UK oil, gas 2030 emissions target 'within reach': NSTA
The UK oil and gas sector cut upstream greenhouse gas (GHG) emissions again in 2023 and its 2030 target "appears within reach", the government's North Sea Transition Authority (NSTA) said today.
But this is "just one step… and does not diminish the urgency of further abatement", the NSTA said. The UK oil and gas industry in 2021 signed the government's North Sea transition deal, which set offshore production emission reduction targets of 10pc by 2025, 25pc by 2027 and 50pc by 2030, all from a 2018 baseline.
The UK upstream oil and gas industry emitted 12.9mn t/CO2 equivalent (CO2e) in 2023, a 3.7pc drop on the year, and 29pc lower than 2018 levels, the NSTA said. Of the decrease in GHG emissions, half came from "actively producing assets" and the other half from assets that had ceased or were approaching the end of production.
Absolute emissions fell, but emissions intensity increased on the year in 2023, "as expected in a basin with declining production", the NSTA said. It projected the average emissions intensity for offshore assets at 24kg of CO2e/bl of oil equivalent (boe) in 2023 — up from 22kg of CO2e/boe in 2022.
The majority of emissions, at 79pc, were from hydrocarbon combustion for offshore power generation. Flaring and venting accounted for 17pc and 3pc of GHGs, respectively.
"Electrification or low-carbon power must play a significant role" in further reducing emissions, the NSTA said. It warned that if electrification is considered "reasonable" for existing developments but has not been implemented, "there should be no expectation that the NSTA will approve field development plans and similar decisions that give access to future hydrocarbon resources on that asset."
The organisation also promised "increased scrutiny of assets with high emissions intensity" and said it will publish later this year a list of assets that flare routinely. The amount of gas flared in 2023 was the lowest on record, at 691mn m³, although it dropped only incrementally from the previous year, the NSTA found.
The upstream industry's "total production emissions" make up just over 3pc of overall UK emissions, according to the NSTA. The North Sea industry has committed to reducing GHG emissions by 90pc by 2040, from 2018 levels, and to net zero by 2050. The UK has a legally binding goal of net zero GHG emissions by 2050.
Overall, upstream emissions make up a relatively small proportion of total GHG emissions from the fossil fuel industry. The UK government in August said it would develop new environmental guidance for oil and gas firms, in light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered.
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Tanker freight rates expected to rise from 4Q: Appec
Tanker freight rates expected to rise from 4Q: Appec
Singapore, 12 September (Argus) — Tanker freight rates are expected to pick up in October-December and into next year's first quarter on recovering demand for dirty tankers, delegates said at the S&P Global Commodity Insights Appec conference in Singapore. Clean tanker freight rates for Long Range (LR) 2 and LR1 vessels fell in the third quarter because of competition from dirty tankers, Rohit Radhakrishnan, general manager, tanker and gas, Pacific Carriers, said at the conference on 11 September. Rates were dampened on higher competition from increased vessel supply, largely because several dirty tankers such as very large crude carriers (VLCCs) switched to ship clean products. A fully laden VLCC equates to slightly more than three LR2 cargoes, which are the vessels normally used to ship diesel and gasoil from the Middle East to Europe. This was in line with a trend since July when several dirty tankers such as VLCCs were booked to carry clean petroleum products from the Mideast Gulf and Asia to Europe, given weak seasonal demand for VLCCs in the northern hemisphere and higher time-charter equivalent (TCE) rates for clean LR vessels. But the dirty tanker freight market has risen since late last week. With the recent increase in demand for dirty tankers, its $/t discount with clean tankers has decreased, said Peter Kolding, vice president of commercial and pool management at Hafnia, a tanker company. As the winter season is also coming up, demand should increase, lending a general recovery in the fourth-quarter rates, Kolding added. VLCC freight rates have steadily moved higher from about 11 months-low because of active chartering activity late last week, with several freight participants also noting that they have already touched a bottom and should continue rebounding. The Argus -assessed rate for a VLCC carrying a dirty cargo from the Mideast Gulf to southeast Asia rose to $7.52/t on 11 September, from the 11 months-low of $6.49/t on 4 September. Tanker freight rates in 2025 will still be strong compared with past years, Radhakrishnan said, but might be slightly weaker than in 2024. With freight rates in the first quarter being seasonally strong, the market should be off to a good start, Kolding added, but noted that "we still got to keep an eye on geopolitical effects." The Red Sea conflict has played a huge part in freight rates this year because of increased tonne-mile demand and costs as vessels reroute through the Cape of Good Hope, said Kolding, adding that it would take a while for the conflict to be resolved. Rates could also find further support if crude prices continue to fall, attracting charterers to book tankers such as VLCCs as offshore storage for oil, the conference moderator said. By Sean Zhuang Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Victoria seeks further gas storage capacity
