November 2020, Vol. 247, No. 11

Global News

Global News

OPEC Predicts Oil Demand to Plateau in Late 2030s

World oil demand will plateau in the late 2030s and could by then have begun to decline, OPEC said, in a major shift for the producer group that reflects the lasting impact of the coronavirus crisis on the economy and consumer habits. 

(source OPEC)

According to OPEC’s “2020 World Oil Outlook,” oil use will rise to 107.2 MMbpd in 2030 from 90.7 MMbpd in 2020.  The updated projection is 1.1 MMbpd lower than it predicted for 2030 in last year’s forecast and came amid speculation that the coronavirus crisis may prove a tipping point for peak demand.

“Global oil demand will grow at relatively healthy rates during the first part of the forecast period before demand plateaus during the second half,” said the report, which looks at the 2019-2045 timespan.

“Future demand will likely remain persistently below past projections due to the lingering effects of the COVID-19-related shutdowns and their impact on the global economy and consumer behavior.”

While oil use to fuel cars, trucks and industry will rebound as economies recover, OPEC voiced concern future growth may be partly offset by factors like a post-pandemic shift to homeworking and teleconferencing over commuting, as well as efficiency improvements and a shift to electric cars.

Even before the pandemic, rising climate activism in the West and widening use of alternative fuels were putting the strength of long-term oil demand under more scrutiny. Despite scaling back its forecasts, OPEC had still seen growth.

This year, it also sees potential for demand to begin to decline after 2030 given developments like a faster adoption of electric cars, more fuel efficiency and a larger reduction in business and leisure travel after the pandemic. 

Longer term, its reference case is for oil demand to reach 109.3 MMbpd in 2040 and decline slightly to 109.1 MMbpd by 2045.

Saudi Aramco Evaluating $10 Billion Pipeline Deal

Saudi Aramco is in talks with BlackRock and other investors on a planned deal worth over $10 billion to sell a stake in its pipeline business, sources told Reuters. 

If it comes to fruition, the transaction would be similar to infrastructure deals signed this and last year by Abu Dhabi’s national oil company ADNOC, which raised billions of dollars by leasing its oil and gas pipeline assets to investor partners.

The reported Saudi Aramco deal was still in its early stages, and there was no formal decision on the investors yet, one of the two sources familiar with the matter told Reuters.

The deal would provide Aramco with cash at a time when oil prices are low and the company faces a $75 billion dividend pledged during its initial public offering last year.

Ukraine Could Export Gas to Europe This Winter

Ukraine has stored a record volume of natural gas and may be in a position to export some of it to the European Union this winter if market conditions are favorable, according to Ukrtransgaz.

“We do not exclude that in case of a favorable situation in the European market, Ukraine will start exporting gas to the EU countries,” said Serhiy Pereloma, acting director of the state-run gas transit operator.

The government has said that last winter’s unusually warm weather had allowed it to country to store a significant volume of gas underground.  Ukrtransgaz said in early October that its natural gas reserves had reached a decade high of 28 Bcm.

Ukraine, a traditional route for Russian gas to Europe, reportedly has about 30 Bcm of total underground gas storage.

Armenia-Azerbaijan Border Fights Raise Concern for Pipeline Corridor

The worst spate of fighting between Armenia and Azerbaijan since the 1990s has raised concerns about the security of critical pipelines through the border region, but Azeri’s state energy company says the infrastructure is safe.

Analysts said military clashes between Armenia and Azerbaijan over the territory of Nagorno-Karabakh had not affected energy supplies from the region but could disrupt oil and gas exports should the conflict escalate.

Ibrahim Akhmedov, a spokesman for SOCAR, told Reuters that the country’s oil and gas infrastructure was operating normally and that its exports were being carried out as usual. Oil major BP also said the business operations at its projects in Azerbaijan were continuing as usual.

Azerbaijan’s primary route for oil exports is the Baku-Tbilisi-Ceyhan pipeline, which accounts for 80% of the country’s oil exports and runs via Georgia and on to the Turkish Mediterranean coast. It has a capacity of 1.2 MMbpd or more than 1% of global oil supplies.

BP is leading the international consortium developing Azerbaijan’s giant Shah Deniz field, which is expected to make its first deliveries to Europe later this year.

TC Energy to Buy Rest of TC PipeLines in $1.48 Billion Deal

TC PipeLines said major shareholder TC Energy Corp offered to buy the rest of the natural gas pipelines operator in a deal that valued the company at about $1.48 billion.

Since the general partner of TC PipeLines is an indirect subsidiary of TC Energy, a committee of independent directors was formed to review the offer. Prior to the sale, TC Energy owned a 23.96% stake in TC PipeLines, according to Refinitiv data.

TC PipeLines common shareholders were to receive 0.650 common shares of TC Energy, representing a value of $27.31 per share, a premium of 5.4% at the time of the announcement.

China on Course for Record LNG Imports as Industries Recover

China’s imports of liquefied natural gas will likely grow 10% to new highs this year as companies scoop up cheap supplies to cover increasing industrial use and robust residential demand.

With its total natural gas use likely expanding at 4-6% this year, China is a rare bright spot on the world gas market.  Global demand is predicted to fall by about 4% due to coronavirus lockdowns.

