’s outlook.
Discussing the need for oil investment in view of meeting demand in the long term, Barkindo said today that “any talk of the oil and gas industries being consigned to the past and of the need to halt new investments in oil and gas is wrong-headed.”
“Let me stress that the return of investments is a core objective of the Declaration of Cooperation,” he said, referring to the agreement of the OPEC+ group, which has been managing supply to the market for several years now.
OPEC, oil industry executives, and analysts have been warning this year that chronic underinvestment in oil supply, while demand is still growing, would lead to energy crunches within a few years.
OIL:
EIA says tapping U.S. crude reserve would have limited economic effect
Julia Fanzeres, Bloomberg, November 16, 2021
Oil edged up after the Energy Information Administration said the impact of a potential release from U.S. emergency crude reserves would only be short-lived.
Futures fluctuated between gains and losses in a choppy trading session on Tuesday. The EIA said the impact on oil prices after releasing crude from strategic reserves would only be temporary, echoing several market analysts. Meanwhile, natural gas futures jumped on gas-to-oil switching concerns after Russia’s controversial pipeline, Nord Stream 2, was delayed.
“We’re still on the cusp of winter, which is the peak demand season and there’s still a bullish undertone to the market,” said John Kilduff, founding partner at Again Capital LLC. “It’s a tight set-up and still vulnerable to some upside if they don’t come through with the SPR release.”
Since hitting a seven-year high above $85 last month, oil has drifted lower amid uncertainty over U.S. policy and the possibility that a resurgence in the pandemic may crimp demand. OPEC and its allies are restoring supplies halted last year, but only gradually.
With energy prices rising, U.S. President Joe Biden has been under pressure to tap the country’s emergency crude reserves. While the U.S. has joined countries including India and Japan over concerns of supply tightness in the market, India’s Oil Minister Hardeep Singh Puri said that strategic oil reserves were intended for “force majeure situations” such as natural disasters versus short-term solutions for price increases.
Meanwhile, the International Energy Agency said Tuesday that market tightness is starting to ease as production recovers in the U.S. and elsewhere. Some consuming nations have also questioned whether a coordinated sale of strategic reserves by major oil users would help.
Prices:
- WTI for December delivery rose 50 cents to $81.36 a barrel at 12:30 p.m. in New York
- Brent for January settlement increased 83 cents to $82.88 a barrel
Natural gas prices jumped to a three-week high as a German regulator suspended Nord Stream 2 pipeline’s certification. The suspension will allow time for Nord Stream 2 AG, the operator of the pipeline owned by Gazprom PJSC, to set up a German subsidiary in a bid to meet European Union rules requiring gas producers to be legally separate from entities transporting the fuel.
Earlier, Federal Reserve Bank of St. Louis President James Bullard said that he thinks the Federal Reserve should go in a more hawkish direction to manage inflation. The pullback of support for the economy would lead to a stronger dollar, which would likely weigh on commodities.
GAS:
LNG industry launches ‘carbon neutral’ framework
Susanna Twidale and Marwa Rashad, Reuters London, November 17, 2021
An international liquefied natural gas (LNG) body on Wednesday launched a framework for rules to declare cargoes carbon neutral as it seeks to make the practice of offsetting emissions a last resort.
Environmental groups are skeptical about the use of carbon offsets and say the ability to pay for emission reductions elsewhere could prolong the use of fossil fuels.
Around 30 cargoes, or less than 1% of global LNG trades, have been declared carbon neutral to date, but the number is expected to grow as companies seek to differentiate themselves through their environmental credentials.
“There is a wide disparity in the nature of these (carbon neutral cargoes), which is why we created this framework,” Vincent Demoury, secretary general of the International Group of Liquefied Natural Gas Importers (GIIGNL) told Reuters.
The framework outlines a series of steps, with the first requiring companies to monitor and verify their greenhouse gas emissions intensity.
For a company to declare its shipment carbon neutral, it would need to show transparent emissions data, make the best efforts to reduce emissions at its operations and use offsets for any remaining emissions for the cargo’s lifecycle, including scope 3 emissions, or those generated when the customer uses the fuel.
Not all of the 30 shipments that have claimed to be carbon neutral to date include scope 3 emissions and therefore would not have been able to make that claim under the GIIGNL framework, Demoury said.
He said the aim was to encourage emission cuts primarily at a company’s own operations.
“Offsetting the residual emissions is better than nothing but this shouldn’t be seen as the primary objective of the industry,” he said.
The framework did not specify which type of offset, which can cost as little as 50 cents, should be used, but said they should meet criteria, such as being independently verified and retired from circulation once they have been use
MINING:
Alaska’s largest-ever gold nugget up for sale
Mining.Com, November 16, 2021
A rare and massive gold nugget, weighing around 20lbs (9kg), has been put up for sale 23 years after it was discovered and it’s expected to reach at least $1 million at an auction that takes place on Dec. 8.
The Alaska Centennial Nugget, estimated at the size of a baby’s head, was discovered by gold miner Barry Clay near the town of Ruby, Alaska, in 1998, 100 years after the 1896 Klondike Gold Rush.Top of Form
He found the valuable remnant while pushing dirt with his bulldozer along the shores of the Swift Creek Mine.
The nugget is the largest ever found in Alaska, and only smaller than the “Boot of Cortez” nugget found in Mexico, which weighs 24lbs (11kg).
Clay is said to have buried the nugget near a tree, buying time until he decided what to do with his remarkable find.
The current owner bought the rock directly from Clay, and it has been in the same family for more than two decades.
The upcoming auction will be the first public offering of the museum-quality piece.
The fact that the Alaska Centennial gold nugget exists at all makes it all the more exceptional, Craig Kissick, Director of Nature and Science at Heritage Auctions said in a video.
