Europe turns to gas storage to offset French LNG halt

: Natural gas
23/03/13

European countries are increasing withdrawals from underground sites to offset a halt to regasification from France's four LNG terminals.

European regasification fell to its lowest since 23 October 2022 on 11 March as industrial action halted output from French terminals (see sendout graph). The Elengy-operated 8mn t/yr Montoir, 6.6mn t/yr Fos Cavaou and 2.2mn t/yr Fos Tonkin facilities halted operations at 13:00 CET (12:00 GMT) on 6 March, followed by the 12.4mn t/yr Dunkirk terminal at the start of the 7 March gas day.

French sendout collapsed to just 90 GWh/d on 6-12 March from 1.2 TWh/d earlier in the month. And the shortfall in supply is having ripple effects throughout the continent.

France has increased its withdrawals from underground storage as a share of consumption since the beginning of the strikes. Withdrawals accounted for 60pc of total supply on 6-11 March — according to the latest data — up from 48pc earlier in the month and 46pc in January-February (see French stockdraw graph).

And the uptick in withdrawals relative to consumption has also been felt by neighbouring countries, previously reliant on regasified supply from France, although the effect has been muted by mild weather, which has led to a fall in heating demand.

France has reversed its pipeline flows and imported supply from Spain in recent days to make up for the shortfall in LNG. Exports towards Belgium have also fallen, reversing to net imports on 7-8 March. And flows towards Germany have halted while exports to Switzerland — most of which then transits to Italy — have also slowed (see supply graph).

The halt in exports towards Belgium has led onward eastward flows from the country towards Germany and the Netherlands to fall sharply. Belgian exports towards Germany fell to their lowest since March 2022 on 11 March. And Belgium imported from the Netherlands on 6-8 March for the first time since late January.

And with less pipeline supply reaching Germany from Belgium, France and the Netherlands, the country's withdrawals have risen. The German stockdraw rose to 1.2 TWh/d on 6-11 March — according to the latest available data from GIE — from 1 TWh/d earlier in the month. And withdrawals as a share of German consumption rose to 36pc over the period, from 28pc earlier in the month and in January-February (see German stockdraw graph).

Italian withdrawals also slightly increased their share of the country's consumption as imports at Tarvisio — where Italy imports from France via Switzerland — halted completely on 9-12 March. The Italian stockdraw accounted for 24pc of Italian consumption on 6-10 March up from 22pc earlier in the month. But Italian consumption fell to 2.1 TWh/d on 6-12 March from 2.7 TWh/d earlier in the month, which may have limited the draw on underground stocks.

By Auguste Breteau

French withdrawals increase supply share TWh

German stockdraw increases supply share TWh

European LNG sendout steps down TWh

French pipeline exports collapse as sendout stops GWh

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24/11/05

Voting set to conclude in race for White House

Washington, 5 November (Argus) — Voting concludes today in the US presidential contest between former president Donald Trump and vice president Kamala Harris, a race with high stakes for energy policy, trade and climate change. Polls will close by 6-9pm ET in eastern states and by 11 pm ET in most western states, but election officials say it will take time to count votes, including from mail-in ballots that will trickle in over the coming days. As of 3 November, voters who went to the polling stations early or sent mail-in ballots added up to 48pc of the total turnout in 2020, according to analysis by the Washington Post. The presidential race is likely to be determined by voters in Michigan, Wisconsin, Pennsylvania, North Carolina, Georgia, Arizona and Nevada, where pre-election polls have shown no decisive lead for Harris or Trump. Voters are casting ballots at a time when domestic oil and gas production is booming. US crude output reached a record high 13mn b/d last year, while gas production hit a record 103 Bcf/d, according to the US Energy Information Administration. Despite record production and profits in the oil industry, Trump has focused heavily on energy policy — and voter anger over higher prices across the economy — in his bid to win a second term. US drivers paid an average of $3.07/USG for regular grade gasoline in the week ended on 4 November, the lowest price in 10 months — but still higher than at any point during Trump's first presidency. On the campaign trail, Trump has assured oil and gas producers that under his watch they would be permitted to "drill, baby, drill" and has promised to dismantle the energy tax credits in President Joe Biden's signature climate initiative, the Inflation Reduction Act. Harris has committed to support the 2022 law and other energy policies adopted by Biden, including continued support for electric vehicles. Harris has disavowed her 2019 pledge to ban hydraulic fracturing. But oil and gas firms remain concerned about restrictions on federal leasing and efforts to electrify the vehicle fleet if she is elected. The next president will decide key questions on energy policy, such as how to proceed with a "pause" on the licensing of new US LNG export facilities and to manage climate-related rules for power plants, oil and gas facilities and vehicles. The race for the White House will have equally high stakes for companies involved in metals and agriculture , as well as other commodities. Trump is planning a combative approach to trade, with a 20pc tariff on all foreign imports and even higher tariffs against China, and to rescind many regulations. In 2025, the US Congress is poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. Russia's war on Ukraine, and the future of US restrictions on Russian energy exports is also at stake during the election. Trump has vowed to end the war by forcing Kyiv to negotiate a deal with Russian president Vladimir Putin and appears to back the Kremlin's argument that the continuation of US sanctions on Russia would weaken and undermine the dollar. A Harris administration would continue enforcing the G7 price cap on Russian oil exports and, possibly, add to the restrictions on Moscow's earnings from its oil and gas exports. The growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East is threatening to overwhelm the final months of Biden's term in office and any foreign policy initiatives either candidate vying to succeed him will pursue in the region. US-China relations are likely to remain adversarial in coming years. Viewing Beijing as the principal economic and geopolitical challenge for the US is a rare overlap in foreign policy priorities identified by Trump and Harris. Of particular concern in Washington is the ability of oil exporting countries such as Iran, Venezuela and Russia to find willing buyers for their crude in China despite US sanctions. Polls also show a tight race in the fight for control of the US House of Representatives, where Republicans hold a slim 220-212 majority. Up to 22 congressional races are up to grabs, with a range of potential outcomes favoring either party, election ratings firm Cook Political Report says. Cook rates 208 seats as solid or leaning Republican, and 205 solid or leaning Democratic, with both shy of the 218 needed for control of the chamber. In the US Senate, where Democrats hold a 51-49 majority, Republicans have a clear path to taking control because of polling leads in West Virginia and Montana. Republicans could win control of the Senate by flipping just one seat, if Trump wins the election, but would need to flip two seats if Harris wins. By Chris Knight and Haik Gugarats Presidential race still a toss-up Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Oil services upturn takes a pause for breath

