Welcome to day two of CERAWeek by S&P Global in Houston. This morning we’ve already heard from Exxon Mobil Corp. Chief Executive Officer Darren Woods, and coming up this afternoon will be OPEC Secretary General Haitham Al-Ghais.
(Bloomberg) — Welcome to day two of CERAWeek by S&P Global in Houston. This morning we’ve already heard from Exxon Mobil Corp. Chief Executive Officer Darren Woods, and coming up this afternoon will be OPEC Secretary General Haitham Al-Ghais.
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All time stamps are Houston.
EQT Sees US Natural Gas Market in Balance Mid-Year (1:54 p.m.)
The head of EQT Corp., the largest producer of natural gas in the US, said he sees the domestic market coming back into balance in the “middle half” of this year as production adjusts following the recent precipitous collapse in prices.
Gas futures have tumbled by more than half in the past three months. That’s spurred a pullback in drill-rig deployment, specifically in the Haynesville shale basin, which straddles Louisiana and East Texas, EQT Chief Executive Officer Toby Rice said in a Bloomberg TV interview. EQT is focused on the Marcellus shale in Appalachia.
“Simply put, weather did not show up this year, and that’s created” a surplus of about 500 billion cubic feet of gas, Rice said. “But as a result of these lower prices, we do think that activity levels will adjust accordingly.”
Conference Attendance Hits a Record (1:42 p.m.)
Preliminary numbers are in: CERAWeek attendance this year hit a record, with about 7,000 delegates, conference organizers said. The 41st edition also features a record number of speakers at about 1,000, said Jeff Marn, a spokesman. Attendance is up from about 6,000 people last year, he said.
Oil Markets on Pace to Tighten, Traders Warn (1:15 p.m.)
Worldwide oil markets will tighten during the second half of this year, driven by a recovery in demand from China, top commodity traders Gunvor and Trafigura said.
Meanwhile, supply is unlikely to grow significantly, especially in the US, they said. Crude and condensate production in the US is expected to rise by about 700,000 barrels per day in 2023 and long term, output is likely to peak by the end of the decade primarily due to the slow pace of investments, said Helen Currie, ConocoPhillips’ chief economist.
IRA Seen Drawing Investment Away From European Refiners (1:10 p.m.)
The US Inflation Reduction Act is drawing investment in technology away from European refiners, said executives from Poland’s PKN Orlen and Spain’s Repsol SA.
Excessive regulatory restrictions also create hurdles for investment, said Juan Abascal, executive managing director at Repsol. “Europe has decided to place the cost of energy transition on the consumer,” Abascal said, while in the US taxpayers are bearing the burden. The next generation of consumers — which will benefit more from the transition to cleaner energy — will be able to support its costs, he said.
For Houston-based Phillips 66, building a business case based on a government incentive isn’t as attractive as it looks from the outside. “I wouldn’t say it’s a comfortable position to be in,” said Zhanna Golodryga, an executive vice president at the company, which is currently building one of the world’s largest renewable diesel plants.
Williams CEO Says Renewables Have Boosted Gas Demand (1 p.m.)
Greater deployment of wind and solar energy in key US markets have been followed by an increase in demand for natural gas pipelines and storage, according to Williams Co. Chief Executive Officer Alan Armstrong.
“As renewables keep getting added, our actual incremental peak load continues to go up,” Armstrong told Bloomberg Television. “That’s because gas is commonly used as a backup fuel for renewable energy, he said, adding that gas infrastructure including storage is “going to be critical” as the nation transitions to cleaner forms of energy.
Kerry Calls for Balancing Energy Transition, Demand (12:42 p.m.)
The world must find a way to meet energy demand without undermining the transition to cleaner fuel sources, said John Kerry, the US special presidential envoy for climate.
“The demand is there globally and people are demanding that we keep our economies moving. You can’t just suddenly shut off your economy,” Kerry said during an interview with Bloomberg TV in Houston. “But at the same time you can stay focused on reducing the emissions that are the byproduct of that energy that keeps your economy moving.”