“Fewer than 50 gold nuggets over 250 ounces exist as gold in nugget form… (it’s) inherently rare; gold nuggets of massive size, even more so,” he says.
Some of Alaska’s richest placers worked in the area around the town of Ruby from 1910 to 1920. There are only a handful of commercial mining operations there today.
POLITICS:
Interior deputy details plan to curb oil and gas development
Heather Richards, E & E News, November 17, 2021
The Interior Department’s second in command this week pledged the Biden administration is orchestrating a paradigm shift for the federal oil program, explaining in unusually candid detail possible components of the strategy to restrain fossil fuel development on public lands.
“We are here to fundamentally reform the Interior Department’s oil and gas program,” Deputy Secretary Tommy Beaudreau said during an interview with the Energy Policy Institute at the University of Chicago.
Beaudreau said the federal oil and gas program was designed in a “bygone” era where the chief priority was clear: “Get it out of the ground to enhance domestic sources of energy supply.”
Now, the risks of climate change demand a fundamental shift in global energy use, and in that national program, he said. But it’s a complicated process because those laws were written to favor extraction of fossil fuels, he added.
Beaudreau noted several specific policy changes that are being considered and spoke favorably of raising royalty rates, as well as launching new rules around valuation of fossil fuels to limit how royalties are whittled down through exclusions and write-offs.
He also made a case for more cautious leasing, adopting policies that don’t prioritize first dibs for oil and gas operators on public lands that may have other values (E&E News PM, Oct. 29).
The Biden administration has come under fire from the left for not being more aggressive in ending the federal oil and gas program, even as lawmakers on the political right and industry have lambasted Interior as anti-oil (Energywire, Nov. 4).
The rancor began in January when the White House froze new oil and gas leasing and began a comprehensive review of how the federal government manages its vast stores of crude oil and natural gas.
But it’s been strong-armed into restarting oil and gas leasing through a temporary injunction by a Louisiana federal judge considering a lawsuit against the administration. Meanwhile, Biden officials have resisted talking about their review findings and delayed the release of an interim report on potential reforms for the program.
The first sale of the Biden administration is taking place in the Gulf of Mexico later today, despite protests from environmental groups.
Beaudreau said selling oil and gas drilling rights in the Gulf right now isn’t what the administration would have wanted. But he said the sale underscored that to make lasting change in the federal oil program, the administration will have to take some losses along the way.
“We have to deal with the litigation and we have to deal with the terms that we inherited from the previous administration on that lease sale,” he said.
An alumnus of the Obama administration who served as the Bureau of Ocean Energy Management’s first director, Beaudreau also said he is focused on making reforms “durable.”
Beaudreau led BOEM following the Deepwater Horizon oil explosion that killed 11 men in the Gulf of Mexico and which prompted a series of offshore safety reforms by the Obama administration. Some of those were undone by the Trump administration.
“I was heavily invested in those reforms. I watched what happened during the Trump administration as they were rolled back,” he said. “A huge part of my thinking, as well as the department’s, is how do we fundamentally change these programs in a way that is lasting and durable.”
He said the way to do that is to follow the process, to create a new administrative record, that makes the case for new policies in the climate era.
“I know that can be hard. I wish it was less procedural than it is. But I believe that going through that process is the best way to, at the end of the day, make sure the changes last and get us on a path to decarbonizing public lands.”
CLIMATE CHANGE:
Investors shower love on Rivian and Lucid
Ben Geman, Axios, November 17, 2021
Here are two numbers that say a lot about how investors view two key electric vehicle startups: $232,000 and $89 billion.
Driving the news: That’s luxury EV startup Lucid Motors Q3 revenue and its market capitalization at yesterday’s close of trading.
- Lucid, which just began deliveries, has zoomed past Ford’s market cap and matched General Motors.
- Meanwhile, EV startup Rivian, which just went public last week, has a stunning market cap of roughly $150 billion after yesterday’s latest gains.
Why it matters: The eye-popping valuations signal how investors see the potential for huge EV market growth, and how those two startups may be well-poised.
- Lucid’s team includes several Tesla veterans, and its Lucid Air just won Motor Trend’s car of the year.
- The Amazon- and Ford-backed Rivian, which just recently began deliveries of its pickup, also has a foothold in the growing market for electric delivery vehicles thanks to its large contract with Amazon.
Yes, but: “Unfortunately, a company like Tesla doesn’t come along very often and the valuations placed on Rivian and Lucid are questionable, particularly in comparison to the existing automotive companies,” Edmunds analyst Jessica Caldwell tells the Financial Times.
The role of minerals in US transportation electrification goals
Reed Blakemore, Atlantic Council, November 16, 2021
Electric vehicles will play a pivotal role in US efforts to reduce emissions and meet climate commitments under the Paris agreement. For the United States to deliver on the “decade of ambition” President Biden declared at COP26 in Glasgow, it must tackle the 30 percent of its greenhouse gas emissions originating from transportation. To that end, the administration’s pledge to bring electric vehicle sales to 50 percent of the consumer car market is central to its plans to deploy clean energy infrastructure under the Infrastructure Investment and Jobs Act. The administration’s goals of dramatically increased transportation electrification will shape US demand for key minerals and metals.
In the Atlantic Council’s new report: The Role of Minerals In Realizing US Transportation Electrification Goals, author Reed Blakemore examines projected EV growth in the United States, and the commensurate demand for minerals. Blakemore discusses the trajectory of mineral demand growth resulting from an acceleration of EV deployment in the United States, the steps that policymakers and the industry are taking to ensure those minerals demands are met, and where gaps still exist as the United States pursues its electrification goals.