Friday, July 10, 2020
Energy, Petrochemicals and Plastics 72
1 Monday Was A No-Good, Terrible, Very Bad Day For The Pipeline Business
https://www.forbes.com/sites/davidblackmon/2020/07/07/monday-was-a-no-good-terrible-very-bad-day-for-the-pipeline-business/
Monday was a no good, terrible, very bad day for the midstream sector of the domestic oil and gas industry.
First, Dominion and Duke Energy announced over the weekend that they have cancelled plans to complete the $8 billion Atlantic Coast Pipeline project. The pipeline would have carried natural gas produced in the Marcellus Shale region across the Appalachian Mountains to markets a long the East coast of the U.S.
The cancellation of the project comes weeks after the companies had actually won a case before the U.S. Supreme Court that gave them the right to build the pipeline underneath the Appalachian Trail, a route that anti-development groups had opposed. But that expensive litigation helped to increase costs related to the project to levels that would have diminished its profitability.
2 Oil Market Recovery Threatened By Weaker Fuel Demand
https://oilprice.com/Energy/Oil-Prices/Oil-Market-Recovery-Threatened-By-Weaker-Fuel-Demand.html
Gasoline demand appears to be weakening in some parts of the United States, as the coronavirus continues to spread. The states hardest hit by the surging number of infections are also some of the largest, with tens of millions of drivers. Much of the country continues to see a slight uptick in gasoline consumption. But in Arizona, Texas and Florida, where the coronavirus is raging, a growing number of people are staying home. Cases are rising in more than 30 states.
3 Global recession will hasten refinery rationalisation
https://www.reuters.com/article/us-global-oil-kemp-idUSKBN2481WD
Coronavirus and the cyclical slump in petroleum consumption are accelerating a long-term rationalisation of the global refining industry and a shift eastwards in its centre of gravity to Asia.
Refinery margins for making middle distillates such as gasoil and jet fuel have plunged to their lowest since 2009 as lockdowns and recession have cut fuel consumption by millions of barrels per day.
Much of this is cyclical and will unwind if and when the major economies and their fuel consumption recover and stocks of gasoline and diesel return to more normal levels.
4 Did COVID Kill LNG Natural Gas Dreams?
https://www.fxempire.com/forecasts/article/did-covid-kill-lng-natural-gas-dreams-660124
The current minimum amount of positive figures or green shoots are swiftly removed by new depressing figures of crude oil stock volumes in USA or lower estimates of OECD and MENA region GDP figures for 2020. The total impact is still unclear, but one thing has become obvious, energy demand and supply is under pressure, but not yet balancing out the right way.
At present, the main focus when talking about energy demand destruction is on crude oil and its products. Clearly, oil is struggling, but its sister, natural gas is totally on life-support.
5 Multibillion-dollar gas projects in jeopardy as global market collapses
https://www.theguardian.com/business/2020/jul/07/multibillion-dollar-gas-projects-in-jeopardy-as-global-market-collapses
Plans for new terminals may be abandoned because of glut of fossil fuel supply, says study
A multibillion-dollar pipeline of projects aiming to ship gas around the world on giant tankers could be in jeopardy because of a collapse in the global gas market, according to a report.
A study by Global Energy Monitor has found that spending on new gas terminals needed to ship super-chilled liquified natural gas (LNG) on seaborne tankers has more than doubled in the past year, from $82.8bn (£66.3bn) to $196.1bn.
6 U.S. natural gas exports to Mexico set to rise with completion of the Wahalajara system
https://www.eia.gov/todayinenergy/detail.php?id=44278
Exports of natural gas by pipeline are the largest component of U.S. natural gas trade, accounting for 40% of all U.S. gross natural gas exports in 2019. EIA expects these exports to increase with the completion of the southern-most segment of the Wahalajara system, the Villa de Reyes-Aguascalientes-Guadalajara (VAG) pipeline. VAG began operations in June 2020, connecting new demand markets in Mexico to U.S. natural gas pipeline exports.
7 Making The Most Of Low Prices: A Short Guide For Natural Gas Importers
https://www.forbes.com/sites/thebakersinstitute/2020/07/08/making-the-most-of-low-prices-a-short-guide-for-natural-gas-importers/
Prices of natural gas have fallen precipitously in recent months as the global COVID-19 pandemic deepened the already existing misalignment between growing supply and relatively sluggish demand. Post-COVID-19 recovery should increase the demand through 2022, but a soft market is expected to continue through 2025. These conditions could provide an unprecedented opportunity for natural gas buyers/importers. However, while enjoying the benefits of a buyer’s market, they should consider the deleterious effects that ultra-low gas prices can have on gas producers/exporters and the natural gas market as a whole.
