The Oil, Gas, and Petrochemical Industry Newsletter Edition 19
DEEPAK RASTOGI
Oil & Gas Professional | 10+ years experience in Refining and Petrochemical Industry | Chemical Engineer | Energy Sector | Production Manager@ IndianOil
1. Price Trends for Brent, WTI, and Natural Gas
Before diving into the latest developments, let's take a look at the recent price trends for Brent, WTI, and Natural Gas.
2. Major Investments and Acquisitions
TotalEnergies’ $9 Billion Offshore Investment in Suriname
TotalEnergies is planning a massive $9 billion investment to develop oil resources offshore Suriname, a country in South America.
This project aims to tap into the vast oil reserves discovered in the region, following the success of neighboring Guyana’s oil boom.
The company is preparing to assemble a fleet of deepwater rigs and support vessels for this historic development. Although the final investment decision is expected soon, TotalEnergies has already started reserving construction capacity for a floating oil-production vessel. This project is anticipated to transform Suriname’s economy, which has faced delays and disappointments in the past.
The production is slated to begin by 2028, potentially making Suriname a significant player in the global oil market.
Deepwater drilling refers to the process of extracting oil and gas from underwater locations, typically at depths greater than 300 meters.
Aramco’s $2 Billion Contract with Saipem for Marjan Field
Saudi Aramco has awarded a $2 billion contract to Saipem, an Italian engineering and construction services company, for the development of the Marjan offshore oilfield in Saudi Arabia. This contract falls under the existing Long-Term Agreement (LTA) between Aramco and Saipem.
The project involves the engineering, procurement, construction, and installation of topsides and jackets for wellhead platforms, as well as the installation of rigid flowlines and submarine composite cables.
The Marjan field is one of Saudi Arabia’s largest offshore oilfields, and this development is part of Aramco’s broader strategy to enhance its offshore production capabilities.
Topsides refer to the upper part of an offshore oil platform, including the drilling rig, living quarters, and processing facilities.
AM Green’s Acquisition of Chempolis Biofuel Technology
AM Green Technology and Solutions has acquired Chempolis Oy, a Finnish company specializing in next-generation 2G biofuel technology. This strategic acquisition is part of AM Green’s plan to invest $1 billion over the next three years to produce sustainable aviation fuel (SAF).
The acquisition will enable AM Green to establish large-scale bio-refineries that utilize multiple feedstocks to produce high-value green products, such as ethanol and lignin.
Chempolis’ technology is known for its ability to process lignocellulosic feedstocks, which are plant-based materials that are not used for food. This move aligns with AM Green’s vision to become a leading player in the global bio-refinery technology platform, contributing to the decarbonization of the aviation industry.
Lignocellulosic feedstocks are composed of cellulose, hemicellulose, and lignin, and are used to produce biofuels and biochemicals.
3. Energy Market Trends and Forecasts
OPEC’s Forecast for Global Oil Demand Growth by 2050
OPEC (Organization of the Petroleum Exporting Countries) has released its World Oil Outlook 2024, predicting that global oil demand will reach 120.1 million barrels per day (bpd) by 2050. This forecast represents a significant increase from current levels, driven by economic growth, population expansion, and urbanization, especially in non-OECD (Organization for Economic Co-operation and Development) countries.
OECD refers to a group of countries with high-income economies and a high Human Development Index (HDI).
OPEC emphasizes the need for substantial investments in oil and gas to meet this demand, estimating a requirement of $17.4 trillion by 2050. The report also highlights the importance of balancing energy security, affordability, and emissions reduction. Despite the push for renewable energy, OPEC believes that oil and gas will continue to play a crucial role in the global energy mix.
Report on Fossil Fuels’ Renewed Focus Amid Energy Security Concerns
A recent report by GlobalData indicates that energy security fears have led to a renewed focus on fossil fuels. The ongoing conflict in Ukraine has heightened concerns about reliable energy supplies, prompting many countries to scale back their energy transition efforts temporarily. This shift has resulted in increased investments in oil and gas projects to ensure stable and affordable energy.
