Francine moves inland as tropical depression
Hurricane Francine weakened to a tropical depression on Thursday after slamming into southern Louisiana as a Category 2 hurricane the previous evening and spurring offshore operators to shut in around 39pc of oil output in the Gulf of Mexico.
Francine was last about 30 miles south of Jackson, Mississippi, according to an 8am ET advisory from the National Hurricane Center, with maximum sustained winds of 35mph. The storm will move over central and northern portions of Mississippi through early Friday bringing heavy rains.
Offshore oil and gas operators including Shell, ExxonMobil and Chevron evacuated workers and shut in production from some of their offshore operations in advance of Francine, while a number of ports, including New Orleans, Louisiana, shut down.
About 674,833 b/d of offshore oil output was off line as of 12:30pm ET Wednesday, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 907mn cf/d of natural gas production, or 49pc of the region's output, was also off line. Operators evacuated workers from 171 platforms.
Shell said Wednesday evening that production at its Perdido, Auger, and Enchilada/Salsa facilities in the Gulf of Mexico remained shut in, but it would reassess its position as offshore conditions improve.
BP said it temporarily shut down and evacuated personnel from its Castrol lubricants facility in Port Allen, Louisiana.
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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.
US summer gasoline demand lagged pre-Covid levels
US summer gasoline demand lagged pre-Covid levels
Houston, 11 September (Argus) — US gasoline demand ended the 2024 summer driving season well below pre Covid-19 pandemic norms and at the lower end of average post-Covid levels. US summer driving season gasoline demand — measured from the last Monday in May to the first Monday in September — averaged 9.1mn b/d this year, according to US Energy Information Administration (EIA) weekly demand data released Wednesday. That is up by 49,000 b/d from the same period in 2023 and up by 291,000 b/d from 2022 but well below the 9.4mn b/d levels in the summer of 2021 when demand surged in the wake of the pandemic as the US economy reopened. In the ten years prior to the pandemic, weekly US gasoline demand averaged 9.3mn b/d in the peak summer months ( See chart) . Even as Americans drive more than ever , demand has failed to keep pace, likely due to increases in the efficiency of internal combustion engines and fully-electric vehicles (EVs) and hybrids comprising a greater portion of the automotive fleet. The weekly EIA data released Wednesday is less accurate than the monthly numbers published by the agency at a lag, but those too have shown summer demand below pre-pandemic levels . Gasoline demand was 9.1mn b/d in June, the most recent monthly data, down by 246,000 b/d from the same month last year and down by 583,000 b/d from June 2019. Future outlook lowered The agency has also downgraded its demand outlook in recent days. On Tuesday it lowered its demand, price and inventory expectations for road fuels such as gasoline in its monthly Short-Term Energy Outlook (STEO). The agency revised down its expectations for gasoline demand in the second and third quarters of this year by 1.1pc and 0.4pc respectively to just over 9.1mn b/d. Demand in the second quarter of next year is expected to be 30,000 b/d higher than this year, but third quarter demand is expected to be 90,000 b/d lower, helping drive an overall 20,000 b/d gasoline demand decline next year. Headed into the third quarter, US refiners have been cutting runs after weaker-than-expected summer gasoline demand raised inventories and narrowed margins. Refiners also take plants offline for maintenance in the fall amid seasonally narrower margins. Access to the export markets could be a hedge against an uncertain domestic demand outlook, and several coastal refineries up for sale in North America could give a buyer access to global markets for the road fuel. US refiners have steadily exported more gasoline since about 2007, sending 298mn bls overseas last year compared to 46mn bls in 2007. By Nathan Risser US summer driving season gasoline demand ’000 b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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