8 Weekly Resin Report: July Trading Starts with a Bang
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-july-trading-starts-bang/118442603763291
The spot resin markets ended June with a flurry and began July with a bang, writes the PlasticsExchange in its Market Update. Despite the shortened week, participants still came to transact and closed a significant number of deals, as prices for polyethylene (PE) and polypropylene (PP) ticked higher. Producers implemented their $0.04/lb price increase on to June PE contracts, while PP contracts were steady to a half-cent higher based on market/index.
9 Covid-19 brought sudden productivity hikes to chemical operations
https://www.bicmagazine.com/departments/operations/pu-covid-19-brought-sudden-productivity-hikes-to-chemical-op/
While Covid-19 has been mostly associated with negative impacts, particularly on decreased product demand as well as project deferments, the productivity increase is an unexpected positive side, as reported by Petrochemical Update.
New ways to work adopted by petrochemical companies as part of the Covid-19 response resulted in productivity increases so significant that many of the new practices are likely to remain well after the pandemic.
10 Asia petrochemicals outlook, w/c July 6
https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/070620-asia-petrochemicals-outlook-wc-july-5
The Asian petrochemicals market outlook remains mixed in the week started July 5, with propylene and methanol markets expected to receive support on resilience in restocking needs and tight spot supply. Other markets, such as paraxylene and purified terephthalic acid, are seen staying bearish as they grapple with a supply glut and sluggish demand.
11 The Next, ‘Natural’ Evolution in Thermoplastic Expandable Microspheres
https://www.plasticstoday.com/sustainability/next-natural-evolution-thermoplastic-expandable-microspheres/71974718263289
Thermoplastic expandable microspheres (TEMS), launched in the early 1980s, are spherical particles that consist of a polymer shell that encapsulates gas. They are, in a sense, micro “balloons,” and upon heating, a tremendous volume and density change takes place.
This feature is a consequence of the tailor-made combination of:
A thermoplastic shell softening at the glass transition temperature, and
a blowing agent with a suitable boiling point (normally a hydrocarbon) simultaneously expanding when heated that, in turn, puts pressure on the shell walls. When inflated, this dramatic increase in volume of the microsphere makes it a great blowing agent, a filler providing surface effects, performance flexibility, and weight reduction.
12 Oil Falls After EIA Confirms Large Crude Inventory Build
https://oilprice.com/Energy/Crude-Oil/Oil-Falls-After-EIA-Confirms-Large-Crude-Inventory-Build.html
Crude oil inventories in the United States swelled by 5.7 million barrels in the week to July 3, the Energy Information Administration reported, but gasoline inventories drew down.
Analysts had expected an inventory decline of 3.114 million barrels for crude oil in the period, while the American Petroleum Institute reported a crude build the day prior, to the tune of 2.048 million barrels.
13 Opec production was the lowest on record in June
https://www.argusmedia.com/pages/NewsBody.aspx?id=2121703&menu=yes
Opec production was the lowest on record in June, when three Mideast Gulf countries made additional voluntary cuts and others improved their output restraint.
Overall group output fell by 1.82mn b/d from May to 22.28mn b/d in June, the most depleted level since Argus began keeping records in January 1998.
14 Long delayed polyethylene units in U.S. Gulf Coast set to start up but timing won’t help
https://www.bicmagazine.com/departments/operations/pu-long-delayed-polyethylene-units-in-u-s-gulf-coast-set-to-/
South Africa-based Sasol will put online by September a 420,000-tonne long-density polyethylene (LDPE) unit in Lake Charles, Louisiana while Taiwan-based Formosa should be on the final stages of completion of a 400,000-tonne LDPE plant it had intended to start in April in Point Comfort, Texas, as reported by Petrochemical Update.
15 Petrobras to launch tender for Brazil’s largest-ever FPSO
https://www.offshore-energy.biz/report-petrobras-to-launch-tender-for-brazils-largest-ever-fpso/
Brazilian oil company Petrobras will be launching a tender for the construction of Brazil’s biggest floating production storage and offloading (FPSO) vessel.
According to an article by Reuters which cited two people with knowledge of the matter, the state-controlled oil firm will announce the tender by the end of August.