24/11/04

Oil services upturn takes a pause for breath

New York, 4 November (Argus) — The boom in demand for oil field services is showing signs of wavering in the short term as international customers signal greater caution around spending and the outlook for US shale remains challenged. Upstream spending growth in the North American onshore market is expected to be flat in 2025, with low natural gas prices, drilling efficiencies and further consolidation among producers in the shale patch all exerting downward pressure. Given a mixed international outlook, one bright spot will be offshore markets, and deepwater in particular, according to investment management firm Evercore ISI. "The solid growth years of 2023 and 2024 are over as the cycle resets," senior managing director James West says. "We view 2025 as an aberration in a long-term, albeit slower, growth cycle." In the near term, the sector's attention will be focused on spending plans by top producers including state-run Saudi Aramco and Brazil's Petrobras, as well as any signs of a potential recovery in Chinese oil demand given the government's latest stimulus efforts to kick-start growth. The sector has had to contend with more than $200bn of shale mergers and acquisitions over the past year, which has shrunk the pool of available customers, and led to oil field services providers beginning their own round of consolidation. Moreover, with capital discipline remaining the rallying cry, significant productivity gains have enabled producers to do more with less. Its immediate challenges were put into stark contrast this week by oil's renewed plunge, this time on the back of Israel's decision to spare Iran's energy infrastructure from retaliatory strikes. SLB, the biggest oil field services contractor, has attributed recent price volatility to concerns over an oversupplied market owing to higher output from non-Opec producers, as well as questions over when the cartel will return barrels to the market and weak economic growth. That spurred some customers to adopt a "cautionary approach" when it came to activity and spending in the third quarter. Gas to the rescue But SLB remains upbeat over the long-term outlook, given the current emphasis on energy security, a key role for natural gas in the energy transition, and expectations that oil will remain a "large part" of the energy mix for decades to come. Gas investment remains robust in international markets, particularly in Asia, the Middle East and the North Sea. "While short-cycle oil investments have been more challenged, long-cycle deepwater projects globally and most capacity expansion projects in the Middle East remain economically and strategically favourable," SLB chief executive Olivier Le Peuch says. Exploration successes in frontier regions from Namibia to Suriname are also unlocking vast reserves that only serve to bolster confidence in the offshore market. Global offshore investment decisions will approach $100bn this year and in the next 2-3 years, adding up to more than $500bn for 2023-26, according to Le Peuch, representing a "growth engine for the industry going forward". Meanwhile, Baker Hughes expects to capitalise on a growing market for gas infrastructure equipment. The company forecasts natural gas demand will grow by almost 20pc by 2040, with global LNG demand increasing at a faster rate of 75pc. "This is the age of gas," chief executive Lorenzo Simonelli says. The top services firms see limited short-term growth prospects for North America, with the exception of the Gulf of Mexico. Hydraulic fracturing services provider Liberty Energy plans a temporary reduction in its fleet in response to slower customer activity and market pressures. And SLB says any potential pick-up in gas rigs could be offset by a further decline in oil rigs owing to efficiencies. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexican hydrogen regulatory efforts gain ground