Australia’s Victoria seeks further gas storage capacity
Singapore, 12 September (Argus) — The state Labor government of Victoria will introduce laws to allow offshore gas storage projects in its waters as it grapples with a predicted supply deficit because of declining Bass strait production. Victoria, which is Australia's largest user of household and commercial gas, will allow gas to be stored in empty gas reservoirs offshore in a bid to boost supply security, Victorian energy minister Lily D'Ambrosio said on 11 September. But the state's waters extend three nautical miles offshore, meaning the laws will not cover most of the state's depleted fields in the Otway and Gippsland basins which lie in federally administered zones. Victoria's largest storage is the 26PJ (694.3mn m³) onshore Iona facility in the state's west, owned by domestic gas storage firm Lochard Energy which plans to expand its capacity by 3PJ . But further capacity is needed to help bridge seasonal gaps, with the new laws possibly advancing privately-owned GB Energy's Golden Beach gas project, which could add 12.5PJ of storage to the grid. The Gippsland basin joint venture (GBJV) and Kipper Unit JV which feed the three Longford gas plants in the state's east have historically supplied about 60pc of southern states' gas, but operator Exxon plans to close one of the plants in July-October , cutting the 1.15 PJ/d facility's capacity to 700 TJ/d and further to 420 TJ/d later this decade. GBJV operated just 50 producing wells and six gas platforms in the 2024 southern hemisphere winter, with Exxon expecting a 70pc reduction in the number of wells from 2010 levels by next winter. The Australian Energy Market Operator's (Aemo) 2024 Victorian Gas Planning Report (VGPR) update confirmed the need for greater supply in Victoria, as declining demand would not offset the loss of supply from the GBJV. Peak southern state winter demand exceeds 2 PJ/d, but at full capacity, pipelines linking Queensland state's coal-bed methane fields to the southern states can meet only 20pc of such demand. Coal and gas-dependent Victoria this year approved its first nearshore gas project in a decade as the government softens its anti-gas stance. LNG import plans The possibility of LNG imports is firming in Victoria, with Australian refiner Viva Energy announcing public consultation has begun on its supplementary environmental effects statement (EES) for a planned floating storage and regasification unit, adjacent to its 120,000 b/d Geelong refinery. The Geelong LNG terminal would have the capacity to supply more than half of Victoria's current gas demand, Viva said on 12 September. The terminal's surplus gas could also flow into the connected southern states of South Australia, New South Wales and Tasmania. A public hearing into the proposal, which could see the import of 45 cargoes/yr, is expected to be held in December before an independent committee reports to the state's planning minister next year. Subject to a final investment decision, works could commence in 2026 to deliver first gas for winter 2028, Viva said, aligning with Aemo's expected shortfall of 50PJ in that year. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China slowdown drags global oil demand: IEA
China slowdown drags global oil demand: IEA
London, 12 September (Argus) — A sharp slowdown in China continues to weigh on global oil demand growth, the IEA said today. In its latest Oil Market Report (OMR), the IEA sees China's demand increasing by just 180,000 b/d in 2024, compared with its forecast for 300,000 b/d last month and well below the 710,000 b/d it had projected in January. This was the main reason the IEA cut its 2024 global oil demand forecast by 70,000 b/d to 900,000 b/d. The Paris-based agency said year on year gains of just 800,000 b/d in the first half were the lowest since 2020 and based on "actual data received year-to-date." It sees demand growth remaining subdued in 2025 at 950,000 b/d, unchanged from last month's estimate. The gloomy outlook comes after China recorded a fourth consecutive oil monthly consumption decline in July, at 280,000 b/d, the IEA said. The Paris-based agency attributes the slowdown in China's oil use to a "broad-based economic slowdown and an accelerating substitution away from oil in favour of alternative fuels weigh on consumption." China is not the only country where oil demand is weaker than previously anticipated. The IEA halved its US oil demand growth estimate for this year to just 70,000 b/d, noting a sharp drop in gasoline deliveries in June. "With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade," the IEA said. The agency's latest medium term oil outlook sees world oil demand peaking at 105.6mn b/d in 2029. The IEA's latest projections add to concerns about the health of oil demand this year. Even Opec, which had until August kept its highly bullish oil demand forecast unchanged, has trimmed its expectations for this year and next although its 2024 projection of over 2mn b/d demand growth remains well above most other outlooks. Supply surplus incoming The IEA's forecast does not bode well for a plan by some members of Opec+ to start unwinding 2.2mn