NEWS OF THE DAY:
Natural gas plunges 11% as U.S. weather forecast stifles demand
Gerson Freitas, Jr., World Oil, November 30, 2021
Natural gas futures plummeted 11% in the U.S. as forecasts shifted warmer through the middle of next month, allaying concern about tight domestic supplies amid a global shortage of the heating fuel.
The expiration of the December contract last week amplified the market’s volatility. Prices closed 7.5% higher on Friday as traders rushed to close out bearish positions before the contract rolled off the board. Contracts for January delivery fell 62.3 cents to settle at $4.854 per million British thermal units in New York on Monday.
Since late summer, volatility in gas prices has stayed well above the average for the past decade even after a drop from last month’s peak as traders try to gauge whether winter cold will strain inventories.
Late-autumn cold in Europe and Asia has sparked fears that global gas shortages will worsen as nations struggle to refill stockpiles. But so far, there’s little sign of a similar situation developing in the U.S., even as shale producers keep a lid on output and the country’s exports of liquefied natural gas surge to a record. U.S. gas stockpiles are only 1.6% below normal for the time of year.
The so-called widowmaker spread between March and April futures, essentially a bet on how tight inventories will be at the end of the northern hemisphere’s winter, shrank to 41.5 cents, the narrowest since June, after widening to $1.909 last month.
Much of the U.S. should see milder-than-usual weather this week, with temperatures expected to peak in the 50s Fahrenheit in Minneapolis and Chicago, according to the Weather Channel. The western half of the country should continue to see above-normal temperatures at least through Dec. 13, private forecaster Commodity Weather Group said in a note to clients.
“Particularly mild weather from Wednesday to Friday will decimate physical market demand and intensify downward pressure on Henry Hub spot prices,” EBW AnalyticsGroup said in a note to clients.
“The downward pressure should remain,” said John Kilduff, founding partner at hedge fund Again Capital in New York. December start is looking like a “bust in terms of gas demand,” while storage levels have improved this fall, he added. “We’re decently supplied now.”
Norway’s Oil Boom Is Only Just Beginning
Felicity Bradstock, OilPrice.Com, November 28, 2021
- Norway’s revenues from oil and gas production hit a record high this year and are showing no signs of slowing down
- While Norway is a major supporter of clean energies, it is also a firm believer that the energy transition can only be achieved by using the profits from oil and gas production
- The future is bright for Norway’s energy giant Equinor, which will be able to take advantage of growing energy demand and play a leading role in the coming energy transition
Norway’s oil and gas production is at an all-time high, bouncing back solidly from a year of pandemic restrictions and curbs on production. Norwegian firm Equinor is running the show with oil and gas revenues doubling and new discoveries by the company suggesting that Norway will continue to produce fossil fuels well into the coming decades. As the oil industry was battling with Covid-19 pandemic restrictions and the severe decrease in oil demand throughout 2020, Norway was able to weather the storm thanks to tax breaks on oil and gas firms, allowing them to come back stronger in 2021. These actions by the government have been criticized by environmental activists hoping for a swifter transition to renewable energy. But for a country founded on oil revenue, it is hardly surprising that Norway wants a continuing piece of the action as post-pandemic oil demand rises.
Norwegian Prime Minister Jonas Gahr Støre believes that a total end to oil exploration and production would harm the transition to renewable alternatives in a world still so reliant on oil and gas. He stated, “If we were to say from one day to the other that we close down production from the Norwegian shelf, I believe that would put a stop to an industrial transition that is needed to succeed in the momentum towards net zero…. So, we are about to develop and transit, not close down.”
Norway has also been one of the largest suppliers of gas to Europe, second only to Russia, as shortages across the region have driven gas prices to record highs. The huge gas producer earned an estimated $7.9 billion in gas revenues in October thanks to the significant hike in prices. The Norwegian government continues to support gas production as a cleaner alternative to coal in the transition to alternatives.
As Norway ramps up its oil production to meet increasing global demand and as several countries come out of pandemic restrictions and businesses start up again, the country’s oil output has been exceeding forecasts month on month. Crude oil output reached 1.82 million bpd in October, up from 1.77 million in September. Natural gas output also went up, achieving 10.4 billion cubic meters of production in October, up from 8.9bcm in September.
As output increases, so do revenues. Norway’s oil major, Equinor, more than doubled its revenues in the third quarter of 2021, compared to the same period in 2020, thanks to rising gas prices and increased oil demand. Net profits rose to $1.4 billion between July to September, according to the company
Equinor’s oil outlook is optimistic, as the company announced its 6th discovery in domestic waters this year in November. The find, north of the Tyrihans field off the coast of Norway, is thought to hold 62 billion barrels of crude. Equinor stated of the development, “Such near-field discoveries are profitable, robust against fluctuations in oil (and) gas prices, they have a short payback period and low emissions.”
