US readies auction for Gulf of Mexico oil leases

Market: Crude oil, Natural gas
24/02/23

The US has finished preparations for an auction next month of oil and gas leases in the Gulf of Mexico, giving producers their first chance since 2021 to buy drilling rights in the region.

The US Interior Department today released a final notice to hold Lease Sale 259 on 29 March. The agency will offer oil and gas leases on 73.3mn acres (300,000 km²), fulfilling a congressional mandate from last year's Inflation Reduction Act to hold an offshore lease sale by the end of next month.

Offshore producers have lobbied President Joe Biden's administration to resume regular leasing to provide more predictability to their ability to operate in the Gulf. The Inflation Reduction Act requires another offshore lease sale by 30 September, but additional lease sales cannot be held until the administration finalizes a new offshore leasing plan for 2023-28.

The Interior Department, in a offshore leasing plan proposed last summer, said it was considering resuming twice-a-year lease sales in the Gulf of Mexico. But the agency is also considering a "no lease sale" option that would halt further leasing until at least 2028.

Oil industry groups last month filed a lawsuit asking a federal court to set a 30 September deadline for the Biden administration to finish the five-year leasing plan. Industry officials are urging the administration to reject the no lease sale option.

"Halting new leasing on US federal lands or waters would hurt communities that depend on offshore production," American Petroleum Institute Frank Macchiarola senior vice president said at an industry event this week in Canada. "It would also likely cause volatility in global energy markets."

The US Gulf of Mexico produced 1.7mn b/d of crude last year, according to federal data. Offshore production could hit a record high of 1.9mn b/d this year, according to the US Energy Information Administration's latest Short-Term Energy Outlook.

By Chris Knight

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19/11/24

Cop: Countries join fossil fuel subsidy phase-out group

Baku, 19 November (Argus) — Colombia, New Zealand and the UK today joined a Netherlands-led international coalition focused on phasing out incentives and subsidies for fossil fuels. They made the announcement at the UN Cop 29 climate summit in Baku, Azerbaijan. The coalition was first formed at Cop 28 in December last year. Member countries that sign up to the coalition commit to publish an inventory of their fossil fuel subsidies a year after joining, and to develop a plan to phase them out. Countries agreed at Cop 26, in 2021, to phase out inefficient fossil fuel subsidies, and reaffirmed this a year later at Cop 27. G20 members first pledged in 2009 to do the same. But global fossil fuel consumption subsidies hit over $1.2 trillion in 2022 and more than $600bn in 2023, IEA data show. "We truly feel that this is something we should tackle at a European level as well", EU energy commissioner Wopke Hoekstra said today. "This is something the next Commission will push; this is something I will personally push", he added. New Dutch climate and green growth minister Sophie Hermans admitted that phasing out fossil fuel subsidies is a "sensitive topic", but that the country is working on a plan. The first step is to make transparent which fossil fuels subsidies are in countries' systems, she said. The coalition now has 16 members — Austria, Antigua and Barbuda, Belgium, Canada, Costa Rica, Denmark, Finland, France, Ireland, Luxembourg, the Netherlands, Spain and Switzerland, as well as the three countries that joined today. Four members have made their national inventory of fossil fuel subsidies transparent — Belgium, France, Ireland and the Netherlands. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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G20 mayors call for $800bn/yr to address climate change

19/11/24

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19/11/24

G20 mayors call for $800bn/yr to address climate change

Rio de Janeiro, 19 November (Argus) — Mayors from G20 countries are asking for at least $800bn/yr in investments by 2030 to tackle the effects of climate change. "We need better and faster access to international financing to ensure infrastructure that supports the socioeconomic security of our communities," Rio de Janeiro's mayor Eduardo Paes said. The joint statement from nearly 60 mayors and urban leaders was drafted during the Urban20, a G20 forum that includes leaders from major cities worldwide, and was delivered to Brazilian president Luiz Inacio Lula da Silva. The statement will also be delivered to other G20 members during the ongoing G20 summit in Rio de Janeiro. Climate change is one of the main topics being debated at the G20 summit. Brazil, which holds the G20 presidency this year, has set the energy transition as one of its goals for the year. The group reaffirmed its support for the Paris Agreement climate goals , saying it "fully subscribes" to the Cop 28 deal struck last year, which included language on transitioning away from fossil fuels. Urban investments such as low-emission transport, clean energy, and climate-resilient infrastructure can "significantly reduce emissions" and boost economic growth, according to the statement. The funding could unlock around $23.9 trillion in returns by 2050, it said. The $800bn/yr would cover around 20pc of urban climate finance needs and "serve as a catalyst for additional private sector funding," according to the Global Covenant of Mayors for Climate and Energy, a non-government organization for climate leadership that comprises over 13,000 cities worldwide. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Progress on actions to cut emissions uncertain