b/d of voluntary cuts starting in December. "With non-Opec+ supply rising faster than overall demand — barring a prolonged stand-off in Libya — Opec+ may be staring at a substantial surplus [next year], even if its extra curbs were to remain in place," the agency said. The IEA's latest balances show a supply surplus of more than 1mn b/d in 2025. On global supply, the IEA lowered its growth estimate to 660,000 b/d compared with 730,000 b/d last month. But global growth next year could be as high as 2.1mn b/d even if all Opec+ cuts are maintained, the IEA said. The agency said global observed oil stocks declined for a second consecutive month in July, by 47.1mn bl, although it noted a steep build in oil products stocks to the highest since January 2021. The IEA attributes the recent oil price declines to demand-based fears centred on China and noted the falls came despite "hefty supply losses in Libya and continued crude oil inventory draws." By Aydin Calik Global oil demand/supply balance* mn b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's CER undecided on SMC issuance details
Australia's CER undecided on SMC issuance details
Sydney, 12 September (Argus) — Australia's Clean Energy Regulator (CER) has not yet decided on the level of details that will be published alongside the upcoming safeguard mechanism credits (SMCs), while estimated issuance numbers remain within a "wide" range, delegates heard at a forum in Sydney. The regulator will start to issue SMCs early next year to safeguard facilities that report scope 1 greenhouse gas (GHG) emissions below their annual baselines. Each SMC will represent 1t of CO2 equivalent (CO2e) below a facility's baseline, which will have the option to either hold it for future use or sell it in the market. The CER has an estimated range of SMC issuance numbers for the July 2023-June 2024 compliance year, the first under Australia's reformed safeguard mechanism . But this range is "very wide" as several factors are at play, executive general manager Carl Binning told delegates at a safeguard mechanism forum organised by the regulator in Sydney on 11 September. SMC issuances will be "relatively modest initially" according to Binning, but volumes are expected to build up over time as companies intensify efforts to reduce emissions while baselines converge to industry averages. He declined to provide any internal estimates on SMC issuances. Australian companies need to submit their emissions and energy data under the National Greenhouse and Energy Reporting (NGER) scheme by 31 October, including covered emissions data for individual safeguard facilities. The CER is finalising the so-called energy intensity determinations for each facility, which will be used to set their baselines. Baselines will be based on a production-adjusted framework initially weighted towards site-specific emissions intensity values, transitioning to industry average emissions intensity levels by 2030. Under the reformed mechanism, facilities that emit more than 100,000t of CO2 equivalent (CO2e) in a fiscal year face declining baselines — at a rate of 4.9 pc/yr until 2030 — and need to surrender Australian Carbon Credit Units (ACCUs) or SMCs if their onsite abatement activities were not enough to keep their emissions below thresholds. Australia's Department of Climate Change, Energy, the Environment and Water (DCCEEW) late last year estimated SMC issuances would start at around 1.4mn units in the 2024 financial year ending 30 June 2024, rising to 7.4mn in 2030 and 10.3mn in 2035. Facilities that fall below the coverage threshold of 100,000t CO2e can choose to continue receiving SMCs for up to 10 years — with their baselines continuing to decline if they opt in — and the DCCEEW expects such issuances will be the main source of SMCs by 2035 (see table). Uncertain data level All safeguard facilities will need to give a breakdown of the surrendered ACCUs by the method under which they were generated for the first time from the 2024 financial year, as well as a breakdown of their emissions by CO2, methane and nitrous oxide. The CER will publish 2023-24 safeguard data by 15 April 2025. But while the regulator will also need to publish the number of SMCs issued to a facility, there is still no definition on whether it will disclose where SMCs surrendered by facilities came from, Binning told delegates. "One of the issues we're really wrestling with in the design of our new registry is how much information we tag," Binning said. "I think the marketplace is interested in more granularity… so I'd actually invite feedback on this topic," he added. The CER expects that the new registry replacing the Australian National Registry of Emissions Units (ANREU) will be operational by the end of calendar year 2024. It plans to issue SMCs into the new registry and transfer all ACCUs from the ANREU "gradually" over the following months before the start of the next safeguard compliance period. By Juan Weik Projected SMC issuances (mn) Financial year From safeguard facilities From below-threshold facilities Total 2024 1.36 0.05 1.41 2025 1.62 0.13 1.75 2026 2.27 0.06 2.33 2027 3.20 0.26 3.46 2028 3.52 0.22 3.74 2029 4.34 0.54 4.88 2030 5.67 1.77 7.44 2031 5.31 1.92 7.23 2032 5.29 3.75 9.04 2033 6.77 3.47 10.24 2034 5.82 4.72 10.54 2035 4.80 5.51 10.31 Source: DCCEEW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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