24/11/01

Mexican hydrogen regulatory efforts gain ground

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US job growth slumps in October, jobless rate at 4.1pc

24/11/01

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US court set to weigh biofuel blend mandates

24/10/31

US court set to weigh biofuel blend mandates

New York, 31 October (Argus) — A US court on Friday will weigh some novel issues that could affect enforcement of the Renewable Fuel Standard (RFS), the federal program that sets minimum biofuel blending levels for domestic motor fuel supplies. The Environmental Protection Agency (EPA) in last year's RFS regulation required refiners and importers to blend increasing volumes of renewable fuel from 2023-2025. But the rule differed from past obligations in a crucial way. While the RFS law set annual volume targets of cellulosic, advanced and conventional biofuels through 2022, it tasked EPA with setting volumes in subsequent years by balancing factors such as the environmental impacts of biofuels, energy security, expected production and consumer costs. In a consolidated case to be heard Friday by the US Court of Appeals for the District of Columbia Circuit, environmental groups and oil refiners are separately challenging aspects of how the EPA applied those factors in setting 2023-25 volumes. The court has previously affirmed the legality of many RFS rules. "Past cases always give you some perspective on how the DC court might see it," said Susan Lafferty, a partner at law firm Holland & Knight. "But the DC court could also say, ‘not relevant anymore because this is a different part of the statute that we are working with.'" Refiners say EPA misapplied the criteria, upping compliance costs more than necessary by setting targets for cellulosic and conventional biofuels too high and targets for advanced biofuels too low. They also challenge EPA's balancing of potential impacts, noting that the agency assumed that all parties can easily pass the costs of compliance on to consumers. In a separate case this year, the DC Circuit discarded EPA rejections of program waiver petitions, in part because judges disagreed that refiners can easily pass on the cost of Renewable Identification Number (RIN) credits used to show compliance with the RFS program. EPA used this pass-through theory in the 2023-2025 rule "like a magic wand, waving it around to dismiss any argument that the rule will cause harm", the American Fuel and Petrochemical Manufacturers and small refineries said in a case filing. Lafferty expects the judges at Friday's hearing to probe the extent to which EPA's volumes relied on this pass-through theory, "a policy that now this very court has gutted." Environmentalists have similarly targeted EPA's cost analysis, arguing that the agency downplayed the environmental drawbacks of growing crops for energy. The Center for Biological Diversity and the National Wildlife Federation argue that EPA has legal discretion to set post-2022 volumes for corn- and soybean-derived biofuels as low as zero. EPA counters that the court owes the agency deference in evaluating scientific data and making predictive judgments. And biofuel groups that have intervened argue that the program is designed to require more biofuel production even if there are no formal volume requirements in law anymore. While EPA's post-2022 authority to set blend mandates is a new issue, the DC Circuit has handled various cases about EPA's implementation and has generally been deferential to the agency's volume decisions. The court this year upheld 2020-2022 targets. In a 2019 decision, the court kept volumes in place , despite telling EPA to more deeply weigh endangered species impacts. While the court might take issue with some aspects of EPA's latest rule, including the agency's lateness in finalizing volumes, judges could again be reluctant to upend fuel markets if they find only small oversights. Depending on how skeptical judges appear about EPA's arguments on Friday, the case could cause concern for biorefineries. A decision is expected next year, meaning any order for EPA to better justify its decisions or go back to the drawing board would likely fall to the next president's administration. On the panel for Friday's hearing are two judges familiar with the program: Democratic appointee Cornelia Pillard, who wrote the opinion this year upholding 2020-2022 blend mandates, and Republican appointee Gregory Katsas, who dissented and said those volumes were excessive. The third judge on the panel is Democratic appointee J. Michelle Childs. RINcrease or decrease RIN market activity has thinned as participants await the results of the court case and November's presidential election. In its latest rule, EPA aimed to provide a clearer picture over a longer timeline by finalizing volumes over multiple years. But the agency underestimated the growth in renewable diesel production, partly because of unexpectedly high feedstock imports. The result has been persistent oversupply, which took D4 biomass-based diesel credit prices from around 150¢/RIN in spring last year to as low as 42¢/RIN a year later according to Argus assessments. Multiple refiners have consequently dialed back biofuel production. In the past, RIN prices have proven sensitive to legal developments as traders anticipate supply and demand shifts. Prices softened this summer after the DC Circuit vacated small refinery waivers, leaving it unclear whether many facilities would have to buy RIN credits at all. By Cole Martin and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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