Oil: Demand up, supply down. LNG global growth. China’s grip on supply chain.

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Oil executives say demand will rise, despite emphasis on renewables
Jessica Resnik-Ault, Yahoo Finance, March 1, 2021

Oil demand is expected to rise over the next decade and the fossil fuel will remain to be a crucial part of the energy mix, even as renewables draw increasing attention, Hess Corp Chief Executive John Hess said at CERAWeek on Monday.

At the biggest gathering of top energy leaders, investors, and politicians from around the globe, climate change and renewable fuels are taking center stage this year with oil companies trying to reorient their portfolios as the fossil fuel industry reels from the coronavirus pandemic, which destroyed fuel demand and caused the loss of thousands of jobs.

“We don’t think peak oil is around the corner – we see oil demand growing for the next 10 years,” Hess said. “We’re not investing enough to grow oil and gas in the future,” he said, explaining that prices would need to rise to support that investment.

While demand is likely to recover sharply after the pandemic, supply is going to be slower to resume, he said, as shale producers operate conservatively to meet shareholder’s needs.

“I’m proud of being an oil and gas person,” said Repsol CEO Josu Jon Imaz. “We are going to need oil and gas in the coming years.”

An emphasis on renewable investment could trigger an oil price spike, said Maynard Holt, CEO of investment bank Tudor, Pickering, Holt & Co, speaking on a panel.

“The possibility that the world pulls a California is really high: you take the ball off of affordability and reliability and have a crunch,” Holt said, referring to California’s electricity crisis and shortage from 2000 to 2001.

Related:  Lessons of downturn may have Big Oil poised for sharp recovery


Shell: LNG set for global growth
Sarah Smith, LNG Industry.Com, March 1, 2021

Global LNG trade increased to 360 million t in 2020, according to Shell’s latest annual LNG Outlook, despite the unprecedented volatility caused by the COVID-19 pandemic which resulted in lockdowns around the world.

Though marginal, the increase in volume reflects the resilience and flexibility of the global LNG market in 2020, a year which saw losses to global GDP of several trillion dollars as economies large and small struggled to contain the COVID-19 outbreak. Demand in 2019 stood at 358 million t.

Global LNG prices hit a record low early in the year but ended the 12-month period at a six-year high as demand in parts of Asia recovered and winter buying increased against tightened supply.

“LNG provided flexible energy which the world needed during the COVID-19 pandemic, demonstrating its resilience and ability to power people’s lives in these unprecedented times,” said Maarten Wetselaar, Integrated Gas, Renewables and Energy Solutions Director at Shell.

“Around the world, countries, and companies, including Shell, are adopting net-zero emissions targets and seeking to create lower-carbon energy systems. As the cleanest-burning fossil fuel, natural gas and LNG have a central role to play in delivering the energy the world needs and helping power progress towards these targets.”

Natural gas emits between 45% and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.


Nickel, cobalt price: 10 charts show China’s grip on battery supply chain to last decades
Frik Els, Mining.Com, February 26, 2021

New study shows Asian cathode, precursor producers’ control of nickel, cobalt supply go way beyond long-term off-take agreements.

While it was not named in the executive order, Beijing this week dismissed efforts by the US in a presidential decree to move supply chains for semiconductors, pharmaceuticals, batteries, critical minerals and strategic materials away from China.

Chinese Foreign Ministry spokesman Zhao Lijian said, “artificial efforts to shift these chains and to decouple is not realistic,” urging Washington to “uphold the safety and reliability and stability of global supply chains.” 

The Biden administration has acknowledged that making the US more self-sufficient would not be achieved overnight but the scale of the task may be underestimated.

In the battery supply chain for energy storage and electric vehicles, China’s command of the market is startling, and wresting it away is likely a decades-long process.

new report by Roskill on the global cathode and precursor market out to 2030 lays bare how dependent developed markets, particularly Europe, are on China for mined material, precursors and cathode components.   


