Oil prices have fallen below $ 60, but remain at levels not reached since January 2020.
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Friday, February 19, 2021
The Texas electricity crisis is receding, but the outages, damage and human toll were historic. Texas grid operator ERCOT will be in place from Friday morning said that it would come out of “emergencies” later in the day. After a crazy week, WTI fell a bit, but maintained a profit of almost $ 60, a price not seen since January 2020.
The Texas outage is diminishing. As of Tuesday, about 45 gigawatts of electricity generation from renewables, coal and natural gas was offline. More than 4 million people lost power. On Friday, most of those people saw power restored. The crisis has once again drawn attention to several grid policy issues: the lack of weather resilience in Texas power generation resources, the lack of a capacity market and the isolation of the state grid from the rest of the country.
US oil production was affected. About 4 MB / d of US oil production was sidelined due to power outages, wellhead freezing, and other equipment failures. Most of the failures were in the Permian basin. Restarting frozen wells or wells with shutters isn’t necessarily easy, and some restarts can take weeks.
Related: Is This Oil Rally The Start Of Something Much Bigger?
Texas prohibits shipping of natural gas outside the state. Texas Governor Greg Abbott took the drastic step of banning the export of natural gas from the state in order to maintain the supply. The move is highly controversial and potentially illegal, although most analysts note that any legal challenges are undecided, as the warrant will have expired by the time a judge reviews them. The governor also personally sent requests to several LNG exporters to stop operations.
LNG shipments canceled. At least 10 LNG shipments have been canceled due to the grid crisis, according to Bloomberg.
Restarting the refinery can take weeks. Four of Texas’s largest oil refineries suffered widespread damage from the cold snap and would take weeks to recover, according to Bloomberg. The outage could reduce the demand for crude oil, but reduce the supply of refined products. The four refineries include ExxonMobil’s (NYSE: XOM) Baytown and Beaumont plants, Petroleum’s Marathon (NYSE: MPC) Galveston Bay Refinery, edTotal (NYSE: TOT) Port Arthur facility. The result could be $ 3 per gallon of gas by May.
The US wants to reopen talks with Iran. The US government said it would accept an invitation from the EU to talk to Iran. Iran didn’t exactly jump on the news, saying it would “immediately reverse” recent actions on its nuclear program, but only after the US lifted sanctions.
Gas companies have hit the “jackpot” on the Texas freezer. While Texans struggle to keep the lights and heat on, gas producers in Lone Star state, or at least those whose wellheads don’t freeze, are having a great time.
Saudi Arabia to increase production. Saudi Arabia is on the cusp of reversing the voluntary 1 MB / d production cut in the coming weeks, according to the Wall Street Journal, with the returned barrels hitting the market in April. “A Saudi production increase … makes perfect sense given the tightness that the market is beginning to emerge,” Ole Hansen, head of commodities strategy at London-based Saxo Bank, told WSJ. “The market will probably do pretty well.”
Shell will sell Alberta assets for $ 900 million. Royal Dutch Shell (NYSE: RDS.A) will sell its shale assets of Duvernay in Alberta for $ 900 million Crescent Point Energy Corp. (TSE: CPG) Related: Oil Prices Are Rising While US Oil Production Is Decreasing 30%
Maersk plans carbon-neutral shipping containers. Shipping giant AP Moller Maersk A / S is accelerating plans to transition to carbon neutral operations, including plans to add the first biofuel-powered container ship.
American slate remains cautious for the time being. With the WTI rising to $ 60 a barrel, the US shale industry could be in a better financial position than previously expected. Recent comments from shale executives suggest that drillers will not return to aggressive spending plans, but focus on cash generation.
Canadian gas drilling is on the rise. Canadian shale gas drilling has risen rapidly this year and Canadian gas exports to the US are also on the rise. The drilling companies in Canada are hoping to capture more market share now that American drills have cut back.
Texas Freeze increases the cost of charging a Tesla to $ 900. The Texas power shortage during the cold snap has caused spot power prices to soar that the rise in power prices equals $ 900 for a Tesla charging.
$ 100 oil possible on commodity supercycle. Several investment bank analysts say oil could soar to $ 100 a barrel as we could be at the beginning of a new commodities super cycle.
Egypt to restart a second LNG plant. Egypt is about to restart a second LNG plant after an eight-year shutdown. The reboot boosts Egypt’s hopes to develop a major natural gas hub and LNG export industry.
Shell’s Nigerian accounts have been frozen in a legal dispute. A Nigerian court confines Royal Dutch Shell’s (NYSE: RDS.A) access to his bank accounts in the country during years of legal dispute.
By Tom Kool for Oilprice.com
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