Good News For LNG FID Projects, Dutch Cabinet Says “Gas production from the Groningen field will be completely terminated”

More good news yesterday for LNG developers looking to FID in 2018 with the Dutch cabinet detailing its plans to shut down Groningen gas production to zero.  It seems like the 3.4 earthquake on Jan 8 was the straw that broke the camel’s back and led to the Dutch cabinet’s plan to take Groningen natural gas production to zero.   In Feb, a technical committee recommended to the cabinet that Groningen gas production be reduced from 2.07 bcf/d to 1.16 bcf/d.  The cabinet went further and yesterday issued its release “Cabinet: end of gas production in Groningen” that sees Groningen production reduced to the recommended 1.16 bcf/d in Oct 2021, but no later than Oct 2022.  However, the cabinet went further, saying “Gas production from the Groningen field will be completely terminated”.  We estimate Groningen will be down 1.68 bcf/d by 2022/23.  This is an elimination of gas supply, not a delay.  The timing is a big positive to LNG supply developers.   China’s game changing priority on its fight against pollution is, by itself, moving the LNG supply gap closer to 2020.   This is positive for LNG projects, such as Shell’s LNG Canada, looking to go FID in 2018. Continue reading “Good News For LNG FID Projects, Dutch Cabinet Says “Gas production from the Groningen field will be completely terminated””

Good News For LNG FID Projects, Qatar’s 3 Bcf/d LNG Expansion Now Targets Yr-End 2023 And Not As Early As July 2022

LNG developers looking to FID in 2018 will see an increasing LNG supply gap for 2022 and 2023 with Qatar Petroleum Corporation’s announcement that its expansion to add 3 bcf/d of LNG capacity is now targeting year-end 2023 and not as early as July 2022.   Last July (July 4, 2017), QPC announced that its 3 bcf/d expansion would be completed within 5-7 years ie. July 2022-July 2024.  Today’s  announced year-end 2023 timing represents an 18 month delay to that potential early completion date of July 2022 and now closer to the late completion date of July 2024.  LNG supply was balanced in 2017 but there are continued large LNG supply additions in 2018 and 2019.  The key for LNG buyers is what fills their increasing demand once the 2018 and 2019 supply wave is absorbed.  Qatar’s 3 bcf/d expansion was the largest LNG supply project in the July 2022-July 2024 period. This 18 month delay creates the expectation of a bigger LNG supply gap in 2022 and 2023, and should help push more LNG buyers to try to lock up supply.  It is certainly a positive for LNG developers and creates a higher likelihood for some of these LNG projects, like Shell’s LNG Canada, to go FID over the summer. Continue reading “Good News For LNG FID Projects, Qatar’s 3 Bcf/d LNG Expansion Now Targets Yr-End 2023 And Not As Early As July 2022”

Russia Energy Minister Novak Points To A Gradual Withdraw Or Exit From Cuts Potentially Starting As Soon As Q3/18

WTI is trading down $0.18 to $62.16 as of 840am MDT, but we would have expected WTI to be a little lower this morning following the Bloomberg TV interview with Russia energy minister Alexander Novak.  On one hand, it makes sense as the headline from the Bloomberg posted story (and what everyone sees) and the video clip was titled “Russia Affirms Commitment To Oil Deal”.  The headline fits to the consensus expectations for the cuts to continue at least to the end of 2018 with an increasing acceptance of Saudi Arabia’s guiding the market to expect continued cooperation into 2019.   We wouldn’t have given it a second thought if we hadn’t listened to the short two minute video clip.  Novak is saying that its hard to predict market balancing, but “we believe it might start to happen starting with the third or fourth quarter” and “as soon as the ultimate goal is achieved, which is the balancing of the market, we will start considering gradual withdraw or exit from this deal.”   We didn’t expect oil to crash this morning but thought it would be a little lower as Novak points to the potential start to a gradual withdraw starting in Q3/18.  This gradual start is especially so given last week’s IEA’s Oil Market Report that noted the surplus oil stocks were down to 53 million barrels above the 5-yr average as of Jan 31.  Listening to the video clip is also a good reminder to do more than read headlines. Continue reading “Russia Energy Minister Novak Points To A Gradual Withdraw Or Exit From Cuts Potentially Starting As Soon As Q3/18”

LNG Canada Reiterates It Wants To Be In Construction in 2018, Feels More Like An Expectation

There were some great tweets yesterday from Business in Vancouver’s Nelson Bennett on quotes from LNG Canada CEO Andy Calitz.   Bennett tweeted [LINK]Andy Calitz, CEO for LNG Canada, tells #GLOBEforum plan is to start construction on Kitimat project 2018, FID documents being prepared”, and even more significantly “Direct quote: “At the time (2016) we said we wanted to be in construction in 2018. My answer remains unchanged.”   Continue reading “LNG Canada Reiterates It Wants To Be In Construction in 2018, Feels More Like An Expectation”

If EOR In Eagle Ford/Other Shales Works, US Oil Can Keep Growing Post 2020 Even If Wells Don’t Keep Getting Better Every Year

It should be a big focus week on US shale oil growth potential with the convergence of global oil leaders, including OPEC, in Houston for CERAWeek.  US shale surprising to the upside in 2017 was the supply shock to oil markets and forced OPEC to continue cuts in 2018.  The key question for oil markets is how long can the US players keep getting bigger and better wells as the cause and effect formula is that bigger and better wells leads to stronger than expected oil production.   The IEA just issued its Oil 2018 (5 yr forecast for oil) estimates US oil supply is +2.7 mmb/d and oil/NGLs +3.7 mmb/d from 2017 thru 2023, but the IEA forecast includes US oil growth essentially stopping after 2021.   We expect that global oil markets are going to leave Houston with a view that US oil growth will continue to be very strong at least in 2018 and 2019 with a clear impression that US shale oil wells will be bigger and better in 2018.   The key assumption for lower YoY US oil growth post 2020 is that wells don’t get keep getting bigger and better.  It is why we believe there may be a more important, question that is being overlooked by everyone and likely to not get headlines this week – can EOR be successful in more than the Eagle Ford shale oil?  Because if so, this can be a game changer for US shale and set up a view that the US can keep growing post 2020 and not that it stops growing as soon as the wells don’t keep getting bigger and better every year. Continue reading “If EOR In Eagle Ford/Other Shales Works, US Oil Can Keep Growing Post 2020 Even If Wells Don’t Keep Getting Better Every Year”