Energy security refers to the uninterrupted availability of energy sources at an affordable price.
However, the report suggests that the transition to low-carbon energy sources will continue, albeit at a slower pace. The emphasis on fossil fuels is seen as a short-term measure to address immediate energy security needs while long-term strategies for sustainable energy development are still in place.
Dallas Fed’s Report on U.S. Upstream Activity
The Dallas Federal Reserve has released its latest Energy Survey, showing a slight decline in U.S. upstream oil and gas activity in the third quarter of 2024. The survey’s business activity index dropped from 12.5 in the second quarter to -5.9, indicating reduced activity among energy firms.
Upstream activity involves the exploration and production of oil and gas.
While oil production saw a modest increase, natural gas production declined. The report also highlights rising costs for equipment and services, which are growing at a slower pace compared to previous quarters. Additionally, the survey reveals increased uncertainty among firms, with the outlook uncertainty index jumping to 48.6. Respondents expect the price of West Texas Intermediate (WTI) oil to average $73 per barrel by the end of 2024.
4. Technological Innovations in Energy
SLB and NVIDIA’s AI-Powered Energy Solutions Collaboration
SLB (formerly Schlumberger) and NVIDIA have expanded their collaboration to develop AI-powered solutions for the energy industry. This partnership focuses on creating generative AI models tailored for energy applications, such as subsurface exploration and production operations. By leveraging NVIDIA’s NeMo platform, SLB aims to enhance its Delfi and Lumi platforms, which are used for data management and AI in the energy sector.
Generative AI refers to AI systems that can create new content, such as text, images, or simulations, based on existing data.
These AI models will help energy companies optimize their operations, improve efficiency, and reduce their carbon footprint. This collaboration is expected to drive significant advancements in how energy companies manage and utilize their data.
Cleanova’s New Carbon Capture Filtration Technology
Cleanova has introduced Cleanova.C-CLEAN, a groundbreaking carbon capture filtration technology designed for CCUS (Carbon Capture, Utilization, and Storage) applications. This technology aims to capture carbon dioxide (CO2) from various industrial sources, ensuring that the captured gas is free from solid and liquid contaminants. The filtration system is tailored to specific conditions such as CO2 concentration, temperature, and pressure, making it highly efficient and cost-effective.
CCUS is a technology that captures CO2 emissions from sources like power plants and industrial processes, preventing them from entering the atmosphere.
Cleanova.C-CLEAN includes advanced filters like UNIQ-MAX for removing suspended particles, liquid/gas coalescers for solvent purity, and activated carbon filters for eliminating hydrocarbons. This innovation supports global efforts to achieve net-zero emissions by 2050 by providing reliable and efficient carbon capture solutions.
5. Environmental and Sustainability Initiatives
Electrification in Drilling Operations to Reduce Carbon Footprint
Electrification of drilling operations involves using electricity from the utility grid instead of diesel generators to power drilling rigs. This shift significantly reduces carbon emissions and operational costs.
Traditional rigs rely on diesel generators, which emit a substantial amount of CO2. By connecting rigs to the electrical grid, emissions can be cut by more than half.
For instance, a rig using diesel might emit around 20 metric tons of CO2 per day, whereas a grid-powered rig emits roughly 8 metric tons. This transition not only lowers the carbon footprint but also aligns with global decarbonization goals. The integration of renewable energy sources into the grid further enhances these environmental benefits.
Decarbonization refers to the reduction of carbon dioxide emissions through the use of low-carbon power sources.
TotalEnergies’ Long-Term SAF Supply to Air France-KLM
TotalEnergies has signed a significant agreement to supply Air France-KLM with up to 1.5 million tons of sustainable aviation fuel (SAF) over the next decade. This deal aims to reduce the airline’s carbon footprint by using fuel made from waste and residues, which can cut CO2 emissions by up to 90% compared to conventional jet fuel.
Sustainable aviation fuel (SAF) is a biofuel used to power aircraft that has similar properties to conventional jet fuel but with a smaller carbon footprint.