The news agency explained that such vessels cost between $2.5 billion and $3 billion to build. Winners of the tender build and own the platforms, and lease them to Petrobras in contracts with daily rates of up to $1 million that often last longer than 15 years.
16 Talos Energy Forced To Share Massive Zama Oil Find With Mexico’s Pemex
https://oilprice.com/Latest-Energy-News/World-News/Talos-Energy-Forced-To-Share-Massive-Zama-Oil-Find-With-Mexicos-Pemex.html
Talos Energy has been ordered to come to some agreement with Mexico’s state-run oil giant, Pemex for the development of its massive Zama oil field made back in 2017.
The Zama discovery is so large—potentially 670 million recoverable barrels large–that it is the largest discovery in Mexico by a private company in decades.
The hitch for Talos, however, who won offshore Zama back in 2015, is that the oil in Zama perhaps bleeds into the neighboring block, operated by Pemex. At least that’s the narrative Pemex is telling.
17 Mexico’s Pemex plans $22.4 billion debt swap
https://www.reuters.com/article/us-mexico-pemex-idUSKBN24836M
Mexico’s Petroleos Mexicanos said on Tuesday it will offer a swap for $22.4 billion worth of bonds maturing between 2027 and 2060 as the state oil firm seeks to manage its massive debt load.
The company, known as Pemex, which had financial debts of nearly $105 billion at the end of March, announced the swap in a filing with the U.S. Securities and Exchange Commission (SEC). The document did not specify when the offer would go into effect.
18 Shale companies receive more than $2.4 billion in pandemic assistance
https://www.worldoil.com/news/2020/7/7/shale-companies-receive-more-than-24-billion-in-pandemic-assistance
The shale industry is getting at least $2.4 billion in loans from the U.S. government’s Paycheck Protection Program aimed at helping businesses that are struggling with the impact of the coronavirus pandemic.
The program will benefit more than 16,000 oil and natural gas explorers and service providers, according to data released Monday and compiled by Bloomberg. Mach Resources LLC, the gas producer run by Chesapeake Energy Corp. co-founder Tom Ward, is among companies listed as receiving loans of $2 million to $5 million.
19 Big Oil’s Investment Risk Is Spiking
https://oilprice.com/Energy/Energy-General/Big-Oils-Investment-Risk-Is-Spiking.html
The major integrated oil companies: Shell,(NYSE:RDS.A, RDS.B); ExxonMobil, (NYSE:XOM); BP, (NYSE:BP); Chevron, (NYSE:CVX), and a few others, so named for their vertical stewardship of the hydrocarbon molecule from initial extraction to final refining, have come under increasingly accurate fire from climate change advocates. In the past organizations like Greenpeace and a host of other conservation organizations, have used direct measures to interdict oil company operations. Measures that were flashy, as they drew a lot of attention from the global press, but over the long haul did little to achieve their goals of stopping oil and gas exploration.
20 Coronavirus pain drives Big Oil’s dash for record debt
https://www.reuters.com/article/us-oilmajors-debt-idUSKBN2481KF
The world’s top oil and gas companies locked in cheap borrowing rates to raise a record amount of debt in the second quarter of 2020 and boost cash reserves as a buffer against a collapse in revenues because of COVID-19.
The dash for debt piles pressure on company balance sheets and the issue is particularly acute for BP (BP.L) and Royal Dutch Shell (RDSa.L). Already burdened by high levels of borrowing, they also face the disruption of a major shift towards renewables and low-carbon.
The world’s top seven energy firms – BP, Shell, Exxon Mobil (XOM.N), Chevron (CVX.N), Equinor (EQNR.OL), Total (TOTF.PA) and Eni (ENI.MI) – raised $60 billion in debt in the quarter, nearly half of the $132 billion in oil and gas sector borrowing over the period, Refinitiv data showed.
21 Oil producers will fight for market share as consumption growth slows
https://www.reuters.com/article/us-global-oil-kemp/oil-producers-will-fight-for-market-share-as-consumption-growth-slows-kemp-idUSKBN24716P
Slower growth will intensify intra-company and intra-company competition for market share putting downward pressure on prices, revenues, investment and employment over the next two decades.
Petroleum has always been a deeply cyclical business and there is no reason to expect any lessening of cyclical volatility (“Oil prices, or how I learned to stop worrying and embrace the cycle”, Reuters, April 25, 2018).
But consumption growth has been progressively slowing since the early 1970s and that underlying trend looks set to continue through the 2020s and 2030s