Cheniere Will Add Pipeline Capacity at Sabine Pass (11:55 a.m.)
Cheniere will need to add new natural gas pipeline capacity to its Sabine Pass terminal in Louisiana, where it’s planning a major expansion, CEO Jack Fusco said.
The line will need to tie back to a production area directly to ensure deliveries for contracted customers, whether that’s a short line to the Haynesville in Louisiana, or going up to the Marcellus shale in Appalachia or to Canada, he said.
The four lines feeding Sabine are maxed out at about 5 billion cubic feet per day, and Cheniere currently pays about $800 million for firm pipeline capacity to deliver to that terminal. “We like to be into the basin because we have to provide the molecules to customers,” Fusco said.
Trafigura Is Doing ‘Major’ Audit After Alleged Nickel Fraud (11:42 a.m.)
Trafigura Group is carrying out a “major internal audit” after being hit by an alleged nickel fraud, CEO Jeremy Weir said in an interview, in his first public comments on the subject. The company shocked the commodities world last month when it announced it was facing losses of nearly $600 million after finding that cargoes of nickel it had bought didn’t contain any nickel.
“You’ve got to learn from experiences like this,” he said in an interview with Bloomberg TV. He emphasized that the alleged fraud was limited to a particular line of Trafigura’s business, and that the company had found no internal involvement from its own employees.
Weir also said that China is already exerting a “pull” on some commodities and appears set to surpass the economic growth target of 5% announced at the weekend.
Demand is “looking very good,” while shops and restaurants are full, he added, noting that international travel is likely to pick up strongly as well. Globally, “we are surprising very much on the upside,” Weir said.
Kuwait Expects Full Production at Oman Refinery by Year-End (10:40 a.m.)
Kuwait expects full production volumes at its 230,000 barrel-per-day joint venture refinery in Oman by the end of the year, Kuwait Petroleum Corp.’s deputy chairman and CEO Nawaf Al-Sabah said at a press conference Tuesday. Kuwait has committed to supply about 65% of the crude the refinery will process, Al-Sabah said.
The country’s national oil producer hasn’t lost any Asian market share amid competition from relatively cheap Russian crude supplies, Al-Sabah added.
“They have built their refineries to handle Kuwait export crude so it’s not easy for them to switch around,” he said.
His comments in Houston came a day after he told Bloomberg TV that Chinese oil demand is growing strongly as “pent-up demand” accumulated during the pandemic is unleashed. On Tuesday, he described the Chinese resurgence as “sustainable.”
Kuwait sits atop one in every 10 barrels of the world’s untapped crude, and Al-Sabah said he foresees the OPEC member participating in global oil markets for at least another 85 years.
Higher Copper Prices Will Trigger New Mines: Freeport CEO (10:18 a.m.)
Higher copper prices will bring new mining projects to churn out the metal needed to support the global energy transition, according to the head of the world’s largest publicly traded copper company.
There isn’t enough copper being produced in the world over the medium- to long-term to support the energy transition, Freeport-McMoRan Inc. CEO Richard Adkerson said Tuesday during a Bloomberg TV interview at CERAWeek in Houston. That means copper prices will rise, which will ultimately prompt new mining projects.
Occidental Sees Oil Production Falling Short of US Forecast (9:30 a.m.)
Occidental expects daily US oil production to grow by 500,000 barrels this year, almost 20% lower than the official government forecast.
About 80% to 90% of that output increase will come from the sprawling Permian Basin of West Texas and New Mexico, according to Fred Forthuber, president of the Occidental subsidiary that oversees pipelines and marketing of crude and natural gas. Occidental’s estimate stands in contrast to the Energy Information Administration’s 600,000 barrel-a-day growth forecast for 2023.
Europe Prepares for a Winter Without Russian Gas (9:10 a.m.)