The SAF will be produced at TotalEnergies’ biorefineries in France and Europe. This partnership supports Air France-KLM’s goal to reduce CO2 emissions per passenger-kilometer by 30% by 2030. This initiative is part of a broader strategy to decarbonize the aviation industry and promote energy transition.
Northern Lights’ Readiness for CO2 Storage
The Northern Lights project, a joint venture between TotalEnergies, Equinor, and Shell, has completed its CO2 receiving and storage facilities in Norway. This project is the world’s first commercial carbon capture and storage (CCS) service, designed to transport and store CO2 from industrial sources. The facilities include a terminal to receive CO2, a 100 km subsea pipeline, and offshore storage sites 2,600 meters below the seabed. The first CO2 injections are expected in 2025. This project aims to help industries reduce their carbon emissions by providing a reliable storage solution. This initiative is crucial for achieving global climate goals.
6. Energy Security and Geopolitical Developments
Saudi Arabia’s Shift in Oil Market Strategy
Saudi Arabia is shifting its oil market strategy by moving away from its unofficial target of $100 per barrel. The kingdom plans to increase oil production to regain market share, even if it means accepting lower prices. This decision comes as Saudi Arabia faces competition from other oil-producing nations and aims to stabilize its economy.
The strategy change is also influenced by the need to fund Vision 2030, a plan to diversify the Saudi economy away from oil dependency. By increasing production, Saudi Arabia hopes to attract more buyers and maintain its influence in the global oil market.
Vision 2030 is a strategic framework aimed at reducing Saudi Arabia’s dependence on oil, diversifying its economy, and developing public service sectors such as health, education, infrastructure, recreation, and tourism.
U.S. and Canada Negotiating Arctic Seabed Boundaries
The U.S. and Canada have agreed to negotiate the boundaries of the Arctic seabed, an area believed to be rich in oil and gas reserves. This region, located north of Alaska, Yukon, and the Northwest Territories, has become increasingly accessible due to climate change, which is melting sea ice and opening new shipping routes. The negotiations aim to resolve overlapping claims and establish clear maritime boundaries.
This move is also a response to the growing presence of Russia and China in the Arctic, which has strategic and economic implications. The Arctic seabed is of significant interest due to its potential resources and the geopolitical importance of the region.
Shell and Chevron’s Gulf of Mexico Shutdown Due to Hurricane
Shell and Chevron have shut down their oil production facilities in the Gulf of Mexico in response to Hurricane Helene. Approximately 29% of U.S. crude oil production and 17% of natural gas output in the Gulf have been halted. The companies evacuated non-essential personnel and secured their platforms to ensure safety.
The Bureau of Safety and Environmental Enforcement (BSEE) is monitoring the situation and will work with operators to resume production once the hurricane passes. This shutdown highlights the vulnerability of offshore oil production to extreme weather events.
7. Renewable Energy Projects
SAFFiRE’s SAF Pilot Plant in Kansas
SAFFiRE Renewables has broken ground on a new sustainable aviation fuel (SAF) pilot plant at Conestoga Energy’s Arkalon Energy ethanol facility in Liberal, Kansas. This plant will process 10 tons of corn stover daily to produce cellulosic ethanol, which can be upgraded into SAF. The project is a collaboration with the U.S. Department of Energy, National Renewable Energy Laboratory, and other partners. The goal is to create a scalable biofuel business that reduces the carbon footprint of aviation fuel by at least 83% compared to conventional jet fuel. This initiative is expected to generate 500 new jobs and contribute $92 million to the local economy. Corn stover refers to the leaves, stalks, and cobs left in a field after the corn is harvested. This project represents a significant step towards sustainable aviation and biofuel production.