18/11/24

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18/11/24

Cop: Progress on actions to cut emissions uncertain

Baku, 18 November (Argus) — Progress on mitigation — actions to cut greenhouse gas emissions — is uncertain at the UN Cop 29 climate summit, as talks on a specific text related to the issue are at risk to be pushed back to 2025, losing any progress made in the past year. Some countries had proposed using the mitigation work programme — a work stream focused on reducing emissions — to progress the commitment made at Cop 28 in 2023 to "transition away" from fossil fuels. But talks have stalled and could end without a conclusion at the summit. Developed countries as well as developing nations including some small island states and countries in Latin America — such as Brazil, Colombia, Peru, Mexico — have expressed disappointment about how mitigation talks were going. New Zealand called on countries to follow up on last year's decision on mitigation at Cop 28 and Norway added that these issues deserved "more than silence on mitigation". Switzerland complained that mitigation was "held up by a select few", and said that the discussion was critical for increased commitments for next year's 2035 Nationally Determined Contributions (NDCs). NDCs are countries' climate plans that include emissions reduction targets. Cop parties are due to submit new versions by February 2025. The US also said that Cop 29 needed to "reaffirm the historical Global Stocktake decision" taken last year. And developed nations, led by the EU, called for the discussion to continue this week — the second week of Cop 29. But countries including Bolivia, Iran and Saudi Arabia, for the Arab Group, pushed back on this. The mitigation work programme is "not… open to reinterpretation", Saudi Arabia's representative said today. The country said earlier that it did not want new targets to be imposed, complaining about the "top-down approach" taken by developed countries. India reminded developed countries that they have yet to deliver on their new finance commitment — a crucial step for more ambitious NDCs in developing nations. But "Cop 29 cannot and will not be silent on mitigation", the summit's president, Mukhtar Babayev said today. "On mitigation we have been clear that we must make progress, "he said, adding that he has asked ministers from Norway and South Africa to consult on what an outcome on mitigation could look like. EU climate commissioner Wopke Hoekstra today said that it is "imperative that we send a strong signal this week for the next round of NDCs", he said. Points related to mitigation — including transitioning away from fossil fuels and phasing out inefficient fossil fuels subsidies — are currently mentioned in the draft text for the new finance goal, known as the new collective quantified goal (NCQG). It is the key issue at Cop 29. Developed countries agreed to deliver $100bn/yr in climate finance to developing nations over 2020-25, and Cop parties must decide on the next stage — including the amount. Developed countries are likely push for the fossil fuel language to stay in the finance goal text, especially if mitigation talks stall elsewhere. But countries such as Saudi Arabia have long opposed this, while developed countries have received some criticism for still not having given an amount for the new finance target. By Georgia Gratton, Prethika Nair and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: G20 momentum key to Cop climate finance outcome

18/11/24

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18/11/24

Cop: G20 momentum key to Cop climate finance outcome

Baku, 18 November (Argus) — The outcome of the G20 leaders' summit in Brazil taking place on Monday and Tuesday on climate financing will be key to the success of the UN Cop 29 climate conference in Baku, Azerbaijan, summit president Mukhtar Babayev said today. "We cannot succeed without [the G20], and the world is waiting to hear from them," Babayev said. The leaders' summit takes place at the beginning of the second week of the Cop 29 conference. Progress at Cop 29 last week towards agreeing a new climate finance target for developing countries — the so-called NCQG — was not sufficient, Babayev said. He is concerned that parties are not moving towards each other fast enough. Little progress was made in the first week on three main areas of disagreement: the amount of climate finance which should be provided, how it should be structured, and which countries should contribute. Babayev urged G20 leaders, including US president Joe Biden who will be present in Brazil, to send a "positive signal of commitment to solving the climate crisis," and deliver clear mandates for Cop 29. The talks in Baku move from the technical to the political phase this week. Ministers typically have more authority to move red lines. But parties should focus on wrapping up less contentious issues early in the week so as to leave time for major political decisions, according to Simon Stiell, executive secretary of UN climate body the UNFCCC. Babayev expects talks on the amount of climate financing which will be on the table to continue until the last day of the summit at the end of this week, he said. The Cop presidency has invited former and upcoming Cop hosts the UK and Brazil to advise and "ensure an ambitious and balanced package of negotiated outcomes." Both countries have in the past week communicated more ambitious emissions reduction targets, which have been broadly welcomed. The EU today called for the Cop presidency to step up its role in the process. "We do need a presidency to lead, to steer us in the direction of a safe landing ground," European commissioner for climate action Wopke Hoekstra said. Hoekstra declined to be drawn on the amount of climate financing that the EU would like to see. Developing countries have pushed for a high goal of $1.3 trillion/yr, well above the previous target of $100bn/yr. The EU today reiterated instead its desire for the base of contributor countries to be enlarged beyond the current roster of countries defined as developed under the UNFCCC, and for as much private finance to be mobilised as possible to add to public finance. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US west coast refiners boost Canadian TMX intake