Despite ongoing growth in its oil operations, the company is not shying away from the energy transition, with plans to invest $23 billion in renewable energy by 2026. Equinor aims not only to be an international major in low-carbon oil production and carbon capture and storage technologies but also to become a market leader in wind and solar power. As Equinor continues to provide vital oil and gas supplies to Europe at a time where prices are rising to unprecedented levels and several countries are facing energy shortages going into winter, the company is optimistic about its role in traditional energy provision as well as its ability to use profits to invest in the long-term transition.
Following months of increased production and record export levels, Norway’s oil and gas companies announced they are now increasing their investment forecasts for 2022. Tax incentives from the government to support increased oil output are part of the drive, as a national statistics office (SSB) survey showed that Norway’s largest business sector now hopes to invest $17 billion in 2022, instead of the planned $15.6 billion. Tax incentives over the coming year are expected to spur a two-figure percentage growth in investments in 2023.
There is no end in sight for Norway’s oil and gas industry, which continues to get stronger every year, despite production curbs and revenue losses during the pandemic. And with Equinor also investing heavily in renewables, it is certainly not a one-trick pony. Norway’s future in energy is looking increasingly certain, with Europe’s oil and gas demand not showing any sign of waning, Equinor appears to be the star of the show.
Russia’s Arctic LNG 2 agrees loans worth 9.5 bln euros
Anton Kolodyazhnyy, Gabrielle Tetrault-Farber, Reuters, November 30, 2021
Russian gas producer Novatek NVTK.MM said on Tuesday its Arctic LNG 2 plant has signed loan agreements with foreign and Russian banks worth 9.5 billion euros ($10.8 billion), securing necessary external financing for the project.
Earlier this year, Novatek shareholders approved external financing of $11 billion for the $21 billion Arctic project, which is expected to start production of liquefied natural gas in 2023.
Novatek has had difficulty in securing funds from Europe, wary of political standoff with Russia as well as calls against tapping hydrocarbons in the Arctic amid efforts to tackle climate change.
Novatek said that Chinese financial institutions, including the China Development Bank and the Export-Import Bank of China, signed credit facility agreements totalling 2.5 billion eurosfor up to 15 years.
Financial institutions from the OECD member countries signed credit facility agreements totaling up to 2.5 billion euro. This includes the Japan Bank for International Cooperation (JBIC) and other lenders insured by export credit agencies.
It has not disclosed the other international lenders involved in the deal. Sources told Reuters earlier this month that Italy’s SACE may insure a loan of around 500 million euros for Arctic LNG 2.
The financing to be provided by the syndicate of Russian banks including Sberbank SBER.MM, Gazprombank GZPRI.MM and its subsidiary Bank GPB International S.A., State Development Corporation VEB.RF and Bank Otkritie Financial Corporation, will total 4.5 billion euros under the credit facility agreement, which had been signed earlier.
Arctic LNG 2 is expected to be launched in 2023 and reach full LNG production capacity of almost 20 million tonnes a year in 2026.
The project’s shareholders are Novatek (60%), TotalEnergies TOTF.PA (10%), CNPC (10%), CNOOC 0883.HK (10%) and Japan Arctic LNG, a consortium of Mitsui & Co, Ltd. 8031.T and JOGMEC (10%).
Drills tap high grades beyond Arctic Mine
Shane Lasley, North of 60 Mining News, November 29, 2021
Trilogy Metals Inc. Nov. 22 reported that assay results from two holes drilled this year at the Upper Kobuk Mineral Projects in Northwest Alaska tapped high-grade mineralization beyond the current pit at the Arctic Mine project.
A 2020 feasibility study for developing a mine at Arctic details a financially robust operation that would produce 1.9 billion pounds of copper, 2.3 billion lb of zinc, 388 million lb of lead, 386,000 ounces of gold, and 40.6 million oz of silver over an initial 12-year mine life.
This operation is based on 43 million metric tons of reserves averaging 2.32% copper, 3.24% zinc, 0.57% lead, 0.49 grams per metric ton gold, and 36 g/t silver.
While high-grade volcanogenic massive sulfide deposits such as Arctic are typically mined from underground, the Arctic feasibility study details plans for a lower cost open-pit mine feeding a 10,000-metric-ton-per day mill.
Ambler Metals LLC, a joint venture operating company equally owned by Trilogy and South32 Ltd., completed an 18-hole (4,131 meters) diamond drill program this year designed to upgrade a portion of the indicated resources at Arctic to the higher confidence measured category, as well as provide material for metallurgical testing and geotechnical information.
“The latest drilling program at Arctic will assist Ambler Metals in the continued de-risking of the project and in the detailed engineering of the asset,” said Trilogy Metals President and CEO Tony Giardini.
The first assay results are from two geotechnical holes, AR21-0173 and AR21-0175, drilled to test the stability of the pit wall on the northeast side of the proposed Arctic Mine. Both encountered high-grade mineralization beyond the currently defined pit at Arctic.
Hole AR21-0173 cut 3.77 meters averaging 2.15% copper, 0.87% zinc, 0.34% lead, 0.83 g/t gold, and 82.89 g/t silver from a depth of 110.5 meters at the north edge of the deposit. This hole shows that one of the high-grade zones in the mine plan extends north just below the proposed open pit.