This week: Senate takes up coronavirus relief after minimum wage setback
Jordan Carney, Juilegrace Brufke, The Hill, March 1, 2021

The Senate is expected to take up a $1.9 trillion coronavirus relief bill this week, after a key official dealt a blow to hopes of using the legislation to increase the minimum wage.

The House passed the COVID-19 legislation over the weekend with language included that would hike the minimum wage to $15 per hour by 2025.
But that language is expected to be stripped out in the Senate after the parliamentarian, Elizabeth MacDonough, advised key offices that the language does not comply with budget rules that govern reconciliation, the process lawmakers are using to bypass the 60-vote legislative filibuster.
The decision sparked fierce pushback from progressives lawmakers and outside groups, who renewed calls to either nix the legislative filibuster or overrule the parliamentarian. Neither option has the support of enough Senate Democrats, and the White House has signaled it will respect the minimum wage ruling.
In another blow to progressives, top Senate Democrats nixed a “Plan B,” floated in the wake of the parliamentarian’s ruling, to penalize large corporations that don’t pay their workers a certain amount. A source familiar told The Hill that there were concerns that ironing out the back-up plan would have slowed down the overall coronavirus relief bill. 


From the Washington Examiner, Daily on Energy:

LATEST PITCH TO FOSSIL FUEL WORKERS: Sens. Joe Manchin and Debbie Stebanow are aiming to make good on Democrats’ promises to fossil fuel workers by expanding an advanced manufacturing tax credit program deployed as part of the Obama-Biden administration’s Recovery Act.

Their American Jobs in Energy Manufacturing Act introduced today would build on the 48C tax credit by offering $8 billion to build or retrofit manufacturing and industrial facilities to make clean energy technologies such as battery storage, carbon capture and removal, low-emissions vehicles, energy efficiency equipment, and more.

Half the funding would be targeted for use in places where coal mines have closed or coal plants have retired, a priority for Manchin, who represents West Virginia, a big coal and natural gas producing state.

“The downturn of the coal industry has left many Americans and West Virginians with a lack of new opportunities,” Manchin said in a press briefing. “Tax credits to incentivize a cleaner energy future should be targeted to drive new investment in communities most affected by this transition.”

The rest of the funding would target the auto industry. Stabenow represents Michigan, the nation’s auto manufacturing hub that was hit hard during the Great Recession.

Manchin said the focus of the bill is meeting the challenge of matching lost fossil fuel jobs with new ones created in clean energy. By retooling existing facilities, workers won’t have to move to find new work.

“That’s all we are trying to do is match it up so people can live where they want to live,” Manchin said.

Manchin, the powerful Energy Committee chairman, has challenged President Biden to fulfill the promise of his clean energy and infrastructure spending agenda to create new jobs that can replace lost work in the fossil fuel industry.

Provisions like his new bill would likely have to be included in Democrats’ forthcoming infrastructure/climate legislation if Manchin, a centrist swing vote, in a 50-50 Senate, is to support it. Manchin said he’s “eager” to work with the Biden administration to make sure the bill becomes law “sooner rather than later.”

These types of efforts are also crucial to appease unions that endorsed Biden that are upset about his early move to cancel the Keystone XL pipeline.

Supporters of the original iteration of the 48C credit say it was one of the most successful tools deployed by the Obama-Biden administration to recover from the Great Recession, spurring investments in U.S. manufacturing. The $2.3 billion in competitive 48C credits supported a variety of clean energy products, from wind and solar to electric vehicles and their power systems, carbon capture and smart grid technologies, and renewable fuels.

“It was extremely successful,” said Stabenow, a sponsor of the original program. “I know it worked.”

The Energy Department fielded more than 590 applications and recommended that the Internal Revenue Service approve nearly 200 projects, representing more than 130 manufacturers across 43 states, according to Third Way, a centrist Democrat think tank.

Third Way says manufacturing jobs have one of the highest job multiplier effects of any industry and project that every $1 billion issued through a new 48C credit program could add $3.6 billion in GDP and roughly 8,000 direct jobs across the country (along with 23,000 indirect jobs).