Today’s Key Takeaways: EIA raises U.S. oil production forecast. OPEC leaves global oil demand forecast unchanged. Australian labor strike threatened Global LNG exports. Latin lithium alliance coming? Wind power industry facing soaring costs.
NEWS OF THE DAY:
EIA hikes forecast for record U.S. oil production
Ben LeFebvre, Energywire, August 9, 2023
The increases in oil production will likely keep the U.S. as the world’s No. 1 crude oil producer, ahead of Saudi Arabia and Russia.
The U.S. Energy Information Administration on Tuesday raised its U.S. oil production forecast for this year and next, predicting output would reach record levels for both years as high energy prices keeps drilling activity humming.
The increases in oil production will likely keep the U.S. as the world’s No. 1 crude oil producer, ahead of Saudi Arabia and Russia. Together, the three countries produce about one-third of oil in the world.
The production surge comes as the Biden administration tries to shore up its credentials with environmental allies who have pressed it to shut down fossil fuel development on public land.
But it also comes as Republicans have tried to paint the administration as actively choking off U.S. oil production, the vast majority of which comes from privately held or state-controlled lands.
The United States will produce an average of 12.8 million barrels a day of crude this year and 13.1 million in 2024, the EIA said in its latest forecast, an increase from its July forecast for 12.6 million barrels and 12.85 million, respectively. The projections for the two years would easily break the previous record of 12.3 million barrels a day set in 2019, according to the EIA. Producers hit the 13 million mark briefly once before — shortly before the pandemic, which sent the market reeling and forced companies to reduce activity.
The increase is “a result of higher expected well-level productivity and higher crude oil prices,” said the agency, which is the independent statistical arm of the Energy Department.
Oil companies in the United States have posted record profits last year as Russia’s invasion of Ukraine scrambled global crude markets and sent prices soaring. A subsequent decline in prices this year prompted OPEC and Russia to reduce output, and prices surged in July.
That has benefited companies like Exxon Mobil Corp., Chevron Corp. and other U.S.-based producers who have seen exports grow even as domestic demand has come back from the depths experienced during the Covid-19 pandemic.
OIL:
OPEC leaves forecasts for global oil-demand growth unchanged
William Watts, MarketWatch, August 10, 2023
The Organization of the Petroleum Exporting Countries on Thursday left its forecasts for growth in 2023 and 2024 world oil demand unchanged. In its monthly report, OPEC said it expects demand this year to grow by 2.4 million barrels a day, followed by 2.2 million barrels a day, or mbd, in 2022. Non-OPEC liquids supply is expected to expand by 1.5 mbd in 2023, a slight upward revision. OPEC expects the main drivers of liquids supply growth for 2023 to be the U.S., Brazil, Norway, Kazakhstan Guyana and China, while the largest decline is expected from Russia. OPEC said uncertainties remain around U.S. shale-oil output potential and unplanned maintenance in 2023. Non-OPEC liquids production is forecast to grow by 1.4 mbd in 2024, unchanged from the previous estimate.
GAS:
Australia Labor Strikes Risk 10% of Global LNG in Threat of New Energy Shock
David Stringer, Dan Murtaugh, Bloomberg, August 10, 2023
- Australia action would curb exports and send prices higher
- Chevron, Woodside in talks aimed at averting disruption
Potential strikes at three major liquefied natural gas facilities in Australia could disrupt about 10% of global exports of the fuel and deliver a new energy price shock across Asia and Europe.
Workers at Chevron Corp. and Woodside Energy Group Ltd.facilities in Australia have voted to approve industrial action at the North West Shelf, Wheatstone and Gorgon operations, and some walkouts could begin as soon as next week under labor rules.
European natural gas fluctuated Thursday as traders weighed the prospects of any major impact and erased some of the 28% surge the previous day — a move not seen since the early weeks of the Russian invasion of Ukraine last year that upended global supply of the fuel.
Futures had briefly topped €40 a megawatt-hour Wednesday for the first time since June, though they are still down more than 80% from the unprecedented levels hit in August last year. The contract traded at €36.78 as of 9:25 a.m. in London.
MINING:
Is a lithium triangle alliance coming?
Shane Lasley, Metal Tech News, August 9, 2023
Latin American countries collectively hold over 50% of the world’s identified raw lithium. These resource-rich nations have begun asserting that they will no longer accept extractive international trade relationships-hoping to leverage this natural wealth of a suddenly in-demand mineral to bolster the region’s development and encourage the growth of specialized industries and clean energy infrastructure.
We don’t want to sell lithium to Europe … we want to sell lithium vehicles that run with lithium batteries,” said Argentina’s undersecretary for Latin American and Caribbean affairs, Gustavo Martínez Pandiani.
Argentina is building the first lithium battery factory in Latin America, which will help move it beyond extraction and into the potential production of electric vehicles and batteries.
“That will allow us to develop our own capabilities in terms of our own industries, our own companies exporting with added value. That is the type of cooperation we want to develop,” he said.
“This was the first time that we had the opportunity to discuss in such clear terms a mechanism that would take us away from extractivism in Latin America,” Argentina President Alberto Fernández said at the Community of Latin American and Caribbean States Summit in Brussels last month.
Even though Argentina is an outlier with only about 20% of the world’s resources still largely undeveloped, officials there have joined the table to discuss setting up a strategic regional alliance on lithium-or, in the words of Bolivian president Luis Arce “a kind of lithium OPEC.”
Between the 1950s and 1980s, oil-producing countries like Venezuela and Saudi Arabia increased state involvement in their industries, finally launching the Organization of the Petroleum Exporting Countries (OPEC), defined as “a permanent intergovernmental organization of 13 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries” which today controls 40% of the global oil supply, its production, and prices.
POLITICS:
Wind Industry Seeks More Support As Costs Spiral Out Of Control
Irina Slav, OilPrice.Com, August 10, 2023
- The wind power industry is facing soaring costs, with increases ranging between 20% and 40% since February 2022.
- Siemens Gamesa, the wind power segment of Siemens Energy, is grappling with significant financial losses after selling insufficiently tested turbines.
- Big Oil companies are stepping into the wind sector, making significant investments without government subsidies, challenging traditional wind companies on their own ground.
Back in June, the chief executive of Danish wind turbine major Ørsted said the British government needed to provide more financial support for the wind industry because of rising costs.
Then, Siemens Gamesa, the wind power unit of Siemens Energy, began issuing warnings about its business performance due to failures in the wind turbines it produced.
Last month, Swedish Vattenfall pulled out one of the biggest offshore wind projects in the UK. The utility cited soaring costs that made the project unviable.
Higher costs, technology problems, and persistent supply chain problems have turned into a triple curse for the wind industry, not without its own help: wind, like solar, has been marketed as much cheaper than alternatives. The latest news from the sector suggests the industry is only now remembering it also needs to make a profit in addition to wind farms.