LanzaTech and SEKISUI’s Waste-to-Ethanol Plants in Japan
LanzaTech and SEKISUI CHEMICAL have signed a Master License Agreement to develop multiple waste-to-ethanol plants across Japan. These plants will convert municipal solid waste (MSW) and industrial waste into ethanol using a microbial catalyst and gas fermentation process. The first commercial-scale facility is expected to produce 10 to 12 kilotons of ethanol annually. This ethanol can be further converted into sustainable aviation fuel (SAF) and other valuable products. The technology aims to reduce waste, capture carbon, and create a sustainable supply chain. This initiative builds on a successful pilot plant in Kuji City, Iwate, Japan, which demonstrated the feasibility of converting waste-derived syngas into ethanol. This project supports Japan’s goals for a low-carbon society and sustainable resource management.
Syngas is a mixture of hydrogen, carbon monoxide, and carbon dioxide, typically produced from gasifying organic materials.
8. Corporate Strategies and Business Moves
Shell’s Cancellation of Blue Hydrogen Project
Shell has decided to cancel its blue hydrogen project in Norway, known as the Aukra Hydrogen Hub, due to a lack of market demand. The project aimed to produce 1,200 tons of blue hydrogen per day by 2030 using natural gas and carbon capture technology. However, high production costs and insufficient demand made the project financially unfeasible. This decision follows a similar move by Equinor, another energy company, which also canceled its hydrogen project in Norway.
Blue hydrogen is produced from natural gas with carbon capture and storage to reduce emissions.
Despite the potential environmental benefits, the economic challenges have led Shell to halt this initiative. The company will now focus on other energy projects that align better with market needs and financial viability.
ExxonMobil’s New Fawley Refining-Complex Units
ExxonMobil is investing £800 million (approximately $1 billion) to upgrade its Fawley Refinery in the UK. This project includes the construction of a new low-sulfur diesel facility and a hydrogen plant. The upgrades aim to increase diesel production by 40% and reduce the UK’s reliance on imported fuels.
The new hydrogen plant will support the production of sustainable aviation fuel (SAF), contributing to lower emissions in the aviation sector.
The Fawley Refinery, one of the largest and most complex in Europe, has been operational since 1921. This investment is part of ExxonMobil’s strategy to meet current energy needs while building the foundations for a low-carbon future. Low-sulfur diesel is a cleaner-burning fuel that meets stringent environmental standards.
Wood’s Contract for Operating a Major Plastics Recycling Facility
Wood, a global consulting and engineering company, has secured a three-year contract to operate and maintain the Freepoint Eco-Systems plant in Hebron, Ohio. This facility is one of the world’s largest advanced plastics recycling plants, spanning 25 acres and utilizing a 260,000 square foot warehouse.
The plant will process 90,000 tons of end-of-life plastics annually, converting them into pyrolysis oil through a process called depolymerization.
This oil can be used to produce new plastic products, supporting a circular economy. Wood will manage the facility’s operations, safety, and maintenance, employing over 100 people. This contract aligns with Wood’s sustainability goals and contributes to reducing plastic waste and greenhouse gas emissions.
Pyrolysis is a process that breaks down materials at high temperatures in the absence of oxygen.
9. Regulatory and Policy Changes
Management of Orphaned Wells in the U.S.
The U.S. government is addressing the issue of orphaned wells, which are abandoned oil and gas wells that pose environmental hazards. These wells can leak harmful gases like methane and contaminate groundwater. The Bipartisan Infrastructure Law has allocated $4.7 billion to plug and remediate these wells across federal, state, Tribal, and private lands. The Department of the Interior is leading this effort through its Orphaned Wells Program Office, which coordinates with various agencies to inventory, assess, and close these wells. This initiative aims to reduce greenhouse gas emissions, improve public health, and create jobs.
FTC’s Greenlight on Chevron’s Hess Acquisition Amid ExxonMobil Arbitration
The Federal Trade Commission (FTC) is expected to approve Chevron’s $53 billion acquisition of Hess Corporation, despite challenges from ExxonMobil. This merger will significantly enhance Chevron’s oil and gas portfolio, particularly in Guyana, where Hess has valuable assets. However, ExxonMobil, a partner in the Guyana joint venture, is contesting the deal, claiming a right of first refusal on Hess’s assets. The arbitration panel will review this dispute in 2025. The FTC’s approval comes with conditions, including preventing John Hess, CEO of Hess, from joining Chevron’s board to avoid antitrust issues. Antitrust laws are regulations that promote competition and prevent monopolies. This merger is part of a broader trend of consolidation in the U.S. oil and gas industry, aiming to strengthen companies’ positions in a competitive market.