The next winter in Europe is expected to be difficult because the continent will go into the season without any supplies from Russia, Eni SpA CEO Claudio Descalzi said. For the current winter season, the region still counted on Russian supplies that were shipped through mid-2022 before they were cut off as the war in Ukraine escalated.
Norway is already producing natural gas at maximum capacity, Equinor ASA CEO Anders Opedal said. The company, which has stepped up production to meet the country’s needs, says that if gas demand rises due to a severe winter, Norway would need to curtail demand and boost imports.
Exxon Says EU Windfall Tax Hurts Green Efforts (9:07 a.m.)
Exxon’s CEO slammed Europe’s windfall profit tax on oil and gas producers, saying it drives away investment and undermines energy transition efforts.
The EU slapped the new tax on oil companies last year after Russia’s invasion of Ukraine caused fuel prices to skyrocket, squeezing consumers already enduring surging inflation.
The tax would wipe out years of profit from recent refining investments, and means Exxon plans to pull back future spending on the continent in favor of the US, Darren Woods said. The CEO also criticized “ideologues” who want to get rid of oil and gas for driving the climate debate.
Such policies have created unintended consequences, such as countries burning more emissions-intensive coal to meet consumers’ energy needs when supplies fell short after the Ukraine war started, Woods said.
“What we saw in Europe should be a wake-up call,” he said.
Crude Processors Adding Hydrogen, Carbon Capture Tech (8:30 a.m.)
A number of major crude processors on the US Gulf Coast are looking to reconfigure refineries to incorporate hydrogen and carbon capture technologies, said Justin Jackson, senior vice president of process and chemicals at Wood, an engineering and construction company.
A lack of expertise in investment and technology has created a gap in the world’s carbon reduction ambitions and ability to carry it out, he said.
“We’ve hired everybody in North America between us and the [project] owners,” Jackson said on the sidelines of CERAWeek.
National Oil Companies Say They’re Turning to Natural Gas (8:30 a.m.)
National oil companies in China, Kuwait and Nigeria are increasingly focusing on producing natural gas over oil, officials from the state-owned entities said in a panel discussion, favoring gas as a cleaner bridge fuel during the energy transition.
Nigeria’s energy production mix currently is 70% oil and 30% gas, Bala Wunti, NNPC Ltd’s chief upstream investment officer said, but the country wants to flip those production numbers. Kuwait is also looking to increase its gas production, Bader E. Al-Attar, managing director with Kuwait Petroleum Corp. said. China plans to invest more in upstream natural gas production, too, said Zhen Wang, an energy economist with the national oil company, CNOOC Energy Economics Institute.
All said they think using carbon capture and sequestration is key as their countries continue growing production.
International Buyers Want US Exports to Replace Russian Supply (8:20 a.m.)
The Port of Corpus Christi exported about 70 million barrels of oil in December alone, Sean Strawbridge, the CEO of the Texas oil hub said.
International buyers are increasingly seeking US crude grades such as West Texas Intermediate and West Texas Light as a replacement for Russian Urals oil, added Occidental’s Forthuber.
Panelists said that crude exports out of the US Gulf Coast are likely to stay strong, as infrastructure capacity currently exceeds projected growth in production. Exports of natural gas liquids such as propane and ethane may face logistical constraints over the next five years, but those could be relieved by repurposing some crude assets to carry NGLs instead, said Corey Prologo, director of North America Oil Trading for commodity trading giant Trafigura.
Exxon’s Next Offshore Vessel Heads for Guyana (7:58 a.m.)
Exxon’s newest offshore oil-production vessel has departed a Singapore shipyard bound for Guyana.
The Prosperity floating production, storage and offloading facility, or FPSO, is headed for the Payara field, one of Exxon’s multiple crude discoveries off the coast of the South American nation, the company’s Guyana country manager Alistair Routledge said at the conference Tuesday.
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