Today’s Key Takeaways: Falling short of critical minerals demand to meet net zero emissions goals. Average price of oil in 2023 projected at $91 (AK needs $86 to balance budget). Electricity constraints slow down Canada’s first LNG terminal. Using abandoned mines to store clean energy. Manchin’s top aide joins API.
NEWS OF THE DAY:
According to the recently released “Energy in Perspectives” by the IEA, anticipated supply of critical minerals falls short of that required to meet projected demand in 2030 in the net zero emissions scenario for ALL minerals except iron.
Too Early to Sustain $100 Per Barrel Oil
Andreas Exarheas, Rigzone, January 17, 2023
It’s just too early to sustain $100 per barrel oil, according to Standard Chartered.
“It is highly likely that we see $100 at some point this year, however, we don’t expect it to stick,” a Standard Chartered analyst told Rigzone.
“We are forecasting a Brent average of $91 this year so any move above $100 would likely be brief. It’s just too early to sustain $100 – oil demand growth [is] limited this year and [the] macro backdrop [is] creating headwinds, particularly in H1,” the analyst added.
“[The] first year in which we think the average will be over $100 is 2025,” the Standard Chartered analyst continued.
In a report sent to Rigzone earlier this month, Enverus Intelligence Research (EIR) highlighted that, as of December, it projected Brent at $93 per barrel in the first quarter of this year and $108 per barrel in the fourth quarter of 2023.
In a research note sent to Rigzone in January, Goldman Sachs noted that it expects solid global oil demand growth of 2.7 million barrels per day in 2023 to push the market back into deficit in H2 and raise Brent to $105 per barrel by the fourth quarter of 2023.
The U.S. Energy Information Administration (EIA) expects the Brent spot price to average $80 per barrel in the first quarter of this year, $78.34 per barrel in the second quarter, $76.69 per barrel in the third quarter, and $75.36 per barrel in the fourth quarter, according to its latest Short Term Energy Outlook (STEO). The EIA’s latest STEO, which was released this month, highlighted that the Brent spot price averaged $100.94 per barrel in 2022.
Brent closed above $100 per barrel several times last year, peaking at a close of $127.98 per barrel on March 8, 2022. Brent then dropped from a close of near $123 per barrel in May 2022 to a close of just above $76 per barrel on December 9, 2022, before rising to a close of above $85 per barrel in January 2023.
EXCLUSIVE-Electricity constraints force Canada’s first LNG terminal to delay renewable shift
Rod Nickel, Nia Williams, Reuters, January 16, 2023
Shell PLC’s SHEL.L LNG Canada export project in British Columbia plans to start building its proposed second phase with natural gas-powered turbines and switch to electricity as more renewable power becomes available, a top executive said, a decision that means the expansion project will initially generate high greenhouse gas emissions.
LNG Canada, in which Japan’s Mitsubishi Corp 8058.T owns a 15% stake, is set to be Canada’s first liquefied natural gas (LNG) export terminal. The first phase is expected begin shipments around 2025.
With global demand for natural gas from sources other than Russia accelerating after its invasion of Ukraine last year, LNG Canada is weighing whether to build by 2030 a second phase to double annual capacity to 28 million tonnes.
LNG Canada has previously described this approach as only one of the options it was considering.
How abandoned mines can become clean energy storage systems
Staff Writer, Mining.Com, January 17, 2023
An international team of researchers has developed a novel way to store energy by transporting sand into abandoned underground mines. The new technique, called Underground Gravity Energy Storage (UGES), proposes an effective long-term energy storage solution while also making use of now-defunct mining sites.
In a paper published in the journal Energies, the scientists explain that UGES generates electricity when the price is high by lowering sand into an underground mine and converting the potential energy of the sand into electricity via regenerative braking and then lifting the sand from the mine to an upper reservoir using electric motors to store energy when electricity is cheap.
Regenerative braking is an energy recovery mechanism that slows down a moving vehicle or object, such as an elevator, by converting its kinetic energy into a form that can be either used immediately or stored until needed. In other words, the electric traction motor uses the vehicle’s momentum to recover energy that would otherwise be lost to the brake discs as heat. Regenerative braking system lifts are already applied in newly highly energy-efficient buildings.
Joe Manchin’s top aide to join oil and gas lobbying group
Hans Nichols, Axios, January 12, 2023
Why it matters: As Manchin’s top aide for the last two years, West knows the politics – and the players — of the energy and climate change debates. His hiring indicates that API is preparing to play offense and defense in the new Congress.
- Through the on-again and off-again Build Back Better negotiations, he developed a reputation as a fierce advocate for Manchin’s positions.
- A former Division I golfer, West worked closely with White House officials and other senate offices on a deal that Manchin ultimately — and somewhat surprisingly — supported: The Inflation Reduction Act, which included some $370 billion to combat climate change and reduce greenhouse gas emissions.
What we’re hearing: West’s departure is unrelated to Manchin’s decision on whether to run for reelection in 2024, which still has much of Washington waiting.
- Wes Kungel, Manchin’s current legislative director, will replace West as the new chief of staff.
What they are saying: “Lance joins API at a critical time for our industry,” API president and CEO Mike Sommers said.
- “His position on Capitol Hill placed him at the center of some of our country’s more important legislative debates, and his deep relationships on both sides of the aisle will be a tremendous asset to our organization and the industry we serve,” Sommers said.
- “I’m grateful for the opportunity to help shape a commonsense energy future that benefits all Americans,” West said. “API and its members are leading the world with innovative solutions to ensure we have reliable, affordable, and cleaner energy the country and world needs.”
The big picture: With the passage of the IRA, the Biden administration will turn to implementing the climate provisions to ensure the new spending will help the U.S. achieve its goal of cutting emissions 50% below 2005 levels by 2030.
- Sen. Majority Leader Chuck Schumer and Manchin were unable to pass the permitting reform legislation that Manchin demanded for his vote for the billions in green energy subsidies.
- Permitting reform, as well as getting the Mountain Valley Pipeline project approved, will remain key priorities for Manchin.