10. Maintenance and Operational Updates
Gazprom Neftekhim’s Major Maintenance Announcement
Gazprom Neftekhim Salavat, a major oil processing, petrochemical, and fertilizer complex in Russia’s Bashkortostan region, has announced major maintenance activities. The maintenance will involve repairing the CDU-24 (Crude Distillation Unit) and a hydrotreater. These repairs are scheduled to start this week and are expected to be completed by mid-October. During this period, another key unit, CDU-6, will continue operations to ensure some level of production. The CDU-24 unit accounts for about 40% of the plant’s capacity, making this maintenance crucial for the plant’s overall performance. The Salavat complex is significant in Russia’s oil processing industry, with a capacity to produce approximately 1.5 million tons per year (MMtpy) of gasoline and 2.3 MMtpy of diesel. Crude Distillation Unit (CDU) is a critical component in refineries where crude oil is heated and separated into different fractions.
TotalEnergies’ LNG Supply to HD Hyundai Chemical
TotalEnergies has signed a Heads of Agreement (HoA) with HD Hyundai Chemical to supply 200,000 tons of liquefied natural gas (LNG) annually for seven years, starting in 2027. This agreement aligns with TotalEnergies’ strategy to expand its long-term LNG sales and strengthen its position in South Korea, the world’s third-largest LNG importer. The LNG will be used to supply natural gas to one of HD Hyundai Chemical’s industrial sites.
This deal helps TotalEnergies secure long-term sales in Asia and reduce exposure to spot market gas prices. This agreement supports the transition from coal to natural gas, which is a cleaner energy source, thereby contributing to reduced carbon emissions.
Liquefied natural gas (LNG) is natural gas that has been cooled to a liquid state for ease of storage and transport.
YECC’s Copolymer Plant Project in China
YECC (Shaanxi Yanchang China Coal Yulin Energy & Chemical Co., Ltd.) has awarded a licensing contract to ECI Group for a 150,000 tons per year (tpy) copolymer plant project in China. The plant will be located in Yangqiaopan, Jingbian County, Yulin City, Shaanxi Province. ECI Group will provide its proprietary hybrid reactor technology, which is based on the well-proven ICI autoclave technology. This technology will enable the production of various high-value copolymer products such as LDPE (Low-Density Polyethylene), EVA (Ethylene Vinyl Acetate), and EBA (Ethylene Butyl Acrylate). The project includes the technology license, process design package, and technical support during installation and start-up. This plant is expected to enhance YECC’s production capabilities and support future expansion.
11. Q&A and Feedback Section
Q&A from Subscribers
Q1: How does Sea6 Energy’s seaweed-to-crude oil project contribute to renewable energy?
A: Sea6 Energy converts seaweed into bio-crude oil, providing a renewable alternative to fossil fuels, helping in reducing carbon emissions.
Q2: How is India managing corn imports for ethanol production?
A: Due to rising ethanol demand for blending with gasoline, India has become a net importer of corn, with plans to import around 1 million tons to support ethanol production.
Q3: What impact does China’s oil demand slowdown have on the global market?
A: The slowdown in China’s oil demand, driven by an economic slump and the rise of electric vehicles, is leading to lower global oil prices and could signal a peak in global oil demand sooner than expected.
Feedback Section
Anya Robertson, Houston, USA: “The section on advanced coatings for fracking wellheads was insightful! It’s great to see technology addressing operational efficiency issues.”
Rajesh Kumar, Mumbai, India: “The articles on India’s green ammonia projects and ethanol production strategies are very relevant. Looking forward to more updates on these topics.”
Thank You !
Thank you for being a part of our journey. We look forward to bringing you more exciting updates and insights in the future. Stay informed, stay connected, and let’s continue to grow together!
Warm regards,