18/11/24

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18/11/24

US west coast refiners boost Canadian TMX intake

Houston, 18 November (Argus) — US west coast refiners have increased heavy Canadian crude purchases by almost 75pc since the 590,000 b/d Trans Mountain Expansion (TMX) pipeline started operations in May, but imminent California refinery closures threaten demand. The 590,000 b/d TMX project nearly tripled the capacity of Trans Mountain's pipeline system to 890,000 b/d when it opened on 1 May. The line runs from Alberta's oil sands to Vancouver on Canada's west coast, giving direct access to lucrative Asian markets, where buyers are eager for heavy sour crude. About 305,000 b/d of mostly heavy sour Canadian crude has loaded at the Westridge terminal in Vancouver in the six months since the pipeline made its debut, according to analytics firm Vortexa, hitting a record of nearly 415,000 b/d in October (see graph). US west coast refiners received just over 150,000 b/d during this period, up from less than 40,000 b/d a year earlier, and deliveries rose to a high of nearly 205,000 b/d last month (see graph). Most TMX crude destined for the US west coast has gone to Californian refiners, with Marathon, Chevron and Phillips 66 emerging as consistent buyers. Proximity to Vancouver and cheaper prices are attracting west coast buyers to TMX grades. The voyage time to California takes four days, compared with 10-14 days for Ecuadorean grades and over a month for Saudi crude. The new flows have undermined west coast interest in Mideast Gulf and Latin American supply. West coast imports from the Mideast Gulf fell by 25pc on the year to just under 260,000 b/d in the first six months of TMX operations, Vortexa data show. Crude arrivals from Saudi Arabia have been hardest hit, falling to only 40,000 b/d over the period, a third of the 2023 amount. Refiners are also turning away from Latin American grades. Mexican crude imports have dropped by 65pc since TMX started up, while imports of Ecuadorean heavy sour Napo and Oriente have fallen by 14pc. Napo differentials have weakened as a result, dropping to a $9.70/bl discount to Nymex WTI for October from a $6.70/bl discount for May. Oriente fell by $1.20/bl to a $5.70/bl discount to WTI between May and October. Alaskan ANS differentials have also come under pressure. December-delivery ANS averaged a $1.09/bl premium to Ice calendar-month average Brent, down from $4.30/bl a year earlier (see graph). But that drop has bolstered west coast demand for Alaskan crude, and spot ANS sales to the region rose by 8pc on the year to 1.6mn bl in May-December, Argus data show. Lower-priced ANS is also attracting interest from further afield — almost 1.2mn bl loaded for delivery to China in September, the highest such flows since April 2021, according to Vortexa. Rising tide Canadian crude remains plentifully supplied to refiners in the US midcontinent, despite earlier concerns that the TMX line would constrain availabilities. Rising Canadian oil sands output has meant that Enbridge's 3.1mn b/d Mainline system from west Canada to the US midcontinent has been operating at full capacity, and 2.9mn b/d flowed to the region in July, the highest for the month since 1993, US EIA data show. August imports fell to 2.6mn b/d after wildfires limited production in Canada's key upstream province Alberta. West coast demand for TMX crude could be undermined over the longer term by refinery closures. Phillips 66 aims to shut its 139,000 b/d Los Angeles refinery in late 2025. US west coast operators say more plants will close after then, citing a "hostile regulatory environment" in California and increased costs as the state government tightens the regulations governing refineries and production. By Rachel McGuire Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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