Hole AR21-0175 cut three high-grade zones on the northeast edge of the proposed open pit. From a depth of 71.9 meters, this hole cut 24.94 meters averaging 1.85% copper, 2.96% zinc, 0.57% lead, 0.28 g/t gold, and 27.09 g/t silver.
This includes 5.62-meter higher-grade subinterval averaging 4.94% copper, 10.57% zinc, 1.71% lead, 0.4 g/t gold, and 58.9 g/t silver.
“The initial drilling results from Arctic continue to confirm our belief that the Arctic deposit is one of the highest grade polymetallic mineral projects in the world,” said Giardini. “Not only is Arctic high-grade, but it also has wide zones of mineralization that are relatively close to surface.”
With the slow turnaround time at assay labs, these are the first results from the 2021 drill program at UKMP.
“It is good to see the results of our 2021 drill program are beginning to come in from ALS Laboratories. Also, good to see these high-grade extensions, just outside the proposed pit and relatively close to surface, in holes that were primarily designed to collect geotechnical information,” said Trilogy Metals Vice President of Exploration Richard Gosse. “We are looking forward to seeing the results of the remaining 16 drill holes at Arctic as well as from the regional drill program.”
From the Washington Examiner, Daily on Energy:
SENATE GOP STALLS NDAA OVER NORD STREAM 2: Senate Republicans blocked the annual National Defense Authorization Act yesterday as they bucked Democratic leadership for not allowing consideration of various Republican amendments, including one that would impose sanctions in connection to the Nord Stream 2 pipeline, the Washington Examiner’s Susan Ferrechio reports.
Republican hopes of punishing the pipeline operator and restricting what Senate Minority Leader Mitch McConnell called Russian President Vladimir Putin’s “encroachment over Europe” via the pipeline run contrary to President Joe Biden‘s approach, as his reversal of sanctions has been pitched by the administration as a means of supporting diplomacy with Germany and Russia.
Exxon-backed scientists unveil advance for CO2 storage
Ester Wells, ENERGYWIRE, November 30, 2021
Researchers say they have discovered a way to form carbon dioxide-trapping crystal structures in as quickly as one minute — the fastest formation ever documented for these structures — potentially offering a way to store billions of tons of carbon dioxide under the ocean floor in a cost-effective way.
Scientists at the University of Texas at Austin found that adding magnesium to the reaction that creates hydrates, structures that trap CO2 molecules, accelerates the reaction by 3,000 times its normal speed. They slashed the reaction time from hours or days to under a minute.
“It’s a huge deal because if you’re talking about industrial-scale carbon capture, we want hydrates to form as quickly as possible and not have to wait hours or days for them to get started, and that’s where our research comes in,” said Vaibhav Bahadur, a mechanical engineering professor at the UT Austin and lead author of the new paper, published this fall in ACS Sustainable Chemistry & Engineering.
Hydrates form when carbon dioxide is combined with water under high pressure and low temperature, according to the study. Typically, toxic chemicals like tetrahydrofuran are used to speed up the reaction, but Bahadur said these create environmental concerns.
Using metals like magnesium instead is not only safer but cheaper because they are passive processes, not requiring energy to be added, the paper found.
The team, working in partnership with Exxon Mobil Corp. and the Energy Institute at UT Austin, discovered the potential of magnesium in hydrate formation by accident, Bahadur said. The team was working with aluminum in another experiment and saw that the metal helped catalyze that reaction.
“It was a chance discovery,” he said. “We saw that aluminum was working well and thought that magnesium might be even better because it’s more reactive than aluminum, and it’s in the same category of metals as aluminum.”
The researchers said that carbon would be captured from the air or from industrial emitters like power plants, then pumped into reactors sitting on the ocean floor because the naturally occurring pressure and temperature conditions there are ideal for hydrate generation. Then, hydrates created using the rapid new process within those reactors could be injected into subsea rock formations, where they can be stored, Bahadur said, “literally forever.”
Carbon capture utilization and storage is “the only group of technologies that contributes both to reducing emissions in key sectors directly and to removing CO2 to balance emissions that cannot be avoided,” according to the International Energy Agency. A 2020 IEA report said that while carbon capture is a critical part of reaching net-zero climate targets, the 20 commercial CCUS operations worldwide are “nowhere near the amount required to put global emissions on a sustainable path.”
The researchers said hydrates theoretically could provide a viable storage option if carbon capture were to reach levels called for by IEA and other organizations to reach climate targets.
The sluggish rate at which hydrates form has been the key barrier to their broader application in the past — so overcoming it now could mean a faster, greener method of carbon storage that could do away with toxic chemicals normally required to speed up the reaction, Bahadur said. The scientists are interested in commercializing the technology, following patent approval.
“We need new techniques to sequester carbon,” Bahadur said. “Right now, we’re sequestering about half of a percent of the carbon that will need to be sequestered by 2050 … so this is an exciting way of potentially locking up carbon for eternity.”