LNG imports are set to hit a record 65-67 mtpa, analysts and Chinese traders estimate, a tenth more than 2019’s total and at a growth rate that could see China overtake Japan as the world’s top buyer by 2022.

Some analysts believe China’s economy has mostly returned to its pre-virus growth path.

US Gas Production, Demand to Fall from Peaks Due to Coronavirus

U.S. natural gas production and demand will drop in 2020 from record highs last year as coronavirus lockdowns cut economic activity and energy prices, according to U.S. Energy Information Administration (EIA) projections.

The EIA said dry gas production is expected to drop to 90.64 Bcf/d in 2020 and 86.81 Bcf/d in 2021 from the all-time high of 93.06 Bcf/d in 2019.

It also projected gas consumption would fall to 83.66 Bcf/d in 2020 and 78.73 Bcf/d in 2021, from a record 85.20 Bcf/d in 2019.

That would be the first annual decline in consumption since 2017 and the first time demand has fallen for two consecutive years since 2006.

The EIA’s projections for 2020 in October were higher than its September forecasts of 89.88 Bcf/d for supply and 82.68 Bcf/d for demand.

The agency forecasts that U.S. LNG exports will average 6.32 Bcf/d in 2020 and 8.73 Bcf/d in 2021, up from a record 4.98 Bcf/d in 2019. That is higher than its September forecasts of 6.27 Bcf/d in 2020.

T.D. Williamson Crews Isolate Burning NGL Pipeline for Repair

T.D. Williamson crews isolated a ruptured 14-inch natural gas liquids (NGL) pipeline while product continued to flare off, enabling repair while the system remained in service and creating the conditions for the fire to extinguish itself. 

The west Texas pipeline exploded after it was hit by a third-party contractor excavating the right-of-way in early October. The explosion and massive fire that followed, which shot flames 300 feet into the air, injured four people, one critically, and destroyed the trencher and all other equipment within a 300-yard radius.

The operator moved quickly to reroute product at a drastically lower flow rate. Within hours of the line strike, TDW had begun mobilizing equipment and personnel to the site, including eight hot tapping and plugging (HT&P) technicians who arrived from multiple TDW service centers in Texas, Oklahoma and California to provide around-the-clock coverage.

Charles Parrish, TDW technical sales representative, West Region, Texas & New Mexico, said the company’s response included 40 individuals, seven operations centers and six departments from across the United States. He added that full COVID-19 precautions were followed at every step.

Pipeline Rupture at India Gas Plant Sparks Fire, Halts Supply

A fire at an Oil and Natural Gas Corp (ONGC) plant caused by a pipeline rupture temporarily cut gas supplies to customers, including power and fertilizer companies, a source at gas marketing firm GAIL (India) Ltd told Reuters.

Surat Municipal Commissioner Banchhanidhi Pani said the fire was in the 36-inch Uran-Mumbai gas pipeline.

The fire broke out at ONGC’s Hazira gas processing plant in western Gujarat state and has since been extinguished, ONGC said, adding that it is working to resume normal operations. There were no casualties, ONGC said.

GAIL, India’s biggest gas marketing firm, supplies the bulk of gas produced at ONGC’s western offshore fields to customers in the states of Gujarat, Goa, Rajasthan, Uttar Pradesh and Madhya Pradesh. The Hazira plant also gets gas from western offshore fields.

TransAlta and Tidewater Agree to Sell Pioneer Pipeline

TransAlta and Tidewater Midstream said they have reached an agreement with ATCO Gas and Pipelines to sell the Pioneer Pipeline for US$194 million (C$255 million).

ATCO acquired the right to purchase the Pioneer Pipeline through an option agreement with NGTL. Upon closing, Pioneer will be integrated into NGTL’s and ATCO’s Alberta natural gas transmission systems to provide natural gas supply to power generation stations at Sundance and Keephills.

As part of transaction, TransAlta entered additional long-term gas transportation agreements with NGTL for transportation service of 400 TJ/day by 2023. TransAlta’s current commitments, including the 139 TJ/day with Tidewater, were to remain in place until closing of the transaction.

The agreement replaced an earlier deal to sell an interest in Pioneer Pipeline to NOVA Gas Transmission.

Atlantic Bridge Gas Compressor Station gets U.S. Approval

The Federal Energy Regulatory Commission (FERC) has given Enbridge final approval to put the Weymouth natural gas compressor station into service.

The Weymouth station is part of Enbridge’s Atlantic Bridge project, which is supported by contracts with local distribution companies and an industrial customer.

“The Weymouth Compressor Station will enable three local gas utilities in Maine and one in Canada to benefit from additional access to natural gas, helping homes and businesses switch from higher-emitting fuels to cleaner-burning natural gas,” an Enbridge spokesperson told P&GJ in an email.

Atlantic Bridge is replacing a 6.3-mile (10-km section of pipeline from 26-inch to 42-inch pipe in the existing footprint in New York and Connecticut. The project also involves a new meter station in Connecticut, modifications to various stations spread across several states, installations of four new compressor units at existing facilities, and the new compressor station in the community of Weymouth, just outside of Boston.

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